Poland's mBank sells insurance arm to AXA in $175 mln deal

* mBank is Polish unit of Germany's Commerzbank (Xetra: CBK100 - news)

* Polish lender wants to focus on core banking business

* Banks in Poland under pressure from low interest rates (Adds details, comment, share price)

WARSAW, Sept 12 (Reuters) - Poland's mBank, is selling its insurance arm to French group AXA (Paris: FR0000120628 - news) in a deal worth 135 million euros ($175 million), the companies said on Friday, as the Polish lender moves to focus on its core banking business.

mBank, Poland's fourth-largest lender, and other Polish banks are not in urgent need of cash as earnings results have been solid. But lenders, facing further interest rate cuts, are trying to fight off pressure on margins and improve their banking revenues.

"mBank is cleaning up the group, focusing on core banking," a source familiar with the transaction said.

PKO BP, Poland's biggest bank, is also reducing its focus on some non-core businesses. It is looking for a partner to buy 50 percent of its insurance business as early as 2015.

mBank, a unit of Germany's Commerzbank, will sell its insurance company BRE TUiR to AXA, and also signed a 10-year insurance distribution agreement with AXA. The transaction is subject to regulatory approval.

The transaction will involve payment of 570 million zlotys ($175 million), according to AXA. Since part of this will be spread over several years, the one-off boost to mBank's gross profit will amount to 180 million zlotys.

By 0929 GMT mBanks' shares were up 0.8 percent, outperforming the main Warsaw bourse index.

(1 US dollar = 0.7738 euro) (1 Polish zloty = 0.2385 euro) (1 US dollar = 3.2455 Polish zloty) (Reporting by Marcin Goclowski; Editing by Susan Thomas)