(Bloomberg) – National Bank of Australia Limited earnings were highest in the first half of the year, despite the company's growth in key lending sectors for businesses, despite continued pressure on profit margins.
In a statement Wednesday, cash profits rose 1% to $3.58 billion ($2.33 billion) in the six months ended March 31. This is compared to the average estimates of analysts surveyed by Bloomberg.
CEO Andrew Irvine has been a Melbourne lender for a year and is facing an economy with expected falling interest rates, putting banks’ profitability under pressure. Analysts warn that rival push is being hurt by stricter financing markets, so shares of rival Rival Westpac Banking Corp. fell earlier this week.
“We are optimistic about the potential growth prospects for Australia and New Zealand economies,” Irving said in the statement. “However, escalating global trade tensions are a key source of uncertainty. In this context, we maintain a strong balance sheet.”
The company's business and private banking sector had lower damage rates and lower profit margins, offsetting the volume growth. Fees are slightly higher due to investment-backed business growth.
Profits slipped and fell in individual banking units, including collateral, which the company described as “challenging.”
Irving said that while market volatility and changes in global trade policy are affecting the economy, Australia can withstand these changes well.
“Uncertainty may be uncomfortable for businesses and families, but Australia has entered this period overall,” Irving said. “Low unemployment, ease of inflation and expected growth are all helping. This provides the capacity for future cash rate cuts to offset all further global headwinds.”
The net interest margin was stable at 1.70%. In addition to the contribution of the Ministry of Marketing and Finance’s business, it contributes three basis points less. NAB will pay a temporary dividend of 85 cents per share.
(Added CEO quote in paragraph 4, more details about the results for the fifth)
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