National Australia Bank posted an annual cash profit of $6.14 billion, a decline of 9% from the previous year, even as its net interest margin rose by 6 basis points to 1.8%.
Chief executive Andrew Irvine warned the bank faces an uncertain economic backdrop, with international developments weighing on sentiment and households and businesses coping with higher costs.
NAB expanded its presence in business lending, with balances rising 9.8% over the year and the bank reporting gains in market share in that segment.
The lender said household buffers remained relatively strong, pointing to a low incidence of borrowers in negative equity and an 11% increase in offset account balances during the year.
“Household consumption growth is expected to slow, and the downturn in the housing market is likely to weigh on activity.”
NAB disclosed a deterioration in arrears during the second half of the year: home loan repayments overdue by 30 days or more climbed 11 basis points to 1.69% between March and September.
Credit provisions rose sharply, with the bank taking a $1.5 billion impairment charge for the year compared with $833 million a year earlier. NAB attributed the increase to a tougher economic outlook, growth in loan volumes, weakening asset quality in business lending and house price falls affecting its mortgage book.
In October the bank cut 2,500 roles as part of a drive to improve efficiency and respond to the weaker operating environment.
Despite the headwinds, NAB left its full-year dividend unchanged at $1.70 a share, maintaining the payout amid higher provisions and rising arrears.
