Australia's NAB Q1 cash profit up 7 pct to record

SYDNEY, Feb 20 (Reuters) - National Australia Bank Ltd

, the country's top lender by assets, on Friday posted record first-quarter cash earnings as bad debts fell by a quarter, outweighing tighter lending margins.

NAB said unaudited cash profit rose 7 percent to A$1.55 billion ($1.39 billion) for the three months to December 31, compared with A$1.45 billion a year ago.

Cash profits, which exclude one-offs, non-cash accounting items and investment gains or losses, are the most closely watched by investors.

$1 = 1.1134 Australian dollars)

(Reporting By Byron Kaye; Editing by Jonathan Oatis)

((byron.kaye@thomsonreuters.com)(+612 9373 1815))

Keywords: AUSTRALIA NAB/EARNINGS