The Reserve Bank is widely expected to hike interest rates for the third time in 2026 on Tuesday, taking the cash rate back to 4.35 per cent, where it sat for most of 2024.
National Australia Bank chief executive Andrew Irvine said it was difficult to predict the future because of the current macroeconomic volatility, but he was optimistic about customers' ability to cope.
"Our (business) customers, by and large, enter this period in a strong cash position," he told a results briefing on Monday.
"Deposits at the bank are up meaningfully and most of our customers have relatively lower leverage and strong cash buffers to withstand the cycle, and there'll be opportunities for many of them to grow and take advantage of any dislocation."
In NAB's small to medium enterprise segment, conditions were "surprisingly robust" with strong lending activity and a solid pipeline.
But given a sharp drop in business confidence in April and the Middle East war, the bank expects to see a drop in activity in the weeks and months ahead.
NAB's retail customers also have strong buffers, the bank indicated as it released its earnings for the six months to March 31.
Eighty per cent of NAB's home loan customers didn't reduce their repayments in 2025 even as the official cash rate dropped from 4.35 per cent to 3.60 per cent.
As a result, mortgage customers' offset and redrawn balances grew by nine per cent in the past 12 months.
"I'd say for most households, they'll be able to manage through this," Mr Irvine told journalists.
"The challenge, of course, is on the margins, and there will be households that are entering hardship. We'll be there for those customers."
NAB would also support business customers, he said.
"If they were a good business at the start of this economic crisis, they're still a good business and we'll back them," Mr Irvine said.
The majority of businesses that had made contact to date were not looking for help with financial difficulties, they were instead planning for seasonal and price volatility.Â
NAB supported them through higher limits on working capital and overdrafts, and zero-interest loans, through a $1 billion economic resilience program launched in April.
The bank increased its capital and provisioning coverage to account for the uncertain times, including setting aside $300 million in buffers for sectors expected to be most impacted by fuel shortages and costs.
NAB posted a 19.3 per cent fall in 2026 first-half statutory net profit to $2.75 billion on revenue of $11.16 billion.
Its preferred metric of cash net profit, which excludes large items, was flat at $3.59 billion against the same period last year, but 2.3 per cent higher than during the end of its 2025 fiscal year.
NAB's result was supported by strong growth of 5.4 per cent in its business and private banking arm and a higher net interest margin, which reflects its earnings on lending activity.
The bank will pay an interim dividend of 85 cents per share, in line with its previous payout.
In afternoon trading, NAB shares were down 1.5 per cent to $39.25.
18°C