UPDATE 2-Net margins, slowing loans pressure China's CCB

* Q3 net profit up 18.6 percent

* Lending up 3.6 percent

* Net interest margin falls to 2.41 pct, seen stabilising

BEIJING/HONG KONG, Oct 23 - China Construction Bank faces slower lending as the government reins in an ultra-loose monetary policy that helped jolt the world's third-largest economy back into robust growth.

But stabilising net interest margins could offer relief for CCB, China's second largest lender and in which Bank of America has an 11 percent stake, following a sharp drop earlier in the year, analysts said on Friday.

CCB beat forecasts with an 18.6 percent rise in third-quarter profit to 30.3 billion yuan ($4.4 billion), as lending dropped to more normal levels following a boom earlier in the year. Analysts' average forecast was 28.36 billion yuan.

The bank's total loans grew at a more modest 3.6 percent in the third quarter to 4.56 trillion yuan ($668 billion), after jumping 20 percent in the first half of the year.

It did did not comment on trends for the rest of the year.

China's big banks extended a surprisingly strong 517 billion yuan in September, up from 410 billion yuan in August but still well below levels in the first six months.

Analysts had said China might lean on banks to tighten lending, eating into profit as the country's ultra-relaxed monetary stance as part of its economic stimulus was reined in.

"There is unlikely to be a surge in bank loans in the fourth quarter as China's banking regulator has told banks to be cautious during the final months of the year," said Chen Xingyu, director at Phillip Securities Research in Shanghai.

He predicted more weak loan growth for the fourth quarter, saying total loans -- up 24 percent for the year through September -- should grow by about 25 percent for the full year.

CCB said its net interest margin narrowed to 2.41 percent at end-September from 3.3 percent a year earlier. Much of the drop came in the first half, with the end-September margin down just slightly from 2.46 percent at end-June in a sign that narrowing margins that have threatened profits are easing.

"I believe the bank's net interest margin will see a gradual recovery during the fourth quarter of this year and the first quarter of 2010," said Chen.

Chen's comments echoed remarks from other major Chinese banks in August that margins were starting to stabilise after narrowing sharply under China's 4 trillion yuan stimulus plan to maintain growth during the downturn.

That policy bore fruit in the third quarter, as China's GDP grew 8.9 percent from 7.9 percent in the previous quarter and 6.1 percent in the first three months of the year in the depths of the global downturn.

Some fear China's ultra-loose lending in the first half could work through into increased bad loans, but CCB said its non-performing loan ratio fell to 1.57 percent at the end of the third quarter from 2.21 percent at the end of 2008.

Smaller rival Minsheng Bank kicked off China's bank earnings season on Wednesday with an 8.9 percent rise in quarterly profit, citing factors including increased net interest income.

China's largest bank, ICBC, and Bank of China, China's largest foreign exchange lender, were set to report third-quarter results on Oct. 29.

Shares in China Construction Bank have risen 66 percent in Hong Kong this year, outperforming a 57 percent gain on the benchmark Hang Seng Index.

For full earnings report, click: http://www.hkexnews.hk/listedco/listconews/sehk/20091023/LTN20091023305.pdf)

For a graphic on recent earnings click on http://graphics.thomsonreuters.com/109/CH_CCBPF T1009.gif

(Reporting by Michael Wei and Doug Young; Graphics by Claire Morel; Editing by Ian Geoghegan)