National Australia Bank's strategic focus on its Australian business, spelled out by chief executive Cameron Clyne in a briefing in March, has yet to bear fruit if yesterday's interim results are anything to go by. The home lending business is lagging, credit card receivables are flat and MLC was hit hard by volatile markets.NAB's Australian mortgage portfolio grew by a little over five per cent. The bank acknowledged that volumes were below system and attributed this to a number of factors.Clyne said a lot of system growth during the period was driven by first home buyers, a group that did not see NAB as their first port of call. The bank "repositioned" its broker business and during a transition period volume growth through the channel fell below system.Sales through the proprietary mortgage channel also fell below system. The bank made an investment in sales capabilities and things started to turn around.Share in housing lending fell from 13.2 per cent in March 2008 to 13 per cent a year later.On the positive side, the bank increased its share of retail deposits, up from 14.4 per cent in March last year to 15.1 per cent in the latest half. This was due, in part, to the launch of NAB's new online retail brand UBank.UBank has had mixed success. It has opened a new channel for the bank to attract deposits but it remains a one product organisation, offering only term deposits. The launch of the rest of its products suite has been put on hold until conditions improve, and perhaps until the bank's systems are able to support the brand's values (see separate article).Cash earnings of $455 million from the Australian retail banking business were up 8.6 per cent on the previous corresponding period but down 5.4 per cent from the September 2008 half.Business banking performed better than retail. Business lending share (an unreliable measure) was up from 18.9 per cent in March 2008 to 19.7 per cent in the latest half.The Australian business and private banking division reported cash earnings of $1 billion, up 7.1 per cent on the previous corresponding period but down six per cent on the September half.As with other parts of the bank's business, solid underlying performance was dragged back by big increases in bad debt charges. In retail banking the charge for bad and doubtful debts was $262 million, up 92.5 per cent on the previous corresponding period, and in business and private banking the charge was up 125 per cent to $371 million.Clyne said the bank had yet to reach the peak of bad debts for the cycle. The bad debt experience has moved from a handful of high profile corporate failures to the mid market and SMEs. With the bank forecasting that unemployment will reach 7.5 per cent next year and 7.7 per cent in 2011, the bad debt experience is yet to hit the retail market.Overall, the bank reported net profit after tax of $2.6 billion, down 0.9 per cent on the previous