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UPDATE 2-AustraliaGÇÖs CBA H1 cash profit dips on regulatory costs charge, misses forecast

misses forecast@

* CBA first-half profit slips 2 pct to A$4.74 bln

* CEO expresses "regret" over result, promises to "do better" (Recasts adds CEO, analyst comments)

SYDNEY Feb 7 (Reuters) - Commonwealth Bank of Australia , the countrys biggest mortgage lender, posted a decline in first-half cash profit on Wednesday, missing analysts' expectations as it booked an A$575 million ($454 million) charge for regulatory costs including a money-laundering lawsuit.

CBA reported that cash profit for the six months ended Dec. 31 slipped 2 percent to A$4.74 billion from the same period last year, contrasting with an anticipated 5 percent rise in profit, according to seven analysts polled by Reuters.

"We recognise, and regret, that these costs arise from our failure to meet some standards that we should have," outgoing Chief Executive Ian Narev said in a statement. "We will continue to work hard to do better."

Narev, who has led CBA since 2011, announced his retirement last year amid mounting calls for his resignation following allegations in a federal lawsuit that CBA had overseen tens of thousands of breaches of anti-money laundering rules.

CBA said last month it was handing the CEO mantle to its retail banking boss, Matt Comyn, surprising several experts who had expected the bank to avoid naming someone from within its ranks on concerns the person may be seen as tainted by the scandal.

CBA booked an A$375 million expense to pay civil penalties and legal fees related to money-laundering claims and an A$200 million provision for further expected costs related to regulatory, compliance and remediation programs.

"We expect this result to be disappointingly received ... and doubt that the latter amount (A$200 million charge) could be regarded as non-recurrent," Credit Suisse analysts wrote in an emailed note.

CBA shares have shed about 19 percent from their 2015 peak.

The bank also adjusted its earnings to reflect the A$3.8 billion sale of its life insurance business to AIA group , which will be completed by the end of the current calendar year. Including those earnings, cash profit would have been flat at A$4.87 billion, it said.

Cash profit, a measure that excludes one-offs and non-cash accounting items, is closely watched by investors.

CBA declared an interim dividend of A$2 a share, up one Australian cent from a year ago.

The banks net interest margin, the difference between interest costs and interest earned and a key gauge of profitability, rose 6 basis points to 2.16 percent during the period. ($1 = 1.2682 Australian dollars)

(Reporting by Paulina Duran in Sydney; Additional reporting by Shashwat Pradhan in Bengaluru; Editing by Jane Wardell and Peter Cooney)