Meanwhile, Mr Clyne believes Australia is not heading towards a recession, but expects economic activity is likely to remain subdued until at least the September federal election.

He pointed to a managed slowdown of the Chinese economy as an emerging global risk although he said the US economy ''has clearly come back''.

For Australia though, the economy remains in a holding pattern.

''There's certainly still no credit growth, so you can surmise that on a range of things. There's always a traditional period where people don't spend or there's not much activity into the election campaign,'' Mr Clyne said in Melbourne on Monday. ''I can't see a catalyst between now and then.''

But he dismissed suggestions Australia was heading for a recession. He said business confidence remained low, with firms holding back investment plans. One bright spot remained consumer confidence, which was holding up.

''Consumer confidence is less of a problem than business confidence,'' Mr Clyne said. ''Generally there is always an uptick in consumer confidence after an election. Because by definition the party that wins, most people voted for and they feel good about the outcome,'' he said.

''As to whether it translates to activity, time will tell because obviously opposition are painting the picture they are going to have a good look at the books and there might be need for some austerity.''

NAB's economists are tipping at least one more interest rate cut this calendar year, a move that could see the Reserve Bank's official cash rate fall to 2.5 per cent.

Meanwhile, with the UK government reportedly preparing for a public sale of part, or all, of its 39 per cent stake in Lloyds Banking Group, Mr Clyne said he would watch how well investors supported any sale. Royal Bank of Scotland, which is majority owned by the UK government, is slated for a full return to the stockmarket.

But he said investors would need some evidence that NAB's Clydesdale operations in Britain could carry on without support from its Australian parent.

''We don't rule any options in or out - but for an IPO you've got to have the business seen to be on a standalone footing,'' Mr Clyne said. But he acknowledged the UK market was still ''fairly challenging''.

''They only narrowly avoided a triple-dip recession. Economic activity there is quite low, regulatory environment there is quite challenging. So it's quite difficult for the banks,'' he said.

A downgrade of NAB's British business by ratings agencies in late 2011 had materially impacted the profitability of its UK bank, he said.

The British business, which has been plagued by losses and become a key concern for investors, reported better earnings during the third quarter due to lower charges for bad debts and lower costs.

While Mr Clyne is confident Australia will avoid recession, Bank of America Merrill Lynch is less certain. The US bank said there was a 25 per cent chance the economy would fall into recession in the second half of 2015, with real GDP growth averaging 1 per cent in 2015 and -0.1 per cent in 2016. Unemployment would peak in 2016 at 7.5 per cent.