May 12 (Reuters) - Commonwealth Bank of Australia on Thursday beat an estimate for third-quarter cash earnings, as solid growth in lending and lower costs at the country's biggest bank more than offset margin pressure from intense competition.

The results mark the end of Australian banks' latest earnings cycle that saw lower margins across the board, although much of that squeeze is expected to ease in the coming year as interest rates rise.

They also signal improving performance at CBA, which has been slimming down its portfolio to focus on core domestic operations since a powerful inquiry in 2018 highlighted serious shortcomings in the financial sector.

"The March quarter underlined the disciplined execution of the group's strategy, focused on our core banking franchises," Chief Executive Officer Matt Comyn said.

"Continued growth in household deposits, home loans, business lending and business deposits was a feature of the quarter."

CBA said its home lending balance in the quarter to March grew by A$6.9 billion from December-end, but noted that raising fixed home loan interest rates had softened lending volumes in March.

Total operating expenses fell 3% from a year ago and the bank lowered its credit provisions to A$5.7 billion at the end of March, from A$5.9 billion at the end of December.

That helped it post a cash net profit after tax of about A$2.40 billion ($1.66 billion), in line with year-earlier figures but higher than a Barrenjoey estimate of A$2.15 billion.

CBA did not disclose a net interest margin figure, but said it was under pressure during the quarter. It, however, booked a loan impairment benefit of A$48 million due to improving economic conditions in the country.

The company did not detail how potentially higher Australian interest rates would impact business, unlike its rivals that this month flagged a bump to profits from tighter central bank policy but remained largely cautious on costs. ($1 = 1.4415 Australian dollars) (Reporting by Shashwat Awasthi; Editing by Anil D'Silva and Shailesh Kuber)