Greece's ATEbank grows Q1 profit 23.1 pct y/y

* Q1 net profit grows 23.1 pct y/y, trading gains help

* NPL ratio drops to 6.8 pct from 7.8 pct in Q1 2008

* Bank expects credit growth of 10 pct this year

ATHENS, May 14 (Reuters) - Greece's sixth-largest lender ATEbank (AGBr.AT) said on Thursday first quarter group net profit rose 23.1 percent to 37.3 million euros ($50.6 million), boosted by trading gains.

Net interest income at the state-controlled bank grew 8.9 percent to 158 million euros, with net interest margin dropping to 2.6 percent from 2.9 percent in the first quarter last year, the result of a narrowing of deposit spreads.

The bank said net fee and commission income rose to 15.8 percent to 17.5 million euros.

Credit to households -- mortgages and consumer loans -- rose 22.6 percent, well above the market's 9.2 percent growth rate, to reach 8.1 billion euros. Deposits were up 2.9 percent to 20.6 billion.

Lending to small businesses grew 64.5 percent to 2.1 billion euros, also above the market's performance, partly due to ATEbank's involvement in working capital loans launched by the Small Businesses Guarantee Fund, part of government measures to boost lending to SMEs.

ATEbank has been given shareholder approval for a 675 million euro capital boost via the issue of preferred shares to the government, part of a state-backed liquidity support plan.

Greece has pledged 28 billion euros to lenders to keep the country's 250 billion euro economy adequately funded.

ATEbank's non-performing loans ratio improved to 6.8 percent from 7.8 percent in the first quarter of 2008.

"The bank projects credit expansion of at least 10 percent in 2009, driven by increased lending to companies, households and the agro business sector," Chairman Dimitris Miliakos said in a statement. (Reporting by George Georgiopoulos; Editing by David Cowell)