The National Australia Bank has recorded an eight percent rise in overall earning, making a profit worth $1.7 billion for December.
The report came as a surprise after NAB demerged from its UK business worth $3.2 billion recently. The unaudited data showed the net profit was almost $1.5 billion. The first quarter of the bank depicted more expense of up to five percent, which had been overlooked because of its two percent increase in revenue. The increase was an average of the two previous quarters, which was recorded as a result of better lending and improved management of wealth and resources.
NAB also received an advantage from its rise in net interest margin, which is the difference between the interest rate paid by the bank to borrow money and the rate at which it is lent. The quarterly report shows that the cash profit is around three percent more than what was recorded in the September quarter in 2015, making the bank cross last year’s $5.84 billion cash profit for the whole year.
The first quarter report of 2016 indicated the fall of debt of NAB by 52 percent, making it $84 million as a result of lower effect on the bank of the declining mining industry. According to analysts, the bad debt level has fallen, generating strong revenue for the bank, but the level might increase in the future, thereby depressing profits. “This sharp reduction in bad debts is not sustainable,” Omkar Joshi, an investment analyst at Watermark Funds Management, said as quoted by the Sydney Morning Herald.
CEO Andrew Thorburn said that Australian banking has posted quite a better revenue growth. However, the banking business seems more intense with a rise in funding costs. “NAB is a stronger, more focused bank, positioned to deliver growth for shareholders in its core markets, as we drive towards our vision of becoming Australia and New Zealand’s most respected bank,” Thorburn said as quoted by Business Insider.