NAB CFO Nathan Goonan
NAB reported a net profit of A$3.49 billion for the six months to March 2024 – a fall of 11.9 per cent compared with the previous corresponding period. The results showed a small improvement on the September half last year, when the bank reported net profit of $3.44 billion. On a cash basis, profit was down 13 per cent year-on-year to $3.54 billion.
Income: Net interest income has been largely flat for the past three halves, falling from $8.47 billion in the March half last year to $8.33 billion in the September half and then rising to $8.39 billion in the latest half. Other operating income fell 15 per cent year-on-year to $1.7 billion. Net operating income fell 4 per cent year-on-year to $10.1 billion.
Expenses and cost to income: Operating expenses rose 5.8 per cent year-on-year to $4.7 billion, with staff costs up 6 per cent and general expenses (including technology costs) up 6.2 per cent. The cost-to-income ratio rose 410 basis points from 43.3 per cent in the March half last year to 47.4 per cent in the latest half.
Impairment expense: The credit impairment charge rose from $393 million in the March half last year to $409 million in the September half and then fell back to $363 million in the latest half. The charge was made up of $189 million of specific provisions (up 50 per cent over the previous corresponding period) and $174 million of collective charges (down 35 per cent on the previous corresponding period). The credit impairment charge represented 10 bps of gross loans and acceptances – down from 11 bps.
Credit quality: The value of assets past due by 90 days or more rose from $3.4 billion in in the March half last year to $4 billion in the September half and $4.6 billion in the latest half – an increase of 36.4 per cent over 12 months. Assets past due by 90 days or more as a proportion of gross loans and advances rose 15 bps year-on-year to 64 bps. Total non-performing exposures rose 29.2 per cent to $8.7 billion over the same period, representing 1.2 per cent of gross loans an acceptances.
Margin: Group net interest margin fell 5 bps year-on-year to 1.72 per cent. The biggest margin impacts were from home loan competition, higher term deposit and other funding costs and changing deposit mix.
Return on equity: ROE fell from 13.3 per cent to 11.5 per cent year-on-year. On a cash basis, ROE was 11.7 per cent.
Earnings per share: Earnings per share have fallen from $1.30 a share in the March half last year to $1.17 in the September half and $1.14 in the latest half.
Dividend: The bank declared an interim dividend of 84 cents a share, unchanged from the September half last year and up a little from 83 cents in the March half last year. The dividend payout ratio was 74.9 per cent, compared with 76.3 per cent in the September half last year and 65.7 per cent in the March half.
The divisions: NAB’s biggest division, business and private banking, reported cash profit of $1.7 billion for the half – down 2.4 per cent from the previous corresponding period. The personal banking division’s profit fell 29.6 per cent to $553 million. Corporate and institutional banking was down 2.8 per cent to $899 million. New Zealand was down 7.7 per cent to $750 million.
Market share: The bank’s share of the Australian mortgage market fell from 14.7 per cent in the March half last year to 14.6 per cent in the September half and remained steady in the latest half. Business lending share rose from 21.6 per cent to 22 per cent year-on-year. Business deposit share rose from 19.9 per cent to 20.3 per cent and household deposit share rose from 13.8 per cent to 13.9 per cent. In New Zealand, mortgage market share and deposit share were up, while business lending share was steady.
Capital: The bank’s common equity tier 1 capital ratio fell 6 bps year-on-year to 12.15 per cent. The bank announced that it will extend its share buyback program and buy back an additional $1.5 billion. On a pro forma basis, assuming the buyback is completed, CET1 would fall to 11.75 per cent.
Funding and liquidity: Gross loans and advances grew by 3.5 per cent year-on-year to $725 billion. Customer deposits grew by 3.8 per cent to $596 billion over the same period. The bank’s liquidity coverage ratio is 139 per cent and its net stable funding ratio 118 per cent.
Customer remediation: Provision charges for customer related remediation doubled during the half, rising from $45 million in the March half last year and $43 million in the September half to $87 million in the latest half. Remediation expenses during the half were $19 million. The bank said all NAB wealth remediation has achieved practical completion and regulatory close, while JB Were remediation remains outstanding.
Staffing and branches: The number of Australian retail branches and business banking centres has fell from 546 in the March half last year to 513 in the September half and 493 in the latest half – a 10 per cent decline over 12 months. New Zealand branch numbers were cut 5 per cent to 127 over the same period. The bank has 38,499 staff (full time equivalents) – up from 38,128 in September last year.