NAB update confirms better bad debts but slower growth
NAB's third-quarter update brought with it another buyback, confirming that while extra capital is not needed to cover bad debts, it's also not needed to fund slowing growth.
We’ve had Commonwealth Bank and Bendigo and Adelaide Bank full-year earnings reports and today National Australia Bank released a third-quarter trading update. So, the market leader, the biggest regional and one of the lesser majors.
That spread of reports has etched a fairly clear picture of the sector, and what is clear above anything else is there is too much capital in the system and not enough to do with it. But, reassuringly, it also shows the slowing economy is not yet causing credit issues.
From the capital perspective, a slowing economy means the opportunity to lend is lower, while the robustness of business and household balance sheets shields the banks from bad debt write-offs.
NAB today announced it was buying back $1.5 billion in equity, saying “we acknowledge the challenging environment for our customers. Nonetheless, we're pleased to observe that most customers are displaying resilience, with only a modest degradation in asset quality in 3Q23.”
