NAB announces a return to profit

NATIONAL Australia Bank has lifted its first-half cash profit 2.3 per cent to $3.29 billion and held its interim dividend at 99 cents.

Revenue for the six months to March 31 rose 1.8 per cent but net interest margin declined by 0.11 percentage points on the prior corresponding period to 1.82 per cent.

“The operating environment for banks remains challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations,” chief executive Andrew Thorburn said.

Net profit rebounded to $2.55 billion compared to a writedown-heavy $1.7 billion loss in the prior corresponding period.

The charge for bad and doubtful debts rose 5.1 per cent to $394 million mainly due to potential risks in the bank’s commercial real estate portfolio.

NAB shares fell 2.7 per cent on the eve of the release, with banking stocks sold off following rival ANZ’s announcement on Tuesday of a disappointing half-year cash profit, and amid worries the housing market has peaked.

ANZ chief executive Shayne Elliott said this week he was gearing his bank for a decline in credit growth due to increased regulation of the Australian mortgage market, but Mr Thorburn sounded an optimistic note about the outlook.

“Australia’s economic fundamentals provide a favourable backdrop including strong population growth and improving business conditions,” Mr Thorburn said.

“In this environment we are well placed to deliver for our customers and our shareholders.”

NAB’S HY NUMBERS

* Cash profit up 2.3pct to $3.29b

* Net profit $2.55b v $1.74b loss

* Revenue up 1.8pct to $8.87b

* Interim dividend flat at 99 cents, fully franked

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