The National Australia Bank Ltd (ASX: NAB) share price has dropped more than 1% after reporting its FY25 result.
FY25 result
NAB reported a number of financial figures in its result for the 12 months to 30 September 2025:
- Net operating income increased by 2.9% to $20.8 billion
- Expenses climbed 4.6% to $9.85 billion
- Credit impairment charge worsened by 14.4% to $833 million
- Cash earnings fell 0.2% to $7.09 billion
- Net profit down 2.9% to $8.76 billion
- Final dividend per share flat at $0.85
- Full-year dividend per share up 0.65% to $1.69 per share
Performance breakdown
The business reported key drivers for revenue growth were volume growth and higher markets & treasury income, partially offset by higher customer-related remediation charges and the impact from business disposals and run-offs.
Gross loans and advances (GLAs) increased by 5.9% and deposits increased by 7.4%.
On the net interest margin (NIM), the underlying NIM fell 1 basis point (0.01%) after excluding a 2 basis point (0.02%) increase from markets & treasury and a 2 basis point benefit from lower liquid assets. The NIM is how much profit a bank is making on its lending, taking into account the loan interest rate and what it’s paying for funding (term deposits and so on). The underlying decline was largely due to its higher cost of funding (including the cost of deposits).
Expenses increases partly because of $130 million related to a payroll review and remediation charges. There were also higher personnel and technology-related costs, partially offset by productivity benefits and lower costs related to the group’s enforceable undertaking with AUSTRAC.
The credit impairment charge increased to $833 million because primarily of customers in the group’s lending portfolio and to a lesser extent its unsecured lending retail portfolio.
Its percentage of non-performing loans increased from 0.95% in FY22, to 1.13% in FY23, to 1.39% in FY24 and FY25 was 1.55%. Business lending was the driver here.
In terms of the divisional performance:
- Business and private banking cash earnings rose 1.6% to $3.3 billion
- Personal banking cash earnings climbed 9.9% to $1.25 billion
- Corporate and institutional banking cash earnings climbed 4.7% to $1.85 billion
- New Zealand banking cash earnings rose 2.8% to $1.49 billion
Outlook for the NAB share price
The bank said that it’s optimistic about the outlook, and that NAB has a clear strategy. It’s “well placed to manage” the bank for “the long term and deliver sustainable growth and returns for shareholders.”
NAB said it has a few key priorities including growing business lending, driving deposit growth and strengthening its own channels of home lending (as opposed to brokers).
Ultimately, the bank will need to grow profit to excite investors further, in my opinion. Flat profit isn’t going send the NAB share price sustainably higher.
There are other ASX dividend shares I’d rather buy with more growth potential.
