UPDATE 1-ANZ Q1 cash profit up 13 pct, helped by Asia growth

* Q1 cash profit rises to A$1.73 bln, just ahead of forecasts

* Expects FY2014 bad debt provisions to fall by 10 pct

* On track to achieve 4-5 pct revenue growth in FY2014

* ANZ seeks to raise A$1 bln with hybrid note offer

(Adds drop in provisions, CEO comments)

SYDNEY, Feb 11 (Reuters) - Australia and New Zealand Banking Group Ltd , Australia's third-largest bank by market value, on Tuesday reported a 13 percent rise in first-quarter cash profit, putting it on track to meet its growth targets for this year.

ANZ also said the quality of its lending book had improved, and expects provisions for bad loans to drop by about 10 percent in the year to September 2014.

Cash profit rose to A$1.73 billion ($1.55 billion) for the three months to December, up from A$1.53 billion a year earlier, bolstered by double-digit growth in its institutional banking business in Singapore, China and Hong Kong.

The result was slightly ahead of two analysts' forecasts around A$1.70 billion.

"The bottom line is that we have made a good start to 2014," ANZ Chief Executive Mike Smith said in a statement. "There remain a number of challenging issues in the global economic environment, however these are now largely more predictable."

While banks reap the benefits of cost controls, ANZ is aiming to set itself apart by pursuing a pan-Asian strategy and growing the proportion of earnings it gets outside Australia. It is also targeting a larger share of local home loans.

Assuming no change in foreign exchange rates, the group reaffirmed it expected revenue to grow by 4 to 5 percent in the fiscal year and expenses to rise by about 2 percent.

It said group net interest margin, a core measure of a bank's profitability, was slightly lower in the first quarter due to some pricing pressure on lending, with Australia's cash rate at a record low of 2.5 percent.

ANZ booked a $191 million provision for bad loans in the first quarter, down sharply from $322 million in the previous quarter.

The bank said it plans to issue a hybrid note to raise around A$1 billion, partly to refinance convertible preference shares that it issued in 2008.

($1 = 1.1183 Australian dollars)

(Reporting by Byron Kaye and Sonali Paul; Editing by John Mair)

((byron.kaye@thomsonreuters.com))

Keywords: AUSTRALIA ANZ/EARNINGS