Why is National Bank (ASX: NAB) down ~6%
National Australia Bank (ASX: NAB) has fallen ~6% following a disappointing FY26 result, with weaker earnings and a sharp increase in bad debt provisions weighing on sentiment. The selloff comes despite a very strong post mid-term broader market, highlighting company-specific concerns over credit quality and profitability.
- Cash profit fell 13% to $6.14bn, well below consensus expectations of $6.59bn — a substantial $450m miss.
- Second-half cash profit of $3.50bn also disappointed, compared with forecasts of $3.69bn.
- Credit impairment charges almost doubled to $1.55bn, from $833m a year earlier, with the deterioration concentrated in corporate, institutional and business banking.
- Operating income rose 5.8% to $22.01bn, broadly meeting expectations, suggesting the main problem was rising credit costs rather than revenue growth.Management struck a cautious tone, with CEO Andrew Irvine highlighting persistent inflation and the potential for a housing market correction as key economic risks.
Importantly, NAB’s weakness extends beyond today’s result. The stock has fallen more than 8% YTD, compared to a +10% gain by top performer ANZ.
NAB’s revenue growth remains encouraging, but the sharp deterioration in credit impairments is difficult to overlook. We believe investors will want clearer evidence that bad debts are stabilising before confidence returns, particularly given the challenging economic outlook.
- MM continues to prefer ANZ, which we hold, over NAB.
