National Australia Bank (NAB) | SNAPSHOT
Profile: National Australia Bank (NAB) is one of Australia’s four major banks. It provides financial services to retail, business, corporate and government clients. Recognisable brands include nabtrade, UBank, JBWere and Bank of New Zealand.
History: National Australia Bank has been operating for over 160 years and today it has more than 34,000 staff serving nine million customers worldwide
Earnings composition: The Business & Private Banking division accounted for 42% of NAB’s total cash earnings in FY19, generating $2.8bn. The next biggest contributor was Corporate & Institutional Banking with $1.5bn, or 22% of cash earnings. The Consumer Banking & Wealth and New Zealand Banking divisions delivered $1.4bn and $997m (20% and 15%) in cash earnings respectively in FY19. The Corporate Functions and Other division reported a loss of $1.6bn.
Most recent result – FY19: NAB declared a final dividend of 83 cents, down from 99 cents in 2H18. In combination with the 1H19 dividend of 83 cents, which was also rebased from 99 cents in 1H19, the total dividend for FY19 was $1.66, down from $1.98 in FY18. Cash earnings for FY19 was $5.1bn, down 10.6% on the prior corresponding period (pcp). This included $1.4bn of large notable items, predominately related to customer remediation costs. Excluding large notable items, cash earnings for the period increased 0.8% on the pcp to $6.5bn. Consumer Banking & Wealth division cash earnings declined 11.2% on the pcp to $1.4bn, while New Zealand Banking division cash earnings were up 8.1% on the pcp to $1bn. NAB’s net interest margin (NIM) declined to 1.78% in FY19, from 1.85% in the FY18. The net interest margin is a bank income measure which is largely the difference in the interest banks receive for loans and the cost of its funds (such as interest on deposits) as a percentage of its loan book.
Company guidance: NAB is progressing towards a public market exit of MLC, but it is retaining the option to consider all forms of exit. NAB is targeting divestment by the end of FY20. It achieved cost savings of $480m in FY19 and is targeting further savings of at least $200m by 30 September 2020. NAB stated it is well placed to meet APRA’s “unquestionably strong” Common Equity Tier 1 (CET1) benchmark from January 2020. Its pro-forma CET1 capital ratio is expected to be 10.75% (from 10.38% at 2H19) following its dividend reinvestment plan.
Important dates: Ex-dividend date is 14 November 2019 and payment date is 12 December 2019. NAB’s AGM is scheduled for 18 December 2019.
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