Move follows similar warning from rival Westpac
Major lender NAB is bracing for a spike in bad credit relating to the ongoing conflict in the Middle East.
In an ASX statement on Monday, the bank said it expects credit impairment charges for the first half of its financial year to total $706 million, around $300 million higher than previously anticipated.
Of that increase, $201 million relates to the expected economic fallout from lower fuel supply and surging energy costs stemming from the US-Israel-Iran war. A further $152 million reflects NAB’s higher assessment of the likelihood of an Australian economic downside scenario. These impacts are partially offset by earlier impairment forecasts that have not materialised.
“In light of the volatility in markets following the conflict in the Middle East, National Australia Bank (NAB) has reviewed its credit provisioning and capital settings to better reflect the risks now inherent in our business,” the group said.
The ratio of collective provisions to credit riskâweighted assets is now expected to be 1.35% as of March 2026, up from 1.31% in December 2025. NAB will release its first-half results on Monday, 4 May.
NAB is the second major bank to flag rising bad debts linked to the Iran war. Last week, Westpac said it expects a 10-basis-point credit impairment charge on average gross loans in the first half.
“With the supply shock from the energy market disruption expected to result in higher inflation and higher interest rates, an expected slowing in economic growth will create a more challenging environment for some customers,” said Westpac.
The warnings come amid a nervous ceasefire between Iran and the US. The Strait of Hormuz, through which a fifth of global oil supply passes, remains effectively shut, causing energy prices to soar.
Australians are facing record-high fuel prices at the pump, leading to heightened inflation – or even stagflation – fears.
Commonwealth Bank has downgraded its outlook on the Australian economy, warning of higher unemployment and higher-for-longer central bank interest rates.
While CBA contended that strong mortgage buffers will shield households from worst economic shocks, it is becoming apparent that not all major lenders share CBA’s optimism.
