National Australia Bank (NAB) has posted a solid first-quarter performance for the 2025 financial year, showing a 2% increase in revenue and strong growth in deposits and lending. However, its cash earnings have declined by 2%, primarily due to higher credit impairment charges and tax expenses.
The bank’s financial highlights for the three months ending 31 December 2024 are as follows:
Revenue Growth: Up by 3%, driven largely by a strong performance in Markets & Treasury (M&T) income.
Deposits: Increased by 2%, reflecting positive performance in the bank’s deposit portfolio.
Lending: Home lending grew by 1%, allowing NAB to gain market share. Business lending rose by 2%, including a 1% increase in small-to-medium enterprise (SME) lending.
However, despite revenue growth, cash earnings for the period amounted to $1.74 billion, a 2% decrease compared to the second half of 2024. The statutory net profit was $1.70 billion, while the Common Equity Tier 1 (CET1) ratio stood at 11.6%, reflecting the impact of dividend payments and capital management initiatives.
Credit Quality and Impairments
The bank also faced challenges in credit quality, with credit impairment charges rising to $267 million. This increase was largely driven by higher impairments in the business lending and unsecured retail portfolios. The non-performing exposures to gross loans ratio increased to 1.43%, partly due to rising arrears in Australian mortgages and small business lending.
Strategic Initiatives
NAB continues to focus on long-term sustainable growth, while maintaining cost discipline. As part of this strategy, NAB is targeting over $400 million in productivity savings for FY25.
In an effort to improve customer service, NAB has extended Saturday branch openings at 29 high-traffic locations. The bank has also joined BioCatch Trust Australia, an inter-bank fraud intelligence network, to help detect scams before payments are made. Additionally, NAB is supporting Australian businesses and farmers with discounted green loans through a $300 million program with the Clean Energy Finance Corporation.
Despite the positive momentum in deposits and lending, the market has reacted negatively, with NAB shares trading 6.72% lower at $36.86, reflecting concerns over its declining cash earnings and rising impairments.
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