Investors gave a big thumbs up to the National Australia Bank’s first quarter trading update, even though the bank, like its peers saw its net interest margin crimped in the quarter.
The shares closed up by 4% at $29.67 in a strong end to Thursday’s session.
The strong performance by NAB and its shares helped the shares of its peers – in fact the rise led the Commonwealth back over $100 a share where it ended t $100.78, up 1.2% for the day.
That is the first time CBA shares have been over $100 each since mid-January.
The NAB’s strength also saw ANZ shares end up more than 1% at $27.71 and Westpac shares also closed more than 1% higher at $22.62. Yesterday’s rise means the ANZ has now regained all those losses after its weak results earlier this week.
The NAB’s update means that only the ANZ among the four majors failed to reveal a cash earnings figure for the December quarter or half.
Macquarie didn’t either give an earnings figure but has never released quarterly earnings figure preferring to issue only general comments on its performance and its major areas of business.
While the NAB’s net interest margin fell 5 points to 1.64%, investors were happier to see the drivers behind the 9.1% rise in unaudited cash earnings for $1.8 billion.
The bank said in an update filed with the ASX that the higher profit was helped by higher house prices, the improving asset quality of home and business loans and lower bad debt provisions.
CEO Ross McEwan said in the update that the NAB had gained market share in lending and deposits in the quarter.
NAB’s home lending grew 2.6% in the quarter while small business lending rose 3.4% (That is a traditional strength of the NAB) and deposits were up by $18 billion.
The results were helped by a credit impairment write-back of $35 million and a slight drop in the number of borrowers making 90-day overdue payments, reflecting improved economic conditions and rising house prices.
“These results reflect an ongoing focus on executing our strategy, making the bank simpler for customers and colleagues,” Mr McEwan said.
But he warned the pandemic continued to cause problems.
“Disruptions to supply chains and labour markets caused by the recent spread of Omicron present challenges for some of our customers.
The major regional bank, the Bendigo and Adelaide reports its interim results on Monday. Suncorp’s regional bank reported a modest 5% or so rise in net profit to $200 million for the half year earlier this week. AMP Bank saw a solid rise in earnings over 2021 as well.
All four majors reported falls in their NIMS but are hoping the Reserve Bank will lift rates to allow them to shift the cost of the variable home and business loans higher to ease the pressures on margins.
