H1 cash profit A$2.78 bln vs A$3.48 bln consensus H1 NIM at 2.01...

• H1 cash profit A$2.78 bln vs A$3.48 bln consensus
• H1 NIM at 2.01 pct, ROE at 9.7 pct
• Results reflect challenging period -CEO
• No. 1 lender NAB reports on Thursday

(Recasts first sentence, adds CEO comments, industry context, financial details)

Australia's No. 4 lender, ANZ Banking Group (ANZ), on Tuesday posted its biggest half-yearly decline in cash profit since 2008 and slashed dividends for the first time in seven years on rising corporate defaults led by a mining downturn.

Cash profit for the first six months to March 31 slipped to the lowest in six years to A$2.78 billion ($2.13 billion)compared with A$3.68 billion a year ago and analysts' estimate of A$3.48 billion. It slashed interim dividend by 7 percent to 80 cents.

Of the major four Australian banks, ANZ is the only one to have developed a large business overseas, predominantly in Asia, but under new CEO Shayne Elliott it is shifting its strategy to refocus at home.

"This result reflects a challenging period for banking," Elliott said. "We’ve had to make some decisions about how we see the environment in a subdued, lower-growth world. Part of that is getting the dividend on a sustainable, conservative ... basis."

Net interest margin, a key gauge of profitability, dipped narrowly to 2.01 percent. Return on equity slipped to 9.7 percent in the half from 14.7 percent in the year-ago period.

ANZ had earlier warned that bad debt charges for the first half would likely double to more than A$900 million due to a downturn in the resources sector.

On Tuesday it said it booked a A$918 million charge for soured loans, while adding it continued to see "pockets of weakness" associated with low commodity prices in the resources sector.

Australia's major banks have small exposures to mining and mining-related services, accounting for between 1 and 2.2 percent of their overall portfolios, and their total loan losses are near record lows.

ANZ booked a A$441 million charge to accelerate banking software amortisation and a A$260 million impairment of the Group's investment in Malaysia's sixth-biggest lender, AmBank, which is embroiled in a political scandal linked to state fund 1Malaysia Development Berhad and Prime Minister Najib Razak.

Reuters reported last month that ANZ was weighing the sale of its 24 percent in the Malaysian lender.

On Monday, No. 3 lender Westpac Banking Corp (WBC) missed forecasts to post growth of 3 percent in cash profit as bad debt charges soared to a six-year high.

No. 1 lender National Australia Bank (NAB) reports first-half numbers on Thursday. ($1 = 1.3046 Australian dollars)