Strong Result Propels NAB to Record High

The quarter reflects controlled execution and improving earnings quality. The bank appears positioned to benefit from stable economic conditions whereas maintaining conservative capital settings.

National Australia Bank Limited (ASX: NAB)

National Australia Bank Limited (ASX: NAB) delivered a strong start to FY26 with first quarter performance showing clear momentum compared with the second half of FY25. Underlying profit increased 12%, supported by contributions from all customer divisions and a stable domestic economic backdrop. Cash earnings were up 15%, helped by lower credit impairment charges. The revenue raised 6%, or 4% excluding Markets & Treasury, driven mainly by business volumes, improved fee income and reduced remediation costs.

Net interest margin edged up 2 basis points to 1.80%, reflecting better deposit returns, whereas lending competition remained evident. Costs were broadly steady despite higher technology and staffing expenses, as productivity gains and lower one off charges helped absorb the increase.

Business growth trends were encouraging. Australian business lending rose 2%, with Business & Private Banking expanding 3% and gaining share in SME and total business lending. Home lending grew at 1.1 times system growth excluding Advantedge run-off, and proprietary channel drawdowns improved to 46%, up from 41% in the prior half. Deposit balances across Business & Private Banking and Personal Banking increased 3%, including strong 6% growth in transaction accounts excluding offsets. The successful migration of Citi Consumer Business customers onto NAB systems was completed during the quarter, showing an important integration milestone. Management reiterated its focus on productivity, targeting more than $450 million in savings for FY26 and aiming to keep expense growth below FY25’s 4.6%.

From a capital perspective, the Group CET1 ratio eased to 11.48% at December 2025 from 11.70% in September, largely due to the final dividend payment and $6.0 billion in risk weighted asset growth. This was partly offset by earnings generation and an 11 basis point benefit from the sale of the remaining 20% stake in MLC Life. Credit RWA increased $2.4 billion and is showing $6.4 billion in lending growth, moderated by model and methodology benefits. Other movements included changes in market risk, operational risk and a decline in IRRBB RWA following adoption of the revised APS 117 standard.

Funding and liquidity remain sound. The Level 1 CET1 ratio raised at 11.50% and the leverage ratio was 4.9%. Over the four months to January 2026, NAB raised $15.8 billion in term wholesale funding, supporting balance sheet flexibility. The update suggests NAB is balancing growth with careful capital management whereas continuing to invest for efficiency gains.

(Source: Company Report)