Key Highlights

• NAB reported cash Earnings of $6.14 billion for the 2026 financial year, down 13.4 per cent on the previous year.

• Excluding them, reports described cash earnings as broadly flat at about $7.1 billion.

• reports on the result put net Operating Income at about $22 billion, up 5.8 per cent, supported by higher lending volumes and a better margin.

• Reports indicated that Business Loan balances grew by roughly nine to ten per cent, with Business and Private Banking cash earnings, excluding notable items, up about 10.7 per cent.

What does National Australia Bank (ASX:NAB)'s latest result tell investors about the state of Australian business lending? In short, NAB's full-year result to 30 September 2026, released on 5 November, showed a bank still growing its loan book and holding its dividend, but one whose reported profit was cut by a large accounting change and by a sharp rise in Credit Impairment charges.

The central development: a lower headline, a steadier core

NAB reported cash earnings of $6.14 billion for the 2026 financial year, down 13.4 per cent on the previous year. Much of that fall reflects large notable items rather than day-to-day trading. coverage of the result put those items at about $1.35 billion, mainly linked to a change in the bank's software Capitalisation policy, which was first flagged at the half-year. Excluding them, reports described cash earnings as broadly flat at about $7.1 billion.

That distinction matters because it separates an accounting change from the underlying earning power of the franchise.

Holding the payout while reported profit fell is notable, and it suggests management is comfortable with its capital position.

What NAB does and how it earns its money

NAB is one of Australia's four major banks, serving personal, business and institutional customers in Australia and New Zealand. Its distinguishing feature among the majors is a heavy emphasis on business banking, where it has historically held a encouraging share of lending to small and medium-sized enterprises.

Most Revenue comes from net interest income, the gap between what the bank earns on loans and what it pays for deposits and wholesale funding. Fees, markets income and wealth-related activities add to that. Its main reporting areas are Business and Private Banking, Personal Banking, Corporate and Institutional Banking and New Zealand Banking.

Operating performance in the 2026 result

Revenue was the brighter part of the picture. reports on the result put net operating income at about $22 billion, up 5.8 per cent, supported by higher lending volumes and a better margin.

Business lending was the standout. Reports indicated that business loan balances grew by roughly nine to ten per cent, with Business and Private Banking cash earnings, excluding notable items, up about 10.7 per cent. Corporate and Institutional Banking and New Zealand Banking were weaker, according to the same coverage.

The weak spot was credit quality. Credit impairment charges were reported at about $1.55 billion, up from $833 million, including a build in collective provisions and larger individually assessed provisions, mostly in business lending. Loans more than 30 days overdue also rose between March and September, according to one report. NAB attributed the higher charges partly to more challenging economic conditions.

Costs were reported up about 4.5 per cent. In its third-quarter update on 17 August 2026, NAB had said its common Equity tier one ratio stood at 11.93 per cent, against an operating target of more than 11.25 per cent, and that Australian business lending had risen 2 per cent in the quarter.

Sector conditions and competitive position

Australian banks are navigating elevated interest rates and a cautious business sector. At the half-year, chief executive Andrew Irvine pointed to higher fuel costs, Supply disruptions and Inflation weighing on businesses, which were becoming more careful with spending.

Competition is most intense in home lending, where lenders fight for Volume and margin. NAB has been shifting more of its home loan origination to its own proprietary channels; its third-quarter update showed these at 50.9 per cent of drawdowns, up from 47.7 per cent in the first half.

In business banking NAB is comparatively well placed, and the lending growth in this result supports that view. However, faster growth in cyclical segments can bring higher credit costs, as this year's provisioning shows.

Cost reset and the outlook for 2027

NAB also announced a restructuring. Reports indicate up to 2,500 roles will be removed by September 2027, with roughly $300 million of related costs expected in 2027. For the 2027 financial year, one report said management expects underlying cost growth below 3 per cent and Investment spending close to the 2026 level of about $1.8 billion. These are management intentions rather than guaranteed outcomes.

Mr Irvine was reported as expecting a difficult year, with household consumption slowing and a housing market downturn weighing on activity. Investors will want to see whether cost savings can offset the pressure on revenue and credit.

Key risks and what to watch

Several uncertainties stand out:

• Credit quality: further deterioration in business lending, where NAB is most exposed, could keep impairment charges elevated.

• Margins: competition for deposits and loans, and any change in interest rates, can compress the net interest margin.

• Execution: delivering a large restructuring while meeting cost targets carries operational risk.

• Housing and consumer demand: a downturn would affect volumes and arrears.

• Regulation and capital: changes to capital rules or conduct requirements could alter returns and dividends.

Overall, the result shows growing business lending and a maintained dividend, alongside rising bad-debt costs and a slower economy.