(Reuters) -National Australia Bank reported a slight increase in third-quarter cash earnings on Monday, supported by improved margins and growth in business and home lending.
Australia's top business lender posted cash earnings of A$1.77 billion ($1.15 billion) for the three months ended June 30, compared with A$1.75 billion a year ago.
The Reserve Bank of Australia has cut interest rates by 75 basis points so far this year, delivering the latest reduction last week while signalling further easing.
The lower interest rate environment has aided higher lending volumes and improved asset quality.
NAB said business lending grew 4% and Australian home lending grew 2% during the quarter compared with the quarterly average of the first half.
Its net interest margin - a closely watched measure of bank performance which compares interest payments received on loans minus interest paid out to deposit holders - increased by 8 basis points.
Excluding Markets and Treasury, NIM rose 4 basis points, mainly due to higher earnings on replicating portfolios and lower short‑term funding costs.
NAB said the ratio of default but not impaired assets to gross loans rose 2 basis points, as Australian mortgage book arrears flattened and ratio trends in the Business and Private Banking segment showed early signs of stabilising.
The lender also booked a credit impairment charge of A$254 million in the quarter, mainly related to business lending in Australia and New Zealand and unsecured Australian retail portfolios.
NAB's costs rose 3% in the quarter and it now expects operating expenses to grow about 4.5% in fiscal 2025, including an estimated A$130 million for a program to identify and remediate payroll issues.
($1 = 1.5363 Australian dollars)
(Reporting by Himanshi Akhand and Roshan Thomas in Bengaluru; editing by Diane Craft and Stephen Coates)
