Finance Finance News NAB profit dips in first quarter trading update

NAB profit dips in first quarter trading update

NAB coronavirus hq
The headquarters of one of Australia's biggest banks was evacuated after a worker was confirmed with COIVD-19. Photo: AAP
Twitter Facebook Reddit Pinterest Email

National Australia Bank has reported a 1 per cent fall in its cash earnings for the first quarter, despite a large reduction in bad and doubtful debts related to the commodities sector.

NAB reported unaudited cash earnings of $1.6 billion, down from $1.7 billion in the first quarter last year.

The bank’s statutory earnings were actually up slightly from the same period last year, from $1.5 billion to $1.6 billion.

NAB said its revenue was up 1 per cent, from lending growth and better trading income, although net interest margin – the profitable gap between what the bank pays to borrow money and the rate it lends it out at – was “broadly stable”.

The bank also booked a 23 per cent decline in bad and doubtful debts to $164 million, thanks largely to a non-repeat of increased provisions for the mining and agricultural sectors.

While it reduced its bad debt provisions, NAB noted an uptick in delinquent loans, with those now at least 90 days overdue rising from 0.85 per cent of the loan book to 0.9 per cent.

However, the bank’s expenses rose, due to a scheduled pay rise during the quarter under its enterprise agreement, as well as redundancy payments.

NAB said it had reduced its full-time equivalent head count by 488 staff during the three months to the end of December.

The bank’s chief executive Andrew Thorburn said the lack of profit growth reflected challenging conditions.

“While the Australian and New Zealand economies remain resilient and continue to deliver solid growth, the operating environment has some challenges with funding costs remaining elevated and competition still intense,” he noted in the update.

Mr Thorburn added that NAB had made a “solid start to 2017”, with revenue up and asset quality remaining strong.


View Comments