(Reuters) -National Australia Bank reported an 8% drop in its cash earnings for the third-quarter on Friday, hurt by rising competition in the mortgage market and higher expenses, while it flagged further deterioration in its asset quality.
Sustained high costs of living have further eroded household
disposable incomes and their ability to meet loan payments, resulting in rising arrears for the bank.
NAB’s ratio of non-performing exposures to gross loans was 1.31%, as at June-end, up 11 basis points from March, reflecting broad-based deterioration in its business lending portfolio and higher arrears for the Australian mortgage portfolio.
Net interest margin, a key measure of profitability, was stable with small reductions from lending competition and deposit mix, offset by benefits of a higher interest rate environment, NAB said.
The country’s top business lender posted cash earnings of A$1.75 billion ($1.16 billion) for the quarter ended June 30, compared with A$1.90 billion a year ago.
The bank’s common equity tier 1 ratio – a measure of its spare cash – stood at 12.6% as at the end of third quarter.
($1 = 1.5131 Australian dollars)
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