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National Australia Bank shares fell more than 5% after the lender forecast a sharp slowdown in housing credit growth, citing weaker homebuyer activity following recent tax changes. NAB reported third-quarter cash earnings of AUD 1.83 billion, while Australian home loan applications declined 15% from the previous quarter. The bank expects investor credit growth to move from more than 8% last year to a 1.4% contraction in its 2027 financial year, while total housing credit growth is forecast to slow from around 7.5% to 2.5%. NAB also warned of pressure on property prices in Sydney and Melbourne.
National Australia Bank (NAB) shares fell more than 5% on Monday after the lender lowered its expectations for housing credit growth, pointing to weaker demand following recent changes to Australia's property tax rules.
NAB, Australia's third-largest home lender and largest business lender, reported cash earnings of AUD 1.83 billion for the three months ended June. The result was 2% above the average of the previous two quarters, excluding one-off items.
However, housing activity remained weak. NAB recorded a 15% decline in Australian home loan applications in the third quarter compared with the second quarter. The fall came after the Labor government introduced tax reforms aimed at improving housing affordability.
NAB shares dropped 5.2%, marking their sharpest one-day decline since April last year. The fall was considerably larger than the 0.2% decline in the S&P/ASX 200 index, while NAB shares have declined 7.4% so far this year.
The bank expects housing credit demand to weaken sharply in its 2027 financial year, which begins in October. Investor credit growth is forecast to fall from more than 8% in the previous year to a 1.4% contraction. Overall housing credit growth is expected to slow from around 7.5% to 2.5%.
NAB CEO Andrew Irvine said customers were facing greater challenges and uncertainty due to the Middle East conflict, higher domestic interest rates and recent tax changes announced in the Federal Budget.
The bank had also warned earlier this month that house prices in Sydney and Melbourne could decline by as much as 10% during the current year. NAB expects only modest price growth of around 1% in both cities in 2027.
NAB reported a net interest margin of 1.79% for the quarter. Its common equity tier 1 ratio, a key measure of financial strength, stood at 11.93%, compared with 12.14% a year earlier.
The lender is targeting savings of more than AUD 450 million for the 2026 financial year and expects operating expenses to grow at a slower pace than in the previous year.
NAB's results came as Australia's major banks closed their August earnings season amid increasing concerns about the impact of changes to property investment tax concessions. The country's four largest banks account for the majority of Australia's AUD 2.4 trillion mortgage market and have all reported a slowdown in home loan applications following the tax changes announced in May.
Commonwealth Bank of Australia, Australia's largest home lender, also reported a 15% decline in home loan applications, highlighting that the slowdown is affecting the wider mortgage market rather than NAB alone.
Source Reuters
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