NAB reports steady FY25 earnings as artificial intelligence drives efficiency and customer innovation

National Australia Bank (NAB) has reported largely steady earnings for the 2025 financial year, with cash earnings dipping just 0.2 per cent to $7.09bn despite higher impairment charges and rising costs. The bank is also increasingly looking to artificial intelligence to streamline operations, improve customer experiences, and drive efficiency across its business. Statutory net profit came in at $6.76bn, with chief executive Andrew Irvine stating that the results reflect solid momentum across the business as the bank pushes ahead with its refreshed strategy. “Our FY25 results mark the first full year since we refreshed our strategy, and I’m pleased to say we’re making progress,” Mr Irvine said. “We continue to be disciplined in executing our strategy, in particular our focus on the three key business priorities; growing our business bank, driving deposit growth and strengthening proprietary home lending.” He said the results showed that NAB was becoming “a simpler, safer and faster bank for our customers” and earnings reflected “momentum across our businesses, supported by strong lending and revenue growth in the second half”. Strong performance across the bank NAB’s net operating income rose 2.9 per cent to $20.81bn, supported by growth in lending and customer deposits. Its net interest margin improved slightly to 1.74 per cent, up from 1.71 per cent last year, helped by higher returns on deposits and capital portfolios. Gross loans and acceptances grew 5.9 per cent, while customer deposits jumped 7.4 per cent over the year. Mr Irvine said Australian business lending balances grew 5.8 per cent in the second half, “the strongest half-yearly growth in 3½ years”. Across the full year, business lending rose 9.1 per cent, while total customer deposits were up 7.4 per cent. “Competition in business banking continues to increase, but we’re competing from a position of strength,” he said. “We know this market well, we have a leading position, and we want not just to defend our position but extend it.” He added that NAB’s personal banking division had also delivered “a very strong year,” with cash earnings up 9.9 per cent. In home lending, NAB’s strategy to strengthen its proprietary channels continues to deliver results. “In the past two years, our proprietary settlements have increased by 46 per cent,” Mr Irvine said. “In FY25, the proportion of mortgages written through our bankers improved to 41 per cent. “This has been achieved by investing in customer relationships, new bankers, and the tools to help them, and by introducing solutions that deliver simpler, faster and safer outcomes.” Capital strength and dividends NAB maintained a strong balance sheet, with a common equity tier 1 ratio of 11.7 per cent as at September 30. After including the sale of its remaining 20 per cent stake in MLC Life for $497m, completed in October, the pro forma ratio rises to 11.81 per cent. Liquidity remained solid, with a coverage ratio of 135 per cent and a stable funding ratio of 116 per cent. The bank declared a final dividend of 85 cents per share, taking the total for the year to $1.70 per share, returning $5.2bn to 540,000 shareholders and millions of Australians via superannuation funds. AI and innovation Mr Irvine said artificial intelligence would play an increasingly important role across NAB’s operations. “Artificial intelligence will transform what we do and how fast and how well we do it,” he said. “Right now, our focus is on using AI to enhance staff knowledge, streamline low-value operational work and improve customer experience.” He said NAB would take a cautious approach in applying AI to credit decisions, ensuring there were “no unintended consequences for customers”. “We’ve always had models that help drive credit decisioning and we’ll continue to leverage those,” he said. “But we’ll move slowly on using AI directly in pricing or lending decisions to make sure customers are protected.” Mr Irvine also called for a national focus on building AI capability and skills. “We need to make sure all Australians have the opportunity to learn the skills needed to use AI tools to their full potential,” he said. Costs and impairments Operating expenses rose 4.6 per cent to $9.85bn, including $130m in payroll review and remediation costs. Excluding those, expenses were up 3.2 per cent, reflecting higher personnel and technology costs, partly offset by $420m in productivity savings. Mr Irvine said NAB had increased its productivity target from $400m to $450m and remained focused on “perpetual productivity year in and year out”. “We tend not to do big one-off restructures. It’s all about recurring productivity for us and managing our business well,” he said. He added that artificial intelligence was expected to drive further efficiencies. “We’re optimistic that AI will provide opportunities that benefit customers and help drive efficiencies in our business,” Mr Irvine said. Credit impairment charges increased to $833m, up from $728m a year earlier, mainly driven by higher charges in business lending and unsecured retail portfolios. Mr Irvine said the increase was consistent with expectations and largely due to “a handful of single-name exposures”. “The rate of delinquency has slowed, if not plateaued, which gives us confidence looking forward to FY26,” he said. Confidence in Australia’s future Mr Irvine said NAB remained optimistic about Australia’s economic outlook, forecasting GDP growth of about 2 per cent in 2025 and 2.3 per cent in 2026. “The economy is growing at about full capacity without generating too much inflation,” he said. “We’re growing about as fast as we can at this stage for our country. What we need to do now is focus on really driving productivity.” He said housing remained “Australia’s biggest societal and policy challenge”, noting NAB’s commitment to provide at least $60bn in financing for housing affordability by 2030. “To achieve stronger long-term growth, we need more dwellings, less red tape, quicker decisions, and more reliable, affordable energy,” he said. Mr Irvine reiterated his optimism for the future, stating that NAB enters FY26 with strong momentum and a clear strategic focus. “We have a consistent strategy, clear priorities, and an experienced leadership team focused on execution,” he said. “We know there’s more to do, but we’re on the right path.”