The National Australia Bank (NAB) has completed a record interim earnings season for our big four banks.
The NAB this morning extended the run of interim higher profits and dividends from our banks, reporting an 8.5% rise in cash earnings and a six cents a share rise in dividend payout.
The bank, the last of the three March 31 balancing reporting banks, told the ASX that it earned $3.1598 billion (matching market forecasts) and will pay an interim dividend of 99 cents a share.
The company’s bad and doubtful debts charged fell 52% from the previous corresponding period to $528 million, thanks to improvements in Australia and especially the troubled UK banking businesses, which the bank acknowledged.
In January the CBA had cash earnings of $4.2 billion, Westpac this week revealed cash profits of $3.7 billion and the ANZ last week reported cash earnings of $3.5 billion.
All up that’s more than $14.7 billion in interim cash profits for our four giant banks. No wonder they are too big to fail.
NAB 1Y – NAB lifts first half profit, dividend
NAB CEO, Cameron Clyne said in this morning’s statement the UK business was benefiting from improvements in the British economy.
"The economic environment continued to improve during the period. This is evident in the UK where confidence and economic growth have risen again and become more broad based," he said.
Mr Clyne was also optimistic about the outlook for business lending in Australia.
"In Australia, the housing sector has strengthened further, and improved business confidence, along with corporate gearing at near 20 year lows, makes us optimistic about the business sector and potential for a recovery in business credit growth."
Today’s result was the last to be delivered by CEO Clyne, who will be replaced by Andrew Thorburn in the coming months.
The NAB said that statutory net profit rose 15.8% to $2.86 billion, an increase of $390. The bank said that revenue increased by 2.6% to $9.2 billion, "but decreased by 1.2% if foreign exchange movements are excluded."
"Group net interest margin (NIM) was 1.94%, down 9 basis points on the March 2013 half year, of which 3 basis points is attributed to increased holdings of liquid assets and marketable securities. Customer NIM was flat reflecting lower deposit, funding and liquidity costs, offset by increased lending competition.
"Expenses at a headline level rose 11.6%,largely driven by movements in foreign exchange rates and higher UK conduct related charges. Excluding these items operating expenses increased by 2.9% and compared to the September 2013 half year, increased by 0.4%," NAB said.
That saw the bank’s cost to income ratio jump 2.30 percentage points to 45.4% (or 45.4 cents in every dollar of income).
The fall in the bank’s NIM to 1.94% (1.94 cents in the dollar) means the NAB is the first of our banks to see its net interest margin dip under 2 cents in every dollar of income, a very low level.
