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Highlights
- NAB posts $3.58 billion in half-year cash earning
- Dividend lifted to $0.85 per share
- Business and institutional banking segments deliver growth
National Australia Bank (ASX:NAB) is back in the spotlight after releasing its FY25 half-year results, reporting solid earnings, a slight lift in dividends, and ongoing pressure in parts of its lending portfolio. For investors keeping an eye on ASX dividend stocks, NAB's performance offers a fresh perspective on how major banks are managing economic headwinds in 2025.
For the six months ending 31 March 2025, NAB reported cash earnings of $3.58 billion, up 1% year over year. Statutory net profit came in at $3.4 billion. The bank also declared a half-year dividend of $0.85 per share, a 1.2% increase from the previous payout, reinforcing its role among top ASX dividend stocks.
A key metric closely watched by market participants, the net interest margin (NIM), remained flat at 1.70%. However, when excluding market and treasury contributions, NIM saw a slight dip due to rising funding costs, deposit repricing, and stiff lending competition.
Revenue climbed 1.7% compared to the second half of FY24, bolstered by stronger treasury and markets income. Excluding those factors, revenue declined 1.1%, impacted by margin compression despite loan volume growth.
Operating expenses rose 1.4% due to increased technology investments, financial crime compliance, and personnel costs. That said, NAB managed to extract productivity gains and benefited from lower costs tied to its previous enforceable undertaking with AUSTRAC.
Performance across divisions was mixed. Business and private banking delivered 1.4% growth in cash earnings to $1.63 billion. Corporate and institutional banking earnings rose 4.1% to $909 million, while New Zealand banking posted an impressive 12.5% increase in local currency. However, personal banking saw a 6.8% decline in earnings.
Deposit growth stood out, with household and business deposits growing faster than the broader market. Household deposits rose at 1.3 times the pace of the industry, and business deposits at 1.6 times, signalling resilience in NAB’s deposit franchise.
One area of concern was loan arrears. Housing loans overdue by more than 30 days rose to 1.87%, while 90+ day arrears increased to 1.15%, indicating ongoing pressure on some borrowers. This diverged from the trend seen at Westpac (ASX:WBC), where arrears declined.
Looking ahead, NAB expressed confidence in the underlying strength of the Australian and New Zealand economies, pointing to a stable credit outlook and a robust balance sheet. As part of the All Ordinaries index, NAB’s performance remains a key indicator for broader market health.
With continued focus on cost control, deposit growth, and strategic investment in digital infrastructure, NAB remains one of the financial heavyweights shaping the trajectory of Australia’s top banking stocks in the current cycle.
