New figures show a 7 per cent rise in National Australia Bank’s underlying profit for the first quarter.

NAB made $1.55 billion before one-off benefits and losses, most of which related to treasury shares, revaluations and hedging.

With the one-offs included, the bank has posted an unaudited statutory net profit of approximately $1.4 billion for the quarter ending December 2013.

NAB’s profit growth was not based on rising revenue, which was up only 1 per cent and was hit by lower interest margins.

The bank has instead benefited from a fall in bad and doubtful debts, which dropped 23 per cent to $324 million. Insiders say this is due to a string of lower charges on NAB’s UK businesses and Australian banking.

The bank has bagged $10.1 billion in wholesale funding this financial year, most of which will run for terms around 5.3 years on average.

Even so, NAB says it funded its December loan growth entirely through customer deposits.

NAB CEO Cameron Clyne says as business confidence begins to pick up so has its market share growth in both mortgages and household deposits, though business borrowing continues to lag.

“While recent improvements in business confidence and conditions are encouraging, we are yet to see this translate into a meaningful increase in demand for business credit, and competition in this space remains elevated,” Clyne observed in NAB’s report.