National Australia Bank shares rise as profits rise 9% on strong lending

A National Australia Bank (NAB) sign is displayed outside an office building in central Sydney, Australia July 24, 2015. REUTERS/David Gray

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  • Q1 cash profit beats MS estimate
  • NAB optimistic about prospects for Australia and New Zealand – CEO
  • Shares track best day since Nov. 10

Feb 10 (Reuters) – National Australia Bank (NAB.AX) reported a 9.1% rise in first-quarter profits as growth in consumer and business loans from the country’s second-largest lender offset shrinking margins , sending its shares more than 4% higher on Thursday.

NAB reported cash profit of A$1.80 billion ($1.29 billion) for the quarter ended Dec. 31, higher than A$1.65 billion a year earlier and a Morgan estimate Stanley of approximately A$1.60 billion.

“NAB started fiscal 2022 well…asset quality remained benign and good momentum continued across our business despite the still competitive environment,” Chief Executive Ross McEwan said.

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The bank’s lending and deposit volume grew by A$18 billion each in the quarter as it gained market share in both areas, he said, while revenue rose. by 8%.

Home loans and business loans in Australia increased by 2.6% and 3.4%, respectively, and loans in New Zealand increased by 2.2% in the quarter.

UBS analysts called it a “strong result” and said NAB’s operating performance was well above consensus in pre-provision operating profit (PPOP).

NAB shares rose 4.1% to A$29.54, their highest level since January 18 and on track for their best day in three months, while the broader market (.AXJO) was in increase of 0.9%.

McEwan added that while disruptions to supply chains and labor markets from the Omicron variant had created uncertainty, the bank was optimistic about the outlook for Australia and New Zealand.

NAB has consistently joined its Australian peers in reporting the effects of fierce competition, as its net interest margin fell 5 basis points to 1.64% in the quarter.

Record-low interest rates and fierce competition in the mortgage market are cutting margins for Australian lenders, which are also being hit by borrowers switching to fixed-rate mortgages. Read more

The Common Equity Tier 1 (CET1) ratio, a closely watched measure of available cash, was 12.4% as of December 31, down from 13% as of September 30.

($1 = 1.3926 Australian dollars)

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Reporting by Shashwat Awasthi and Indranil Sarkar; Editing by Anil D’Silva and Sherry Jacob-Phillips

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