NAB's 3Q Profit Up, Flags Further Asset Deterioration

By Alice Uribe

SYDNEY--National Australia Bank signaled its third-quarter profit rose amid a stabilization in the operating environment, but the lender flagged that asset quality deteriorated further over the period.

NAB, the country's biggest business lender, recorded an unaudited net profit of 1.90 billion Australian dollars (US$1.26 billion) for the three months through June. No comparable figure was disclosed, but it compares with a profit of A$1.75 billion reported by the bank a year ago.

"Our third quarter fiscal 2024 result reflects a more stable operating environment and benefits from the consistent execution of our strategy," Chief Executive Andrew Irvine said. While most customers are proving resilient, NAB said it has seen asset quality deteriorate further, which was expected.

NAB's net interest margin, which is a measure of the difference between what a bank pays to get deposits and funds and what it charges to lend money, was stable in the third quarter, with small reductions from lending competition and deposit mix, offset by benefits of a higher interest rate environment.

"Lending balances rose 1% over the June quarter, supported by 3% growth in Australian SME business lending as we continue to prioritize growth in our SME franchise," said NAB. "In Australian home lending, our growth was sub-system at 1%."

The lender reported unaudited cash earnings--a measure adjusted for fair value and hedging movements--of A$1.75 billion for the quarter. NAB said this fell 0.2% when compared to the first half quarterly average.

NAB's closely watched Common Equity Tier 1 capital ratio, a key measure of a bank's ability to withstand financial shocks, was 12.6% for the third quarter.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

August 15, 2024 18:53 ET (22:53 GMT)

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