UPDATE 1-Banco Popular parent posts Q3 net loss; shares down

* Q3 loss $125 mln

* Q3 hurt by rising unemployment in Puerto Rico

* Shares fall more than 5 percent

Oct 19 (Reuters) - Popular Inc (BPOP.O), the parent of Banco Popular, posted a narrower third-quarter net loss as it works around its credit problems to navigate the economic downturn.

Net loss for the quarter was $125 million compared with $668 million, a year ago.

Puerto Rico's largest bank, however, said net income applicable to common shareholders for the quarter ended Sept 30, was $595.6 million, or $1.40 a share, compared with a loss of $680 million, or $2.42 a share, in the year-ago period.

The company, whose third-quarter results reflect the deepening recession and rising unemployment in Puerto Rico, said it expects economic trends to continue for the foreseeable future.

Net interest income fell 15 percent to $276 million, while provision for loan losses rose 31 percent to $331 million.

Shares of the company fell more than 5 percent in pre-market trade. They closed at $2.68 in Friday on Nasdaq. (Reporting by Archana Shankar in Bangalore; Editing by Ratul Ray Chaudhuri)