NAB’s business borrowers are feeling stressed, with a “continued broad-based deterioration in the Business & Private Banking business lending portfolio” over the June 2024 quarter.

In a trading update on Friday NAB said the ratio of non-performing exposures to gross loans and acceptances increased by 11 bps from March 2024 to 1.31 per cent in June.

The bank also called out  “higher arrears for the Australian mortgage portfolio” but did not put a number on arrears.

Surprisingly, NAB recognised a credit impairment charge for this quarter of $118 million. This is down from charges of $193 million and $170 million in the two prior quarters.

The NAB trading update echoes worsening trends in asset quality reported by Commonwealth Bank last week. The data from both banks is also consistent with the gloomy findings reported all year by CreditorWatch in its monthly Business Risk Index.

NAB said its net profit in the third quarter was nine per cent more that the average quarterly profit of $1.75 billion in the bank’s first half.

Lending balances, NAB said, rose 1 per cent over the June quarter, “supported by 3 per cent growth in Australian SME business lending as we continue to prioritise growth in our SME franchise. 

“In Australian home lending, our growth was sub-system at 1 per cent. 

“Balancing returns and growth in this dynamic market will remain important.”