Margins also squeezed by lending competition
Banking major NAB’s first-half results have raised the prospect of heightened mortgage stress in Australia, despite the prospect of multiple interest rate cuts on the horizon.
According to the results, non-performing exposures increased by $2.57 billion or 29.6% to $11.26 billion on a year-on-year basis.
“This mainly reflects broad-based deterioration in the business and private banking business lending portfolio, combined with higher arrears for the Australian mortgage portfolio,” said the bank.
Non-performing loans as a percentage of total loans increased 10 basis points to 1.49%, driven primarily by NAB’s business and private banking segment, and “to a lesser extent” higher home lending arrears.
The bank’s CET1 capital ratio (a key solvency indicator also fell by 34 basis points from September 2024 to 12.01%.
Chief executive Andrew Irvine (pictured) said: “We are managing our business well in continued challenging operating conditions.
“Our bank is in good shape and we have a clear strategy. We are well placed to manage our business for the long term and deliver sustainable growth and attractive returns for shareholders."
Company wide, net profit was down slightly on a year-on-year basis to $3.4 billion, while the net interest margin fell three basis points to 1.7%. NAB attributed this to higher wholesale funding costs and lending competition.
