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May 9 (Reuters) - Australia's biggest bank Commonwealth Bank of Australia said on Tuesday its third-quarter unaudited cash profit rose 4.3 percent after it grew its home lending business faster than peers.
Cash earnings climbed to A$2.4 billion ($1.77 billion) for the three months ended March 31 compared with A$2.3 billion a year ago.
"In home lending, growth continued to be underpinned by strong proprietary channel performance," CBA said in a limited trading update, referring to loans issued through the bank rather than by mortgage brokers.
The bank's home lending rose by 7.8 percent over the 12 months ended March 31, compared with a 7 percent average for all Australian banks.
The growth outlook for Australian banks, which are highly reliant on mortgage loans, has dimmed after the country's prudential regulator announced on March 31 new limits on some types of lending.
CBA said lending to property investors had reduced as a proportion of total lending during the quarter, with new interest-only lending being closely managed in line with regulatory guidance.
Bad debts rose to A$6.7 billion during the third quarter, compared with A$6.3 billion a year ago.
Impairment expenses were A$202 million, halved from the A$427 million incurred in the previous year.
CBA's update followed rivals Westpac Banking Corp, National Australia Bank and Australia and New Zealand Banking Group, which reported a rise in half-year cash profit over the last week.
CBA reported a Tier 1 capital ratio of 9.6 percent at March 31, lower than peers at 10 percent or higher, but that included a differently timed dividend payout. ($1 = 1.3550 Australian dollars) (Reporting by Rushil Dutta; Editing by Richard Pullin)