UPDATE 2-Van Lanschot sees little profit growth, shares fall

* Net profit down 86 pct to 30.1 mln euros as forecast

* Sees no return to former levels of profitability

* Says dividend 0.28 euros/shr vs 2007 dividend 3 euro/shr

* CEO expects to lower return on equity target

* Shares down 10.1 pct

(Adds CEO comment)

AMSTERDAM, March 20 (Reuters) - Dutch private bank Van Lanschot (VLAN.AS) reported on Friday an expected 86 percent fall in 2008 profit and said it did not expect to return to former levels of profitability, sending its shares down 10 percent.

Van Lanschot booked a net profit of 30.1 million euros ($40.6 million), in line with analysts estimates and the group's own forecast last December of about 30 million euros. It made a profit of 215 million euros in 2007.

Van Lanschot, a top-five Dutch private bank and rival of Dutch ING (ING.AS) and Belgian KBC (KBC.BR), gets almost half of its income from commissions on transactions for clients, but lower equity markets pushed commissions down 26 percent.

"During the first few months of 2009 the mood on the equity markets remained bearish, and as a consequence investors are staying away from the markets. We therefore do not expect to return to former levels of profitability this year," Van Lanschot said.

Van Lanschot shares were down 10.1 percent at 35.89 euros by 0817 GMT compared with a 2.8 percent fall of the DJ Stoxx European banks index .SX7P, which does not include Van Lanschot.

"We believe van Lanschot's income lines will remain under pressure in 2009. Therefore we remain cautious for the rest of the year and reiterate our Reduce rating, given their premium to most of its peers," SNS Securities said in a note.

Possible interest margin pressure, depressed levels of commission income, and possible higher defaults on loans were factors that could impact Van Lanschot's 2009 profit, Van Lanschot Chief Executive Floris Deckers told Reuters.

The bank will review its financial targets in the next few months and Van Lanschot Chief Executive Floris Deckers expected to cut the return on equiqty target.

"If capital requirements will increase in the future -- and I'm pretty sure that will happen -- than it will be unreasonable to expect a return on equity of 18 percent," Deckers told Reuters.

Van Lanschot, which raised 150 million euros from investors last December, wants to cut costs by 5 to 6 percent compared with 2008 costs of 422 million euros.

He also said that it would take restructuring charges of about 1 percent in the first half this year.

Van Lanschot proposed a dividend of 0.28 euros per share compared with 3 euros in 2007 and it reiterated it aims to pay out between 40 and 50 percent of annual net profit adjusted for interest payments on perpetual loans.

Income from operating activities fell 24 percent to 494 million euros, hurt by lower commission income due to falling equity markets. A loss from selling shares and IT costs also hurt net profit, Van Lanschot said. ($1=.7412 Euro) (Reporting by Gilbert Kreijger; Editing by David Cowell)