The National Australia Bank Ltd (ASX: NAB) share price is the centre of attention after reporting its FY26 first-quarter update.
NAB is one of the largest banks in Australia, with a significant presence in the business banking sector.
NAB FY26 first quarter update
The ASX bank share reported that for the three months to 31 December 2025, its revenue rose by 6%, or it grew 4% excluding markets and treasury (M&T). It benefited from volume growth, higher fees & commissions, and lower customer remediation.
Year on year, housing loans grew by 5% to $442.4 billion, business loans grew by 7% to $336.2 billion and total customer deposits increased 6% to $667.5 billion.
NAB reported that its net interest margin (NIM) – how much money it makes on its loans while including the cost of funding – rose 2 basis points (0.02%) to 1.80%. Excluding M&T, the NIM was stable thanks to “improved deposit outcomes including higher earnings on deposit replicating portfolios”, offset by lending competition.
On the costs side of things, the business reported its expenses were “broadly flat”. Technology spending rose and personnel-related costs were higher because it added more bankers and operations staff in FY25. But, those increases were offset by productivity benefits, lower restructuring expenses, and lower payroll review and remediation costs.
NAB also reported that its credit impairment charge was $170 million for the quarter, a reduction of 36% year on year, or down 26% quarter on quarter.
NAB’s percentage of non-performing loans compared to the total loans and acceptances was 1.47% at December 2025, the lowest quarterly reading since December 2024 and the first time it was a quarter on quarter reduction (from 1.55% at September 2025) in more than two years.
Profitability
The ASX bank share reported it generated statutory net profit of $2.21 billion, while cash earnings were $2.02 billion.
Cash earnings grew 16% year on year, or the rise was 15% compared to the quarterly average of the second half of FY25.
NAB’s quarterly underlying profit rose 12% compared to the FY25 second half quarterly average, with 11% growth year on year.
Outlook for the NAB share price
It’s impressive to see the ASX bank share grew earnings, including underlying earnings, by more than 10%.
The bank is targeting productivity savings of more than $450 million for FY26, along with the goal of FY26 operating expenses growth being less than FY25’s growth figure of 4.6%.
NAB is doing the right things to deliver earnings growth, though it will need to continue its strong level of profit generation in its business lending because household lending competition is strong from places like Macquarie Group Ltd (ASX: MQG).
NAB reported market share gains in small and medium enterprise (SME) lending and total business lending, as well as its Australian home lending.
I’d be very happy as a shareholder, but I don’t think I can call NAB cheap, considering it’s trading at a higher price/earnings ratio (p/e) ratio than it has in the past. Time will tell whether it can maintain this level of revenue growth (of mid-single digits).
There are other ASX dividend shares I’d look at first.
