NAB profits bounce back after recent rate increases
NAB reported a cash profit of $3.29 billion today, with a net statutory profit of $2.55 billion, which bounced back from a loss of $1.74 billion in the March 2016 half year.
Although the bank said the 2.3% boost in cash profits “primarily reflects reduced losses from discontinued operations,” Mozo data shows that extra interest paid by home loan customers after the recent round of rate hikes makes for an extra bonus for the big bank.
All four big banks, along with a number of smaller lenders have been increasing home loan interest rates across product ranges in recent months. Interest-only borrowers and investors bore the brunt of the rate increases, in response to regulations by APRA designed to limit “high-risk” lending.
"The operating environment for banks remains challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations," NAB chief executive Andrew Thorburn said.
The recent interest only rate hikes alone resulted in an extra $160 million in interest for NAB, and all up, the bank stands to make an extra $298 million in interest over a 12 month period from the recent rate hikes.
Similarly, ANZ, which announced a $3.4 billion profit on Tuesday, is set to make an extra $263 million in interest thanks to its recent interest-only rate hikes.
Despite tighter regulations around risky lending, NAB home loan lending in general was up 5.8% or $17.7 billion from March 2016. On the other side of the fence, customer deposits also increased by $22.9 billion, or 6.1%.
Technology that makes banking simpler for Aussies may have something to do with the rise in lending. Thorburn said that as NAB continues to develop and integrate its personal banking platform into its wider network, 55% of customers are now receiving unconditional home loan approval within 5 days, up from just 7% in September 2016.
Westpac is scheduled to announce its profits on Monday.