National Australia Bank’s first-half 2026 results reveal a bank executing on its strategic priorities despite a reported decline in cash earnings, with the underlying business demonstrating notable momentum across its core divisions. The reported cash earnings figure masks a significant one-off impact from a software capitalisation policy change that reduced earnings by $949 million, a move NAB describes as consistent with the rapidly changing technology environment. Stripping out this large notable item, cash earnings grew 2.3% on the prior corresponding period while underlying profit climbed 6.4%, suggesting genuine operational strength beneath the headline numbers.
The real story lies in NAB’s progress against its three key strategic priorities. Business and Private Banking delivered 5.4% growth, well above the broader portfolio performance, while Australian business lending expanded 5.6% with market share gains in both SME and total business lending segments. This is particularly significant given the competitive banking landscape in Australia. The bank’s emphasis on proprietary home lending channels is paying dividends, with drawdowns through these channels lifting from 41.4% of the mix to 47.7%, reducing reliance on broker channels and improving cost economics. Deposit balances across Business and Private Banking and Personal Banking segments grew 4.7%, with particularly strong 8.0% growth in transaction accounts excluding offsets, addressing a historical competitive weakness for NAB.
The bank is taking a more measured approach to its balance sheet, bolstering provisions ahead of potential economic headwinds from geopolitical tensions. Forward-looking collective provisions increased by $300 million, bringing the ratio to 1.35% of credit risk-weighted assets. This proactive stance, combined with balance sheet management initiatives, positions NAB with a March 2026 pro forma Group Common Equity Tier 1 ratio of 12.05%. The interim dividend reinvestment plan, structured with a 1.5% discount and partial underwriting, is designed to raise approximately $1.8 billion, providing additional capital flexibility while maintaining shareholder returns.
Beyond pure financials, NAB is investing in customer engagement and community support. The bank has maintained over 200,000 proactive customer contacts through the Business and Private Banking team since the Middle East conflict erupted, while simultaneously rolling out fraud protection enhancements and opening its first Community Hub in Werribee, Victoria. These initiatives suggest management is thinking beyond quarterly metrics to build long-term relationships and resilience.
Investors should monitor how NAB sustains its market share gains amid economic volatility and whether the shift toward higher-margin proprietary lending channels continues. The software capitalisation policy change also warrants tracking to understand whether further adjustments might be forthcoming. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About National Australia Bank Limited (ASX: NAB)
National Australia Bank is one of Australia’s four major banks, offering a range of banking, wealth management, and financial services. It has a significant presence in business and agribusiness lending.
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