National Australia Bank said it expects a sharp rise in credit impairment charges for the first half of 2026 as the Iran war continues to disrupt global markets. The lender said rising fuel costs, supply pressure, and broader market volatility have increased the chance of an Australian “downside economic scenario,” prompting it to lift provisioning across several sectors.
National Australia Bank, Australia’s largest business lender, said it expects credit impairment charges of $505.5 million in the first half ended March 2026. That figure is up from $249.46 million a year earlier and $347.68 million in the second half of 2025.
The bank linked the increase to growing economic pressure tied to the Middle East conflict. It said the war has added strain to global energy supply and financial markets, while also raising the risk of weaker conditions in Australia.
NAB said it would increase provisioning by $215 million in the first half. Of that amount, $144.09 million will cover fresh provisions for the transport and agriculture sectors, where diesel and fuel supply remains tight, and prices are expected to stay elevated for longer.
The bank also said it added to provisions for construction and commercial real estate borrowers. Those sectors are already facing tighter conditions, and NAB said the broader market backdrop has added more pressure.
NAB shares fell as much as 3.8% on Monday after the update. The stock later traded down near $41, while the S&P/ASX200 moved between a small loss and flat trading. The ASX200 financial index also slipped, with NAB weighing on the sector.
The lender said second-quarter interest-rate volatility, a weaker New Zealand dollar, and the higher provisioning level would reduce its common equity tier 1 capital ratio by about 20 basis points as of March 31. NAB said it would apply a 1.5% discount to its first-half dividend reinvestment plan and could raise to $1.28 billion to support its balance sheet.
The bank also said its first-half result, due on May 1, will include an accelerated amortization charge of $680.38 million after tax. This charge follows changes to its software capitalization policy.
NAB’s loan book stood at $567.9 billion at the end of December. The latest warning makes it one of the first major lenders to quantify the effect of the war, which has entered its eighth week and continues to push up oil prices and add pressure to growth outlooks.
NAB is the second major Australian lender to lift provisioning because of the Middle East conflict. Westpac said last week that its own credit impairment charges would rise as higher inflation and elevated interest rates create a tougher environment for some customers.
NAB said the common theme behind the move is a rise in bad debt risk across exposed sectors. It also said the chance of an Australian ‘downside economic scenario’ has increased as the conflict continues to affect trade, fuel supply, and market conditions.
The pressure is also spreading beyond the banking sector. Airlines such as Qantas and Virgin Australia have warned about the effect of higher fuel costs and disrupted supplies. Those pressures are now feeding into bank assessments of borrower strength, especially in sectors that rely heavily on transport and energy.
Even so, Australian banks remain well capitalized compared with many global peers. NAB’s update shows that lenders are building extra buffers as economic uncertainty grows. For now, the focus will remain on provisioning levels, capital strength, and the extent to which higher fuel and operating costs affect borrowers in the months ahead.