November 2, 2018 / 7:35 AM / 10 months ago

UPDATE 1-Austria's Erste Group ups 2018 profitability target

* Q3 net income at 454 mln euros vs forecast of 402 mln

* Q3 net interest income at 1.16 bln euros vs 1.14 bln in poll

* Ups ROTE target to more than 12 pct from more than 10 pct (Adds net interest income, NPL ratio, CET 1)

VIENNA, Nov 2 (Reuters) - Austrian lender Erste Group reported a 25 percent rise in third-quarter net profit on lower risk costs and higher lending in its eastern European core markets, and it lifted its profitability target for the full year.

Net profit in the three months to the end of September rose to 454 million euros ($518 million), the bank said, topping the 402 million euros expected by analysts in a Reuters poll.

Net interest income, or profit from loans minus funding costs, rose 6.6 percent to 1.16 billion euros, in particular driven by its Czech and Romanian units.

The retail business focused lender raised its full-year outlook of a return on tangible equity (ROTE) to more than 12 percent from more than 10 percent previously, based on expectations of 5 percent growth in its net loan business, flat expenses and low risk costs.

ROTE was at 14.4 percent in the third quarter.

The fully loaded core-tier 1 (CET 1) ratio, the strictest measure of capital, was 12.4 percent at the end of September. Its non-performing loans ratio continued to fall, reaching 3.5 percent in the third quarter versus 4.0 percent at end-2017.

$1 = 0.8760 euros Reporting by Kirsti Knolle; Editing by Sunil Nair

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