JERUSALEM, Nov 17 (Reuters) - Israel's Bank Leumi reported a smaller-than-expected decline in third-quarter net profit, as higher net interest income and lower expenses offset a tripling of its loan loss provision due the coronavirus pandemic.

Leumi, the first of Israel's banks to publish quarterly earnings, said on Tuesday it earned 750 million shekels ($223 million) in the July-September period, compared with 765 million a year earlier and 605 million shekels forecast in a Reuters poll of analysts.

Net interest income rose to 2.22 billion shekels from 2.09 billion a year earlier while loan loss expenses surged to 547 million shekels from 181 million a year earlier. Operating and other expenses fell nearly 10% in the quarter.

Leumi said the jump in its loan loss provision stemmed from "from the effect of the changes in the macroeconomic environment, on the back of a second substantial surge in Israel (in COVID infections) and the subsequent lockdown, which further deepened the effect of the economic crisis and the uncertainty regarding its effect of the Israeli and global economy."

During the pandemic, Leumi said it deferred mortgage repayments of 374 million shekels and loans to small businesses totalling 500 million shekels through Sept. 30.

It said most customers have resumed mortgage payments and only 10% of mortgage loans are still have deferred status, while repayments for about 54% of the deferred loans to small businesses resumed.

It also said it approved 5.7 billion shekels in business loans as part of the state-backed loan fund for businesses hurt by the coronavirus crisis and the loan fund for high-risk businesses.

Leumi's Tier 1 equity to risk assets ratio stood at 11.71% at the end of September, down from 11.73% a year earlier.

Its chief rival, Hapoalim, is expected to issue results on Thursday.

($1 = 3.3615 shekels) (Reporting by Steven Scheer, editing by Louise Heavens)