National Australia Bank (ASX:NAB) said on Monday it plans to book larger credit impairment charges in the first half of fiscal 2026 as it increases provisions in response to heightened risk stemming from the conflict in the Middle East.
The lender also disclosed it expects a pre-tax amortization charge of A$1.35 billion ($961 million) in the first half of 2026, reflecting write-downs to the carrying value of its capitalized software assets.
NAB set its expected credit impairment charges for the first half of 2026 at A$706 million ($504 million), up from A$485 million in the second half of 2025. The bank said the upward revision reflects increased expectations of weakening in the Australian economy as well as potential stress related to higher fuel supply risks and cost pressure connected to the conflict in the Middle East.
The group said that a combination of increased interest rate volatility, a weaker New Zealand dollar and the additional provisioning reduced its common equity Tier 1 - CET1 - ratio by 20 basis points as of March 31. Despite that reduction, NAB still expects to report a pro forma CET1 ratio of over 12% at that date.
Accounting changes to how NAB treats the capitalization of its software are also expected to affect its cost base. The bank warned these changes will lead to higher operating expenses in the second half of 2026, though it said the precise quantum of that impact remains unclear.
NAB is scheduled to release its half-year earnings on May 4. The bank noted it has derived some benefit from higher Australian interest rates this year but cautioned that credit activity could deteriorate if high inflation persists and if disruptions related to the Middle East conflict continue to affect markets.
Context and next steps
The figures NAB provided cover both expected credit impairment charges and a material non-cash software amortization in the coming half-year. Investors and analysts will be able to assess the final numbers and detailed accounting notes when NAB publishes its half-year results on May 4.