National Australia Bank Ltd (ASX: NAB) shares are charging higher on Wednesday.
In morning trade, the banking giant's shares are up 6% to a record high of $47.96.
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NAB shares climb on update
Investors have been buying the big four bank's shares after it delivered a strong first-quarter trading update.
According to the release, for the December 2025 quarter, NAB reported cash earnings of $2.02 billion. This is up 15% compared to the average quarterly result in the second half of FY 2025.
The bank's statutory net profit came in at $2.21 billion and its underlying profit rose 12%, supported by a 6% lift in net operating income and lower credit impairment charges.
Net interest income increased 3% over the prior half average, while total net operating income rose 6%. Excluding Markets & Treasury income, revenue grew 4%, reflecting volume growth, higher fees and commissions, and lower customer remediation costs.
Another positive was that NAB's net interest margin edged up 2 basis points to 1.80% for the quarter. Excluding Markets & Treasury and liquid assets, margins were broadly stable, with improved deposit outcomes offsetting ongoing lending competition.
In addition, it revealed that its expenses were broadly flat over the quarter, as higher technology and personnel costs were balanced by productivity benefits and lower remediation and restructuring expenses.
Lending and deposits growth
NAB's business lending continued to be a standout performer. Australian business lending rose 2% in the quarter, including 3% growth in Business & Private Banking.
Housing lending also strengthened, growing 1.1 times system (excluding Advantedge run-off).
Customer deposits increased 1% over the quarter to $667.5 billion, with solid growth in transaction accounts.
Asset quality improves
Another highlight was that the bank's asset quality showed further signs of resilience.
Its credit impairment charge was $170 million for the quarter, and the ratio of non-performing exposures to gross loans and acceptances fell 8 basis points to 1.47%.
Provision coverage remains strong, with the collective provision to credit risk-weighted assets ratio at 1.31%.
Strong start to FY 2026
NAB's CEO, Andrew Irvine, was pleased with the bank's start to the year. He said:
We have started FY26 strongly. Underlying profit rose 12% compared with the 2H25 quarterly average, driven by increases across each of our customer facing divisions and a supportive Australian economic environment. Pleasingly, asset quality outcomes also improved over 1Q26 and we have maintained appropriate balance sheet settings.
Disciplined execution of our strategy has delivered further progress this quarter across our key priorities of growing business banking, driving deposit growth and strengthening proprietary home lending. Australian business lending rose 2% including 3% growth from Business & Private Banking (B&PB), with market share gains in SME and total business lending. Australian home lending grew 1.1x system excluding Advantedge run-off, with drawdowns via proprietary channels improving from 41% in 2H25 to 46% in 1Q26.
Speaking about its outlook, Irvine added:
We continue to target productivity savings of more than $450 million for FY26 and for FY26 operating expense growth to be less than FY25 growth of 4.6%. NAB is well placed to manage our bank for the long term and to support our customers, while delivering sustainable growth and returns for shareholders.
