NAB shares rose 0.8 percent at mid-session, in line with the broader market, as analysts praised the business unit’s performance, but noted that NAB’s mortgage lending exposure and rising outstanding balances could create headwinds. Are.
The country’s top commercial lender, National Australia Bank, said profit excluding home loans rose in the September half while inflation eroded margins and credit quality, underscoring its focus on non-mortgage business for growth.
Has been done Australia’s banks have for years taken advantage of low interest rates and rising property prices to generate much of their profit growth by selling mortgages, but 13 interest rate hikes in 1-1/2 years and the cancellation of millions of fixed-rate home loans have Competition has been promoted. Due to which the margins have become flat.
It has overtaken NAB, which ranks third for mortgages but first for business loans, as the country’s retail lenders look elsewhere for growth. Demand for business loans, which typically have higher margins, has grown along with consumer demand.
NAB said its commercial and private banking unit’s profits rose 21.6 percent in the financial year ended Sept. 30, including an 11.2 percent rise in the second half compared with the same period a year earlier. Profits in personal banking, which includes mortgages, declined 10.2 percent in the second half.
“I don’t think we’ll be pushing for major growth in the mortgage market over the next 12 months,” NAB CEO Ross McEwan told reporters. He said the bank had deliberately grown its mortgage book at a slower pace than the market.
“There are much better returns for the bank in other parts of our portfolio. We’re not abandoning (mortgage), we’re leaning into our business bank.”
Total annual cash profit was A$7.7 billion ($4.9 billion), up 8.8 percent, under the average forecast of analysts surveyed by data aggregator Visible Alpha. Big mortgage rival Westpac also reported higher annual profit on Monday, despite a fall in home loan profits
NAB shares rose 0.8 percent at mid-session, in line with the broader market, as analysts praised the business unit’s performance, but noted that NAB’s mortgage lending exposure and a rise in outstanding balances could create headwinds. Are.
“On the asset quality front, we expect modest downside going forward resulting in asset quality jitters,” said Azeeb Khan, analyst at E&P Financial.
The company’s net interest margin, a closely watched bank metric of lending minus interest income on deposit accounts, declined to 1.71 per cent as of September 30, from 1.77 per cent at the end of March.
The bank’s credit loss charge of A$802 million was up from A$125 million a year earlier, reflecting a deterioration in asset quality.
NAB declared a final dividend of 84 Australian cents per share, up from 78 Australian cents a year earlier.