UPDATE 2-Czech Komercni's Q3 net hit by loan risk cost

* Results broadly in line with expectations

* Provisions for loan losses double, slight increase ahead

* Shares slip to underperform market

(Adds quotes, share price)

PRAGUE, Nov 4 (Reuters) - Net profit at Czech lender
Komercni Banka fell 23 percent in the third quarter, just
missing expectations, after a rise in provisioning for bad
loans.

The only listed Czech bank (BKOMsp.PR: Quote, Profile, Research) has been battling a
sharp recession in the domestic economy that has hammered its
corporate clients and pushed unemployment to a three-year high,
but said on Wednesday the market was stabilising.

Profit in the quarter fell to 2.68 billion crowns ($151
million), while provisions for loan losses doubled year on year
to 1.32 billion crowns, in line with expectations.

"It seems there are some signs of recovery in the Czech
economy," Chief Executive Henri Bonnet said.

"We fear the (Czech) unemployment rate has probably not
reached its peak. All this will be reflected in our financial
results."

Komercni shares, which have doubled in value since hitting a
six-year low in February, dipped 0.5 percent up 3,410 crowns by
1058 GMT. They slightly underperformed a 0.9 percent rise for
Prague's index .

Komercni, 60 percent owned by French bank Societe Generale
(SOGN.PA: Quote, Profile, Research), has seen its cost of risk jump in previous quarters,
although for the third quarter it grew slightly on a
quarter-on-quarter basis.

The spike has been mainly due to corporate clients but
retail lending was also starting to weigh, board member Didier
Colin said. He said a moderate increase in risk cost could be
expected in the coming quarters.

The Czech economy is expected to contract around 5 percent
this year before a slight return to growth in 2010.

Komercni, which has avoided some of the pain of peers who
had been exposed to risky trading instruments or foreign
currency loans, said it expected its banking income to stabilise
going into next year.

"We don't see much prospects for a quick turnaround in the
economy, unless there is a miracle in exports and investments.
That would imply a fairly stable development of net banking
income," deputy CFO Tomas Tomiczek said.
(Reporting by Jason Hovet, additional reporting by Jana
Mlcochova; Editing by Dan Lalor and Jon Loades-Carter)
($1 = 17.79 Czech crowns)