“There is a reason why there is so much talk about the cost of living, [because] high inflation hurts everyone. It reduces what people can buy with their wages, erodes the value of savings, and it disproportionately hurts those on low or fixed incomes.”

NAB’s net interest margin, a core measure of profitability, was stable, with small reductions from lending competition and customers moving their savings to high-yield savings accounts.

However, analysts said NAB has appeared to reduce its home loan prices over the past month to lure more customers, potentially putting further pressure on the margin over the next six months.

Revenue fell one per cent, and the bank said it had found productivity savings of $400 million in the 2024 financial year.

Irvine said the bank’s lending balances grew one per cent. Loans to small and medium businesses were up 3 per cent, while home loans lifted 1 per cent.

Jefferies analysts Matthew Wilson and Christian Mazza said NAB’s core profits were continuing to shrink, and the bank’s strategy to target franchises was the most vulnerable in this economic environment.

“Asset quality is clearly deteriorating to levels not seen for some time,” the pair said in a note to investors. “Low unemployment and elevated asset prices remain the linchpin.”

E&P analyst Azib Khan said while NAB’s net interest margins were better than expected, its business banking asset quality is deteriorating.

“Revenue softness has been offset by a lower-than-expected credit impairment charge as well as costs being a touch better than expected,” Khan said.

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The element of increasing concern is asset quality. Despite the bad debt charge being lower than expected, there continues to be broad-based deterioration in the business lending portfolio.”

NAB shares closed the trading day 1.5 per cent stronger at $36.48.

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