The NAB posted a 5% rise in June quarter cash earnings to $1.7 billion, putting it in line to beat its 2016 result of $6.48 billion.
The unaudited result was up 2% compared to the March 2017 half year quarterly average but 5% higher than the same three months last year. The statutory net profit was $1.6 billion.
Revenue was up 2%, with growth in lending and improved net interest margins partly offset by lower markets and treasury income.
Bad and doubtful debt charges fell 12% to $173 million, as this chart shows:
“This is a strong result which reflects continued discipline and focus,” says CEO Andrew Thorburn.
“It is reassuring to have our business performing well and our balance sheet settings sound during a period of significant and ongoing regulatory change.”
He says the federal government’s bank levy effective from July and will cost NAB an estimated $375 million a year, or $265 million post tax.
In May, the bank posted a 2.3% rise in half year cash earnings to $3.29 billion.
Full year cash earnings for 2016 were $6.48 billion.
“Our commitment to reshaping and simplifying our business is delivering better outcomes, with cost growth continuing to moderate since the December 2016 quarter,” says Thorburn.
He is confident of achieving more than $200 million in productivity savings this financial year.
“Looking forward we expect to accelerate a range of productivity and growth initiatives, including greater use of digital solutions, ‘customer journeys’ and streamlined work practices,” says Thorburn.
“While the benefits from these initiatives are potentially significant, this needs to be balanced with increased investment.
“The Australian and New Zealand economies remain resilient with solid growth supported by strong population growth and low unemployment.
“Australian business conditions rose again in the June quarter to their highest level since early 2008, with broad based strength across industries.
“However, the household sector faces some challenges with high levels of household debt, muted wages growth and subdued consumer sentiment.”