National Australia Bank (NAB) has joined its peers (Westpac, ANZ and the Commonwealth) in reporting another upsurge in bad debts, this time for the three months to June.
The NAB said cash earnings for the third-quarter profit fell to $1.6 billion as both funding costs and charges for impaired loans increased, the bank told the ASX this morning
A trading update said NAB’s unaudited cash earnings in the June quarter were 3% lower the June quarter of 2015, and 3% weaker than the March quarter of this year.
The bank told the market that the charge for bad and doubtful debts for the quarter rose 21% to $228 million.
"The increase largely reflected the non-recurrence of the unusually low bad and doubtful debt charge in the first quarter of 2016 and an increase in the mining and agriculture collective provision overlay. The ratio of 90+ days past due and gross impaired assets to gross loans and acceptances was 0.81% at 30 June 2016, up from 0.78% at 31 March 2016,” the bank said.
NAB said its revenue was "broadly stable compared with the quarterly average of the March 2016 Half Year with growth in lending offset by lower net interest margin (NIM). Group NIM, excluding the impact of Markets and Treasury2, was slightly lower due to higher funding costs.”
And the bank said its expenses “fell approximately 1% reflecting tight control of costs.” “We continue to deliver on our strategy – getting the basics right, serving our customers better and keeping the balance sheet strong,” NAB Group CEO Andrew Thorburn said in the statement issued Monday morning before trading opened.
“The Australian and New Zealand economies remain resilient and continue to deliver growth amid heightened global uncertainty. While we saw higher funding costs during the quarter, asset quality remains strong and cost control was pleasing.
“These higher funding costs contributed to our decision to not pass on all of the most recent RBA interest rate cut to home loan borrowers. The decision reflects the responsibility we have to balance the needs of all stakeholders – borrowers, depositors and our 584,000 shareholders."
