(Bloomberg) -- National Australia Bank Ltd.’s profit was in line with analyst expectations, supported by strength in its flagship business lending unit.
Cash earnings dipped to A$7.1 billion ($4.7 billion) in the 12 months ended Sept. 30, from A$7.7 billion in the previous year, the Melbourne-based firm said in a statement Thursday. That compared with the A$7.06 billion average estimate in a Bloomberg survey of analysts.
“Despite headwinds, Australia’s economy is in reasonable shape and we are optimistic about the longer-term outlook for Australia,” Chief Executive Officer Andrew Irvine said in the statement.
Lending to enterprises has become a profitable endeavor for Australia’s biggest banks at a tough time for making money from home loans due to years of fierce competition. Investors are also scrutinizing bank spending plans with expectations that lower interest rates next year in Australia could further pressure margins.
The bank said it saw a deterioration in asset quality over the year as the number of troubled loans ticked up, albeit only marginally, echoing signals from all the country’s major banks that bad debts remain in check.
NAB boosted the level of loans backed by deposits and added to its cushion for write-offs, keeping both higher than before the pandemic. That reflects “uncertainty over the impact of global instability” as well as “the ability of customers to manage high interest rates and inflationary pressures,” according to the statement.
Biggest Unit
The business and private banking division, its largest, saw revenue benefiting from volume growth and higher foreign-exchange income. Margins there were lower, due in part to competitive lending pressures.
Meantime, the firm’s personal banking unit took a hit from the impact of competition in mortgages that curbed margins.
NAB shares are up 28% this year.
(Adds details on asset quality from fifth paragraph)
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