National Australia Bank (NAB), Australia’s biggest business lender, has flagged another rise in expenses, citing higher personnel and leave costs, resulting in a 4% dip in shares.
NAB now expects its cost growth for 2022 to be around 3% to 4%, which includes expected provisions of about $60 million to $100 million related to a previously disclosed agreement to fix shortcomings in anti-money laundering compliance.
NAB shares dropped as much as 4.4% to $29.36 – its biggest single-day drop since June 14; while the bank’s cash profit lifted by 6% to $1.8 billion for the quarter ended June 30, compared with $1.7 billion a year ago, driven by an increase in home and business lending, and growth is deposits, Reuters reported.
“As the economy changes, continued low unemployment and healthy household and business balance sheets are helping mitigate the impacts of higher inflation and interest rates,” NAB CEO Ross McEwan said.
While higher rates, surging cost of living, and weak consumer sentiment caused a reversal in home prices from the previous year’s record levels, McEwan said 70% of customer home loan repayments were ahead of schedule.
Runaway inflation has pushed the central bank to tighten monetary policy this year, helping banks protect their margins that grappled with record-low interest rates for the past two years, Reuters reported.
“Overall, we would view this Q3 update as very much in line with consensus with few surprises,” UBS analysts said in a note. “The commentary on NIM is maybe a bit disappointing in the context of some banks which have already reported, but the underlying margin trend is as expected.”
NAB’s net interest margin for the April-June quarter, excluding its markets and treasury business and the impact of the Citi buyout that took effect on June 1, was slightly up compared to the first half's quarterly average due to higher interest rates, partly offset by stiff competition in home lending, Reuters reported.
