National Australia Bank hit the mark so far as interim earnings and dividend are concerned, but is selling its MLC wealth management arm.
NAB also reported first-half cash earnings of $3.29 billion, a 0.2% dip compared with last year, excluding one-off restructuring costs of more than $750 million (which have already been revealed to the market).
Cash profit dropped 16% to $2.76 billion for the half year with those restructuring costs included.
Statutory profit was up 2% to $2.58 billion. Revenue rose a solid 11.4% to $9.6 billion in the half year period.
The NAB’s net interest margin rose 5 points to 1.87% (The ANZ’s fell 7 points to 1.93%), while the cost to income ratio (without the restructuring charges) rose to 43.9 from 42.7%.
Interim dividend was left at 99 cents a share (the ANZ left its interim unchanged as well), a sure sign of the caution at the to of the Melbourne-based banks. That will swallow 96.9% of net profit for the half year.
NAB six months ago announced a plan to cut 6000 jobs by 2020, and on Thursday it said 1050 full-time staff had left the bank at the end of April.
NAB began a strategic review of MLC a year ago and said on Thursday it now wanted to focus on its “core strengths in banking consistent with [the] simplification agenda” and there was an “opportunity for MLC to set an independent strategy and investment priorities". It said it expect NAB’s return on equity to increase after the separation.
The NAB has already sold 80% of its insurance operations to Nippon Life of Japan and said in today’s earnings statement that the sale includes its financial advice, superannuation and funds management businesses.
It will keep the JB Were and nabtrade businesses.
NAB said it was looking to sell the businesses by the end of this year, through a sharemarket float, demerger or possible trade sale.
“The acceleration of our strategy announced with the Group’s 2017 Full Year Results, including an estimated additional $1.5 billion investment over three years, is now well underway,” says NAB Chief Executive Officer Andrew Thorburn .
“We are improving the experience of our customers, reshaping our workforce and growing our bank in an environment of rapid technological and regulatory change.
“This is an ambitious and necessary plan so we can continue to deliver for all our stakeholders, live our purpose to ‘back the bold who move Australia forward’ and achieve our vision to be Australia and New Zealand’s most respected bank.”
Credit impairment charges fell 5.3% to $373 million (The ANZ saw a 43% drop).
The bank’s core capital ratio was 10.21% at the end of March, still short of the regulatory minimum of 10.5%. The sale of MLC will raise enough capital to boost that figure above the minimum.
NAB shares fell 0.6% to $29.39 in the wake of the result.
