UPDATE 1-Australia's CBA Q1 profit up 6 pct
* Q1 cash profit A$1.85 bln vs A$1.75 bln yr ago
* Tier one capital at 10.2 pct
* Impairment expenses up to A$291 mln in Q1
* Says asset growth largely deposit funded
SYDNEY, Nov 7 (Reuters) - Commonwealth Bank of Australia (CBA), the nation's biggest mortgage lender, said its first-quarter cash profit rose 6 percent, boosted by an improvement in trading income and cost controls.
As with Australia's other 'Big Four' banks, CBA's impairment expenses for bad and doubtful debts increased, rising 14 percent from a year ago to A$291 million ($303 million), reflecting a softening in economic growth in the wake of China's slowdown.
Australia's second-biggest lender said cash profit for the three months to end-September, which excludes one-offs and non-cash accounting items and is closely watched by investors, rose to approximately A$1.85 billion from A$1.75 billion a year ago.
Because the of the limited nature of the trading update, few analysts forecast quarterly earnings.
"Revenue growth continued to reflect a combination of conservative business settings, relatively slower system credit growth and elevated funding costs," said the bank, which offers one in every four mortgages in a $1.2 trillion market.
Tier one capital, a measure of a bank's ability to absorb unexpected losses, was at 10.2 percent, up from 10 percent in June.
CBA said its statutory net income for the first quarter was about A$1.8 billion, compared with an expected full-year result of A$7.4 billion, according to Thomson Reuters I/B/E/S data.
Australia's top banks are trying to lower costs by cutting jobs and freezing salaries of senior executives. Analysts expect the sector could lose up to 10,000 jobs in coming years, more than 7 percent of the Australian financial sector workforce.
CBA's first-quarter trading update kicks off a new earnings season for Australia's major banks -- CBA, Australia and New Zealand Banking Corp, National Australia Bank and Westpac.
Australia was one of the few developed countries to avoid a recession during the global financial crisis, but the insulation provided by its powerful mining sector is weakening as demand from China drops off.
Investors are also focusing on slowing loan demand, with mainstay mortgages growing at just 5 percent this year, marking its lowest level in several decades.
Shares in CBA have risen nearly 17 percent so far this year, behind Westpac and ANZ but still ahead of 10.6 percent gain for the benchmark S&P/ASX 200 index. ($1 = 0.9593 Australian dollars) (Reporting by Jane Wardell and Lincoln Feast; Editing by Richard Pullin and John Mair)
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