AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
A lot of humming could be heard around the dividend policy of National Australia Bank with a leading investment banker anticipating over 15% cut in the companyâs dividend payout in 2019. It seems that before NAB could recover from the thrashing of Royal Commission in the final report, it got hit by the expected dividend cut news floating in the market. The stock slipped 0.656% to close at $24.230 on 14 February 2019.
NAB continued to trade in the red zone as the stock price declined by 0.041% to last trade at $24.220 on 15 February 2019. Its Price to earnings stood at 12.040x with a market capitalization of $67.3 billion.
Australiaâs one of the big four banks, National Australia Bank (ASX:NAB) disclosed the departure of CEO and Chairman of the company earlier this month. The company informed that Chief Executive Officer Andrew Thorburn and Chairman Dr Ken Henry have decided to leave the company, expressing their disappointment about what the Royal Commission has brought to light which particularly questioned the integrity and potential of NAB and its management.
In the final report, Hayne Royal Commission has criticized the Board for the way they have dealt with the issues raised by the Commission and expressed that NAB may not be learning the lessons from its past.
But now when the Bank is in its global quest for the appointment of new CEO, the market participants are speculating the sharp cut in NABâs dividend for the current year. The Bank has been consistently returning a higher dividend yield compared to broader industry. Its payout ratio stood at 94.1% in FY18 with total dividend per share of $1.98 and an annual dividend yield of 8.17%.
Analysts believe that a new CEO taking a helm of the staggering ship of NAB would want to announce dividend cuts to bring back the bankâs capital position in shape. However, the National Australia Bank is peddling its capital building plan at a rapid pace as it pushed up its capital raising via convertible notes program to at least $1.65 billion. The action outlines the NABâs aim to meet APRAâs âunquestionably strongâ target Common Equity Tier 1 Capital Ratio of at least 10.5% by January 2020.
On 15 February 2019, the Bank announced that following the strong demand, it has closed the bookbuild earlier than planned. Therefore, it has increased its Capital Notes 3 Offer from previous $750 million to at least $1.65 billion with Margin sent to 4%, lower end of the margin range of 4.00%-4.20% per annum.
However, the analysts believe that the significant dividend cut needs to be taken by NAB due to the pending revision to APRAâs capital framework guidelines, the downturn in the global financial market, and costs on redemption.
Over the past 12 months, NAB has witnessed a negative price change of 16.16% including a dip of 1.78% in the last month.
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
