News: WBC UPDATE 1-Australia's Commonwealth Bank posts 5.7 pct fall in Q1 profit, margins suffer

(Adds other performance metrics)

Nov 7 (Reuters) - Commonwealth Bank of Australia (CBA) posted a 5.7 percent fall in first-quarter unaudited cash profit as higher funding costs put pressure on margins, while higher bad debts also hurt.

Cash earnings, a measure that excludes one-offs and non-cash accounting items, fell to A$2.50 billion ($1.81 billion) for the three months ended Sept. 30, compared with A$2.65 billion a year ago, the bank said in a limited trading update.

Impaired assets for the quarter rose to A$6.6 billion, compared with A$6.1 billion last year, driven by home loan impairments and a few corporate impairments.

Net interest margin - a key measure of profitability – was lower in the quarter, it said, citing higher funding costs and home loan price competition.

Home prices in Australia's biggest city, Sydney, had their worst annual performance since 1990 in October, data showed last week, pointing to a further slowdown in coming months.

Property values in Sydney and Melbourne skyrocketed to record levels last year as all-time low interest rates fuelled a debt-binge in the housing market.

But, a regulatory clampdown on risky lending helped cool the sector while interest from Chinese buyers evaporated as authorities there cracked down on capital flows.

Commonwealth Bank of Australia’s common equity tier 1 ratio stood at 10 percent as of Sept. 30, down from 10.1 percent on June 30.

CBA reports after two of the ‘Big Four’ Australian banks reported a fall in full-year earnings last week, hurt mainly by compliance costs, while Westpac Banking Corp (WBC) reported flat earnings growth on Monday. ($1 = 1.3848 Australian dollars)