NAB reveals whopping $4.1 billion in profits

NAB was the first major back to reveal its half-year profit results, which rose from $3.48 billion in 2022.

Chief executive Ross McEwan said the bank profits have been boosted by higher interest rates and a boom in business lending.

“The higher interest rate environment has also been an important near-term driver of revenue this period,” he said.

Interest rates have risen from 0.1 per cent to 3.85 per cent since May last year.

Mr McEwan also believes there are encouraging signs inflation and interest rates in Australia are peaking, and the nation would avoid a “pronounced economic correction”.

But he warned the full impact of the cost of living crisis was still emerging and he expected economic growth to slow and unemployment to rise.

“In Australia, consumption and overall growth has started to soften reflecting the impact of monetary policy tightening,” he said.

“There are also encouraging signs that inflation is beginning to moderate which, in combination with a deterioration in the outlook for global growth, means the official cash rate is likely at or around its peak.”

Overall, the bank’s revenues rose by 19.3 per cent for the first half of the financial year, with NAB’s acquisition of Citi’s consumer lending business adding 2.7 per cent to the top line figure.

The combined profits of three of the major banks were expected to hit $11.7 billion.

NAB fell short of the $4.2 billion prediction, while ANZ is tipped to report an annual cash profit of $3.8 billion and Westpac $3.8 billion – an increase of more than 10 per cent.

While bad debts from mortgages dropped, Mr McEwan said there was an increase in business lending arrears in the period, while bank failures overseas were “on the rise”.

“This more challenging environment is not unexpected, and we feel well-placed to manage through this period and continue to grow,” he said.

However, he warned the bank was keeping a close eye on the impact of higher interest rates “against the backdrop of a slowing economy and increasing competition”.

“The impact of higher living and interest costs on household spending and the broader economy is becoming more evident and we have a range of options available for customers needing support,” he said.