UPDATE 1-Indonesia's Danamon Q3 net profit down 18 pct

* Bank says hit by higher loan provisioning

* Q3 net interest income up 1.3 pct to 2.479 trln rupiah

* Sees lending growing above 15 percent next year

By Tyagita Silka

JAKARTA, Oct 20 (Reuters) - Indonesia's sixth-largest lender, PT Bank Danamon Tbk (BDMN.JK), reported an 18 percent drop in its third-quarter net profit from a year ago to 495 billion rupiah ($52.68 million), hit by higher loan provisioning.

The bank, controlled by a consortium which comprises Singapore's state investor Temasek Holdings [TEM.UL] and Deutsche Bank (DBKGn.DE), said on Tuesday its outstanding loans shrank 7 percent in the January-September period.

Indonesia's central bank expects the economy to grow 4-4.5 percent this year, which although faster than many neighbours, still marks a slow-down from 6.1 percent growth last year.

"One of the reasons of posting minus 18 percent is due to higher loan provisioning," Danamon's finance director, Vera Eve Lim, said referring to third-quarter net profit.

Danamon's gross non performing loans (NPL) were 4 percent in the first nine months, almost double the 2.1 percent a year ago.

President director Sebastian Paredes told reporters that loan growth this year was likely to be marginal, but was more upbeat on next year, forecasting loan growth would top 15 percent.

Danamon, the first major Indonesian bank to report its results, posted a net profit of 495 billion rupiah in the July-September quarter from 604.63 billion rupiah a year ago, while its net interest income edged up slightly to 2.479 trillion rupiah from 2.45 trillion rupiah a year ago.

Analysts polled by Thomson Reuters I/B/E/S expected the lender to post a net profit of 1.89 trillion rupiah in 2009, up from 1.53 trillion rupiah last year.

Shares in Danamon ended down 1.55 percent on Tuesday, against a 0.74 percent fall in the Indonesia Composite Index .JKSE.

The stock has gained around 102 percent so far this year, outperforming the broader market, which has risen 85 percent. (Writing by Andreas Ismar; Editing by Ed Davies)