NAB Continues Rebound with Higher Earnings, Payout

National Australia Bank has lifted cash earnings 4.1% in the six months to March 31 to $3.48 billion and boosted dividend to 73 cents a share from 67 cents a year ago.

The bank said the higher profit and dividend resulted from “from pricing discipline and strong growth in lending and deposits which were up 10% and 12% respectively from the half year to March 2021.

Revenue rose 10.9% to $9.07 billion for the half.

Statutory profit jumped more than 10% to $3.551 billion.

The NAB’s net interest margin fell 11 points to 1.63%, but excluding the impact from Markets and Treasury and higher holdings of liquid assets, the margin dipped 3 points.

“This reflects competitive pressures and mix issues in housing lending, partly offset by lower deposit and funding costs,” the bank commented.

Expenses rose 2.6%, “reflecting additional bankers and resources to support growth, combined with salary increases and investment in technology. This was partially offset by productivity benefits achieved through simplification and third-party savings, and lower occupancy costs,” the NAB said.

NAB CEO Ross McEwan said in the announcement “execution of our strategy is delivering good results for our customers, colleagues and shareholders. We are producing better and faster experiences and getting the basics right more consistently.”

“This has been achieved during a period of increased customer activity across all divisions of the bank, including the fastest growth in business lending since the GFC,” he said in the ASX release.

“Focused investment has been key to delivering strong momentum across our businesses. The recent shift to a higher growth outlook provides greater scope to keep investing while continuing to deliver productivity benefits. This, along with inflationary pressures has prompted a reset of our FY22 cost growth target to approximately 2-3%, to ensure we drive shareholder returns while balancing cost disciplines and growth opportunities.

“This target includes costs associated with the essential work underway to deliver the requirements of our Enforceable Undertaking (EU) with AUSTRAC over the recent money laundering investment settlement.

“Our results this period were achieved while maintaining strong balance sheet settings. This is key to delivering sustainable growth and keeping the bank safe. Our capital levels remain above our targets despite completing a $2.5 billion buy-back, with a further $2.5 billion buy-back commencing in May 2022. Our FY22 term funding is also well advanced.

“The lift in our 2022 interim dividend reflects progress of our strategy, confidence in the sustainability of our performance and our continued optimism in the medium-term outlook for the Australian and New Zealand economies,” he 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.

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