NAB gains on borrowing rise

City A.M. Reporter
NATIONAL Australia Bank (NAB), the nation’s top lender, picked up market share in home and business lending in the December quarter and said it expects business credit demand to pick up in late 2011.

NAB reported an 18 per cent rise in first-quarter cash profit yesterday, just ahead of analysts’ forecasts, on lower bad debt charges and as its strategy of slashing fees and keeping rates lower than rivals helped it win new business in a subdued environment.

Investors saw the result as positive for NAB and the bank sector, although uncertainty remains over the Australian government’s plans to curb the big banks’ clout and the regulator’s plans to implement the new Basel III capital buffer rules.

“It does sound like NAB is gaining market share and growing a little better than the system,” said Craig Young, analyst at Tyndall Investment Management.

NAB’s December quarter cash profit of A$1.3bn (£822m) was ahead of analyst forecasts for around A$1.23bn and put NAB on course for a record half-yearly profit.

NAB’s market share in home loans grew by 31 basis points to 13.6 per cent, while its business banking market share grew by nearly one percentage point to 23.8 per cent in the quarter, outpacing a decline in business lending in the banking sector.

NAB reported that its capital position remains strong with a Tier 1 ratio of 8.96 per cent.