UPDATE 1-NAB's H2 profit up 8 pct despite bad debts

* H2 cash profit rises, in line with forecasts

* Bank to focus on costs, conservative capital management (Adds CEO quote, details on bad debt charges)

SYDNEY, Oct 28 - National Australia Bank Ltd <NAB.AX>, the country's largest lender, reported an 8 percent rise in second-half earnings on Wednesday, in line with market expectations, despite a big jump in bad debt charges.

Total bad debt charges surged 14 percent to A$2 billion ($1.8 billion) for the six months ended Sept. 30 from A$1.76 billion a year earlier, and the bank gave a cautious outlook.

"We've landed in a strong position on capital, the underlying momentum in our key businesses is good and we've got some positive signs on the outlook but a necessary sense of caution as well," Chief Executive Cameron Clyne told a media briefing.

The bank gave no specific earnings guidance for the current fiscal year, saying merely that it would focus on cutting costs and managing its capital conservatively.

Cash profit for the six months ended Sept 30 rose to A$1.81 billion ($1.66 billion) from A$1.68 billion a year earlier.

The mean forecast of eight analysts surveyed by Reuters was for a cash profit of A$1.74 billion, with the forecasts ranging between A$1.53 billion and A$1.93 billion.

The bank will pay shareholders a final dividend of 73 cents.

NAB shares, which closed at A$30.70 on Tuesday, have risen 47 percent this year on optimism the bank may have seen the worst of the credit crunch and as pressure on net interest margins is expected to ease.

The benchmark S&P/ASX 200 stock index <.AXJO> has risen 28 percent over the same period. NAB's smaller rivals Australia and New Zealand Banking Group (<ANZ.AX> and Westpac Banking Corp <WBC.AX> report earnings on Oct. 29 and Nov. 4, respectively.