NAB chief ‘optimistic’ on economic outlook; bad loans drop
National Australia Bank chief executive Ross McEwan says he is confident the economy will bounce back once COVID restrictions are eased while a growing loan book has boosted the bank’s third-quarter earnings.
In a quarterly trading update on Thursday, NAB reported its unaudited cash earnings were $1.7 billion, up 10.3 per cent which was driven by loan book growth across mortgage (2 per cent), small business (2.7 per cent) and New Zealand (2.7 per cent) lending during the June quarter. It recorded a unaudited statutory net profit of $1.65 billion for the third quarter.
“The strong economic momentum leading into this period, ongoing government support and customers’ relatively healthy starting positions gives us confidence that once restrictions are eased, the economy will bounce back again.“: NAB chief executive Ross McEwan.Credit:Eamon Gallagher
The major bank’s quarterly earnings were also helped by a $112 million reduction in the provision for bad loans caused by COVID-19 and NAB further de-risked its assets by selling $1.5 billion in aviation loans.
At the height of the pandemic, this time last year, NAB had deferred more than $92 billion of home loans and $41 billion of business loans. The bank said the current lockdowns plaguing major cities had caused “less than $1 billion” in loan deferrals as of June 30.
Mr McEwan said the health crisis continued to create “uncertainty and challenges” but continued loan relief would support customers while protecting the bank.
“However, we remain optimistic about the long-term outlook for Australia and New Zealand. The strong economic momentum leading into this period, ongoing government support and customers’ relatively healthy starting positions gives us confidence that once restrictions are eased, the economy will bounce back again.”
NAB will now pursue growth in the retail banking sector through the acquisitions of neobank 86 400 and Citigroup’s Australian customer business, while simplifying core operations in finalising the sale of MLC Wealth.
“We have a clear focus on where and how we will continue to grow,” Mr McEwan said.
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