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* H1 cash earnings of A$3.29 bln vs analyst f'casts A$3.24 bln
* Interim dividend steady at A$0.99 per share
* Economic outlook positive: CEO (Recasts with mortgage arrears rise, adds analyst comment)
By Jamie Freed
SYDNEY, May 4 (Reuters) - National Australia Bank on Thursday said the percentage of homeowners more than 90 days behind on their mortgage payments had risen slightly in Australia's two most populous states, amid increasing concern over the hot property market.
Australia's fourth-biggest lender reported a 2.3 percent rise in first-half cash profit to A$3.29 billion ($2.44 billion) for the first six months to March 31, slightly above analyst expectations, bolstered by lending growth.
The outlook for Australian banks, which are highly reliant on mortgage loans, has dimmed after the Australian Prudential Regulatory Authority (APRA) on March 31 asked them to limit new interest-only lending to 30 percent of total new residential mortgage lending, from 40 percent.
Regulators are worried about a run-up in borrowing following years of investor-led house price growth in Sydney and Melbourne, at a time when household debt is already at record highs and wage growth is low.
NAB Chief Executive Andrew Thorburn said mortgage arrears had increased in the first half, including in the most populous states of New South Wales and Victoria, but from a low base.
"I think we should be taking a glass half full look at the Australian economy," Thorburn told reporters. "The economy continues to grow. People are heading for places like Sydney and Melbourne because of the job prospects."
Mortgage loans more than 90 days past due rose 6 basis points to 0.58 percent between September and March.
NAB also increased its provisions by A$89 million relating to risks in the commercial real estate portfolio, as price growth slows and there are fears of an oversupply of inner-city apartment developments.
"Historically (commercial property) is where the major banks have got into trouble over the last 30 years," Morningstar analyst David Ellis said.
NAB's first-half net interest margin fell to 1.82 percent, from 1.93 percent a year ago due to higher funding costs, but the outlook for the second half is more positive due to recent mortgage rate rises, Chief Financial Officer Gary Lennon told analysts.
While mortgage rate hikes bode well for net interest margins, they could slow lending activity, as Australia and New Zealand Banking Group warned on Tuesday.
NAB's housing loans rose 5.8 percent to A$320.79 billion in the first half from last year.
First-half cash return on equity fell to 14 percent from 14.3 percent a year ago, while Tier 1 capital stood at 10.1 percent at March 31. ($1 = 1.3473 Australian dollars) (Reporting by Jamie Freed and Aparajita Saxena; Editing by Stephen Coates and Richard Pullin)