News: ANZ UPDATE 1-Australia's ANZ Group announces $1.3 bln buyback, first-half cash earnings drop...

(Recasts with share buyback, details on results in paragraph 2-5)

May 7 (Reuters) - ANZ Group (ANZ) announced a new A$2 billion ($1.32 billion) share buyback on Tuesday, despite reporting a 7% slump in first-half cash earnings due to intense competition in Australia's mortgage lending market coupled with higher operating expenses.

The country's fourth-largest bank said cash profit was A$$3.55 billion ($2.35 billion) for the six months ended March 31, compared with A$3.82 billion a year ago and beating a Visible Alpha consensus estimate of A$3.54 billion, compiled by UBS.

Australian banks have allowed margins to fall over the last year as they struggle to compete in an intense home loan market, resulting in the lender posting a first-half net interest margin of 1.56%, down 19 basis points.

However, high rates of interest and inflation in the country have put a lid on borrowing capacity among Australians even as competition has heated up within the sector.

The Melbourne-listed lender also declared an interim dividend of 83 Australian cents apiece, up from 81 Australian cents per share a year earlier.

($1 = 1.5099 Australian dollars)