National Australia Bank has cut interest rates for home owners after unveiling a $1.65 billion first quarter profit.
NAB lowered its standard variable mortgage rate by a quarter of a percentage point to 5.63 per cent, the lowest standard variable rate offered by a major bank.
Commonwealth Bank and Westpac have also reduced interest rates in the wake of the Reserve Bank's cash rate cut.
The move came as Australia's biggest business lender announced a six per cent rise in cash profit in the first quarter of its fiscal year.
Net profit, which includes one-off items, was $1.8 billion in the three months to December 31, up 29 per cent from $1.4 billion a year ago.
Chief executive Andrew Thorburn said the higher profit was driven by strong growth in home lending, though competition remained strong in the business lending market.
CLSA banking analyst Brian Johnson said businesses simply weren't borrowing as much as they were before the global financial crisis, making conditions tough for lenders.
"There's just not much credit growth around," he said.
"The only place where you actually see really strong credit growth is probably in housing; business lending is very subdued and, in fact, businesses are probably hoarding cash at the moment."
But Mr Johnson is upbeat on the future for NAB, given its efforts to cast off weaker divisions like its troubled UK business.
NAB has already publicly floated its US subsidiary Great Western Bancorp and is considering the same action for its UK business, which includes the Clydesdale and Yorkshire Banks.
It has also sold off the majority of its commercial loan book in the UK.
"When you have a look at NAB it's still a bank that is weighed down by several poorly performing businesses," he said.
"As they exit those businesses, presumably what's left is a lot better than NAB sits at today."
NAB shares were up 22 cents at $36.72 at 1440 AEDT.
Mr Johnson said the lender currently offered better value for investors than its fellow big four banks.
NAB has underperformed CBA, Westpac and ANZ for years, due in part to problems with the UK business, which has been affected by that region's economic downturn.
Share
