NAB reports 6.1 per cent fall in net profits for FY24
One of Australia’s biggest banks has warned of a “challenging” time for customers as it releases its full-year results.
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Banking behemoth National Australia Bank has acknowledged its customers are battling “challenging” conditions in the fallout from higher interest rates and rolling cost-of-living pressures as it releases its full-year results for the 2024 financial year.
The bank delivered $6.96bn in profits across the year, a 6.1 per cent fall from last year, and chief executive Andrew Irvine said its “asset quality” had “deteriorated” as pressures piled up on its customer base.
“The Australian economy has remained resilient; however, the impact of higher interest rates and cost of living is challenging for our customers and we are here to help them,” he said on Thursday morning.
“Not unsurprisingly, asset quality deteriorated over FY24 but we have maintained prudent balance sheet setting.
“We will continue to focus on keeping our bank and customers safe through the cycle.”
Net interest margins, a key indicator of profitability that measures how much money a bank makes from lending compared with its borrowing costs, decreased 3 basis points to 1.71 per cent.
“This primarily reflects home lending competition, higher term-deposit costs and deposit mix impacts, partially offset by higher earnings on deposits and capital as a result of the higher interest rate environment,” NAB said.
The bank also warned Australia’s economic growth could remain tepid out to 2025 and 2026.
“While the first half of 2024 will likely mark the trough in real GDP growth, the pick-up in growth from there is expected to be gradual, with 1 per cent forecast this year and around 2.25 per cent over 2025 and 2026,” the bank said.
“Easing inflation, tax cuts and energy subsidies will all help put households in a better position through the second half of 2024, but early indications of how this affects consumption and economic growth are mixed, with some of the benefit likely to be saved initially.
“Weak growth will also feed into labour demand, with the unemployment rate forecast to rise a little further before stabilising around 4.5 per cent.”
The bank also said an interest-rate cut from the Reserve Bank of Australia was “unlikely” before February 2025.
“While moderating inflationary pressures are encouraging, this is happening gradually,” it said.
NAB is one of Australia’s “big four” banks and boasts a market capitalisation of some $120bn.
Originally published as NAB reports 6.1 per cent fall in net profits for FY24
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