The margin pressures that have hit bank earnings over the past year are starting to moderate, NAB chief financial officer Nathan Goonan said yesterday.

Goonan said the decline in refinancing volumes in the home loan market, thanks to a reduction in fixed-rate loan expiries and a more stable rate environment, is helping ease pressures.

He said NAB would stick to its “disciplined approach” to managing home loan returns, which saw its mortgage book grow at 0.9 times system in the March half. 

The bank is also working to increase the proportion of new home loans sold through proprietary channels, which it says provide a better return than loans sold through brokers.

NAB’s net interest margin in the March 2024 half was 1.72 per cent – up from 1.71 per cent in the September half last year but down 5 bps year-on-year. The biggest margin impacts were from home loan competition, higher term deposit and other funding costs and changing deposit mix. 

The biggest NIM contraction was in the personal banking division, which fell 29 bps year-on-year. Business and private banking NIM was down 27 bps year-on-year and New Zealand was down 8 bps. The corporate and institutional banking division improved its NIM over the past 12 months – up 17 bps to 1.04 per cent.