National Australia Bank today reported an 8.7% rise in 1H08 eps, however that result was -3.4% below 2H07.
As can be seen below and commensurate with the trend of other Australian major banks reporting recently, provisions for bad debts have been hiked significantly.
NAB wasn't giving much away with respect to the outlook in the results release, they had this to say on credit quality:
“After several years of very good credit conditions, asset quality measures are now reflecting the changed global credit market conditions. The charge for bad and doubtful debts increased by $336 million to $726 million mainly as a result of a small number of corporate exposures. Underlying asset quality remains sound.
Also this on the outlook for prodcut prices:
Primary product prices have remained surprisingly strong through the turmoil in financial markets and US recession concerns. Although slower demand growth is expected to lead to softer prices through next year, these prices should remain high by historical standards.
As mentioned many times before, the economic climate is going to get worse for the banks before it gest better. Earnings and margins are going to come under pressure.
Apart from ANZ the major banks have endured the current credit crunch well. Will they continue to dodge bullets and ride out the storm? Time will tell but more ANZ type exposures are bound to pop up on the radar for Australian banks in the coming 18 months.