In an upbeat discussion of NAB's trading update for the three months ended 31 December 2021, Ross McEwan group chief executive officer noted the strong growth across all retail and small business operations.
Among the highlights outlined by NAB in a statement to the ASX, were NAB's unaudited statutory net profit and cash earnings – coincidentally, both came in at A$1.8 billion.
Cash earnings growth compared to the comparable quarter last year was 9.1 per cent, and up 12 per cent over the previous quarter.
"In Australia, over the three months to December 2021, home lending grew 2.6 per cent and SME business lending increased 3.4 per cent, and we gained market share across our core lending and deposit products. New Zealand loan growth was also strong at 2.2 per cent over the same period," McEwan said in a statement released by NAB yesterday.
"Volumes have been strong over the quarter with lending and deposits each up $18 billion.
"These results reflect an ongoing focus on executing our strategy, making the bank simpler for customers and colleagues," he said.
Operating performance outcomes showed: • group revenue increased 8 per cent due to higher volumes across housing and business lending, increased fees and commissions, although the markets and treasury business dragged the result down slightly;
• net interest margin declined 5 basis points to 1.64 per cent, mostly due to a "modest" negative impact from NAB's markets business and higher liquids;
• excluding these impacts, NIM declined 2 bps due to competitive pressures and housing lending mix, partly offset by lower funding and deposit costs;
• expenses increased 2 per cent mainly reflecting higher salaries and leave costs, combined with investment to support growth, partly offset by productivity benefits (NAB stated it would target "broadly flat expenses" in FY22).
NAB also outlined an improvement in its credit position, with a write-back of $35 million, on the basis of higher house prices and improving asset quality across both housing and business lending. The improvement its Australian home loan portfolio continued, with the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances down 13 bps to 0.81 per cent.
The group's 2022 First Quarter Pillar 3 Report disclosed Common Equity Tier 1 ratio of 12.4 per cent, compared with 13.0 per cent at September 2021.
This was explained in NAB's trading update as being due to payment of the group's 2021 final dividend (a reduction of 53 bps), less a further 15 bps for shares already acquired under an ongoing on-market buy-back.
If the balance of the $1.4 billion in shares are acquired under the buy-back, NAB's CET1 ratio will drop by around 32 bps.
The proposed acquisition of the Citigroup Australian consumer business in the first half of the current calendar year will drop CET1 by a similar amount – while proceeds from the divestment of BNZ Life will claw back 6 bps.