NAB results: National Australia Bank profit jumps on higher revenues, productivity gains
NAB has flagged cost out programs and more lending helped its profit jump in the December quarter.
National Australia Bank says its normalised cash profit jumped 11 per cent to $2.02 billion in the December quarter, versus the prior corresponding quarter.
Shares jumped 5.7 per cent in morning trade to a record high of $47.96, and have advanced 12.5 per cent to start 2026.
The bank’s total revenues climbed to $5.6b, up 6 per cent on the average of the prior six-month period.
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Managing costs
NAB said the profit result benefited from increased revenue from business lending and cost-out programs that boosted productivity.
The combination of higher revenues and flat costs saw the bank’s overall profit margin rise to 1.80 per cent, up 2 basis points on the prior comparable quarter.
“Disciplined execution of our strategy has delivered further progress this quarter across our key priorities of growing business banking, driving deposit growth and strengthening proprietary home lending,” said Andrew Irvine, the bank’s chief executive.
NAB’s management team is targeting more than $450 million in productivity savings over the 12 months to September 30, 2026, with expense growth less than 4.6 per cent over the financial year.
The bank added that it benefited from lower bad debts equal to $170m, which was below Citi’s estimate of $249m. NAB said a significant part of the bad debt charges were related to business lending, rather than its home loan portfolio.
Citi said the lower-than-expected bad debts were consistent with recent reports from ANZ and CBA to suggest Australia’s national economy is robust, despite the Reserve Bank’s decision to lift borrowing rates 0.25 per cent to 3.85 per cent earlier in February.
Lending volumes lift
Total lending volumes for the quarter ending December 31, grew one per cent to $792.5b, versus the September quarter. The bank’s total business lending stood at $336.2b, with home loans at $442.4b.
The bank’s total customer deposits climbed to $667.5b, up 6 per cent versus the prior corresponding quarter.
“NAB is well placed to manage our bank for the long term and to support our customers, while delivering sustainable growth and returns to shareholders,” Mr Irvine said.
Analysts cheer result
John Storey, a banking analyst at UBS, said he expects investors to hike earnings per share forecasts for NAB and rated the stock a buy with a $47 share price valuation.
“NAB’s first quarter update shows strong growth in earnings and asset quality improvements,” Mr Storey told investors.
UBS forecasts NAB to earn $2.33 a share in the financial year 2026 on a dividend yield of 4.3 per cent.
Citi said it thought some of the positive news from Wednesday’s update was already factored into the share price.
“Overall, a very strong headline [profit] beat underpinned by a great quarter in Markets & Treasury and in better asset quality,” Citi said. “With the clear highlight being the strength of the ex-Markets & Treasury revenue, where NAB has maintained net interest margin [NIM] but done well on volumes.”
Citi expects NAB to pay total dividends of $1.70 per share in the financial year 2026.
Last week, shares in NAB’s rival ANZ also hit a record high as the banking sector attracts buyers on its ability to manage costs and steadily grow revenues.
Australia’s largest bank and home loan lender, Commonwealth Bank, has climbed 9.8 per cent year to date and shares last changed hands for $176.89.
