National Australia Bank CEO Andrew Irvine has highlighted the potential risks from an escalating trade conflict between the United States and China, particularly if former President Donald Trump proceeds with proposed tariffs on US imports.
“I do worry about a global trade war between the two biggest global economies in the US and China,” said Irvine.
“I don’t think anyone wins in the global trade war, so hopefully the rhetoric is bigger than what we actually see on this one.”
Irvine acknowledged that while trade tensions could disrupt global trading patterns and adversely affect Australia, a robust US economy remained beneficial.
“Markets like certainty, and we now have certainty, and we know what we’re going to be dealing with for the next four years in terms of who’s going to be in power in the US. And I think, on balance, that’s positive,” he said.
Cash profit falls, earnings stable
Irvine’s comments came after NAB reported its cash profit dropped by 8.1% in the year to September 30, 2024, to A$7.1 billion, down from A$7.7 billion in the previous year.
Despite cash profit falling, NAB’s earnings were stable in the first half of the year, aided by growth in small and medium enterprise (SME) banking, where business lending rose by 8%.
However, the bank's personal banking segment experienced a significant 20% drop in cash earnings to A$1.17 billion due to lower revenue and higher expenses, compounded by margin pressures in home lending.
Revenue decreased by 2%, impacted by lower net interest margins and treasury income. Non-performing loans also saw a slight rise to 1.19%.
Nevertheless, Irvine is optimistic about the upcoming year, forecasting moderate interest rate relief and economic improvement.
“ Next (LON:NXT) year, we are forecasting moderate easing on the interest rate side, with the first reduction possibly coming in February or March.
"We’ve seen tax relief as well. And so we’re optimistic that next year will be better than this year. So there is light at the end of the tunnel,” he said.
NAB declared a final dividend of A$0.85 per share, totalling A$1.69 for the full year, up from A$1.67 in 2023.