Another of the big four banks has boasted record profits as Australians battle their budget to afford mortgage repayments in light of skyrocketing interest rates.
NAB said the high interest rates as a result of the Reserve Bank of Australia trying to curb inflation had benefited its revenue.
The bank announced an 18.7 per cent rise to $2.15 billion in cash earnings for the first quarter of 2023 compared to the same period in 2022.
The unaudited statutory net profit was $2.05 billion while the bank’s net interest rose 12 basis points to 1.79 per cent.
Compared to the second half of the 2022 financial year, cash earnings rose by 23 per cent.
The bank acknowledged the surging interest rates have caused economic growth and house prices to “soften” as loan repayments rise.
As a result, the bank’s credit impairment charge, which refers to the drop in value of an asset such as a house, was $158 million, reflecting the “impact of lower house prices and business lending volume growth”.
“We know these changing circumstances, combined with cost of living pressures, will create difficulties for some of our customers,” CEO Ross McEwan said.
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“Overall though, continued strong employment conditions and healthy savings buffers mean most customers look well placed to manage through this period.
“We have started FY23 with a strong financial performance and our strategy is continuing to drive targeted growth across our business.”
Lending and deposits increased by 1 per cent over the December quarter for NAB.
Many household budgets across the country have been stretched by a cost of living crisis and rising home loan repayments.
Interest rates have risen sharply since May last year after the central bank started hiking the cash rate from a historic low of 0.10 per cent to the now 3.35 per cent.
The nine consecutive rate hikes have left borrowers scrambling to find money in the kitty for their mortgage repayments.
For a $500,000 loan, borrowers have had repayments increase by $969 a month.
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