National Australia Bank chief executive Ross McEwan says demand for new business loans is highest in regional areas as farmers bounce back from the drought and new homeowners move to country towns.
Mr McEwan said the countrys biggest business bank had seen record demand for new loans over the past six months which was across the board but particularly pronounced in regional and agricultural sectors of the economy.
NAB chief Ross McEwan has warned against government spending cuts as the economy bounces back from COVID-19.Credit:Eddie Jim
Farmers are having a good year after many bad years, Mr McEwan said. People are holidaying in regional Australia too. Were seeing regional and agricultural areas are very strong. It works towards our strength were big in those areas.
Mr McEwan said despite the economy showing signs of improvement, he warned against winding back government stimulus packages ahead of the federal budget next week. Now is not the time to make big moves to get back into surplus, he said.
NAB reported on Thursday the number of new business accounts was 16 per cent higher than last year after the bank reported cash earnings of $3.3 billion for the half, a 48.1 per cent jump on the previous period.
The bank exceeded market expectations in paying shareholders an interim dividend of 60¢ per share, double the amount paid at the same time last year, which Mr McEwan attributed in part to record demand for credit.
We are seeing a pipeline growing that we havent seen for years and years and years, Mr McEwan said. Weve got more bankers being supported by more associates than weve had for probably decades.
A key driver of the banks rising profits was the reduction in its overall credit impairment provision. NAB followed the other major banks in writing back its allowance for bad loans, reducing the provision by $128 million compared to an increase of $1.2 billion last year. While the overall allowance was reduced, NAB increased the provision for aviation a sector that will remain under strain until international borders reopen.
In a breakdown of the banks key divisions, NAB reported cash earnings in its flagship business bank declined by 10.3 per cent to $1.2 billion over the past 12 months due to additional resources allocated to supporting customers through COVID-19.