Why Is National Australia Bank Under Discussion For Dividend Payments?

  • Apr 27, 2019 AEST
  • Team Kalkine
Why Is National Australia Bank Under Discussion For Dividend Payments?

National Australia Bank (ASX: NAB) is one of the big four banks of Australia, recently announced additional costs for the customer remediation matters with the help of press release. As per the release dated April 18, 2019, NAB announced $525 million after tax ($749 million before tax) of additional charges in connection with the increased provisions for the customer-related remediation program. The release issued by the bank also stated that there are expectations that it would reduce H1 FY2019 cash earnings by estimated $325 million as well as earnings from discontinued operations by an estimated $200 million. We will now have a look at the viewpoints of the NAB’s top management. The bank’s CEO (Chief Executive Officer) Mr. Philip Chronican stated that the company is making sure that the customers are compensated more quickly. He also added that, since June 2018, National Australia Bank made around 360,000 payments to the customers with a total value amounting to around $145 million.

National Australia Bank noted that, of the H1 FY2019 charges, around 91% are for the wealth related matters, while the remainder is for the banking. Not so long ago, NAB issued a release on 20th March 2019, in which it stated that it has wrapped up the offer of NAB Capital Notes 3. As a result of the offer, NAB issued 18,740,582 NAB Capital Notes 3 at $100 each, which led to the raising of around $1,874 million. The bank also made an announcement that it has wrapped up the resale of all the convertible preference shares issued by NAB on March 20, 2013, to CPS nominated purchaser in accordance with the resale notice issued by National Australia Bank on February 11, 2019.

We now will have a look at how the bank is performing when it comes to dividends. National Australia Bank has declared dividends at a respectable level for the past few years. In FY2018, the bank declared dividend per share amounting to 198 cents per share and this figure has been the same for the past few years. Amidst the challenging environment, the declaration of dividend of this amount in FY2018 depicts that the bank is having strong fundamentals. In the annual financial report for 2018, the bank mentioned that it periodically adjusts the DRP (or Dividend Reinvestment Plan) in order to reflect the capital position as well as outlook.

At market close on 26 April 26, 2019, and as per Australian Securities Exchange, the annual dividend yield of National Australia Bank stood at 7.72%, which can be considered as a decent level and is broadly in line with the peer mean of 7.7%. Let us now have a look at how the stock of NAB has performed over the past few months. In the span of the last one month, the stock posted the return of 3.18%, while in the span of the previous six months, it delivered the return of 1.99%. Currently, the stock of the National Australia Bank is trading at A$25.670 per share as on 26th April 2019.


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