(Adds industry context, CEO comment, more earnings metrics)
SYDNEY, Feb 16 (Reuters) - National Australia Bank NAB.AX , the country's No. 1 lender by assets, on Tuesday reported an 8 percent rise in first-quarter unaudited cash profit on better lending volumes and stronger results from its wealth division.
NAB posted unaudited cash earnings of A$1.7 billion ($1.21 billion) for the quarter ended Dec. 31. It did not give a year-ago comparison in its trading update, which does not provide as much detail as a full earnings statement.
The ratio of 90-days past due and total impaired assets to gross loans rose to 0.68 percent at end-December from 0.63 at the end of September 2015, reflecting dairy exposures totalling NZ$420 million ($279.34 million).
Dairy prices fell sharply at the latest GlobalDairyTrade auction earlier this month, adding further pressure on New Zealand farmers, the majority of whom are already operating below break-even. Melbourne-based bank said in a statement that it does not currently expect losses in these exposures.
NAB has long trailed its three main rivals - Commonwealth Bank CBA.AX , Westpac WBC.AX and ANZ Banking Group ANZ.AX - on earnings growth and shareholder returns but under new CEO Andrew Thorburn it is trying to increase focus on its more profitable home market.
Earlier this month, it successfully spun off its British arm Clydesdale Bank Plc CYBGC.L by listing it on the London stock market after Thorburn made exiting from the UK a priority. last year, NAB sold 80 percent of its life insurance business to Nippon Life, marking its last major divestment of low-returning legacy assets.
"Investment in priority segments is delivering improving results," Thorburn said in a statement.
NAB posted a 2 percent rise in revenues while charges for bad and doubtful debts for the quarter fell 52 percent to A$84 million, driven by lower charges in Australian banking.
The bank has a Tier-I capital ratio of 10.1 percent as of Dec. 31 but it estimates the ratio to drop by 49 basis points to 9.6 percent due to the overall impact of the demerger and IPO of Clydesdale Bank.
Last week, No. 2 lender by assets CBA posted a 4 percent gain in first-half cash profit, in line with expectations, while bad debts jumped. lender ANZ is due to post quarterly figures on Wednesday. Westpac reports only half yearly and annual numbers. ($1 = 1.4015 Australian dollars) ($1 = 1.5035 New Zealand dollars)