(Adds more details, industry context)
By Swati Pandey
SYDNEY, May 9 (Reuters) - Commonwealth Bank of Australia, the country's No. 2 lender, posted third-quarter cash profit of A$2.3 billion ($1.70 billion), on track for an annual record, but charges for soured loans jumped in the weake of a mining downturn.
Australia's biggest mortgage lender reported a loan impairment expense of A$427 million, or 25 basis points of total loans, it said on Monday in a limited trading update without giving year-ago comparisons or further details.
The ratio was 17 basis points at the end of December. Total troublesome and impaired assets rose to A$6.3 billion during the quarter from A$5.9 billion at the end of December.
CBA's results followed downbeat first-half earnings from the other three major banks last week. Australia's four biggest banks doubled annual profits over the past five years but this year posted a 3 percent drop in combined first-half cash profit, ending a run of six years of record earnings. which follows a June-ending calendar year, in February reported the sharpest rise in bad debts in more than six years as first-half revenue slid. four major banks' aggregate charge for bad and doubtful debts has risen nearly 50 percent or A$834 million to A$2.5 billion in the first half, according to an analysis by consultancy firm KPMG.
On Monday, CBA highlighted Queensland and Western Australia - two of the country's key mining states - for deteriorating asset quality.
It also flagged higher operating expense growth due to ongoing regulatory and compliance costs. Australia's major banks have found themselves in the eye of a storm of accusations over misconduct including interest rate rigging. said its operating income growth was "similar" to the first half-ended Dec.31 while trading income was slightly up in the quarter.
Funds management income slipped due to falling markets while net interest margins were largely unchanged from the December half. ($1 = 1.3563 Australian dollars)