National Australia Bank’s cash profits edged down by 0.2 per cent in the year to September as it recorded higher charges for bad loans in its business bank and had rising expenses.
The country’s largest lender to companies on Thursday said cash earnings were $7.1 billion, almost flat on the prior year, and it remained positive about the economic outlook.
NAB reported a slight decline in cash profits as bad debt charges edged higher.Credit: Nine
The bank said its revenue had increased by 2.9 per cent in the year, helped by loan growth and wider margins, but it also had credit impairment charges tick up, mainly because of business customers facing financial difficulties.
Taking a further bite out of profits, expenses also rose 4.6 per cent, which includes a previously announced $130 million charge due to underpayments of wages and staff entitlements. The result is slightly lower than the market had expected, according to estimates previously cited by UBS.
NAB chief executive Andrew Irvine acknowledged the rise in bad debt charges but said the bank had made progress in selling loans through its own bankers, as opposed to mortgage brokers, and he was optimistic about the economy.
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“Cash earnings were broadly stable over the year. While credit impairment charges increased, pleasingly a number of key asset quality outcomes improved over [the second half of the year], consistent with a supportive Australian economic environment,” Irvine said in a statement to investors.
“We are making good progress on our key priorities of growing business banking, driving deposit growth and strengthening proprietary home lending.”
The final dividend is stable at 85¢ a share.
