In a funny way, the success of the turnaround that Ross McEwan has engineered at National Australia Bank over the past three years can be judged by what’s absent from the bank’s full-year results, as much as what is actually there.– no customer remediation provisions, no impairments on struggling business units, no losses on asset sales, no capitalised software charges.
In personal banking, NAB’s net promoter score is the highest of its big four peers, and loan volumes rose 7.1 per cent across 2022, or 1.1 times growth across the broader system. In part, that’s because of the continued growth opportunities he sees in business lending. But it’s also because McEwan is becoming concerned about the conditions he sees in the mortgage market – although not for the reasons you might think.As you would expect of an Australian bank staring down the barrel of rising interest rates and aNAB has been doing plenty of stress-testing of its mortgage book.
McEwan acknowledges that will change as rates keep climbing, but this isn’t his main reason for pulling back from mortgages. Instead, he says the home loan game remains extremely competitive for a few reasons. And finally, wholesale funding costs are rising, putting further pressure on margins in the mortgage market.
This attitude is partly why NAB’s growth in second-half cash earnings of 6 per cent doesn’t look as explosive as its rivals; ANZ grew cash profit by 9 per cent in the second half, whileMcEwan says NAB tweaked its risk settings in mortgages in November and May, and continues to adjust serviceability buffers.
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