National Australia Bank said its first-quarter cash profit rose 3% from a year ago to $1.65 billion.
The result was after what the bank reported was a sharp rise in expenses leading to a contraction in margins.
Chief executive Andrew Thorburn said the bank was on target to meet its targets despite the rise in expenses, including an additional $1.5 billion of investment over the next three years.
Revenue rose 1% in the quarter with “good growth” from business and private banking, plus corporate and institutional divisions. Bad and doubtful debts fell 23% to $160 million in the quarter. That suggests that without such a large fall, the bank’s cash earnings would have been weaker.
Without giving a figure, the bank saids its net interest margin fell in the quarter, but was “broadly stable” excluding markets and Treasury “impacts.”
“Cost savings of more than $1 billion continue to be targeted by end of FY20” Mr Thorburn said in a statement to the ASX before trading yesterday.
Expenses at the bank rose 4% in the three months ended December 31 because of increased investment and “personnel costs including Enterprise Bargaining Agreement increases".
"Continue to expect FY18 expenses to grow 5-8 per cent in FY18 then targeted to remain broadly flat over FY19-20", the statement said.
NAB shares rose 2.36% to $28.90 yesterday.
