By Sameer Manekar
(Reuters) -National Australia Bank said on Thursday its first-quarter cash profit jumped 19%, helped by a rise in lending deposits for the country’s second-largest bank.
“The higher interest rate environment, resulting from central bank actions to curb inflation, has benefited our revenue this period,” Chief Executive Officer Ross McEwan said.
However, speaking of higher interest rates, McEwan said it was “also causing economic growth and house prices to soften, and loan repayments to increase”.
Australian lenders’ run of strong earnings and stock market outperformance are set to fade later this year, according to analysts, as a cooling economy is expected to result in slower credit growth and more bad debt.
Some analysts are predicting the upcoming results seasons to be “as good as it gets” for the banks.
Earlier in the week, country’s biggest lender Commonwealth Bank of Australia delivered record half-yearly profits but warned of headwinds facing its mortgages business and concerns its margins may have peaked.
For the first-quarter ended Dec. 31, NAB said net interest margin, a key measure of profitability, rose 12 basis points to 1.79% in the reported quarter, while its common equity tier 1 (CET1) ratio was at 11.3% as of Dec. 31, compared with 11.51% as of Sept. 30.
The country’s second-largest lender posted cash earnings of A$2.15 billion ($1.48 billion) for the quarter ended Dec. 31, compared with A$1.80 billion a year ago.
Analysts had expected cash earnings of $2.01 billion, according to Visible Alpha consensus.
The ratio of bank’s stressed loans, interest payments on which are delayed for over 90 days, to gross loans and acceptances fell to 0.62% as of December-end from 0.66% in September-end.
($1 = 1.4480 Australian dollars)
(Reporting by Sameer Manekar in Bengaluru; Editing by Shinjini Ganguli)
