Banks have very strict criteria for reporting impaired exposures and they carry provisions on their books to cover potential losses. The definition of a bad debt may also cause confusion as the inability for a customer to meet their obligations and the expectation of any losses the bank will have if they have to act under their security are 2 very different things. Home loans are generally well covered and risk of loss is relatively small. The biggest bad debts usually come from the corporate sector which generally can't be backed by bricks and mortar security. I am not familiar with CAN however I would be very surprised if NAB thinks there is potential losses that a provision has not already been raised. (You often see comments in reports about the increase in provisions being due to provisioning of a one off corporate exposure.) Highly unlikely any bank has doubtful exposures on their books which have not been recognised and accounted for. After all that is part and parcel of banking and has always been so...................
NAB Price at posting:
$37.92 Sentiment: None Disclosure: Held
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