* Net profit down to 246.2 million euros ($351.5 million)
* Above market consensus
* Net interest income up 27 percent, trading gain down 26 percent
* Looking to expand int'l ops, reinforce investment (Adds CEO quotes, cost details)
By Sergio Goncalves and Andrei Khalip
LISBON, July 28 (Reuters) - Banco Espirito Santo, Portugal's second-largest listed bank, reported on Tuesday a 6.8 percent drop in first-half net profits but beat market forecasts with its international business showing a rise.
Chief Executive Officer Ricardo Espirito Santo Salgado said the share of activities overseas, including countries like Angola and Brazil whose economies kept growing despite the world economic crisis, rose to over 34 percent at the end of June from 29 percent at the end of March, and will keep expanding.
"We haven't reached a 50 percent share (of international business out of total) yet as we wished, but we are making progress," he told reporters. "The way out of this crisis is through economic growth linked to the emerging economies."
He said that although BES was focused on cost-cutting, the bank "is reinforcing some foreign investment" and looking at sub-Saharan Africa and North Africa. He did not elaborate on these plans.
The bank, which has the biggest market capitalization among listed Portuguese banks, said that a near 10 percent growth in net profit from its international operations to 84.8 million euros was a key driver in the results.
Total net profit fell to 246.2 million euros ($351.5 million), above the average of analysts' forecasts of 223 million euros. Net interest income rose 27 percent to 650 million euros. Analysts had forecast net interest income of 662 million euros.
Espirito Santo Salgado said the growth rate of net interest income was likely to diminish in the quarters to come as the bank had a pre-emptive credit spreads increase in 2008.
Also on the negative side, trading gains slumped 26 percent from a year earlier to 162 million euros, while operating costs edged up 2.5 percent to 512 million euros and provisions for bad loans soared 125 percent to 274 million euros.
Excluding pension payments, however, costs effectively dipped 3.2 percent and BES' cost-to-income ratio fell to 51.4 percent from 61.2 percent a year earlier, according to the CEO.
BES stocks slipped 0.32 percent to close at 4.386 euros on Tuesday before the results were announced. (Editing by Rupert Winchester)