National Australia Bank (NAB) has reported cash earnings of A$1.65bn for the third quarter of fiscal 2018, a fall of 3% compared to A$1.7bn last year and down 1% from the quarterly average of the March 2018 half year figure.

The bank attributed the fall in earnings to higher impairment charges and investment spend.

Expenses increased 2% from the quarterly average of the March 2018 half year, driven by higher compliance costs.

Revenue rose 1% from the quarterly average of the March 2018 half year figure. The rise was driven by growth in SME lending within the business & private banking segment and contribution from New Zealand Banking, the bank said in its trading update.

The banking group’s CET1 ratio stood at 9.7% at the end of June 2018, versus 10.21% in the previous quarter. Its leverage ratio was 5.3% on APRA basis.

NAB CEO Andrew Thorburn said: “Notwithstanding a challenging operating environment, financial performance in 3Q18 has been sound. Revenue is up, despite elevated short term wholesale funding costs, while asset quality and balance sheet metrics remain strong.

“As we make progress towards resolving several previously disclosed regulatory compliance investigations, we expect to recognise additional provisions in the 2H18 result, noting there are significant uncertainties in determining a provisioning outcome at this time. These additional costs will be excluded from the expense growth guidance of 5-8% for FY18.”