Home loans hit NAB results

National Australia Bank’s first quarter cash profit has dropped nearly 17 per cent to $1.8bn, hurt by rising provisions for loan losses as Australian home borrowers fall behind on repayments.

But the banking major, led by Ross McEwan, said its earnings were only 3 per cent lower than levels posted in the second half of the 2023 financial year, when reporting in November, noting cash earnings were “broadly stable”.

Unaudited statutory profits came in at $1.7bn.

NAB saw its earnings crimped by $193m in credit impairment charges as the bank faced higher arrears along with volume growth across its business lending arms.

But NAB told investors specific charges remained at “low levels” noting there were no changes to assumptions from the bank for forward-looking adjustments in the quarter

Compared to September 2023, NAB noted its collective provisions to credit risk weighted assets were only up 2 basis points to 1.49 per cent.

Loans 90 days past due and gross impaired assets were stable at 0.75 per cent, with NAB noting this reflected a worsening of arrears in its Australian home portfolio, while its New Zealand business lending arm improved.

Mr McEwan, who marked his last set of NAB results as bank boss on Wednesday, said the quarterly result reflected the bank’s “disciplined approach to growth during what remained a highly competitive period”.

Net interest margin was “slightly higher” than NAB’s second half result, while revenue increased by 1 per cent in the period.

Expenses lifted 2 per cent in the quarter, with NAB noting the bank was targeting productivity savings of “approximately $400m” and expenses growth lower than the 5.6 per cent recorded in 2023.

The veteran banker, who leaves the CEO role on April 1, said NAB was seeing growth across its customer deposits, which lifted 1 per cent in the quarter, while Australian business lending growth enjoyed a 2 per cent bump.