National Australia Bank Profit Tops Estimates, Margins Bite
(Bloomberg) -- National Australia Bank Ltd.'s earnings topped analyst expectations in the first half of the year as the firm's key unit of lending to businesses grew, despite continued pressure on margins.
Cash profit rose 1% to A$3.58 billion ($2.33 billion) in the six months ended March 31, the firm said in a statement on Wednesday. That compared with the A$3.47 billion average estimate of analysts surveyed by Bloomberg.
Chief Executive Officer Andrew Irvine is one year into his role atop the Melbourne-based lender and is facing an economy where interest rates are expected to keep falling, weighing on the profitability of banks. Shares in rival Westpac Banking Corp. earlier this week slipped as analysts warned its push in business lending is being hurt by a tighter funding market.
'We are optimistic about the underlying growth outlook for the Australian and New Zealand economies,' Irvine said in the statement. 'However, escalating global trade tensions are a key source of uncertainty. Against this backdrop, we have maintained strong balance sheet settings.'
The firm's business and private banking division saw lower impairment charges, while lower margins offset volume growth. Expenses were slightly higher due to investments to support business growth.
Profit slipped within the unit of personal banking, which includes mortgages, which the firm described as 'challenging.'
While market volatility and shifts in global trade policy are impacting the economy, Australia is well placed to withstand the changes, Irvine said.
'Uncertainty might be uncomfortable for businesses and households, but overall Australia entered this period in good shape,' Irvine said. 'Low unemployment, easing inflation and anticipated growth are all helping. This provides capacity for future cash rate cuts to help offset any further global headwinds.'
Net interest margin was stable at 1.70%. Excluding the contribution from markets and treasury operations, it dipped by three basis points. NAB will pay an interim dividend of 85 Australian cents per share.
(Adds CEO quote in fourth paragraph, more details on result from fifth)
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