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National Australia cash profit falls 3% as bad debts rise
(Bloomberg) -- National Australia Bank Ltd.’s third-quarter profit fell 3 percent amid rising expenses for bad debts and provisions for mining and agricultural loans.

Unaudited cash profit from continuing operations, which excludes one-time items, declined to A$1.6 billion ($1.2 billion) in the three months ended June 30, the Melbourne-based lender said in a statement on Monday. The charge for bad and doubtful debts for the quarter rose 21 percent to A$228 million.

A streak of record profits at Australia’s biggest banks that was bolstered by foreign lenders exiting the market, falling impairments and cost cuts is drawing to a close. The nation’s big four lenders are facing a regulatory clampdown on mortgages to combat runaway housing prices and bracing themselves to meet demands to boost capital and liquidity.

While revenue was broadly stable, growth in lending was offset by a lower net interest margin due to higher funding costs, according to the statement. Expenses fell about 1 percent due to tight cost controls.

“While we saw higher funding costs during the quarter, asset quality remains strong and cost control was pleasing,” Chief executive officer Andrew Thorburn said in the statement.

APRA intervention still causing headaches for banks
While future cuts to Australia’s official cash rate by the Reserve Bank of Australia (RBA) have been widely predicted, borrowers shouldn’t be holding their breath that they will be passed on by lenders as Australia’s banks continue to try and their footing post the Australian Prudential Regulation Authority’s (APRA) intervention last year.

Australian Bureau of Statistics (ABS) figures released this week revealed that the regulator’s crackdown has proved to be effective in slowing the growth of the investment loan books of Australian lenders. $138.2bn worth of new investment loans were written in the year to June 30 2016, 14.9% lower than the $162.2bn written over the previous 12 months.

Updated requirements about the amount of capital banks have to hold against their mortgage books have been used by some lenders to defend not passing on the full extent of recent RBA rate cuts and out of cycle rate rises, but Philippe Brach, chief executive officer of Multifocus Properties & Finance, said banks are simply putting the needs of shareholders ahead of borrowers.
(Your Investment Property)