Dividend in sight as Austrian bank Erste steps up recovery

* Q3 net profit 276.9 mln euros vs poll avg 206 mln

* Chances of resuming dividend payout increasing, says CEO

* Says not interested in rivals' Austrian assets (Adds detail, quotes from conference call)

By Francois Murphy

VIENNA, Nov 6 (Reuters) - Austrian lender Erste Group gave a first indication of how much profit it would return to shareholders after stronger than expected third-quarter results on Friday buoyed confidence over its recovery from a record loss last year.

Erste, the third-biggest lender in central and eastern Europe, reported net profit well above analysts' forecasts as provisions for converting Swiss franc-denominated loans in Croatia were partly offset by lower tax charges and one-off divestments.

"We would like to pay a dividend to our shareholders for a year which we believe will be a pretty good year," Chief Executive Andreas Treichl said in a conference call with analysts, having not paid a 2014 dividend.

"We also believe that the likelihood it will happen is increasing strongly and the range we would look at is somewhere between 40 and 50 cents."

The average 2015 dividend estimate from analysts polled by Reuters was 41 cents a share.

The bank confirmed its outlook for return on tangible equity at the higher end of its previous guidance and lowered its forecast for bad loan charges and bank taxes, saying it expected solid economic growth this year in all its emerging European markets except Croatia.

Erste's non-performing loans ratio fell in the quarter to 7.4 percent, a five-year low, while net interest income held relatively stable at 1.1 billion euros ($1.20 billion).

PROFIT RISE

The company swung from a net loss of 554.2 million euros in the same period last year to a net profit of 276.9 million euros, easily beating the average forecast of 206 million euros in the Reuters poll.

Erste has faced political challenges in several of its markets. It (Other OTC: ITGL - news) is fighting bank taxes in Hungary and Austria and was dealt a blow in Croatia by having to change the currency in which some loans are denominated from Swiss francs to euros.

Under a deal with Erste and the European Bank for Reconstruction and Development, Hungary passed legislation in February to lower its punitive bank tax from next year.

Treichl rejected any attempt to make a reduction in the bank tax conditional on increased lending to small and medium-sized companies, as some officials have suggested.

One risk Erste cited in its guidance was the chance for more "consumer protection initiatives", such as the Croatian loan conversion.

"We don't know of any (new measures), but if your wife cheats on you three times, you look at a fourth time to be more likely than if she has never cheated on you," Treichl said.

Erste would not buy Austrian assets from rivals Bank Austria or Bawag, he added.

Erste said its return on tangible equity was set to be roughly 10 percent in 2015 and cut its forecasts for loan risk costs to between 750 million euros and 950 million euros and banking levies to about 320 million euros.

It said its pro-forma common equity tier 1 ratio under fully loaded Basel 3 standards rose a percentage point to 11.6 percent of risk-weighted assets (RWAs) as nine-month profit improved while RWAs eased. ($1 = 0.9197 euros) (Editing by Michael Shields and David Goodman)