National Australia Bank Ltd.

The rating outlook on NAB is stable. Australia's economic prospects over the next two years are sound. This is despite subdued GDP growth due to elevated interest rates and the slowing economies of major trade partners. We forecast unemployment in Australia will increase somewhat but remain low in a historical context. We expect modest growth in house prices over the period. Strong immigration-driven population growth along with limited new housing supply should continue to support house prices. NAB should maintain sound earnings and its credit losses should remain low, at about 15 basis points (bps) of customer loans. We project our RAC ratio for the bank will remain strong at 10.5%-11.0% over the next two years. The rating on NAB

...National Australia Bank Ltd.'s (NAB) strong market position and focus on low-risk lending in Australia and New Zealand will continue to support its earnings. The bank focuses on retail, small and midsize enterprise (SME), and commercial banking. Despite rapid increases in consumer prices and interest rates, we see a sound outlook for the economies of both countries. NAB's capitalization will remain a credit strength. We project our risk-adjusted capital (RAC) ratio for the bank will remain strong at 10.5%-11.0% over the next 24 months. As of March 31, 2024, our RAC ratio for NAB was 11.3%. Credit losses should remain low and close to pre-pandemic levels over the next two years. We believe low unemployment levels, modest economic growth, and a change in spending patterns in Australia and New Zealand will shield most borrowers against elevated interest burdens and consumer prices....

Full Report