Borrowers are yet to feel the full pain of the Middle East war, says NAB CEO | The Business
The boss of Australia’s biggest business lender, NAB, has announced a half-year profit miss, and a warning about the building risks of the Middle East war as the Strait of Hormuz remains closed and oil prices stay elevated impacting everything from fuel to plastics.
The bank’s half-year net profit of $2.75 billion was down by more than 19 per cent from the same period last year, weighed down by a $700 million impairment charge.
NAB chief executive Andrew Irvine sat down with The Business presenter, Kirsten Aiken. He says the bank is preparing for a drop in activity levels, and described being in ‘very, very volatile times.’
He says the bank is expecting business activity levels to drop because they’ve seen confidence drop as a result of the crisis.
However, he says mortgage borrowers have been ‘remarkably resilient’, but warns the full pain hasn’t been felt yet.
“In the last year when we had a couple of rate cuts, 80 per cent of our home lending customers did not change their payments, so they’ve been able to absorb the two increases that we’ve had to date without any impact to them,” he says.
“I suspect that things will get a little bit harder from here, but it’s also true that homeowners enter this more difficult period from a position of strength.”
However, he says it’s too early to tell whether the crisis, and potentially another interest rate hike on Tuesday will disproportionally impact first home buyers taking advantage of the government’s 5% Deposit Scheme.
“We just want to make sure that obviously those customers are able to afford those payments and we do adjudicate on that basis,” he says.
He says businesses are worried about cost inflation, which started with the cost of fuel, but he says that’s expanded.
“I think other pressures are going to be emerging as we speak,” he says.”
“Petroleum and petroleum products are in the vast number of consumables that we use every day in our lives. Things like plastics, things like packaging, construction materials, and we’re yet to see those costs really escalate.” he says.
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