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(Bloomberg) — National Australia Bank Ltd. missed first-half profit estimates as higher software costs and the deteriorating economy pushed up credit provisions, offsetting robust loan growth.
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Cash earnings came in at A$2.64 billion ($1.91 billion) in the six months to March 31, according to a statement on Monday. That fell short of the A$3 billion average forecast of analysts polled by Bloomberg.
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Rising energy prices are stoking inflation in Australia, where lenders are setting aside larger buffers in expectation of a souring economic outlook. NAB Chief Executive Officer Andrew Irvine is prioritizing growth in the key business banking division as well as focusing on driving deposit growth and strengthening proprietary home lending.
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Changes to the firm’s software capitalization policy, as previously announced last month, lowered cash earnings by A$949 million, Irvine said. Taking this into account, cash earnings were about 2.3% higher than the second half of last year, the statement said.
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“Geopolitical tensions have created a more volatile macro economic environment,” Irvine said in the statement. “We enter this period in good shape” and actions taken in the first half to bolster the balance sheet will allow the firm to continue to grow and support customers, he added.
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Profit at NAB’s business and private banking division rose to A$1.85 billion with lower credit impairment charges, as revenue benefitted from lending volume growth. The firm’s net interest margin climbed three basis points to 1.81%.
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NAB will pay an interim dividend of 85 Australian cents per share.
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Last week, ANZ Group Holdings Ltd.’s first-half profit surpassed projections on signs of improvement with the bank’s overhaul by CEO Nuno Matos. Westpac Banking Corp. is due to report results on Tuesday.
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(Adds detail from CEO in fifth paragraph)
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