National Australia Bank (NAB) H1 2025 earnings summary

Executive summary

• Cash earnings and ROE increased in a challenging environment, supported by strong capital, provisioning, and liquidity, with a strategic focus on business banking, deposits, proprietary home lending, and technology modernization delivering early positive results.

• Completed all required activities under the AUSTRAC Enforceable Undertaking, with ongoing investment in financial crime controls and awaiting AUSTRAC CEO consent for closure.

• Australia is well positioned amid global uncertainty, with moderating inflation, resilient labor market, and improving GDP growth.

• Home lending drawdowns via proprietary channels up 25% and SME business lending market share increased.

Financial highlights

• Cash earnings rose 0.8% half-on-half to $3,583m; statutory profit down 1.7% to $3,466m, mainly due to the non-repeat of a prior gain on sale of NZ wealth businesses.

• Underlying profit up 1.9% half-on-half to $5,463m; net operating income up 1.7% to $10,281m; costs up 1.4%.

• Dividend per share at 85 cents, payout ratio at 72.7% of cash earnings, within the 65%-75% policy.

• Net interest margin stable at 1.70% half-on-half, with margin pressure offset by deposit and capital portfolio benefits.

• Credit impairment charge fell to $348m from $365m in 2H24.

Outlook and guidance

• Productivity benefits targeted at over $400m for FY25; cost growth expected below FY24's 4.5%; investment spend guidance at ~$1.8bn with opex ratio ~40%.

• CET1 target raised to >11.25% to reflect APRA's AT1 phase-out; strong capital position to support growth.

• Optimism for Australian and New Zealand economic growth, but global trade tensions and regulatory changes pose risks.

• APRA's loss-absorbing capacity requirement will rise to 4.5% of RWA in 2026, and Additional Tier 1 capital will be phased out by 2027.