As mortgage-holders and businesses struggle under the weight of 13 interest rate hikes in 18 months, NAB has announced an 8.8 per cent increase in its cash profit to $7.7 billion.
The Big Four bank reported a statutory net profit of $7.4 billion, up 7.6 per cent from the previous year, saying high-interest-rate benefits were offset by mortgage competition and inflationary pressures.
NAB CEO Ross McEwan said the environment became more challenging in the second half of the year and was likely to remain so in the near-term.
“We saw the impact of higher interest rates in our first-half performance. However, our results softened in the second six months amid intense competition as customers seek the best deal,” McEwan said.
“This is all leading to some of the thinnest mortgage margins I’ve seen in my time in Australian banking.”
The Reserve Bank (RBA) began hiking interest rates in May last year, raising the cash rate from a low of 0.10 per cent to 4.35 per cent. Tuesday marked the board’s 13th hike to rein in stubborn inflation.
“Some customers are feeling it more than others and the RBA’s decision to again increase the official cash rate this week because of persistent inflation will increase the pressure on households,” McEwan said.
Westpac also announced its profits earlier this week, reporting a surge of 26 per cent in net profit to $7.2 billion for the year to September 30.
Banks hike interest rates
NAB was the first of the Big Four banks to pass on the RBA’s 0.25 per cent interest rate hike to variable-mortgage customers and select savings customers, with ANZ, Westpac and CBA following not long after.
NAB, ANZ and CBA's rate increases will be effective from November 17, while Westpac’s rate rise will take effect from November 21.