May 4 (Reuters) - National Australia Bank ( NAUBF ) reported weaker-than-expected first-half cash earnings on Monday, hurt by one-off and impairment charges, while cautioning that the Iran war posed risks to its underlying asset quality.

"While underlying asset quality outcomes have generally improved in 1H26, the outlook is more uncertain as a result of the Middle East conflict which presents a key source of downside risk," NAB said.

NAB, Australia's top business lender, reported cash earnings of A$2.64 billion ($1.91 billion) for the six months ended March 31, falling short of the Visible Alpha estimate of A$2.93 billion and A$3.58 billion posted a year earlier.

The group recorded a pre-tax charge of A$1.35 billion, or A$949 million post-tax, related to a change in its software capitalisation policy. It also posted a credit impairment charge of A$706 million, citing stress related to the conflict between Iran and the U.S.

Cash earnings grew marginally to A$3.59 billion, excluding large notable items in the first half, largely driven by robust growth in business lending volume.

Business lending volumes rose more than 10%, boosting the six-month cash earnings of the business and private banking segment by 12.3% to A$1.85 billion.

NAB's net interest margin - a closely watched measure of lending profitability - increased three basis points from the previous six months to 1.81% in the period ended March.

Meanwhile, the bank's measure of its spare cash or common equity tier 1 (CET1) ratio declined to 11.65% in the first half, from 12.01% last year, reflecting the impact of market volatility.

The U.S.-Iran war, which erupted in late February, has rattled global markets as oil supply disruptions and heightened geopolitical risk have pushed energy prices sharply higher.

The bank declared an interim dividend of 85 Australian cents per share, unchanged from last year.

($1 = 1.3858 Australian dollars)