National Australia Bank’s Q1 net flat at US$986mln

Subdued credit growth and fierce competition caused NAB to lag behind rivals.

National Australia Bank Ltd., Australia's fourth-largest bank, posted fiscal first-quarter profit that was unchanged from a year ago, lagging behind rivals that reported higher earnings in a strengthening economy.

The Melbourne-based bank's unaudited cash earnings in the three months ended Dec. 31 of about A$1.1 billion (US$986 million) matched the result in the same period a year earlier. Earnings included a bad debt charge of A$739 million (US$666.57 million), compared with A$824 million (US$743.3 million) a year ago.

The stock fell as Chief Executive Officer Cameron Clyne said loan growth was muted and increased competition and higher funding costs squeezed margins.

Commonwealth Bank of Australia, the country's largest bank, posted record profit this month, and Westpac Banking Corp. this week said the worst of the crisis was over as demand for credit and fewer defaults boosted income.

"After Westpac there was an assumption there would be the same sort of result, but that didn’t happen," said Chris Hall, who helps manage about $3.5 billion (US$3.16 billion) at Argo Investments in Adelaide. "In contrast with Westpac, margins were flat and revenue was flat. The competition they are facing in personal banking is really crimping their margins."

View the full story in Business Week.