Malaysia's CIMB lowers 2016 loan growth target

* 2016 loan growth target lowered to 6-7 pct vs 10 pct earlier

* CFO sees challenging environment in second half

* Q2 profit up 36 pct to 872.8 million ringgit (Adds loan growth target, comments from CFO)

KUALA LUMPUR, Aug 29 (Reuters) - Malaysia's second biggest bank CIMB Group Holdings Bhd said it will not be able to meet its 2016 targets for loan growth and return on equity as it expects a challenging macroeconomic environment in Southeast Asia for the second half.

The company lowered its loan growth target for the year to 6-7 percent for 2016 from the initial target of 10 percent.

"We expect moderate pick up in loan growth in the second half but it's still a very challenging environment," group CFO Shahnaz Jammal told a results briefing on Monday.

CIMB has expanded in Southeast Asia in the past decade but the region has suffered slowing economic growth and depreciating currencies this year.

In an earlier statement, CIMB said the performance of its Singapore and Malaysia operations are expected to be subdued.

CIMB's net profit rose 36 percent to 872.8 million ringgit ($216.31 million) for the quarter ended June from 639.8 million ringgit in the same period a year ago. Two analysts had an average profit forecast of 695 million ringgit for the quarter, according to Thomson Reuters data.

Net interest income for the quarter rose about 4 percent to 2.35 billion ringgit, it said in a statement.

Last week, Malaysia's biggest lender Malayan Banking Bhd (Maybank) said it is keeping a close watch on loans made to the oil and gas sector, after posting a 27 percent drop in quarterly net profit as allowances for loan impairment losses tripled. ($1 = 4.0350 ringgit) (Reporting by Liz Lee and A. Ananthalakshmi; Editing by Muralikumar Anantharaman)