NAB – UBS rates the stock as Sell

The bank will take $1.19bn in additional remediation charges in the second half in its results. This top-up is driven by the inclusion of provisions for customer refunds for self-employed advisers.

National Australia Bank has now assumed a refund rate of 36% of all advice fees received from 2009-2018. Further charges are also being taken for consumer credit insurance, non-compliant advice and higher provisions for salaried advisers to 28% of total advice fees received.

UBS asserts the announcement continues the bank’s track record of large “one-off”, “specified” and “below-the-line” items. The broker is disappointed, calculating that these large one-off items have accelerated to an average of 24% of cash profit since the global financial crisis.

The broker retains a Sell rating and $23 target.

Sector: Banks.

Target price is $23.00.Current Price is $28.07. Difference: ($5.07) – (brackets indicate current price is over target). If NAB meets the UBS target it will return approximately -22% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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