On Tuesday, NAB reported a $1.8 billion cash profit for the third quarter, an increase of 6 per cent on the third quarter of the previous financial year.
In a statement to the ASX, NAB CEO Ross McEwan said that the bank’s cash earnings increased by 3 per cent compared to the quarterly average during the first half with continued lending and deposit momentum, which were up by 2 per cent and 4 per cent, respectively.
“Our performance this quarter is pleasing, highlighting the ongoing execution of our strategy including completing the acquisition of Citigroup’s Australian consumer business,” he said.
NAB confirmed that it had completed the Citi acquisition in June after the two firms originally reached an agreement in August last year. Excluding the acquisition, cash earnings before tax and credit impairment charges increased by 2 per cent on the first half quarterly average.
The bank said that its net interest margin (NIM) was slightly lower but, excluding lower markets and treasury income, NIM was slightly up as a result of the rising interest rate environment. This was partly offset by home lending competition and higher wholesale funding costs.
“As the economy changes, continued low unemployment and healthy household and business balance sheets are helping mitigate the impacts of higher inflation and higher interest rates,” commented Mr McEwan.
He added that most of NAB’s customers were well placed to respond to economic challenges, with around 70 per cent of customer home loan repayments now ahead of schedule.
“Our business is also in good shape for this evolving environment,” Mr McEwan continued.
“Balance sheet settings remain strong and we are well advanced on our FY22 term wholesale funding task with $34 billion raised by end June. Investments to deliver simpler, more digital experiences for customers and colleagues are supporting balanced growth and productivity benefits which are expected to exceed $400 million in FY22.”
There were $11 million of credit impairment charges during the quarter, which NAB said reflected “continued benign asset quality” which included low specific charges.
Revenue rose by 2 per cent compared to the first half, or 3 per cent when excluding M&T income. Expenses were up by 1 per cent, with NAB stating that additional full-time equivalents to support growth along with higher personnel and leave costs were partly offset by productivity.
“We have a clear strategy and executing this with discipline is our key priority,” Mr McEwan concluded.
“We will continue to focus on getting the basics right, managing our bank safely and improving customer and colleague outcomes to deliver sustainable growth and improved shareholder returns.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.