NAB Announced Trading Update for Q1 FY2019

NAB

One of Australia’s leading Bank, National Australia Bank (ASX: NAB) has released a trading update for its first quarter of FY 2019. The bank has also announced that its CEO Mr. Andrew Thorburn and Chairman Dr. Ken Henry have stepped down from their respective role and they are going to leave the bank.

The bank has reported an unaudited statutory net profit of $1.70 billion and unaudited cash earnings of $1.65 billion for Q1 FY19. When compared to the quarterly average of the second half of FY 2018, the cash earnings of the bank are up 2%, but when compared to the first quarter of FY 2018, the cash earnings are down by 3%.

As per NAB’s CFO Mr. Gary Lennon, despite facing a challenging environment, the bank’s revenue in the first half is broadly stable, and the bank witnessed good growth in SME Lending and housing. The bank’s SME Franchise delivered good results as its ‘Best Business Bank’ initiatives gain traction. While commenting on the Royal Commissions Final Report which was recently released, Mr. Gary told that the Report is Comprehensive, and it will bring necessary change for NAB. 

For Q1 FY19, the Group had Common Equity Tier 1 (CET1) ratio of 10% and a Leverage ratio (APRA basis) of 5.2%. Due to the pressure in housing lending and lower markets, the net interest margin of the bank declined in the first quarter of FY 2019.

During the quarter, the credit impairment charges fell by 5% to $193 million, and it included a $62 million increase in the drought-related Forward-Looking Adjustment (FLA). During the quarter, the Asset quality remained sound with the ratio of 90+ days past due and gross impaired loss assets to gross loans and acceptances broadly stable at 0.72%.

While providing an update on its MLC wealth Management Business, NAB informed that its plan to exit its MLC business is having good momentum under new leadership. The proposed exit of MLC is subject to market conditions and shareholders’ approval and NAB is going to take a disciplined approach to the exit of MLC.

NAB’s CEO Mr. Andrew Thorburn has stepped down as CEO and the Board has accepted his resignation. NAB Board has also announced that it will initiate a global search process for the CEO role while actively considering a range of quality internal candidates and in the meantime, Phil Chronican will serve as acting CEO to ensure the smoothest possible transition.

NAB’s Chairman Dr. Ken Henry who has also stepped down from his role said that he and the Board had recognized that change was necessary and according to him the timing of his departure will minimize disruption for customers, employees, and shareholders.

On 7 February 2019, the company’s securities were placed in a trading halt pending an announcement in relation to the leadership changes. After the announcement regarding the leadership changes, the trading halt was lifted. At the time of writing (At the time of writing (on 8 February 2019, AEST 1:21 PM), National Australia Bank is trading in red and the stock price is A$24.570 per share which implies the fall of A$0.360 per share or 1.444%. In the past six months, the share price of NAB decreased by 10.32%, however, in the last one month the shares have increased by 2.93%.


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