Shares of National Australia Bank closed Friday's session at A$43.36, marking a 1.6% decline. The drop occurred as the S&P/ASX 200 index fell roughly 2%, representing its most significant single-day loss in nearly a year.
Interest Rate Decisions Impact Sector
The Reserve Bank of Australia recently increased its cash rate by 25 basis points to 3.85%, its first hike in two years. In response, National Australia Bank, Commonwealth Bank, Westpac, and ANZ have all announced they will raise variable mortgage rates by 0.25%. These increases are scheduled to take effect between February 13 and February 17.
Upcoming Financial Reports
Investors are preparing for a series of key bank updates in February. Commonwealth Bank is set to release its half-year results on February 11, followed by Westpac's first-quarter 2026 update on February 13. National Australia Bank will deliver its own first-quarter trading update on February 18.
Analysts will be scrutinizing these reports for data on loan growth, funding costs, and provisions for bad debts. While higher interest rates can potentially expand net interest margins—the difference between loan income and deposit costs—they also increase financial strain on borrowers, raising the risk of payment defaults.
Market sentiment has turned cautious as global equities experienced simultaneous declines. "Panic is spreading," noted Michael McCarthy of MooMoo Australia in comments to ABC, reflecting the broader market unease.
The banking sector now faces a delicate balance: benefiting from wider margins while managing the credit risks associated with higher borrowing costs. Should banks face rapidly rising deposit expenses that outpace their ability to increase loan rates, recent margin improvements could quickly reverse.
