Aug 12 (Reuters) - National Australia Bank Ltd (NAB.AX), the country"s No. 3 lender, said on Thursday its third-quarter cash profit rose 10.3% as it was able to move funds set aside for potential COVID-19 losses back into profit. Australia"s banks quickly recovered from the pandemic as consumer confidence and the housing market was supported by record low interest rates and government spending, though they face some uncertainty after a recent surge in COVID-19 cases. NAB, which agreed to buy Citigroup Inc"s (C.N) local consumer unit this week, said it wrote back credit impairment of A$112 million in the quarter, compared with bad debt charges of A$570 million last year. read more The bank said cash profit for the quarter ended June 30 was A$1.70 billion ($1.25 billion), compared with A$1.55 billion a year earlier. Chief Executive Ross McEwan warned that recent outbreaks of COVID-19 and resulting lockdowns were creating uncertainties for some customers, though he remained optimistic about the long-term outlook for Australia and New Zealand. "The strong economic growth leading into this period, ongoing government support and customers" relatively healthy starting positions give us confidence that once restrictions are eased, the economy will again bounce back," McEwan said. Its common equity tier 1 (CET1) ratio, a closely watched measure of spare cash, rose to 12.6% at end-June from 12.4% at end-March. ($1 = 1.3559 Australian dollars)