URGENT UPDATE: NAB has just reported a slight drop in earnings, revealing that bad debts are on the rise as some businesses default on their loans. For the year ending September 30, 2024, NAB posted $7.09 billion in cash earnings, a decrease of 0.2 percent from the previous year.
In a detailed announcement on Thursday, NAB also reported a statutory net profit decline of 2.9 percent to $6.76 billion, while underlying profit saw a modest rise of 1 percent. The bank has taken an alarming $833 million charge on debts deemed unlikely to be repaid, marking an increase of 14.4 percent from $728 million reported last year.
Chief Executive Andrew Irvine addressed analysts, highlighting that the deterioration in the bank’s business lending portfolio is attributed to a small number of defaults within its corporate and business banking division, as well as operations in New Zealand. “While single loan exposures are lumpy and hard to predict, it’s not unusual to see some increases in impairments towards the end of an asset quality cycle,” Irvine stated.
NAB did note that Australian mortgage arrears remained stable throughout the year. However, the bank reported that 1.55 percent of its lending portfolio is classified as “non-performing,” up from 1.39 percent a year ago. The bank indicated that conditions started to improve in the latter half of the 2024/25 financial year as inflation moderated and interest rate pressures eased.
“We are committed to working with our customers through their business difficulties,” Irvine emphasized, adding, “Whilst this can take time, our experience shows that this achieves the best overall result for our customers and our shareholders.”
NAB has also declared a final dividend of 85 cents per share, bringing its total dividends for the year to $1.70 per share, a slight increase from $1.69 the previous year. This development may provide some reassurance to shareholders amid rising concerns over bad debts.
As the situation evolves, investors and customers alike are closely watching NAB’s next steps in addressing these challenges. Stay tuned for further updates on this developing story.
