NAB Posts Strong Q1 FY26 Result, Beating Expectations on Profit and Asset Quality
18 February 2026 — National Australia Bank (ASX: NAB) kicked off fiscal 2026 with a stronger-than-expected first quarter, reporting unaudited cash earnings of $2.02 billion for the December 2025 quarter — up 15% on the second-half FY25 quarterly average and 16% above the prior…
Headline Numbers The bank's unaudited statutory net profit came in at $2.21 billion for the quarter, while underlying profit grew 12% compared with the 2H25 quarterly average, driven by broad-based gains across all customer-facing divisions. Net interest margin (NIM) nudged up 2 basis points to 1.80%, though underlying NIM — stripping out Markets & Treasury income and the drag from liquid assets — was essentially flat as deposit tailwinds were offset by ongoing competition in lending. Revenue rose 6% on the quarterly average, and expenses were held broadly flat — a result CEO Andrew Irvine attributed to "disciplined execution" and productivity savings, even as the bank continued to invest in technology and front-line bankers. Comparing with Analyst Expectations NAB's Q1 result appears to have come in ahead of where many analysts had pencilled in expectations. Consensus heading into the update had anticipated modest revenue growth and pressure on margins given the competitive home lending environment and expectations of RBA rate cuts beginning to bite into replicating portfolio yields. On both fronts, NAB delivered more than expected. The 12% underlying profit growth was particularly notable. Analysts had broadly expected mid-to-high single digit growth, making the double-digit outcome a clear beat. The credit impairment charge of $170 million was also well below recent run rates — the 2H25 quarterly average was materially higher — suggesting asset quality is stabilising faster than the market had anticipated. Non-performing exposures fell 8 basis points to 1.47% of gross loans and acceptances, a meaningful improvement. On capital, the CET1 ratio of 11.48% came in slightly below the 11.70% recorded at September 2025, reflecting dividend payments and RWA growth of $6.0 billion. While some analysts had flagged capital as a watch point, the ratio remains comfortably above APRA's 10.25% minimum requirement, and the bank's leverage ratio held at 4.9%. Growth Drivers Volume growth was solid across the board. Total gross loans and acceptances rose 1% over the quarter to $792.5 billion, with business lending up 2% and housing lending up 1%. Business & Private Banking delivered 3% business lending growth with market share gains in SME lending — a key strategic priority for Irvine's leadership team. Home lending grew at 1.1x system (excluding Advantedge run-off), and the share of drawdowns via proprietary channels lifted from 41% in 2H25 to 46% in 1Q26 — a sign that NAB's push toward direct distribution is gaining traction. Customer deposits in Business & Private Banking and Personal Banking rose 3%, with transaction account growth of 6%. Outlook NAB reiterated FY26 guidance, targeting productivity savings of more than $450 million and operating expense growth of less than the 4.6% recorded in FY25. The bank completed the migration of Citi Consumer Business customers onto NAB systems during the quarter, removing a key integration risk. The Group has also raised $15.8 billion in term wholesale funding over the four months to January 2026, underpinning balance sheet strength heading into the remainder of the year. With asset quality improving, volumes growing ahead of system in key segments, and costs well contained, NAB's first quarter sets a constructive tone for FY26. The 2026 Half Year Results are expected on or around 4 May 2026.
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