NAB reveals a NIM 26 basis points below CBA

NAB's latest trading update highlights one of the clearest differences in profitability between Australia's major banks: its net interest margin is materially below CBA's.

Net interest margin (NIM) measures the difference between the interest a bank earns on loans and other interest-earning assets and the interest it pays to fund those assets, expressed relative to average interest-earning assets. It is one of the most important measures of the profitability of a traditional banking franchise.

Small differences matter enormously because the margin is earned across hundreds of billions of dollars of assets. A 26 basis point difference is equivalent to $2.6 million of additional annual net interest income for every $1 billion of interest-earning assets, before allowing for differences in funding mix, asset composition or other factors.

CBA reported a NIM of 2.05% for FY26. NAB has now reported a NIM of 1.79% for the June quarter — a gap of 26 basis points.

Relevant to note is that NAB's reporting period is different from CBA's full-year result, so the comparison should not be treated as perfectly like-for-like. Nevertheless, the difference in margins is significant.

NAB's headline NIM fell 2 basis points compared with the quarterly average for the March 2026 half year. However, NAB said that excluding Markets & Treasury, its NIM actually increased 2 basis points, helped by higher earnings on deposit and capital replicating portfolios, partly offset by lending competition and deposit impacts.

The broader NAB result was solid: revenue increased 2%, while cash earnings excluding the large notable item increased 2% compared with the first-half quarterly average.

But the comparison with CBA shows why NIM deserves particular attention. CBA is not merely generating more profit because it is larger. It is earning materially more net interest income for each dollar of interest-earning assets. That is a fundamental advantage in banking profitability.

CBA FY26 vs NAB 3Q26
Indicator	CBA FY26	NAB 3Q26	Comparison
Reporting period	Full year	June quarter	Not directly like-for-like
Cash earnings / NPAT	$10.982bn +7%	$1.83bn +4% y/y	CBA avg. quarter ≈ $2.75bn
Statutory profit	$10.866bn +7%	$1.81bn +9% y/y	Both growing
Pre-provision / underlying profit	$16.469bn +6%	$2.9bn +6% y/y	Similar core growth
NIM	2.05% -3bp	1.79% -2bp*	CBA 26bp higher
ROE	14.0% +50bp	Not disclosed	No direct comparison
Operating expenses	$13.755bn +6%	$2.6bn +5% y/y	Similar cost pressure
Credit impairment	$788m +9%	$299m +18% y/y	Higher y/y for both
CET1	12.0% -30bp	11.93% +28bp vs Mar	Virtually identical
Note: CBA figures are for the full year to June 2026. NAB figures are for the June 2026 quarter. NAB year-on-year changes compare 3Q26 with 3Q25. *NAB headline NIM change is versus the 1H26 quarterly average; excluding Markets & Treasury, NAB NIM increased 2bp.