CORRECTED-UPDATE 2-Australia's CBA cash profit near doubles in rebound from COVID slump

(Corrects 3Q profit in 2020 to A$1.3 billion in 5th paragraph, not A$1.2 billion; reflects correction in headline and 1st paragraph)

* CBA posts Q3 cash profit of A$2.4 bln

* Lending volume growth robust

* Home loan arrears rise as deferrals wind down

May 12 (Reuters) - Commonwealth Bank of Australia’s third-quarter cash profit almost doubled as a rapid economic recovery spurred lending and enabled the country’s largest bank to reverse bad debt provisions made during the COVID-19 pandemic.

Australia’s control over the pandemic, near-zero interest rates and government spending has allowed its banks to recover quicker than their global peers and move funds set aside for potential COVID-19 losses back into profits.

Last week, peers Westpac, National Australia Bank and Australia and New Zealand Banking Group together reversed nearly A$1 billion ($783.8 million) in bad debt provisions, boosting their half-year profits and dividends.

“Credit quality across our lending portfolios remained sound,” CBA Chief Executive Officer Matt Comyn said in a statement on Wednesday.

The lender’s cash net profit after tax from continuing operations rose to A$2.4 billion from A$1.3 billion a year earlier.

CBA, which follows a different reporting calendar than its rivals, said it booked a loan impairment benefit of A$136 million in the quarter, compared with a A$1.6 billion expense last year.

It lowered its total credit provisions to A$6.5 billion at the end of March, from A$6.8 billion at the end of December.

The bank said its adjusted net interest margin - a key metric of profitability - also benefited from an increase in zero-cost deposits and lower wholesale funding costs.

CBA, which aims to take the No.1 spot for business lending from NAB, said its quarterly business lending volume grew 8.1%, at more than three times the market rate.

The Sydney-based lender reported troublesome and impaired assets of A$7.8 billion at the end of March, lower than the A$8.2 billion on its books three months earlier.

The lender said it saw a small rise in home loan arrears in the quarter as deferral of mortgage payments ended, and expects further modest increases in the coming months.

$1 = 1.2758 Australian dollars Reporting by Shashwat Awasthi in Bengaluru; Editing by Shailesh Kuber and Stephen Coates