National Australia Bank, the country's top lender by assets, on Thursday highlighted increased pressure on margins as it posted an 8.5 percent rise in cash earnings led by lower bad debt charges.
CEO Cameron Clyne, unveiling his final set of results before passing the baton to Andrew Thorburn in August, warned of tough competition and rising regulatory costs stemming from the need to maintain higher capital ratios.
Even so, Australia's "Big Four" banks are on track for a sixth year of record profits, bolstered by low interest rates which are encouraging borrowers and shrinking costs associated with bad debt provisions.
"Earnings have generally been pretty solid. Asset quality trends are pretty good. And banks have performed as per expectations," said Rohan Walsh, investment manager at fund manager Karara Capital.