National Australia Bank has projected A$706 million in credit impairment charges for the first half of fiscal 2026 as the Iran war pressures financial markets, with shares falling by 3.5%.
This is a $300 million increase from the bank's prior forecast. Its impairment charge in the previous half year was $485 million.
“In light of the volatility in markets following the conflict in the Middle East, National Australia Bank (NAB) has reviewed its credit provisioning and capital settings to better reflect the risks now inherent in our business,” the bank wrote in an ASX announcement.
It raised its forward-looking adjustments by $201 million due to potential stresses on sectors that could face greater hits from fuel supply issues or rising costs, such as agriculture, construction, and transport.
The bank said it had lowered forward-looking adjustments for sectors where risks had not materialised or been included in underlying provisioning by $53 million, meanwhile.
The charges also include a $152 million increase in the bank’s economic adjustment, which it credited to updates to its economic forecast and a larger weighting for Australia’s downside economic scenario.
NAB’s Common Equity Tier 1 ratio has dropped by 20 basis points due to these credit impairment charges, interest rate volatility, and a soft New Zealand dollar in the second quarter, it said.
The bank will report its results for the fiscal year’s first half on 4 May.
NAB (ASX: NAB) shares were trading 3.5% lower at $41.08 by 2:50 pm AEST (4:50 am GMT). The ASX’s financials index was also down 0.2%.
Shares in NAB have shed 9.7% across the past five trading days. Its market capitalisation is $126.02 billion.
