UPDATE 1-Shinsei Q1 soars on lower credit costs,keeps outlook

* Q1 net profit up 2.7 times to 13.8 billion yen

* CEO: have no immediate plans to raise capital (Adds details, background)

By Taiga Uranaka

TOKYO, July 29 (Reuters) - Japan's Shinsei Bank (8303.T) on Thursday said its first-quarter net profit more than doubled, helped by a drop in bad-loan costs, and reiterated its forecast for its first annual profit in three years.

The midsize bank, one-third owned by U.S. buyout firm J.C. Flowers, has lost a combined $3 billion over the past two years, hurt by bad bets on real estate and its struggling consumer financial operations.

Shigeki Toma, a former banker at Mizuho Financial Group (8411.T), took the helm in June to lead the struggling bank's turnaround efforts at a time when its far bigger rivals are also having a tough time delivering strong revenue growth.

"Given these encouraging first quarter results, we have no immediate plans to raise capital," he said in a statement.

"However, we do recognise the changing regulatory and market environment, and will consider capital-raising as one of our key strategic options going forward," he said.

Shinsei, also 24 percent held by the government, said net profit came to 13.9 billion yen ($159 million) for the April-June quarter, up from 5.2 billion yen a year earlier.

The bank said its first-quarter credit costs nearly halved to 13.8 billion yen from a year earlier.

For the financial year through March, the bank kept its forecast of 12.5 billion yen in net profit, from a loss of 140.2 billion a year earlier, though below a mean estimate of 14.6 billion yen in a poll of four analysts by Thomson Reuters I/B/E/S.

Shinsei has said it will raise up to 100 billion yen this financial year to bolster its capital after plans to merge with rival Aozora Bank (8304.T) fell through, and the market is eager to hear when it will carry out the fundraising. [ID:nTOE64D00H]

While the amount will be much smaller than the recent fundraising of larger rivals like Mizuho Financial Group (8411.T), it will still cause a massive dilution of the existing shares of Shinsei, whose market value is a little over 150 billion yen.

Shares of Shinsei have lost 27 percent so far this year, underperforming an 8 percent decline in the benchmark Nikkei average .N225. (Reporting by Taiga Uranaka)