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NAB benefits from higher interest rate environment, reports higher revenue and profit

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By Reporter
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3 minute read

The bank has released its first quarter trading update.

NAB has reported unaudited cash earnings of $2.15 billion for the December quarter, an increase of 18 per cent compared to the average of the previous two quarters.

In its first quarter trading update released to the ASX on Thursday, NAB declared an unaudited statutory net profit of $2.05 billion. The bank said that its revenue had increased by 15 per cent, reflecting higher margins, stronger markets and treasury income and volume growth.

“The higher interest rate environment, resulting from central bank actions to curb inflation, has benefitted our revenue this period. But this is also causing economic growth and house prices to soften, and loan repayments to increase,” said NAB chief executive officer Ross McEwan.

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“We know these changing circumstances, combined with cost of living pressures, will create difficulties for some of our customers, and we have a range of options available for those needing support. Overall though, continued strong employment conditions and healthy savings buffers mean most customers look well placed to manage through this period.”

NAB’s net interest margin (NIM) lifted 12 basis points (bps) to 1.79 per cent. Expenses rose by 4 per cent, or 3 per cent excluding Citi’s consumer business, with higher staff-related costs reported to have been partly offset by productivity and lower remediation charges.

As of 31 December 2022, the bank’s group CET1 ratio sat at 11.3 per cent compared with 11.5 per cent as of September 2022. 

“Our business is in good shape for this environment. Capital and provisioning remain strong, and we are well advanced on our FY23 term wholesale funding task with $20 billion issued by 10 February,” commented Mr McEwan.

“We are investing to deliver simpler, more digital experiences for customers and colleagues and continue to target productivity benefits of approximately $400 million in FY23.”

The bank said that its credit impairment charge (CIC) was $158 million, reflecting the impact of lower house prices and business lending volume growth.

Meanwhile, NAB noted that the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances was down 4 bps to 0.62 per cent, which it said mainly reflected continued improvement across its Australian home loan portfolio along with a continued low level of impaired assets in the business lending portfolio.

“Executing our strategy remains our key priority. We are focused on getting the basics right, maintaining cost discipline, managing our bank safely, and improving customer and colleague outcomes to deliver sustainable growth and improved shareholder returns,” Mr McEwan concluded.

NAB benefits from higher interest rate environment, reports higher revenue and profit

The bank has released its first quarter trading update.

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