UPDATE 2-Hungary's OTP Bank says on target after Q1 net rise

(Adds detail, quotes, analysts)

By Balazs Koranyi

BUDAPEST, May 15 (Reuters) - Hungary's OTP Bank OTPB.BU delivered first-quarter net profit just ahead of expectations on Thursday and said it remained on track to deliver profit growth above 10 percent this year.

OTP, central Europe's biggest independent bank with market capitalisation of $12.9 billion, said first-quarter net profit rose by 9.5 percent to 55.34 billion forints ($331 million), against expectations for 54.5 billion in a Reuters poll.

"These figures support our opinion that we will deliver on our full-year target of profit growth above 10 percent," Chief Financial Officer Laszlo Urban told a news conference.

Net interest income rose by 12.6 percent to 112.5 billion forints, just short of analysts' forecasts for 115.4 billion, but the bank's margins shrunk and were seen shrinking further.

"There is a slow erosion and it's not realistic to expect this to stop," Urban said. "As long as Hungary and Bulgaria are so large (in the group), competition and portfolio rollover will push margins down."

OTP's net interest margin dropped to 5.15 percent in the first quarter from 5.56 percent

Overall lending grew 31 percent, primarily on rapid lending expansion in Ukraine, Bulgaria and Russia, but analysts said figures from Russia and Ukraine were disappointing.