The June 2009 quarter looks like it was rougher for National Australia Bank, and maybe other banks, than NAB (and maybe others) suggested when last briefing the market on their March 2009 results (and more than half way through the June quarter).A third quarter trading update published yesterday by NAB in connection with plans to sell $2.75 billion in new shares provides some basic highlights on each of its main businesses.NAB said cash earnings for the June 2009 quarter were around $900 million. This compares with cash earnings for the March 2009 half year of $2.02 billion and average cash earnings over each of the six quarters to March 2009 of $990 million.Problem loans are increasing, most notably in the bank's institutional banking business and also in Britain, with the level of loan strife rising more modestly in Australian business and retail banking.The bank said the ratio of loans either 90 days past due or impaired, relative to gross loans, was 177 basis points June 2009, up from 138 bps at March 2009. NAB said the ratio of gross impaired assets to gross loans at nabCapital increased to 384 bps at 30 June 2009, up from 232 bps at March 2009. This is no drastic increase in the level of actual impaired loans over the quarter (at less than $100 million) but the figures are still of interest given the line advanced by NAB (and other banks) at their March half year briefings that there were few new troubled clients among their largest customers.In Britain the ratio of loans either 90 days past due or impaired increased to 259 bps at the end of the June quarter, up from 199 bps three months before.In New Zealand the ratio was 125 bps at June, up from 113 bps in March.And in business and retail banking in Australia the ratio increased 19 basis points to 129 bps over the June quarter.NAB said the group charge for bad and doubtful debts for the quarter was $1.06 billion, including a specific provision of $859 million. NAB said that about one third of this "related to a small number of individual name exposures". The collective provision B&DD charge was $205 million, "mainly reflecting further downgrades in customer credit quality across all businesses" according to the bank.The bank noted that collective provision balances increased by $115 million in the three months since March 2009.  NAB's specific provision increased by $450 million since March 2009, "attributable to a broad range of industries across all regions."To put that differently: NAB's specific provision increased by 35 per cent over the last quarter while the collective provision increased only four per cent over the quarter.In the midst of much market chatter about the timing of the global economic recovery, if any, and the merit of the recent rally in equity markets, if any, banks like NAB are starting to realise the flood of bad debts that was always likely.