* Q1 net profit 1 bln euros vs forecast 813 mln euros * Helped by growing demand for investment products * Net interest income down, cost to income ratio up (Updates with CEO remarks) AMSTERDAM, May 6 (Reuters) - ING Groep NV, the largest Dutch bank, reported better-than-expected first quarter net profit of 1.01 billion euros ($1.2 billion) on Thursday on strong fee income and fewer bad loan provisions than a year earlier. However, Chief Executive Steven van Rijswijk said that with much of Europe only now emerging from lockdowns, the COVID-19 pandemic was still the main threat to customers’ prospects. “We remain cautious and are taking into account expected delays in credit losses,” Van Rijswijk said. But with savers facing near-zero interest rates, “many customers have turned to investing as an alternative for saving, which for us resulted in growth in investment products,” he said on a call with reporters. Analysts had forecast net profit for the three months ended March 31 at 813 million euros, according to Refinitiv data. In the year-earlier period, ING made a profit of 670 million euros. Income included a one-time benefit of 233 million euros from the European Central Bank after ING made business loans to European businesses that met conditions set by the central bank under its targeted lending programme TLTRO. Provisions for bad loans fell to 223 million euros from 661 million euros in the same period a year ago. ING said net core lending increased by 17.8 billion euros in the quarter, with its wholesale banking arm accounting for 15.1 billion in loans, and the rest mostly retail mortgage loans. Van Rijswijk said loan appetite had improved in Asia and the Americas, and to a lesser extent in Europe, for now focused among exporters. Among key metrics, the bank’s net interest margin shrank to 1.41% from 1.51% a year ago, reflecting a relatively higher cost of customer deposits and worse lending terms. Its cost-to-income ratio worsened to 64.1% from 62.8% as it incurred extra costs to close some retail branch offices in the Netherlands and announced plans to exit retail banking in the Czech Republic and Austria. $1 = 0.8330 euros Reporting by Toby Sterling. Editing by Clarence Fernandez and Mark Potter Our Standards: The Thomson Reuters Trust Principles.