UPDATE 3-Cash America Q1 profit tops market view, sees strong Q2

(Adds analyst's comment, updates share movement)

By Sweta Singh

BANGALORE, April 24 (Reuters) - Payday lender Cash America International Inc (CSH.N) reported better-than-expected first-quarter profit, helped by an improvement in the credit quality of its cash advance loan portfolio, and forecast a strong second quarter, sending shares its up to their 52-week high.

"The increase in marginal profitability of our cash advance portfolio generated much higher levels of earnings as losses as a percent of fees moderated significantly," Chief Executive Daniel Feehanwhile said in a statement.

The pawn lending activities continue to perform well as loan demand has led to sustained growth in the portfolio, Feehanwhile said.

In March, analyst Dennis Telzrow of Stephens Inc had told Reuters that the pawn market is stronger than what most people anticipated and the company's Internet lending business continues to show lower loss rates.

He had said Cash America had an advantage over its competitors, mainly because it has an Internet lending business that others do not have.

Cash America competes with companies like First Cash Financial Services Inc (FCFS.O), Ezcorp Inc (EZPW.O) and Advance America Cash Advance Centers Inc (AEA.N).

Commenting on the results, analyst Henry Coffey of Ferris, Baker Watts said, "Cash America had better loan quality and much bigger profits in the pawn shop business than we expected."

ROBUST QUARTERLY PROFIT

The Fort Worth, Texas-based company said net income rose 34 percent to $25.8 million, or 86 cents a share, compared with $19.2 million, or 63 cents a share, in the year-ago quarter.

Analysts expected the company to earn 80 cents a share, before items, according to Reuters estimates.

Total revenue rose 13 percent to $250.9 million, but fell short of analysts' estimate of $254.5 million.

Revenue from the company's pawn segment, the biggest contributor to total revenue, rose 14 percent to $170.3 million.

Revenue from the cash advance segment rose 10 percent to $79.6 million.

Cash America also declared a quarterly cash dividend of 3.5 cents a share to be paid at the close of business on May 21, to shareholders of record on May 7.