National Australia Bank’s cash earnings dived 16.9 per cent in the December quarter to $1.8 billion amid an economic slowdown, reflected in rising mortgage arrears which triggered a $193 million impairment charge.

Even with the large fall in profit, outgoing NAB chief executive Ross McEwan argued that the bank’s first-quarter performance was “sound” and showed “good momentum” as he prepares to hand the top job to business bank boss Andrew Irvine in April.