NAB reports improvement in UK

NAB, which is focusing on growing mortgages to complement its lead in corporate lending, said it was in the process of downgrading its forecast for loan growth for the business sector. It also said growth was slowing in its mortgage sector.

NAB said it was not all gloom and doom because there were no signs of an acceleration of bad debts. The bank said it was “pretty much” finished with tapping global markets for wholesale funds for the financial year to September, thus protecting it from wild volatility in the markets.

“NAB’s outlook just goes to show how strong Australian banks are compared to their global peers,” said Paul Xiradis, chief executive at fund manager Ausbil Dexia, which owns NAB shares. “There is strong appetite for their paper.

“It also indicates that fears over the funding position of Australian banks is misplaced,” he added. “Updates from other banks will most likely prove that.”

Australia’s two biggest home loan lenders, Commonwealth Bank of Australia and Westpac , cut their fixed home-loan rates, taking advantage of steep falls in longer-term lending rates in markets. NAB has yet to comment on its rates.

Analysts said the moves would have little impact on the mortgage market or net interest margins at banks because less than 10 per cent of $1 trillion home loan market was in fixed-rate loans.

In a statement, the company added: “Despite recent deterioration in economic conditions, United Kingdom banking continued its gradual improvement in performance in the June 2011 quarter. Demand for credit remained subdued, but above system growth in both business lending and mortgages was achieved.”