SYDNEY, AAP – National Australia Bank has joined other major banks in posting a turnaround in full-year earnings, amid gains in the home loans market and a steady performance at its main business banking unit.
Australia’s third-largest lender said cash earnings for the year to September 30 rose 76.8 per cent from a year ago to $6.56 billion.
Statutory net profit also soared, allowing the bank to more than double the final dividend it paid out last year to 67 cents per share.
“Our results this year demonstrate we have negotiated a challenging environment … resulting in safe growth across our business,” CEO Ross McEwan said.
The result was slightly ahead of analyst’s expectations, but concerns over rising costs and intensifying competitive pressures kept the shares in check.
“The competition is there and we do expect to have more pressure coming through and we’re very cognisant of that. We’ve got to be very careful we just don’t end up on that price war,” Mr McEwan told analysts.
NAB shares slipped as much as 2.5 per cent in early trading before recovering somewhat. By 1535 AEDT the stock was down 1.4 per cent at $28.69.
Gross loans and advances were 5.9 per cent higher largely on the back of stronger than market home lending, up 5.3 per cent.
Performance at its key business banking division was steady, with earnings up 0.3 per cent, while personal banking income was up 14.4 per cent and NZ banking enjoyed an 18.7 per cent rise.
On the negative side, earnings at its corporate and institutional banking unit slid 14.8 per cent driven by lower markets income and higher credit losses.
Net interest margin – the difference between what banks charge versus the cost of a loan – fell six basis points to 1.71 per cent, while annual revenue was down 2.2 per cent.
The bank also said wrote back provisions worth $217 million as COVID-19 related loan losses were lower than expected.
“The result was significantly boosted by a net provision release of $217 million compared to a $2.8 billion charge in 2020,” ratings agency Moody’s said.
NAB says it is optimistic about the future beyond the coronavirus pandemic but expects economic recovery will be postponed until 2022.
It estimates a 3.8 per cent hit to the economy in the September quarter, but is forecasting gross domestic product will then rebound by four per cent in 2022, reflecting healthy household balance sheets, ongoing policy support and improved business confidence.
“Our bank has momentum, our strategy is clear and as lockdown restrictions ease, a pick-up in activity is expected,” McEwan said.
“While some uncertainties exist in the outlook including the impact of tapering support, our balance sheet settings are strong and we are well positioned for the expected economic rebound.”
NAB’s final dividend took full year payout to $1.27 a share and follows a difficult year when profits slumped amid the pandemic and dividends were capped by regulators.
NAB FY PROFIT REBOUNDS
* Cash earnings up 77 per cent to $6.56 billion
* Net profit $6.36 billion vs $2.56 billion
* Operating revenue down 2.2 per cent to $16.81 billion
* Fully franked interim dividend 67 cps vs 30 cents a year ago.