(Adds analyst comment, industry context)
SYDNEY, Nov 4 (Reuters) - Commonwealth Bank of Australia CBA.AX, the country's No.2 lender by assets, on Thursday posted first quarter unaudited cash earnings of A$2.4 billion ($1.7 billion) while bad debt charges fell.
Group net interest margin for the three months ended Sept. 30 was "slightly lower," CBA said in a limited trading update, without giving a number or year-ago comparisons. Last year, it had disclosed unaudited first-quarter cash profit of A$2.3 billion.
Australia's four major banks - CBA, National Australia Bank NAB.AX , ANZ Banking Corp ANZ.AX and Westpac WBC.AX - posted their sixth straight year of record profits but are preparing for their slowest earnings growth since the global financial crisis as the economy cools and stricter capital regulations bite.
"Bad debts were the key surprise, coming it at 13 basis points vs consensus estimates of 18 basis points," said Omkar Joshi, investment analyst at Watermark Funds Management.
Troublesome and impaired assets for the September quarter reduced to $5.5 billion, CBA said.
ANZ was alone among the "Big Four" banks to see "a significant deterioration (in asset quality) suggesting that it was an ANZ-specific issue rather than a sector-wide problem," Joshi added.
Home lending growth at CBA was in line with recent growth rates while core domestic business lending growth remained at mid-single digits, CBA said.
Earlier this week, Westpac CEO warned of a "lower for longer" environment with modest credit growth, intense competition and ongoing regulatory uncertainty, after posting a record annual cash profit that rose merely 3 percent.
NAB and ANZ both missed expectations when they posted record cash profits last month.
CBA said its common equity tier-1 ratio increased 70 basis points was 9.8 percent at the end of Septemer.
The lender follows a different calendar and lifted its full-year cash profit by 5 percent to a record A$9.14 billion in August. ($1 = 1.3984 Australian dollars)