SYDNEY, July 30 (Reuters) - National Australia Bank Ltd (NAB) on Friday said it will buy back A$2.50 billion ($1.85 billion) in shares from August, returning part of the cash raised from investors at the pandemic's height just over a year ago.

Australia's third-largest bank by market value is the second of the "big four" lenders to return some of its record cash balance, even while Australia faces near-term uncertainty as the pandemic rages in Sydney.

"(They) are really just a taste, an instalment of the buybacks to come," said Credit Suisse portfolio manager Mike Jenneke.

"There is sufficient confidence in the economy and in the measures that we have and in the recovery that banks are starting to return capital regardless of the lockdowns. But it's also a reflection of the size of the capital buffers that they have in place."

The "big four" have close to A$40 billion in capital over the minimum regulatory requirement, as they built up coffers in recent years and sold non-core businesses.

They are expected to return a large portion of that in coming years, with JPMorgan forecasting Commonwealth Bank of Australia, the country's largest, to launch a A$5 billion off-market buyback in August and A$4 billion on-market buyback in the following 12 months.

Australian and New Zealand Banking Group Ltd this month was the first to announce a A$1.5 billion buyback starting August.

"(This) demonstrates that APRA nor NAB are overly concerned with the current economic environment and impact of continued period of lockdowns given where capital currently sits," said Credit Suisse banking analyst Jarrod Martin.

The Australian Prudential Regulation Authority (APRA) is allowing banks to offer deferrals on pandemic-impacted loans without classifying them as in arrears, as coronavirus lockdowns in major population centres hurt businesses and will likely send Australia's economy backwards this quarter.

NAB left the door open for more capital return, saying it would assess options on how to do so and bring its CET1 ratio within 10.75% to 11.25%, from over 12% currently.

($1 = 1.3514 Australian dollars) (Reporting by Paulina Duran in Sydney and Shashwat Awasthi in Bangaluru; Editing by Devika Syamnath and Christopher Cushing)