(Reuters) -Commonwealth Bank of Australia reported a marginal rise in first-quarter cash profit on Tuesday, with resilient lending and deposit volumes unable to fully counter margin compression from competitive pressures and a lower rate environment.

While the Reserve Bank of Australia’s three interest rate cuts this year have stimulated the housing market and credit growth, the resulting decline in mortgage rates has pressured bank margins, with the benefit of higher lending volumes failing to offset lower interest income per loan.

CBA said its net interest margin, the gap between lending and deposit rates, narrowed in the quarter, compared with the average of the previous two quarters, weighed down by strong growth in lower-yielding liquid assets and institutional deposits.

Excluding these mix effects, the underlying margin also fell slightly due to deposit switching, intense competition and the lower interest rate environment.

Australia’s biggest lender said cash net profit after tax was A$2.6 billion ($1.69 billion) for the quarter ended September 30, slightly higher than A$2.50 billion last year.

($1 = 1.5389 Australian dollars)

(Reporting by Roushni Nair and Sneha Kumar in Bengaluru; Editing by Alan Barona)