A 14% slump in cash net profit, to $5.702 billion in the year to September has not stopped the National Australia Bank from maintaining final and full year dividends.
The fall was driven by $11 million in customer remediation costs in the year to September, and a massive $777 million in restructuring costs which was a far more influential reason for the 14% slide in profit than the impact of the Hayne Royal Commission.
The bank said final dividend will be a steady 99 cents, to go with the steady interim of the same amount for a total of $1.98 a share.
In keeping payout to shareholders steady, the NAB followed the ANZ which on Wednesday maintained its final at 80 cents a share and full-year payout at $1.60 a share. The ANZ reported a 5% slide in cash earnings.
The NAB said that revenue was up 6% to $19.1 billion “mainly reflecting growth in housing and business lending and stable margins, partly offset by lower Markets & Treasury income.”
Net Interest Margin was flat at 1.85% and excluding Markets and Treasury increased 3 basis points (bps), reflecting the impact of prior period repricing and lower funding costs, partly offset by the bank levy and home lending competition.
The bank’s expenses rose 17.8%, but again were much better excluding restructuring-related costs and customer-related remediation – the rose 6.4%, mainly due to acceleration of investment spend announced in 2017.
CEO Andrew Thorburn said in a statement with the results “We are making progress to be a better bank for our customers, employees and owners. While 2018 has been a challenging year, our transformation is on track and benefits are emerging as we become simpler and faster.
“Our FY18 result was impacted by restructuring-related costs and customer-related remediation, with cash earnings 14% lower than FY17. Excluding these items, cash earnings declined 2% due to higher investment spend as we accelerate investment to transform our business. Pleasingly, revenue was higher with good lending growth and stable margins.
“Asset quality and balance sheet metrics remain sound, and we have a clear path to achieving APRA’s unquestionably strong CET1 target of 10.5% by January 2020.
“Performance of our Business & Private Banking division, our leading SME franchise, was a real highlight with strong revenue and business lending growth.
“We are listening and responding to customers, including to Royal Commission issues, and are proactively taking steps to be more customer focussed, as we strive to be Australia’s leading bank, trusted by customers for exceptional service,” he claimed.
A fall in impaired loans helped – but nowhere near the boost, it gave to the ANZ. The NAB said impairment charges declined 3.8% to $779 million, and as a percentage of gross loans and acceptances declined 1bp to 13bps.” The ANZ saw a $1 billion-plus fall.
