News: WBC UPDATE 1-Australia's Westpac H1 cash earnings falls 70%, defers dividend decision

(Adds background, net interest margin, CEO's statement)

May 4 (Reuters) - Westpac Banking Corp (WBC) on Monday deferred a decision on its interim dividend and posted a 70% drop in first-half cash earnings, hit by steep costs over a money laundering scandal and a surge in charges for bad loan provisions due to the coronavirus outbreak.

Australia's second-largest lender's cash earnings fell to A$993 million ($635.62 million) for the six months ended March 31, against A$3.30 billion it earned last year. This missed an average estimate from six analysts that pegged the figure at A$1.22 billion.

In April, Westpac said it would write down more than A$3.67 billion ($2.36 billion) in its first-half results, with most of the charges stemming from the economic deterioration expected from the coronavirus outbreak.

Westpac on Monday also postponed a decision regarding its interim dividend payout and added that it would continue to review its dividend options over the course of the year.

In a bid to ensure stability of the banking system despite the looming credit losses, regulators across the world and in Australia have urged lenders to consider postponing dividends or using buffers like reinvestment plans to better manage capital.

"This is the most difficult result Westpac has seen in many years," said Chief Executive Officer Peter King, but added that the bank was well capitalised and its liquidity and funding metrics were comfortably above regulatory requirements.

On a cash earnings basis, net interest margin - an important gauge of profitability - was 2.13%, marginally higher than last year.

Even before the pandemic, Australian banks were grappling with record-low interest rates and were still in the midst of repaying customers millions of dollars in refunds after a government inquiry found widespread misconduct in the sector. ($1 = 1.5623 Australian dollars)