NAB profits stable as bad business debts creep higher
NAB recorded a small decline in earnings as some businesses defaulted on their loans and bad debts increased.
The business-focused bank on Thursday reported cash earnings of $7.09 billion in the year to September 30, down 0.2 per cent on the previous year.
Statutory net profit fell 2.9 percent to $6.76 billion, while underlying profit rose one percent.
NAB took a charge of $833 million, up 14.4 percent from $728 million the previous year, for debt it thought was unlikely to be repaid.
The big four banks said the deterioration in the group’s commercial lending portfolio involved a small number of customers in its corporate and commercial banking division and New Zealand operations.
“While individual credit exposures are variable and difficult to predict, it is not unusual to see some increases in impairments towards the end of the asset quality cycle,” CEO Andrew Irvine told analysts.
Mortgage arrears in Australia were stable throughout the year, the bank said.
Overall, 1.55 percent of NAB’s lending portfolio was assessed as “out of type”; This rate increased compared to 1.39 percent a year ago.
The company said conditions improved in the second half of the 2024/25 financial year as inflation eased and interest rate pressures eased.
Mr Irvine added that NAB is committed to working with its customers despite their business challenges.
“Although this may take time, in our experience it provides the best overall outcome for our customers and shareholders.”
NAB declared a final dividend of 85 cents per share, increasing this year’s dividend to $1.70 per share from $1.69 the previous year.
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