The updates are in from the big four banks, and the loser is…….the National Australia Bank (NAB) whose interim profit and some details of the result were the weakest of the quartet.
The NAB, ANZ and Westpac (WBC) all have March 31 interim balance dates, while the CBA‘s first half ended on December 31.
It updated the market on its third quarter performance (ending March 31) yesterday and revealed a better than expected $2.2 billion cash profit.
While it talked about increased competition and more challenging conditions, the bank’s profit growth was in line with the half year result’s of a 16% gain.
So it was no wonder the Commonwealth’s shares hit a new set of high yesterday of $80.99, before closing at $80.89, its highest ever close.
It is the standout performer among the banks, followed by the ANZ and Westpac neck and neck, and the NAB bringing up the rear, and struggling a bit thanks to those millstones of its weak UK banks.
Banks 1Y – NAB the weak one
Excluding the CBA third quarter update, the big four banks had a collective interim after tax profit of $14.7 billion, a record.
They are on their way to earn well over $29 billion for the full 2013-14 financial year.
But a way of looking at how the banks performed isn’t the cash after tax profit, but the operating result before the impact of asset impairments (which have been favourable for more than 18 months, and helped the banks drive earnings higher, along with tough cost controls).
The NAB stands out as the weakest performer because of the big four, its operating profit FELL (my emphasis) in the six months to March 31, compared to the same period of 2012-13. This fall got very little publicity.
Buried in the NAB accounts (and in the accounts of the other banks), the NAB reported an operating profit before impairments of $5.031 billion, down 4.2% from the $5.251 billion reported in the March 2013 half year.
The ANZ lifted operating profit 7% to $5.232 billion, Westpac’s also rose 7% to $5.595 billion and the CBA’s rose to $6.397 billion.
NAB shares peaked at $37.07 in October of last year, since then they have fallen, risen and then fallen away since the interim result. NAB and Westpac shares both fell more than 2% yesterday because they went ex dividend, so that’s not a real measure.
NAB shares are the only ones not to have regained and topped their previous pre-GFC highs. At yesterday’s level of $33.58, the shares are around $10 under the high in late 2007.
Shares in Westpac, the ANZ and the CBA have all hit a series of new all time highs this year.
The NAB was also the only bank to report a net interest margin under 2c in the dollar (expressed as 1.94%) in the latest half. It is the lowest net interest margin any major bank has reported for years.
The benefit to NAB from a fall in the size of its impairments was the largest of all four banks in the half year at $588 million.
