(Reuters) -National Australia Bank reported a 3% drop in its first-quarter cash earnings on Wednesday and flagged deterioration in its business and private banking lending portfolio as well as increased delayed mortgage payments.
The country’s top business lender posted cash earnings of A$1.74 billion ($1.11 billion) for the quarter ending December 31, marginally behind the Visible Alpha consensus estimate of A$1.77 billion, as per Citi.
That was lower than the A$1.80 billion cash earnings it reported a year ago.
The proportion of non-performing exposures to gross loans rose 4 basis points from the prior quarter to 1.43% as of December-end, reflecting deterioration in its business and private banking lending portfolio and increased delayed mortgage payments in Australia.
“The economic outlook is improving but cost of living and interest rate challenges persisted during 1Q25,” Chief Executive Officer Andrew Irvine said.
“We remain optimistic about the outlook and are well placed to manage our business for the long term and deliver sustainable growth and returns for shareholders,” Irvine said.
Its net interest margin — a key measure of profitability — declined modestly during the quarter due to higher funding costs and competition, which balanced out the benefits of a high interest rate environment that traditionally benefits banks.
Expenses during the quarter rose 2% mainly due to higher personnel and financial crime-related costs, along with increased technology spend.
NAB continues to target fiscal 2025 operating expense growth to be lower than the prior fiscal’s 4.5% growth, as well as productivity savings of over A$400 million in the year, it said.
The bank’s common equity tier 1 ratio — a closely watched measure of its spare cash — fell to 11.6% as of December-end, compared with 12.4% at the end of September.
Credit impairment charges rose to A$267 million during the quarter, a 38% jump from last year.
($1 = 1.5743 Australian dollars)
(Reporting by Sameer Manekar and Shivangi Lahiri in Bengaluru; Editing by Alan Barona)
Comments