(New throughout, adds CEO comments, more earnings metrics)
SYDNEY, May 5 (Reuters) - National Australia Bank NAB.AX , the country's No. 1 lender, on Thursday posted a 6.5 percent rise in fiscal first-half cash profit, in line with expectations, as its wealth business boasted double-digit earnings growth but bad loans ticked up.
Cash profit for the six months to end of March rose to A$3.31 billion ($2.47 billion) from A$3.1 billion a year ago, coming in close to analysts' estimate of A$3.35 billion. It left dividends unchanged at 99 cents a share for the third straight half.
The result comes in a week of forecast-lagging performances from No.3 lender Westpac Banking Corp WBC.AX and No. 4 ANZ Banking Group ANZ.AX . The country's banks have been battling a downturn in commodities prices while dealing with tougher capital requirements.
For years NAB had underperformed its three major peers on earnings growth and shareholder returns but under Thorburn the bank made exiting the UK a priority to help it focus on Australia and New Zealand, where returns are stronger and safer.
On Thursday, the bank posted a statutory net loss of A$1.74 billion, reflecting loss on the demerger and float of its U.K. operations earlier this year along with conduct charges. ratio of 90 days past due and gross impaired loans rose to 0.78 percent at the end of March from 0.63 percent at end-September.
Bad debt charges rose 7.4 percent from Sept-end to A$375 million, mainly on account of four Australian corporates coupled with charges for New Zealand dairy sector.
"We've got a large book and when you've got an economy in transition like the Australian economy is you're going to face some stressed accounts," Thorburn told reporters.
"The economy is still growing, unemployment is easing down and we're seeing really good growth in non-mining sector coming through. We're going to be vigilant on this but the quality of the overall book still continues to be strong."
Net interest margin rose 1 basis point to 1.93 percent from the year-ago period but Thorburn said margins continued to remain under pressure.
NAB and its rivals, Commonwealth Bank CBA.AX , Westpac WBC.AX and ANZ Banking Group ANZ.AX , have passed along Tuesday's 25 basis point cut in official interest rates, further pressuring margins which are already near record low levels. do expect ongoing pressure in mortgages, in business lending and certainly in the institutional end margins are under a lot of pressure," Thorburn said.
($1 = 1.3414 Australian dollars)