National Australia Bank has posted a $1.55 billion cash profit for the latest quarter, reflecting a seven per cent drop in earnings growth on the same time last year.

In its 2020 third quarter trading update lodged with the ASX on Friday, NAB cited COVID-19 challenges as it set aside more money for potential loan defaults.

“Encouragingly, about 16 per cent of home loan deferral customers … have recommenced repayments,” CEO Ross McEwan said.

“However, many customers still face an uncertain future. Where it makes sense we will offer them extra support to help manage through the pandemic, but providing further credit won’t always be the right thing to do.”