The National Australia Bank has joined rivals ANZ and Westpac in slashing final year dividend after COVID-19 and the recession whacked earnings in the year to September 30.
The NAB reported cash earnings of $3.710 billion, down 36% from the year before. Excluding large one-off costs, cash earnings fell to $4.733 billion for the September year while the bank’s statutory profit totalled $2.559 billion, down nearly 47% on the previous year’s $4.798 billion.
The NAB said in a pre-market opening announcement that it was paying a final of 30 cents a share, the same as the interim and down from two payments of 83 cents a share in the previous year.
That made for a total for the year to September 30 of 60 cents a share, down more than 60% from the $1.66 a share paid in 2018-19.
Westpac reported on Monday that its final and only payout to shareholders for 2019-20 would be a full franked 31 cents a share while the ANZ paid a final of 35 cents after an interim in August of 25 cents).
“A strong balance sheet remains critical to allow us to support customers while keeping the bank safe, the NAB said in its Thursday morning statement.
“Building on our decisive actions in April to bolster capital and provisions, in 2H20 we added a further $1,028 million in forward-looking provisions, bringing total forward-looking provisions raised in FY20 to $1,856 million.
Total provisions for impairments now stand at more than $2.76 billion, three times the September, 30, 2019 figure of $919 million.
The NAB said the second half increase “reflects continuing uncertainty in the outlook combined with extra cover for specific sectors most heavily impacted by COVID-19.”
“Stronger provisions are the right thing to do but have impacted FY20 cash earnings, which are down 25.9% compared with FY19 (ex large notable items).
“In addition, low interest rates and lower fee income contributed to a decline in revenue. While we are acutely aware of the need for disciplined cost management, costs rose in FY20 as we adjusted to the COVID- 19 environment and started implementing our strategy refresh announced in April,” NAB directors added.
