NAB lifts first half profits and dividend
National Australia Bank has joined other major banks in posting a rebound in fortunes amid improving economic conditions, recording a 94 per cent jump in first-half cash earnings to $3.3 billion.
Australia's third-largest lender said the results reflected improving conditions, which had also allowed it to wind back some of the additional provisions taken last year as bad debts failed to materialise.
"This is a clean set of results with no large notable items," Mr McEwan said on an investor call.
"Revenue has been impacted by low interest rates and subdued asset growth ... in an environment like this, it is important to be disciplined on cost."
By 1230 AEST, NAB shares were down 3.2 per cent to $26.48 in a weak Australian market.
NAB's operating revenue for the half-year dipped 1.5 per cent to $8.26 billion, although statutory net profit for the six months to March 31 more than doubled to $3.2 billion.
Like other major Australian banks, its profit plunged last year after it was forced to make higher provisions to cover for higher potential defaults due to the COVID-19 disruptions.
But that hasn't materialised as business activity has picked up and prices in the key housing market have been resurgent.
That allowed the lender to write back provisions of $128 million in the first half, compared with a $1.2 billion charge a year ago.
"The rebound in the Australian and New Zealand economies from COVID 19 has been better than expected," Mr McEwan said.
"This along with the vaccine rollout and continued strong health outcomes, make us optimistic about the outlook."
But Mr McEwan warned the sustainability of the recovery remained uncertain and the impact on customers has been uneven.
Cash earnings at its key business banking segment were down 10.3 per cent from a year ago to $1.2 billion.
NAB said about $2 billion, or 9 per cent of the amount originally deferred, was being managed by a special workout team but only $200 million of this has been due over 90 days.
By contrast, NAB's personal banking unit saw cash earnings rise 14.1 per cent from a year ago to $859 million due to reduced credit impairment charges and low funding costs.
"A very strong capital position, along with large loan loss reserves, reflects the strength of the (NAB) balance sheet even as the risk of bad loans begins to recede," Moody's vice president Frank Mirenzi said in a note after the results.
NAB will pay a first-half dividend of 60 cents a share, double the amount it paid for the same period last year, when it was forced to slash the payout due to economic uncertainty.
Earlier this week, rivals Westpac and ANZ also lifted shareholder payout after first-half earnings bounced back from last year's low.
A review by advisory Ernst & Young on Thursday found that Australian major banks' 2021 half-year results showed a 62 per cent increase in combined cash earnings from the same time last year, totalling $13.8 billion.
This followed significant credit provisioning undertaken in the first half of 2020 and the capital generation ensures they have substantial buffers against potential future shocks.
NAB H1 PROFIT BOUNCES BACK
* Cash earnings up 94pct to $3.3bn
* Net profit up 144pct to $3.2bn
* Operating revenue down 1.5pct to $8.26bn
* Fully-franked interim dividend 60 cents/sh vs 30 cents year ago.
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