The NAB's bad loan book has suddenly improved

Photo: Peter Parks/AFP/Getty Images

The NAB, which has been exposed to a string of major corporate failures, has seen a sudden improvement in its bad debt exposure.

In the bank’s December quarter update, the charge for bad and doubtful debts fell in the three months by 23% to $164 million.

Bad debts from commodity industries have eased. Collective provisions for mining, mining-related and agricultural sectors seen in the September half year didn’t repeat in the three months to December.

At its annual result announcement in October, the bank reported a 7% rise in bad debt charges to $800 million, mainly due to a small number of large company exposures.

The NAB was exposed to troubled legal firm Slater and Gordon, steelmaker Arrium and electronics retailer Dick Smith.

Other banks have also been feeling the pinch on loans turned bad. For the Commonwealth Bank, loan impairment expenses increased 27% to $1.256 billion in 2016.

Today the NAB reported cash profit down 1% to $1.6 billion in the December quarter, dragged by rising wages, the cost of regulatory compliance and redundancies.

The NAB is due to report its first half results in May.

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