National Australia Bank posted a double-digit drop in first-half earnings on Thursday but talked up the strength of the economy and said a margin-crunching struggle for the vital home loan market showed signs of easing.

National Australia Bank Ltd. said it will buy back up to A$1.5 billion ($1 billion) of its own stock as profit at the lender came in line with expectations.

National Australia Bank on Thursday posted a drop of about 13% in its first-half cash earnings as it grappled with high operating costs and cutthroat competition, but raised its ongoing share buyback program by A$1.