NAB Cuts Dividend As Cash Earnings Slip 10.6%

By Glenn Dyer | More Articles by Glenn Dyer

As expected the NAB has followed its rivals in Westpac and the ANZ in cutting returns to shareholders after a slide in earnings and revenue for the year to September 30.

The NAB Thursday morning confirmed a final dividend of 83 cents a share, fully franked at 100%, unchanged from the interim and down from the 98 cents a share paid for each half since 2014.

That made a full-year fully franked payout of $1.66 a share, down 20% from the $1.98 paid for 2017-18 and preceding four years.

The NAB is also running an underwritten dividend reinvestment plan to raise new capital, unlike Westpac which revealed a $2.5 billion raising from big and retail shareholders on Monday.

Westpac also cut its final to 80 cents a share fully franked. In contrast, the ANZ left its dividend steady but cut its franking to 70%.

That’s a move that now looks a bit silly given what the NAB and Westpac have done.

Revenue fell 6.1% for the year to $17.39 billion and the bank said its net interest margin narrowed to 1.78%.

Cash earnings fell 10.6% to $5.097 million and net after-tax profit fell 13.6% to $4.798 billion.

Acting CEO, Phil Chronican (he is the bank’s chair) said in the Thursday release:

“This year has been very challenging, requiring significant actions for us to deal with past issues and make real changes aimed at earning trust with customers and the community.

“Fixing things for customers is an important part of that process. We now have more than 950 people dedicated to remediating customers and in FY19 recognised additional charges of $1,100 million after tax for customer-related remediation. These charges, along with a change in our software capitalisation policy, are the main reasons FY19 cash earnings are 10.6% lower than FY18. While this is a disappointing outcome, excluding these large notable items, cash earnings rose 0.8%.

“We are now more than two years into our three-year transformation. Becoming simpler and faster is delivering real benefits, allowing us to invest in better products and services as well as stronger compliance and controls while holding FY19 expenses broadly flat, as targeted.

“While the operating environment has weakened, our SME franchise continues to perform strongly, growing business lending well above peers. We remain committed to continuing to lend and support our customers and the broader community,” he said.

Glenn Dyer

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 →