Australian NAB profit rises on strong loans and firmer margins

(Reuters) – National Australia Bank Ltd posted a nearly 6% rise in third-quarter cash profit on Tuesday, benefiting from an increase in home and business loans, while soaring interest rates helped to improve margins.

Soaring inflation prompted the Reserve Bank of Australia to tighten monetary policy this year, helping margins at banks struggling with record low interest rates and fierce competition in the mortgage market over the past two years. .

Melbourne-based NAB, along with other members of Australia’s ‘Big Four’, have passed the 175 basis point rise in interest rates since May entirely on to their clients.

“As the economy evolves, persistently low unemployment and healthy household and business balance sheets are helping to cushion the effects of higher inflation and higher interest rates,” Chief Executive Ross McEwan said. .

He added that 70% of customer home loan repayments were ahead of schedule.

The lender, however, increased its cost forecast for 2022 by between 3% and 4%, from 2% to 3%. That excludes the impact of its $882 million buyout of Citigroup’s local consumer business, which went into effect June 1.

Part of the cost increase stems from planned provisions of between A$60 million and A$100 million ($41.92 million and $69.86 million) for matters relating to alleged serious breaches of anti-money laundering laws. money and counterterrorism.

Excluding its capital markets and treasury business and the impact of the Citi acquisition, NAB’s net interest margin for the April-June quarter was slightly above the first-half quarterly average.

Cash profit for Australia’s second-largest lender was A$1.80 billion, up from A$1.70 billion a year ago. The figure was in line with a Morgan Stanley estimate of A$1.80 billion.

The Common Equity Tier 1 (CET1) ratio, a closely watched measure of free cash, fell to 11.6% at the end of June from 12.5% ​​at the end of March.

($1 = 1.4314 Australian dollars)

(Reporting by Harish Sridharan and Sameer Manekar in Bengaluru; Editing by Aditya Soni)

Copyright 2022 Thomson Reuters.

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