National Australia Bank's chief executive, Cameron Clyne, is not deterred by the worsening situation in the financial markets, or the weaker economic outlook, and will maintain the bank's pursuit of market share in the Australian retail and business banking markets.NAB issued a June quarter update yesterday. It reported unaudited cash earnings of A$1.4 billion for the quarter - up from $1.3 billion in the March quarter.Clyne highlighted an improvement in the bank's credit quality, above-system loan growth, good cost control and an improvement in the bank's return on equity. And, he said, the bank's funding program was under control.According to Australian Prudential Regulation Authority data, NAB has grown its mortgage book at more than twice the rate of system growth over the past year. In the June quarter it grew by 4.2 per cent, compared with system growth of two per cent.It has also picked up share in retail deposits and business lending. Its business loan book grew by 20.3 per cent over the year to June, compared with system growth of 1.3 per cent.Such strong growth is often accompanied by some weakening in credit quality, but NAB's credit quality has improved. Bad and doubtful debts fell from 43 to 41 basis points of gross loans and acceptances, quarter on quarter.Mortgage arrears (loans past due 90 days or more) were down seven basis points to 1.85 per cent. Mortgages on "watch" fell from 3.6 per cent to 3.18 per cent.Business banking bad and doubtful debts went up but NAB's chief financial officer, Mark Joiner, described the quarterly figures as "lumpy".He said a better indication of credit quality in business was arrears, which fell four basis points, quarter on quarter. Business loans on "watch"  fell from 4.78 per cent to 3.99 per cent.Clyne said: "At the moment, there is nothing to suggest any acceleration in bad debts. We are comfortable with our position and will continue to take share while it makes sense."The group's net interest margin improved from 2.23 per cent to 2.32 per cent. Joiner said the bank got some improvement in net interest margin (NIM) from "a slight relaxation" in deposit pricing. Deposit flows are so strong that deposit-takers are not having to compete as hard as they have been over the past couple of years.Another source of improved NIM is re-pricing of the business portfolio. Unlike the period after the financial crisis, re-pricing is not a process of setting higher rates for individual business borrowers.Instead, it is a case of redeploying funds from low-return parts of the portfolio to more profitable business use.