Australia’s largest business bank, National Australia Bank Limited (ASX: NAB) has been helping its customers with their money for almost 160 years. On 7 January 2019, NAB announced that the National Australia Bank Limited and its associated entities have ceased to be the substantial holder of Qantas Airways Limited (QAN) since 2 January 2019. Earlier on 2 January 2019, NAB became the substantial holder of Qantas Airways Limited by holding 86,222,204 Fully paid ordinary shares with 5.270 percent voting power.
Before that on 31 December 2018, NAB announced that National Australia Bank Limited and its associated entities ceased to be the substantial holder of Iluka Resources Limited since 24 December 2018. Earlier on 24 December 2018, NAB became the substantial holder of Iluka Resources Limited by holding 21,208,292 Fully paid ordinary shares with a voting power of 5.021%.
The year 2018 was a challenging year for the Bank as there were many issues raised at NAB and in the industry that were unacceptable. Further, there were many instances where the bank did not meet the standards of its customers which are entitled to expect.
Despite a challenging year, the bank delivered a decent financial performance and maintained a dividend payout ratio of 82.6 percent. In FY 2018, NAB reported cash earnings of $5,702 million which was 14.2 percent lower than FY 2017. The decrease in cash earnings was mainly due to restructuring-related costs of $530 Mn and customer related remediation of $261 Mn. In FY 2018, the expenses of NAB grew by 6.4% which reflects additional investment in customer and technology initiatives. The increase in the expenses is in line with the company’s commitment of reshaping and simplifying its business, and it is also within FY 2018 expense guidance of 5-8%.
During the year 2018, the Royal Commission raised several instances where NAB failed to treat customers with care and respect, which is why now NAB is aiming to put things right, and it is taking steps to build a better bank. In FY 2018 the company reported a Statutory net profit of $5,554 million and CET1 ratio of 10.20 percent.
In the NAB’s Business & Private Banking division, the FY18 cash earnings increased by 2.5 percent which reflects stronger (Small and Medium Enterprise) SME business lending and higher margins. The increase in the cash earnings was partly offset by increased operating expenses and higher credit impairment charges. In consumer banking and wealth business division, the cash earnings decreased by 5.8 percent.
On 7 January 2019, the share price of NAB increased by 1.001 percent and the share price of QAN increased by 1.757 percent as on the same date. Meanwhile, in the last six months, the share price of NAB decreased by 12.42 percent as on 4 January 2019. NAB’s shares traded at $24.220 with a market capitalization of ~$66.6 billion as on 7 January 2019.
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