National Australia Bank’s profit boosted by rising interest rates

NATIONAL Australia Bank's profit came in line with analyst estimates as higher interest rates buoyed business lending and the bank lifted its dividend.

Cash profit rose to A$7.10 billion (S$6.5 billion) in the year ended Sep 30, compared with A$6.56 billion a year earlier, according to a statement from the Melbourne-based lender on Wednesday (Nov 9). That compared with the A$7.09 billion average estimate of 13 analysts surveyed by Bloomberg.

While rising interest rates are helping to buoy lending profitability at Australia's biggest banks, forecasts for higher inflation are prompting bank chiefs to warn that home owners could face more stress next year when fixed-rate mortgages mature. That's adding to uncertainty for the nation's banks with the economy also expected to slow.

National Australia chief executive officer Ross McEwan said his firm retained an ongoing focus on strong balance sheet settings.

"Maintaining these settings is important during the current economic uncertainty, with higher interest rates and higher inflation likely to challenge some customers," he said in the statement. "However, strong employment conditions along with substantial household and business savings give us confidence in the resilience of our customers and the broader economy."

McEwan also said the bank will keep its "ongoing cost discipline" to help offset higher inflation. It will pay a final dividend of 78 Australian cents.

"We have made good progress over the past two years which positions us well for a changing environment," McEwan said.

Profit in the key business and private banking unit surged 22 per cent, while corporate and institutional banking grew 35 per cent, according to the statement. Personal banking earnings dipped 3.6 per cent. BLOOMBERG

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