National Australia Bank CEO Andrew Irvine said borrowers have not yet felt the full economic impact of the Middle East war on Monday.
The warning comes as global supply disruptions and elevated oil prices threaten the cash flows of businesses and individuals, potentially increasing loan defaults across the Australian economy.
NAB reported a half-year net profit of $2.75 billion [1], representing a decline of more than 19 percent year-on-year [1]. The bank's financial results for the period ending December 2025 were heavily impacted by a $700 million impairment charge [1].
Irvine said the need for higher provisions was due to the escalating conflict in the Middle East, which has resulted in the closure of the Strait of Hormuz and sustained high oil prices. These factors have created a volatile environment for corporate borrowers, and the broader supply chain.
"We are seeing a rise in provisions as the conflict in the Middle East escalates and oil prices stay elevated," Irvine said.
The bank has increased its provisions to buffer against potential losses as the geopolitical situation remains unstable. The impairment charge reflects the immediate cost of these adjustments to the bank's balance sheet.
Irvine said that the current economic pressure is a lagging indicator for many borrowers. He said that the full weight of these disruptions may not be realized until more time passes.
"Borrowers are yet to feel the full pain of the Middle East war," Irvine said.
“Borrowers are yet to feel the full pain of the Middle East war.”
The decline in NAB's profit highlights how geopolitical instability in the Middle East directly translates into financial risk for Australian institutions. By increasing provisions and absorbing a significant impairment charge, the bank is preparing for a potential wave of defaults triggered by energy price volatility and disrupted trade routes. This suggests that the economic fallout from the conflict is moving beyond immediate energy costs and into the structural stability of corporate and consumer debt.
