May 12, 2020 / 11:16 PM / 13 days ago

UPDATE 2-Australia's CBA takes $970 mln COVID-hit, sells control of wealth unit to KKR

* CBA sells 55% of Colonial First State to KKR for A$1.7 bln

* Bank sees flurry of requests for repayment deferrals on loans

* Third-quarter cash profit fell 23.5% to A$1.3 bln

* Core equity tier one capital ratio falls to 10.7% from 11.7% (Recasts and writes through)

By Paulina Duran

SYDNEY, May 13 (Reuters) - Commonwealth Bank of Australia said on Wednesday it booked A$1.5 billion ($970 million) in provisions in the third quarter to cover future pandemic-related loan losses and that it had sold a majority stake in its wealth management unit to KKR.

The coronavirus crisis has meant Australia's banks are facing record-low interest rates, rising unemployment and what is likely to be the country's first recession in three decades.

CBA's charge brings its total credit provisions to A$6.4 billion while total credit provisions by the country's "Big Four" lenders now stand at more than A$23 billion.

During the January-March quarter, CBA's cash profit fell 23.5% to A$1.3 billion, while higher risk weightings for loan exposure cut its core equity tier one capital ratio to 10.7% from 11.7% at end-December.

Highlighting financial strains caused by the virus on Australians, CBA said it had received 144,000 requests for deferrals on home loan repayments, 70,700 for business loans and 25,000 for personal loans.

Economic modelling by the country's biggest home loan lender also showed it believes home prices could plunge by nearly a third by 2022 in the case of a prolonged downturn.

The bank said, however, it was well prepared to weather the coming economic stress and that capitalisation levels compared favourably to levels seen before the global financial crisis.

"Compared to pre-GFC levels, we now hold three to four times the provisions for credit losses and our capital ratios are more than double on a like-for-like basis," CEO Matt Comyn said in a statement.

It added that the sale of a 55% stake in its Colonial First State wealth management business to private equity giant KKR & Co Inc for A$1.7 billion would increase that core capital ratio by up to 0.40% and is expected to completed in the first half of 2021.

The sale comes after a string of scandals and a shift focus on core banking operations, and follows the sale of its asset management arm to Mitsubishi UFJ Financial Group for $2.9 billion in late 2018.

In the last fortnight, CBA's rivals, which reported first-half earnings, have more than quadrupled their bad debt charges.

Westpac Banking Corp, National Australia Bank , and Australia and New Zealand Banking Group - posted a near two-thirds drop in their combined profit due to the charges which totalled around A$5 billion.

$1 = 1.5444 Australian dollars Reporting by Paulina Duran in Sydney; Additional reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Edwina Gibbs

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