UPDATE 1-PKO BP's Q2 profit up 47 pct on deposits, loans

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WARSAW, Aug 8 (Reuters) - PKO BP PKOB.WA, Poland's largest bank by market capitalisation, reported a 47-percent rise in second-quarter earnings on Friday, in line with expectations, thanks to booming demand for loans and higher margins on deposits.

The state-controlled bank earned 897 million zlotys ($428.8 million), which compared with the average forecast of 901 million zlotys given in a Reuters poll of 13 analysts. PKO made a net profit of 611 million in the same period last year.

"The results are largely neutral," said Marek Juras, head of research at BZ WBK brokerage. "Risk provisions at its loan portfolio are up sharply but that has already been flagged."

Net interest income rose 37 percent to 1.49 billion zlotys as the bank, which has a large share of deposits in low-yielding current accounts, has benefited from a rise in official interest rates to the highest level in more than three years.

Loan volumes jumped 28 percent because PKO, Poland's largest mortgage lender, gained from a strong appetite for credit among consumers as economic expansion spurs demand for homes, cars and flat screen TVs.

PKO shares have lost 4 percent this year, outperforming a 23 percent drop in Warsaw's WIG20 .WIG20 market index.

The bank is valued at 15 times its expected 2008 earnings, above its biggest competitor Bank Pekao BAPE.WA, which is priced at 12.7 times, according to Reuters data. (Reporting by Piotr Skolimowski and Marta Filipiak; Editing by Greg Mahlich)