National Australia Bank conducted a short market briefing on Friday to elaborate on its three-page quarterly trading update, in what may prove to be a regular event.One business highlight cited by Cameron Clyne, the bank's new managing director, was that the bank was increasing its level of business lending in Australia at 1.3 times system growth and that the bank aimed to continue to grow above system in business lending.Margin management in this segment was, he said, "effective".Clyne said while NAB cut interest rates on most home loans in the bank's Australian mortgage portfolio by 100 basis points last week "it was unlikely we will be able to pass on in full future rate cuts".Clyne did not take the trouble to note that NAB's subsidiary Bank of New Zealand has not passed on anything like the reduction of 150 basis points in the cash rate in that market two weeks ago (and nor has any New Zealand lender).NAB published a couple of measures of credit quality. The group charge for bad debts in the December 2008 quarter was $824 million, broken into a specific provision charge of $521 million and a collective provision charge of $303 million.Loans more than 90 days overdue increased to 108 basis points at December 2008 from 83 basis points at September 2008.NAB appeared to suggest there would be a close correlation between the rise in loans classified as 90 days past due and a rise in provisions for bad debts in later reporting periods, though efforts by analysts on the conference call to have the chief financial officer, Mark Joiner, elaborate on this relationship were unsuccessful.Clyne confirmed that there were no more prominent or "name" lending losses in the first quarter, and the top three provisions related to well known, troubled credits.One factor lifting NAB's first-quarter profit was higher trading income, a trend Clyne stressed was due to customer flows and not proprietary trading. Market chatter holds that, across the major banks as a whole, proprietary trading is in fact an important driver of trading profits in current conditions.On the controversy over the sustainability of NAB's dividend, Clyne simply reiterated the position offered by the bank at the annual meeting before Christmas, which boils down to "we'll do our best".Some analysts are sceptical that NAB's profit will be sufficient to maintain its dividend and that any attempt to do so would require an impossibly high payout ratio.Clyne declined to be drawn on strategic questions such as the merit of the bank's investment in Britain. NAB will brief the market on its strategic review on March 12.