NAB keeps a lid on costs

National Australia Bank said it expected growth in operating expenses "will remain within inflation to 2010" while the bank also reaffirmed 2008 earnings guidance.

At the annual meeting in Perth yesterday the managing director, John Stewart, said that the "uncertainty, started by the sub-prime issues in the United States, is likely to be longer lasting and more widespread than we all thought last year. The outlook is further complicated by the potential for the United States to go into recession.

"Against this background," Stewart said, "NAB is faring well enough but we are far from complacent."

Michael Chaney, chair of NAB's board, said that the bank passed through only half of the increased cost of funds to home loan customers. The bank has largely lifted interest rates in line with the higher cost of liabilities for other borrowers.

The bank's management is yet to announce any lift in home loan interest rates in Australia.