NAB warns some sectors are still being hit hard by the coronavirus pandemic
One of the nation’s major banks has revealed a profit spike but warns some sectors are still being impacted by the pandemic.
National Australia Bank has unveiled a major profit boost but has warned some of its business customers are still flailing due to coronavirus restrictions.
The nation’s largest business bank posted cash earnings for the six months ending March 31 of $3.34bn, a 94.8 per cent jump compared with its interim result from last year.
Its statutory net profit for the period was up 144 per cent to $3.21bn, while revenue was down 1.5 per cent to $8.26bn.
NAB chief executive Ross McEwan said Australia’s economic outlook remained optimistic; however, he warned some sectors were faring better than others.
“The recovery is not even, and some customers such as those in international travel and hospitality, particularly in CBD areas, still face significant challenges,” he said.
“Longer-term outcomes for these customers depend on a number of factors expected to become clearer in coming months.
“These include the impact of JobKeeper ending, timing of the vaccine rollout and the reopening of international borders.”
On an economic front, NAB expects the unemployment rate to be in the low level 4 per cent range by the end of next year, which Mr McEwan believes is when the economy may see a lift in wages growth.
The bank noted earnings had benefited from better than expected credit impairment outcomes, as a result of fewer customers defaulting on loans.
NAB along with other banks ramped up bad debt provisions in response to COVID-19, which was expected to cause a blowout of loan defaults.
The bank also noted its personal banking division had recorded a strong uptake in home loans as a result of the low interest rate environment.
NAB’s capital position also grew over the period, with its common equity tier one ratio increasing 90 basis points to 12.7 per cent.
NAB also issued a dividend to shareholders of 60 cents per share fully franked.
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