(Reuters) – National Australia Bank on Thursday joined its peers in flagging lower margins, even as the country’s second-biggest lender posted a 9.1% rise in first-quarter profit due to growth in home and business lending.
Record low interest rates and fierce competition in the home loan market are crimping margins for Australian lenders, which are also taking a hit from borrowers switching to fixed-rate mortgages.
The bank said net interest margin, a key measure of profitability, fell 5 basis points to 1.64% in the quarter.
Chief Executive Ross McEwan said while disruptions to supply chains and labour markets from the Omicron COVID-19 variant had created uncertainty, the bank was optimistic about the outlook for Australia and New Zealand.
NAB posted cash earnings of A$1.80 billion ($1.29 billion) for the quarter ended Dec. 31, compared with A$1.65 billion a year earlier and a Morgan Stanley estimate of about A$1.60 billion.
The bank’s common equity tier 1 (CET1) ratio, a closely watched measure of its spare cash, was 12.4% at Dec. 31, compared with 13% as at Sept. 30.
($1 = 1.3926 Australian dollars)
(Reporting by Shashwat Awasthi and Indranil Sarkar; Editing by Anil D’Silva)
