‘Single biggest issue’: Bank boss says Labor needs to deliver on housing
Labor has nominated housing as a key priority, and in the final days of the election campaign it announced a plan to offer state governments more than $2 billion over four years to boost housing supply.
The focus on housing comes as investors prepare for interest rate cuts. NAB’s Auld has tipped a super-sized 0.5 percentage point rate cut from the Reserve Bank this month, followed by 0.25 percentage point cuts in July, August, November and next February.
‘The first few months of this year have witnessed pretty dramatic shifts in global economic policy. I expect unpredictability and volatility will persist for a while yet.’
NAB chief executive Andrew Irvine
NAB’s profit result was slightly ahead of market expectations, and NAB shares closed 1.6 per cent higher, at $35.87.
A major issue for NAB is growing competition in the business lending segment, which attracts higher margins than mortgage lending and is being targeted by NAB’s rivals. Irvine vowed to expand NAB’s business bank as well as defend it, and pointed to its push to attract more deposits from business clients.
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“In a nutshell, everyone else wants what we have, and we’re not going to give it up without one hell of a fight,” he said.
Morgan Stanley analyst Richard Wiles said that while NAB’s profits beat analyst estimates, the bank’s result had been supported by trading businesses – which tend to be more volatile – and cuts to provisions for bad debts.
“We believe NAB delivered a sound result,” Wiles said. “There are no surprises in underlying margin, credit quality or capital trends.”
The bank’s revenue rose 1.7 per cent, helped by higher income from its markets trading businesses, while its net interest margin – funding costs compared with what it charges for loans – was flat. NAB’s charge for bad loans of $348 million was slightly lower than in the second half of last year.
Irvine said Australia’s economy was probably through the worst of a weak patch, but the sense of uncertainty caused by the Trump administration’s policies would continue for some time, and businesses appeared cautious about taking on new debt in this economic environment.
“The first few months of this year have witnessed pretty dramatic shifts in global economic policy,” Irvine said. “I expect unpredictability and volatility will persist for a while yet.”
NAB announced it would pay a fully franked interim dividend of 85¢, in line with the second half of last year.
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