NAB Profit Up 6.5%, Dividend Unchanged

The National Australia Bank (NAB) has produced the simplest half year result of the three reporting majors this week – with a modest rise in cash earnings, on a modest rise in group revenue and an unchanged final dividend – all after a modest rise in bad debts.

Of course there was a complication – the bank’s final exit from the entanglement of its UK adventure produced a whopping loss, after a whopping loss – but that has been factored into the bank’s valuations by investors for a year- since the departure of the UK banking sector was confirmed last year.

Compared to the complexity and doubtful accounting in Westpac’s report on Monday, to the weak earnings, lower dividend and warnings of more to come from the ANZ, the NAB interim most resembled the stable, solid results from these financial giants in previous years.

The NAB reported cash earnings of $3.31 billion, up 6.5%. A statutory net loss of $1.74 billion was reported, a $5.18 billion turnaround from a year ago as the bank took hits from the revamp and then the spin off of the Clydesdale and other UK banking and finance businesses. Revenue rose 3

The bank singled out its Australian banking operations as the ’star’ in the six months with cash earnings up 5% and revenue up 4% over March 2015 half year.

Bad debts fell from a year ago by 6% to $375 million, but rose 7.4%,or $26 million from September 30 Interim dividend was left steady at 99 US cents.

The bank said the higher result followed:

"Key impacts include increased lending balances, higher Group net interest margin (NIM), and stronger NAB Wealth net income, partly offset by weaker Markets and Treasury income. Group NIM rose 1 basis point, reflecting benefits of repricing in home lending and deposits, partly offset by higher wholesale funding costs and competition for business lending.”

“This is our first result squarely focused on our Australian and New Zealand business. It shows that delivering against our strategic priorities is producing results and laying the foundations for sustainable growth and returns. We have a clear plan and are executing it in a disciplined way,” NAB Group CEO Andrew Thorburn said in this morning’s statement.

“The decisions we have made over the last two years have resulted in NAB being a stronger and simpler business. We are focused on improving returns in our Australian and New Zealand businesses and, while there is still more work to do, we have made good progress against our agenda,” Mr Thorburn said.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →