SYDNEY, May 2 (Reuters) - Australia's No.3 lender Westpac Banking Corp WBC.AX on Monday reported a 3 percent rise in first-half cash profit, lagging forecasts as higher debt impairment charges hurt growth while a significant increase in capital pinched on shareholder returns.
Cash earnings rose to A$3.9 billion ($2.96 billion) for the six months ended March 31 compared with A$3.78 billion a year ago and A$4.07 billion estimate of six analysts polled by Reuters. Earnings were helped by growth in mortgages on the back of record low interest rates.
The nation's oldest bank declared an interim dividend of 94 cents a share, unchanged from 2015 final dividend.
Dark clouds are gathering over Australia's financial sector, which sailed through the global crisis but now faces slowing profit growth, onerous capital rules and rising defaults and questions over corporate responsibility in an election year when bank misconduct is shaping as a hot issue. = 1.3161 Australian dollars)