NAB has confirmed the customer rebate charge of $314 flagged at the quarterly update and warned there could be further costs in FY19. The broker is not factoring in a forecast for additional remediation costs, fines etc but rather applies a -5-10% valuation discount across the sector to account for the risk.
The broker suggests NAB will likely discount its DRP to bolster capital lost through remediation charges and may need to cut its dividend to avoid ongoing earnings pressure if further costs need to be booked. Target falls to $29 from $31, Outperform retained.
Sector: Banks.
Target price is $29.00.Current Price is $25.64. Difference: $3.36 – (brackets indicate current price is over target). If NAB meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
