UPDATE 1-Raiffeisen Zentralbank's core tier 1 ratio falls
* Core tier 1 ratio 10.2 pct at end H1 vs 10.9 pct end-2012
* Pretax profit falls 39 pct to 573 mln euros
* Bank levies rise 39 pct to 117 mln euros (Adds details from statement, background)
VIENNA, Aug 28 (Reuters) - Austrian lender Raiffeisen Zentralbank's core tier 1 capital ratio fell to 10.2 percent of risk-weighted assets from 10.9 percent at the end of 2012, it said on Wednesday, keeping attention focused on the strength of its balance sheet.
RZB is the unlisted parent of Raiffeisen Bank International , which already reported second-quarter group profit fell by a quarter to 120 million euros ($161 million) as costs rose more than expected and it took a one-off hit for an upfront booking of a Hungarian bank levy.
The parent's first-half profit before tax fell to 573 million euros, down 39 percent from year-ago levels flattered by one-off gains. Its operating result rise 5 percent despite a 12 percent gain in risk provisions.
"During challenging times, our goal is not to constantly set new records," RZB Chief Executive Walter Rothensteiner said, saying first-half results reflected stable performance in the bank's core business and a good strategic stance.
Raiffeisen Bank International has said for months that a capital increase to shore up its balance sheet was an option depending on market conditions. Its chief executive last week said it was not in talks with any Arab sovereign funds about taking a stake, after suggesting this was an option.
Prospects for a share sale - especially after Austrian peer Erste Group Bank repaid state aid this month with the help of a 660-million-euro rights issue - have kept Raiffeisen Bank International stock trading at a discount to peers.
Raiffeisen has to pay back state aid and private participation capital of 2.5 billion euros by the end of 2017. Analysts estimate it needs around 2 billion euros to meet upcoming capital requirements from regulators. ($1 = 0.7466 euros) (Reporting by Michael Shields; Editing by Georgina Prodhan)