NAB vs. CBA—Which major bank is handling credit risk better right now?

The following are the top two Australian banks with impressive credit risk handling, supported by robust balance sheet strength.

National Australia Bank Limited (ASX: NAB)

National Australia Bank Limited (ASX: NAB) is one of the leading Australian banks, which is currently trading at $121.45 billion and has a current annual fully franked dividend yield of 4.36%.

NAB has announced on 5 November 2026 its 2026 full-year results for the period ended September 2026. It is reported that gross loans and advances (GLAs) reached $822.4 billion and customer deposits reached $692.6 billion for FY26, reflecting a 5.2% year-on-year increase. Net interest margin grew by 6 bps YoY to 1.80%.

Net interest income grew by 6.4% year on year to $18.5 billion, and net operating income grew by 5.8% year on year to $22 billion. Cash earnings excluding notable items stood at $7 billion, and it has reported a statutory net profit of $6.14 billion.

NAB has reported a cash return on equity excluding large notable items of 11.4% and has done a fully franked dividend distribution of 170 cents per share for FY26.

It has an impressive balance sheet with non-performing exposures/gross loans and advances of 1.56%, a liquidity coverage ratio (LCR) quarterly average of 135%, and a net stable funding ratio (NSFR) of 116%. It has reported a Group CET1 ratio of 11.87%. It has reported credit impairment charges of $1.55 billion, and the credit risk-weighted assets (CRWA) reached $387 billion. It has a total provision / CRWA of 1.76% for FY26.

NAB plans to maintain investment spending at a similar level to FY26, when investment spend was $1.8 billion and is targeting underlying cost growth of less than 3% for FY27.

Commonwealth Bank of Australia (ASX: CBA)

Commonwealth Bank of Australia (ASX: CBA) is one of the top banks listed on ASX with a market capitalisation of $278.28 billion and has a fully franked dividend yield of 3.03%.

CBA had announced on 12 August 2026 its 2026 full-year results for the period ended June 2026. The total group deposit increased by 8% year on year to $1 trillion, and group total lending grew by 7.1% year on year to 1.08 trillion for FY26. It has reported a net interest margin of 2.05%.

Cash NPAT rose 7% year on year to ~$11 billion, and statutory NPAT grew by 8% year on year to $10.9 billion. Dividend distribution rose by 4%, reaching $5.05 per share. The return on equity reached 14% for FY26.

It has reported loan impairment expenses of $788 million. Troublesome & non-performing exposures / Group TCE of 0.94% and total provision/CRWA of 1.53% for FY26. It has a deposit funding ratio of 79%. CBA has reported LCR of 132% and NSFR of 115%. It has reported a common equity tier 1 capital ratio of 12% for FY26.

Conclusion

NAB and CBA have maintained a solid credit profile over the period. CBA appears to have the credit risk management ability, supported by low NPA/TC, loan impairment expenses, and total provision/CRWA ratio. It has a solid profile, reducing its credit risk compared to NAB.

(Source: Company Announcements)