NAB scored an expectations beat on its results on Wednesday morning, but echoes of market warnings came attached.

By the numbers

National Australia Bank has reported a $3.583 billion cash earnings result for the first half of FY25, up 0.8% from the prior half and 1.0% higher year-on-year. Statutory net profit came in slightly lower at $3.407 billion, down 1.7% on 2H24.

Group revenue rose 1.7% to $10.281 billion, driven by stronger performance in the Markets and Treasury division. However, excluding that uplift, revenue fell 1.1% as lower margins across the bank offset underlying volume growth. Net interest margin remained steady at 1.70%.

NAB's Corporate and Institutional Banking division lifted cash earnings by 4.1%. Business and Private Banking, meanwhile, rose 1.4%. New Zealand Banking delivered the biggest improvement, up 12.5% in local currency. Personal Banking fell 6.8% on lower margins and higher credit charges.

As part of the result, the nation’s largest business lender issued a dividend of of 85 cents per share. For those keeping track, that's one cent up from its previous year’s dividend. 

NAB’s earnings beat saw the bank close up 1.6% on Wednesday at $35.87 a share.

Risk commentary reveals an unsteady outlook

On Monday this week, we heard Westpac report its results, along with a bit of a warning for the oncoming storm of global uncertainty.

As part of its risk disclosures, we’re now seeing almost identical commentary from NAB. The message? Batten down the hatches in 2025.

In its latest risk disclosures, National Australia Bank has warned that rising geopolitical tensions and global trade disruptions remain key threats to its operating environment. The bank specifically called out the impact of tariff regimes, pointing to ongoing trade friction between the United States and China, and the risk of retaliatory restrictions that could affect Australian exporters.

NAB risk analysts have identified a range of factors that could play a role in upsetting the global apple cart, including (but of course not limited to):

“Elevated geopolitical instability due to the Russia-Ukraine and Middle Eastern conflicts… rising prices for oil and other commodities, volatility in capital markets and foreign currency exchange rates, rising interest rates and heightened cybersecurity risks.”

Then it highlights ongoing “tensions between the United States and China” which could cause “a reescalation of tensions with the Chinese government leading to a risk of trade restrictions being imposed on Australian exports.” Of course, this was before NAB's risk hawks knew that envoys from the US and China would be meeting in Switzerland (the country, not Peter's house) on the exact same day their results were revealed to the market.

And then of course, there are the persistent threat of Trump’s reciprocal tariff regime, currently on pause but certainly not out of the minds of NAB’s line of risk managers.

“The introduction of tariff regimes by the United States and retaliatory tariffs introduced by its trade partners have increased trade tensions and ultimately could disrupt trade between major economies,” NAB highlighted in its report.

With Australia and New Zealand both heavily reliant on trade, NAB noted that any further escalation in global tariffs or supply chain disruptions - even like the ones caused by the current conflict in the Red Sea - could weigh on customer performance and increase credit losses.

On this week’s Switzer Investing TV, Chris Haynes of Equity Trustees said that this global unease is shared, especially when it comes to banks right now.

“We’ve had this flight to the banks in recent times thinking they’re perfectly safe… but the margin pressure is real” he said adding that investors are buying “the best house in the street and don’t care what they pay for it”.

We’ll see if the echoes of this uncertainty play out in ANZ Bank’s results on Thursday morning.

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