NAB has produced a first-half profit of $2.5 billion, a significant turnaround after a heavy loss in the first half last year.
Cash profit — the bank's preferred measure, which strips out one-off items — of $3.29 billion was up only 2 per cent on the previous corresponding period, and in line with analyst expectations.
The return to profit from last year's write-down ravaged loss was driven by stronger lending and trading income.
The 21.5 per cent improvement for Australia's third-biggest bank reflects reduced losses from discontinued operations mainly in the United Kingdom.
The NAB posted a loss of $1.74 billion in the previous corresponding period as it reduced its UK exposures.
While cash earnings grew, net interest margin — a key measure of bank profitability — fell 11 basis points to 1.82 per cent.
Charges for bad and doubtful debts were up 5.1 per cent or $19 million at $394 million.
NAB's interim dividend was unchanged at 99 per cent per share, fully franked.
However, chief executive Andrew Thorburn signalled tougher competition and regulation were growing challenges.
"The operating environment for banks remains challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations," Mr Thorburn said.
"But Australia's economic fundamentals provide a favourable backdrop including strong population growth and improving business conditions."This article was first published by http://www.abc.net.au
Author: senior business correspondent Peter Ryan and Stephen Letts