UPDATE 1-Thailand's Siam Commercial Bank bullish on prospects

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SINGAPORE, April 25 (Reuters) - Siam Commercial Bank SCB.BK, Thailand's third largest lender, said on Friday it was bullish about prospects due to growing consumer confidence in the country that has helped spur spending and investments.

Siam Commercial, in which the Thai royal family and the Finance Ministry are the two largest shareholders, earlier this week reported an 83.5 percent rise in first-quarter earnings, helped by improved loan margins and higher non-interest income.

"We won't grow profit by 80 percent but we are certain of very sustainable, healthy growth," the bank's president Kannikar Chalitaporn told Reuters on the sidelines of an investment conference in Singapore.

She added that the bank's performance in the first quarter was the result of a long-term strategy of focusing on fee-based income, which could more easily be raised without the need for additional capital.

Turning to the banking sector as a whole, Kannikar said the better-than-expected earnings posted by Thai banks in the first three months of 2008 could be maintained, contrary to comments by analysts that the gains were most one-time in nature.

Citigroup earlier on Friday downgraded Siam Commercial, Bangkok Bank BBL.BK, Krung Thai Bank KTB.BK and Kasikornbank KBAN.BK to "sell", saying the banks' revenue trend would be hard to maintain going into the second quarter.

"We expect the loan growth to grow at a slower pace. Deposit repricing is expected to result in falling margins in second quarter 2008, and gains on investment should weaken," the U.S. bank said.

Kannikar said, however, that loan growth in the first quarter reflected the start of an investment cycle. "I am quite sure it is sustainable." (Reporting by Kevin Lim, editing by Neil Chatterjee)