NAB posts surprise $1.5b quarterly profit despite COVID-19 strain on customers
National Australia Bank has booked a surprisingly strong quarterly net profit despite the financial strain of the coronavirus pandemic on customers.
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National Australia Bank has posted a better than expected $1.5 billion net profit for the June quarter despite ongoing financial pain from the COVID-19 pandemic on customers.
The unaudited result compares with the quarterly average of the half-year result reported in April, a $1.3 billion net profit.
Revenue was up 10 per cent, reflecting higher markets and treasury income.
The steadily rising trend of loans that are overdue by more than 90 days continues to surge, reaching 1.06 per cent in the June quarter, up from 0.97 per cent previously, primarily related to home loans.
“The COVID-19 pandemic continues to challenge our customers and our bank, with varied impacts across industries and communities,” chief executive Ross McEwan said.
“The outlook remains highly uncertain, but decisive actions in April to strengthen our balance sheet allow us to support customers while keeping our bank safe.”
The bank raised billions of dollars earlier this year and slashed its interim dividend.
Mr McEwan said about 16 per cent of home loan deferral customers the bank had checked in on had recommenced payments but for those still struggling, providing further credit was not always the right thing to do.
“It’s very clear that there will be a large number of people that will need support of some shape or form,” he said.
“That could be through restructuring of loans, be that business or home loans, going onto interest-only for a period of time – there are a number of things that we can do to be helpful.
“We’ll take every reasonable step to keep people in homes and keep them moving, but unfortunately there will be some situations where it’s better for people to actually sell up and start again so that they can take some equity out of the situation.”
NAB’s expenses rose 2 per cent, mainly due to higher leave balances and remuneration, prompting the bank to say achieving its target of flattening costs was increasingly challenging.
Some of that extra expense relates to additional customer support during the crisis, with more than 24,000 check-in phone calls made and hundreds more staff being recruited to make more, Mr McEwan said.
He confirmed other jobs would go, however, as reported on Thursday.
“I signalled in April that we had a number of changes to make to the organisation … that I wanted more people on our frontline, dealing directly with customers, and I would be closing out 100 projects that were on the go but just didn’t think would deliver results,” Mr McEwan said.
The bank expects the economy will return to last year’s GDP levels in 2022.
Originally published as NAB posts surprise $1.5b quarterly profit despite COVID-19 strain on customers