* To pay dividend of 1.00 euro this year, no dividend next year
* Underlying net profit 309 mln euros, vs 273 mln expected
* Non-performing loans in CEE at lowest level since Q210 (Adds details, background)
BRUSSELS, Feb 14 Belgian financial group KBC beat expectations for quarterly profit, helped by a strong performance from its central European business where impairment levels were low.
Underlying fourth-quarter net profit came in at 309 million euros ($415 million), compared with a forecast for 273 million in a Reuters poll.
In its Central European business, which comprises units in Bulgaria, the Czech Republic, Hungary and Slovakia, loans rose 1 percent from the third quarter with deposits up 3 percent.
Non-performing loans in the region fell to 5.2 percent in the fourth quarter, the lowest level in the past 10 quarters, partly due to a decline in Hungary.
Loan loss provisions in Ireland, where KBC has 16 billion euros of mortgages and loans outstanding, amounted to 87 million euros in period, down from 129 million in the third quarter.
Ireland is still struggling with the fallout of a property bubble that burst in 2008 and forced the government to plough 64 billion euros ($85 billion) into the country's banks.
KBC repeated that it planned to pay back 1.17 billion euros state aid to the region of Flanders, along with a 50 percent premium, or 580 million euros, in the first half of 2013.
The group said in January it would repay 8.3 billion euros of cheap three-year loans to the European Central Bank in the first quarter.
The group said its tier 1 ratio stood at 13.8 percent at the end of 2012.
KBC will propose a gross dividend of 1.00 euro this year, and will not make a payout next year. ($1 = 0.7442 euro) (Reporting by Robert-Jan Bartunek)