LONDON, April 24 (Reuters) - Lloyds Banking Group reported its first quarter profit fell 28%, in line with analyst expectations, as peaking interest rates and rising competition in the mortgage market squeezed margins.

The British bank on Wednesday reported pretax profit for the first quarter of 1.6 billion pounds ($1.99 billion), down from 2.3 billion pounds a year ago.

($1 = 0.8030 pounds) (Reporting By Lawrence White, editing by Sinead Cruise)