While first-time homebuyers and renters were struggling, with a 7 per cent increase in calls to and from the bank’s financial hardship line, Irvine said most households were proving pretty resilient.

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“Economic growth is slowing and the higher cost of living, resulting from both higher rates and inflation, is being felt by more households as well as businesses,” he said. “They are not enjoying it, but they are getting by.”

While the bank expects economic growth to remain muted over the near term as cost-of-living pressures weigh on spending, it expects some relief later in the year with mooted tax cuts and an easing in monetary policy from November if inflation continues to moderate.

“We overemphasise the difficulties in our economy and those that are struggling, and underemphasise portions of our economy that are doing well,” Irvine said. “The Australian economy, and to some extent, the global economy, are actually pretty resilient and, if anything, performing better than our expectations.”

Irvine said inflation could remain sticky, leaving less room for central banks to cut rates. However, pressure in the labour market has eased and wage growth is expected to slow from last year’s elevated rates, he noted.

“The unemployment rate is expected to continue to drift higher, peaking at around 4.5 per cent by the end 2024, but most indicators of labour demand remain healthy suggesting employment will continue to grow,” he said.

Irvine said the bank had grown its loan book by nearly 9 per cent over the past 12 months, including 8.6 per cent growth in Australian SME business lending, but had taken a selective approach with subdued growth of 3.7 per cent in Australian home lending.

NAB’s net interest margin, a measure of profitability comparing the bank’s funding costs with what it charges for loans, fell 5 basis points to 1.72 per cent.

It comes as a competitive mortgage market and a shift towards more costly term deposits by customers squeezed the sector’s margins, offsetting the benefits of a higher interest rate environment. NAB’s personal banking division saw a 29.6 per cent decline in cash earnings.

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However, Jarden chief economist Carlos Cacho said NAB’s results showed an easing in competition as well as a relatively steady proportion of higher-cost term deposits.

“NAB’s net interest margin highlights that the moderating in mortgage and deposit competition we have expected is coming through, and is a positive sign for the sector,” he said.

“The result also confirms our more benign view of bad and doubtful debt, with credit quality deteriorating only modestly and strong coverage levels maintained.”

Impaired assets and 90-day late payments rose 13 basis points to 0.79 per cent as a proportion of gross loans and acceptances at a time when its Australian home lending and business lending portfolios saw higher arrears.

The bank announced an interim dividend of 84 cents a share, up from 83 cents in the previous period.

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