The National Australia Bank (NAB) has continued the trend of solid bank updates that we saw yesterday from the smaller Bendigo and Adelaide (BEN), and from the Commonwealth (CBA) last week, with an 8% rise in unaudited cash profits for the December quarter to around $1.7 billion.
In an update issued to the ASX this morning, the NAB said the figures exclude the newly spun off Clydesdale bank in Britain. Statutory net profit was $1.5 billion in the quarter.
The results from the NAB confirm that the banking sector hasn’t gone to hell in a hand basket, as the 20% – 30% falls in their share prices in the past year (and especially this year) would have us believe. NAB shares are down 30% in the past year and 14% so far in 2016.
The shares closed at $24.76 yesterday, up 2.5%.
NAB 1Y – National Australia lifts Q1 earnings
The NAB said this morning that revenue increased by around 2%. "Excluding a legal settlement gain in the September 2015 half year, revenue rose approximately 4% benefitting from improved lending volumes, a higher net interest margin (NIM), and stronger Wealth results. Group NIM increased reflecting benefits of home loan repricing partly offset by higher funding costs and competition for business lending.”
"Expenses increased approximately 5%. The result was impacted by the timing of higher personnel costs, largely related to Enterprise Bargaining Agreement salary increases and redundancy costs associated with project completions. Current expectations are for FY16 cash expense growth for continuing operations, and excluding currency impacts, to be less than FY15 expense growth of 4.1%.
"The charge for Bad and Doubtful Debts (B&DDs) for the quarter fell 52% to $84 million. The key driver was lower charges in Australian Banking due to improved asset quality and the non-repeat of the Australian mining and agri overlay top-up in the September 2015 half year.”
“Our performance in the first quarter demonstrates continued momentum across our Australian business and our focus on delivering a great customer experience, particularly in key customer segments,” NAB Group CEO Andrew Thorburn said in this morning’s statement.
“In our core business, investment in priority segments is delivering improving results. This is particularly the case in Australian Banking which this period recorded improved revenue growth on higher volumes and stronger margins, and improved pre-provision profit. While competition in Business Banking remains intense and funding costs have risen, we have a strong franchise and pleasingly the rate of business lending margin decline is moderating.
“Importantly, our asset quality and balance sheet remain strong, notwithstanding recent volatility in markets and commodity prices. Staying focused on these basics of banking is a priority for us,“ Mr Thorburn added.
