UPDATE 1-Erste Q1 net ahead of forecast as trading stronger

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VIENNA, April 30 (Reuters) - Austria's Erste Bank der oesterreichischen Sparkassen posted a 25-percent rise in first-quarter net profit, lifted by its new Romanian unit and slightly more than forecast as trading income beat expectations.

Eastern Europe's second-biggest lender raised net profit after minorities to 302 million euros ($411 million), about 4 percent more than the average estimate in a Reuters poll of 13 analysts as revenues in all categories expanded.

Chief Executive Andreas Treichl, who topped a buying spree in central Europe with the 3.75 billion-euro takeover of Romania's Banca Comerciala Romana (BCR) last year, said he stood by his pledge to raise 2007 net profit by at least a quarter.

Amid a merger frenzy among European banks, in which Erste is seen as a possible target in a few years' time, he reiterated that his bank will be busy this year with digesting the BCR acquisition.

"We have ... set the course for the remaining quarters", Treichl said. "The main focus of our work this year will be to integrate BCR into Erste Bank Group, to expand our Ukrainian subsidiary and to implement our new organisational structure."

BCR contributed 44.3 million euros to net profit, which would have risen by 10 percent without BCR. Erste did not provide year-ago comparisons for the Romanian bank. It forecasts BCR's net profit to rise by 40 percent annually until 2009.

Trading income -- which derives from a bank's own dealing in securities and other assets and is a volatile revenue source -- was the biggest surprise in Erste's results, coming in 37 percent higher than a year ago, at the top end of forecasts.

Net interest income, Erste's biggest revenue source, increased 25 percent, slightly less than forecast, and mainly thanks to the inclusion of BCR. Risk provisions expanded less than interest income, by 18 percent and in line with forecasts.

Fee and commission income rose 28 percent, boosted by fees linked to lending and slightly better than predicted. General administrative expenses were up 26 percent, rising a bit slower than overall revenues.

Erste's share price has risen by 6 percent this year, making it one of the worst performers among banks in emerging Europe. The stock traded at 14 times next year's estimated earnings on Friday, less than its peers as investors remained sceptical about the merits of its expensive BCR acquisition.

To read the Erste analyst poll , click on [ID:nL26311231]