Bank beats earnings predictions, claws back mortgage market share
National Australia Bank has beaten market expectations with quarterly cash earnings of $1.8 billion, driven by higher house prices and the improving asset quality of home and business loans. However, NAB CEO Ross McEwan said that pandemic challenges remained.
In a trading update last week for the December quarter, McEwan said the bank had started the financial year strong, with cash earnings up 9.1% from the same period last year and NAB gaining market share in lending and deposits, The Sydney Morning Herald reported.
NAB share price rose by 4.51% to $29.67 on Thursday as its earnings figures blew past analysts’ expectations. Citi noted that the bank’s cash earnings were around 10% ahead of market predictions, with Citi analyst Brendan Sproules describing the numbers as a “very solid quarterly print.”
Over the December quarter, NAB’s home lending grew 2.6%. Small business lending grew by 3.4% and deposits grew by $18 billion as the bank reclaimed market share from competitors by reducing approval times, the Herald reported. JPMorgan said the bank’s growth in business and home lending was an “outstanding revenue trajectory.”
NAB’s results were also partly driven by a credit impairment write-back of $35 million and a reduction in the number of borrowers making 90-day overdue payments, a reflection of improved economic conditions and rising house prices, the Herald reported.
Read next: CBA profit sees massive jump
“These results reflect an ongoing focus on executing our strategy, making the bank simpler for customers and colleagues,” McEwan said. However, he warned that the COVID-19 pandemic continued to pose problems.
“Disruptions to supply chains and labour markets caused by the recent spread of Omicron present challenges for some of our customers,” McEwan said. “While this creates uncertainty, we remain optimistic about the outlook for Australia and New Zealand and are well positioned to continue to grow with a strong balance sheet and disciplined execution of a clear strategy.”
