Skyrocketing interest rates have helped National Australia Bank post a whopping $4.1 billion in profit, a jump of 17 per cent compared to the same period last year.

NAB was the first major broker to reveal its half-year earnings results, which increased from $3.48 billion in 2022.

Chief Executive Ross McEwan said bank profits have been boosted by higher interest rates and a boom in business lending.

“The higher interest rate environment has also been a major short-term revenue driver this period,” he said.

Interest rates have increased from 0.1 percent to 3.85 percent since May of last year.

McEwan also believes there are encouraging signs that inflation and interest rates in Australia are peaking, and that the nation would avoid a “sharp economic correction.”

But he warned that the full impact of the cost-of-living crisis was still emerging and he expected economic growth to slow and unemployment to rise.

“In Australia, consumption and overall growth have started to soften, reflecting the impact of monetary policy tightening,” he said.

“There are also encouraging signs that inflation is beginning to moderate, which, combined with a deteriorating global growth outlook, means that the official cash rate is likely to be at or near its peak.”

Overall, the bank’s revenue rose 19.3 percent for the first half of the fiscal year, with NAB’s acquisition of Citi’s consumer lending business adding 2.7 percent to the top figure.

The combined earnings of three major banks were expected to hit $11.7 billion.

NAB missed the $4.2bn prediction, while ANZ is leaning to report an annual cash profit of $3.8bn and Westpac $3.8bn, an increase of more than 10 per cent.

While mortgage bad debts fell, McEwan said there was a rise in commercial loan arrears in the period, while overseas bank failures were “on the rise.”

“This more challenging environment is not unexpected, and we feel well placed to navigate this period and continue to grow,” he said.

However, he cautioned that the bank was closely monitoring the impact of higher interest rates “against a slowing economy and increasing competition.”

“The impact of higher interest and living costs on household spending and the broader economy is becoming more apparent and we have a range of options available to customers who need support,” he said.

NAB’s record profit underscores why the bank’s overworked and underpaid staff must receive fair wage increases in the current round of company deal negotiations, the Financial Sector Union (FSU) has urged.

He said the bank’s “enormous” profit has come as a result of the hard work of more than 30,000 employees “who have watched in amazement as the bank’s top executives continue to reject FSU’s demands for a decent pay raise and an end to ‘sweatshop’ working conditions”.

FSU National Secretary Julia Angrisano said her members, like the rest of the community, are experiencing the pain of inflation in every financial decision they make and now NAB has the opportunity and responsibility to do the right thing.

“NAB is well aware that to get even close to becoming a good employer, it must raise wages and reform its exploitative working conditions,” he said.

“If CEO Ross McEwan and NAB’s team of highly paid senior executives were serious about becoming a ‘top quartile’ employer, they would eliminate the discretionary pay system and make sure their colleagues could get out of the work on time.

“The FSU is asking the NAB to resolve these ongoing negotiations for a new Business Agreement on terms that ensure members can afford the cost of living crisis for themselves and their families.”

Meanwhile, the Australian Conservation Foundation has welcomed NAB’s increased transparency about its nature-related risk exposure and urged the bank to set ‘no deforestation’ targets and attach relevant conditions to its loans to agribusinesses.

“Behind every agribusiness that clears wildlife habitat for grazing cattle is a bank loan or mortgage,” said ACF corporate activist Jonathan Moylan.

“We know that around half of Australia’s GDP has a moderate to very high direct dependency on nature, so banks need to be open about their exposure to the risk of financing nature destruction and set targets to minimize it.

“NAB’s announcement that it will assess water-related risks in its agribusiness portfolio is welcome, but as Australia’s leading agribusiness lender it must also assess, disclose and set targets to address biodiversity loss and end the extinction and deforestation.

“NAB has yet to set targets for nature or disclose its portfolio-wide impacts, risks and dependencies on nature. Banks should not lend to agribusiness without any conditions related to deforestation.”

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