NAB says borrowers will take next rate rise in their stride

afr.com:

National Australia Bank says borrowers are robust enough to withstand another official interest rate rise on Melbourne Cup day, providing cover for the Reserve Bank to escalate its fight against inflation.

The number of NAB customers reaching out to call centres is down 20 per cent, and inquiries about higher interest rates are 65 per cent off the peak reached earlier this year, the bank says, as customers adjust to the RBA’s tightening cycle by cutting back on dining out, fuel and leisure travel.

“Consumers are actively making choices to adapt,” said Rachel Slade, NAB’s group executive for personal banking. “They are building muscle to adapt to cost of living pressures.”

NAB’s Rachel Slade: “the Reserve Bank has a tough job trying to get inflation under control and avoid a hard landing.” Natalie Boog

Borrower health will be in the spotlight this week. Westpac reports full-year results on Monday, the RBA is expected to lift the cash rate on Tuesday, and NAB’s annual result is due on Thursday.

Goldman Sachs predicted Westpac may announce a $1 billion on-market share buyback on Monday, with its expected full-year cash profit of just over $7 billion, following Macquarie’s $2 billion buyback unveiled on Friday. Share buybacks, which require approval from the prudential regulator, are prized by investors as an indicator of balance sheet strength.

“Most customers are in pretty good shape,” Ms Slade told The Australian Financial Review. “We feel like we are past the peak of customers being agitated about rates. What we have seen in our proactive contact is that they have really built some resilience over the last 18 months.

“That is good news for the economy because the Reserve Bank has a tough job trying to get inflation under