National Australia Bank (NAB) investor relations material

Executive summary

• Underlying profit grew 6.4% year-over-year, supported by stable margins and broad-based credit growth, excluding large notable items and one-off charges.

• Cash earnings increased 7.1% year-over-year (ex-notables), while statutory profit declined 18-19.3% due to a $1,347m pre-tax ($949m after-tax) accelerated software amortisation charge.

• Interim dividend of 85 cents per share, fully franked, representing 72.5% of cash earnings (ex-notables), with a 1.5% DRP discount and partial underwrite to raise ~$1.8bn in capital.

• Customer advocacy and satisfaction improved, with positive NPS across all segments and recognition as Roy Morgan Major Bank of the Year 2025.

• Customer-centric strategy and technology modernisation are driving improved experiences and operational resilience.

Financial highlights

• Net operating income increased 5.9% year-over-year to $10,870m, with revenue up 3.1% half-on-half and net interest income up 8.5% year-over-year to $9,163m.

• Net interest margin improved by 11 bps year-over-year to 1.81%, with margins broadly stable excluding markets and treasury.

• Operating expenses rose 32.5% year-over-year to $6,365m due to the software amortisation; excluding this, expenses increased 5.1% or declined 0.5% half-on-half (ex-notables), with productivity savings of AUD 199m.

• Credit impairment charge was $706m, up $221m from the previous half, reflecting a $300m top-up to forward-looking provisions.

• Cash return on equity (ex-notables) at 11.6%; basic cash EPS (ex-notables) 117 cents.

Outlook and guidance

• Near-term outlook is more challenging due to inflation, higher rates, and Middle East conflict; economic growth expected to slow to 1.5% in 2026.

• Business credit growth expected to moderate from elevated first-half levels; long-term business investment outlook remains positive.

• No change to cost growth guidance; productivity benefits targeted at >$450m for FY26, with cost growth expected to be less than 4.6%.

• Dividend payout policy and CET1 capital target unchanged; DRP discount applied for the half, with flexibility for future periods.

• Focus on prudent balance sheet settings, disciplined cost management, and continued investment in technology and AI.