BANGKOK, July 29 (Reuters) - Bangkok Bank, Thailand's biggest bank by assets, said on Wednesday it expected its lending to rise 0-3 percent this year, based on its forecast that the economy would contract 3 percent. The bank, which had outstanding loans of 1.04 trillion baht ($30.6 billion) at the end of June, also expected non-performing loans of about 5.0 percent of lending, similar to the first half, President Chartsiri Sophonpanich told reporters. "We will try for growth of 0-3 percent for the whole year, even though our lending shrank in the first half of this year," Chartsiri said, referring to a 6.2 percent drop in loans. Last month, the bank said it was optimistic a surge in government stimulus spending would revive loan growth and that it could hit its 2-4 percent target this year, which would help push 2009 earnings near to last year's 20.2 billion baht. The new loan target is in line with the forecast of 2 percent by analysts for the banking industry average. Second-ranked Krung Thai Bank PCL has forecast 5-6 percent loan growth this year while number three Siam Commercial Bank expects 3-5 percent growth and number four Kasikornbank PCL is aiming for 5 percent. The top lender reported a 3.4 percent drop in second-quarter net profit to 4.86 billion baht, hit by sluggish lending and soft margins, which dropped to 3.04 percent in the quarter from 3.37 percent a year earlier as a result of lending rate cuts. "Probably, our net interest margins might be below 3 percent on average this year," Chartsiri said. The bank, which has assets of 1.74 trillion baht, reported gross non-performing loans of 4.6 percent at the end of June, down from 4.75 percent at the end of March. Chartsiri said its provision charges were at a normal level over the past six months. The bank plans to set aside 1.5-2.0 billion baht in loan-loss reserves each quarter this year. At 0811 GMT, Bangkok Bank shares were down 2.61 percent at 112 baht, while the overall stock market was 1.17 percent lower.