National Australia Bank first-quarter cash profit jumps on loan growth

(Reuters) -National Australia Bank on Thursday reported a 19% jump in its first-quarter cash profit, benefiting from a rise in lending and deposits as well as a higher interest rate environment.

While rapid interest rate hikes and strong lending volumes are benefiting banks‘ margins, the strong run of banks’ earnings is predicted to fade later in the year as runaway inflation and high rates dent borrowing capacity and pressure credit growth.

NAB said net interest margin, a key measure of profitability, rose 12 basis points to 1.79% in the reported quarter.

The banks common equity tier 1 (CET1) ratio, a closely watched measure of its spare cash, was at 11.3% as of Dec. 31, compared with 11.51% as of Sept. 30.

The countrys second-largest lender posted cash earnings of A$2.15 billion ($1.48 billion) for the quarter ended Dec. 31, compared with A$1.80 billion a year ago.

Analysts had expected cash earnings of $2.01 billion, according to Visible Alpha consensus.

($1 = 1.4480 Australian dollars)

(Reporting by Sameer Manekar in Bengaluru; Editing by Shinjini Ganguli)