By Alice Uribe

SYDNEY--National Australia Bank Ltd. (NAB.AU) recorded a drop in third-quarter profit, dragged down by volatile markets, subdued credit demand and low interest rates during the pandemic.

NAB, the country's fourth-largest bank by market value and the biggest business lender, recorded an unaudited net profit of 1.50 billion Australian dollars (US$1.07 billion) for the three months through June. No comparable figure was disclosed, but it compares with a profit of A$1.70 billion reported by the bank a year ago.

Cash earnings, a measure adjusted for fair value and hedging movements and is the basis for calculating dividend payouts, was A$1.55 billion, which NAB said fell by 7.0% against the same quarter a year earlier.

Compared with its first-half quarterly average and excluding large notable items, cash earnings increased by 24%, NAB said.

Write to Alice Uribe at alice.uribe@wsj.com