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Highlights
- NAB interim earnings rise to $3.58 billion
- Focus shifts to SME and premium business clients
- Cash rate tipped to fall to 2.6% by 2026
National Australia Bank (ASX:NAB) has reported a modest 1% rise in interim cash earnings to $3.58 billion for the six months ended March 31, surpassing market expectations of $3.47 billion. This performance underscores the bank’s resilience despite narrowing margins and growing competitive pressure across the financial services sector.
NAB Chief Executive Andrew Irvine highlighted a sharpened focus on strategic lending, particularly to small and medium-sized enterprises (SMEs) and top-tier clients. The bank has taken a more selective stance on business lending, choosing quality over quantity in a market challenged by global uncertainty and cost pressures.
“We haven’t been chasing lower-value lending,” Irvine said, adding that the bank’s emphasis has remained on areas promising better returns, especially in SME banking and high-value clients. This approach also reflects NAB’s strength in deposit growth, now positioning it as the largest business bank not just in lending, but also in deposits—an advantage in margin management.
The net interest margin declined to 1.7%, driven by heightened deposit pricing, wholesale funding costs, and lending competition. Operating expenses rose by 1.4%, but remain well below the 4.5% increase seen in fiscal 2024. Meanwhile, business and private banking earnings slipped by 0.7% year-on-year to $1.63 billion, while personal banking improved 3.6% to $576 million.
The interim dividend was increased by 1 cent to 85 cents per share, placing NAB among notable ASX dividend stocks offering stable returns amid evolving economic conditions.
Looking ahead, NAB forecasts a significant decline in the official cash rate—from the current 4.1% to 2.6% by February 2026. A 50 basis point cut is anticipated this month, with further easing expected through the year. While this would support borrowing activity, Irvine cautioned that falling rates could intensify upward pressure on house prices unless urgent action is taken to expand housing supply.
“If interest rates come down 100bps, that alone is likely to push house prices even higher,” Irvine noted. “We need more focus on supply-side solutions, not just demand.”
The performance of NAB is closely watched as part of the ASX200 index, where movements in major banking stocks significantly influence broader market sentiment. As economic conditions evolve, NAB's strategic decisions around lending, deposit management, and housing commentary will likely remain a key theme in the ASX 200 landscape.
