NAB FY26 result: Shares head for worst day since February 2025 as bad debts nearly double
NAB’s bad debt charge jumped 86% to $1.55bn, well above forecasts, as the bank braces for slowing growth and falling house prices.
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Mentioned
KEY POINTS
- Credit impairment charges rose 86% to $1.55bn, 13.5% above Macquarie’s forecast. Most came from business borrowers, with a further $403m added to forward-looking provisions.
- Cash earnings fell 13.4% to $6.14bn after $949m in one-off charges, driven by a software accounting change. Excluding one-offs, earnings were flat at $7.09bn.
- Net interest margin rose 6 bps to 1.80% and the 170-cent full-year dividend matched forecasts. NAB’s economists expect unemployment to reach about 5.5% by early 2028.
National Australia Bank (NAB) shares are on track to record its worst one-day decline since February 2025, down 6.2% to $38.58 at noon after bad debt charges for FY26 nearly doubled year-on-year, and well-above analyst expectations.
The bank also suffered after-tax one-off charges of $949 million for the year, driven by an accounting policy shift to write down and immediately expense software development costs, which dragged cash earnings down 13.4% to $6.14 billion.
The one-day decline has now flipped NAB into negative year-to-date territory, down 5.2%, despite being up as much as 18% for the year in late February.
FY26 at a glance
All comparisons are against Macquarie’s pre-result estimates.
Cash earnings down 13.4% to $6.14bn vs $6.36bn ests (3.4% miss)
Excluding one-offs, flat at $7.09bn
Underlying profit down 5.4% to $10.38bn vs $10.47bn ests (0.9% miss)
Credit impairment charge up 86% to $1.55bn vs $1.36bn ests (13.5% above)
Net interest margin up 6 bps to 1.80% vs 1.80% ests (in line)
Diluted cash earnings per share of 198.8 cents vs 207 cents ests (4.0% miss)
Final dividend of 85 cents, fully franked, taking the full year to 170 cents vs 170 cents ests (in line)
CET1 ratio of 11.87%, or 12.07% pro forma
Bad debts drive a sizeable miss
The impairment charge came in $184 million or 13.5% above Macquarie forecast, though underlying profit missed by less than 1%. Of the $1.55 billion charge, $1.08 billion related to individual customers, mostly business borrowers in the corporate and business banking books.
NAB also added $403 million to forward-looking provisions, citing: "We have strengthened provisioning to reflect a more challenging environment of slowing growth, declining house prices, higher interest rates and inflationary pressures."
Bad debts ran at 0.19% of loans, up from 0.11% and the highest of the past five years. Home loan arrears also rose, though fast loan growth kept the overall default ratio down 4 bps at 1.22%.
NAB’s economic outlook
NAB’s economists expect the economy to keep slowing, pointing to the 125 bps of RBA rate hikes since February 2026 to tackle inflationary pressures.
Its forecasts:
Real GDP growth of 1.4% in 2026 and 1.0% in 2027, then some improvement in 2028
Unemployment rising gradually to about 5.5% by early 2028
The RBA cash rate on hold at 4.85% “for a while”
The housing market correction adding downside risk to growth
On the consumer, Australian home lending balances grew 3.8%. NAB said it “maintained a disciplined approach to growth as the market became more challenging over 2H26."
The bottom line: NAB is still growing loans and deposits, and the all-important net interest margin and dividend came in line with expectations. But with the RBA cash rate at an 18-year high, a sixfold jump in home borrowers in negative equity and rising stress among small business owners servicing home loans from business income, it’s perhaps no surprise NAB booked a jump in impairments and set aside more for the road ahead.
NAB’s selloff comes on a day the S&P/ASX 200 is up almost 2%, rallying after the Democratic sweep at the US midterm elections. The other major banks would likely be trading higher if not for NAB’s result.
Ticker | Company | % Chg | Price | 1 Month | YTD |
|---|---|---|---|---|---|
JDO | Judo Capital | 3.2% | $0.97 | 3.8% | -45.8% |
MQG | Macquarie Group | 2.5% | $256.00 | 2.4% | 26.1% |
CBA | Commonwealth Bank | 0.3% | $166.73 | 9.6% | 3.8% |
BEN | Bendigo & Adelaide Bank | 0.3% | $10.68 | 4.4% | 0.8% |
BOQ | Bank Of Queensland | -0.2% | $6.96 | 7.8% | 6.0% |
ANZ | ANZ Group | -1.3% | $39.85 | 5.7% | 9.3% |
WBC | Westpac | -2.1% | $36.22 | 5.1% | -5.9% |
NAB | National Australia Bank | -6.3% | $38.59 | 0.2% | -8.7% |
Share price performance as at 12:30 pm AEDT, Thursday, 5 November 2026
While NAB’s economists expect slower growth and higher unemployment, investors are piling into consumer-facing and yield-sensitive parts of the market like retailers and REITs. The market, at least, seems to think there are better days ahead.
