National Australia Bank Ltd.’s (ASX: NAB) shares were uplifted by 1.388 percent on 1 November 2018 (12:55 PM AEST), following the announcement of FY 2018 Results. As per NAB’s CEO Mr. Andrew Thorburn, FY 2018 was a challenging year for NAB, however the bank is on track and benefits are emerging as NAB is becoming more simpler and faster. The FY 2018 results were impacted by restructuring-related costs and customer-related remediation due to which the overall cash earning of NAB decreased by 14.2 percent to $5,702 million in FY 2018 as compared to prior corresponding year. Further, the operating expenses of NAB increased by 6.4 percent in FY 2018 which reflects additional investment in customer and technology initiatives. The increase in the operating expenses was consistent with the NAB’s commitment to reshape and simplify its business, and it was within the previously announced FY18 expense guidance of 5-8%.
The cash earning from Business & Private Banking increased by 2.5 percent in FY 2018 as compared to FY 2017 mainly due to stronger SME business lending and higher margins which was partly offset by increased operating expenses due to acceleration of investment spend combined with higher credit impairment charges. The cash earning from New Zealand Banking increased by 6.7 percent in FY 2018, mainly driven by the higher margins and good lending growth, partly offset by accelerated investment. Due to the decline in the housing margin and an acceleration of investment spend in new capabilities to improve customer experience, the cash earnings from Consumer Banking & Wealth decreased by 5.8 percent in FY 2018. Excluding the customer related remediation, the revenue of NAB increased by 1.8 percent which reflects growth in housing and business lending and stable margins, partly offset by lower Markets & Treasury income.
The Asset quality of NAB remained broadly stable with the ratio of 90+ days past due and gross impaired assets to gross loans and acceptances increased by 1bp to 0.71%. The Asset quality was benefitted from the sound economic conditions and prudent risk settings. As at 30 September 2018, the Common Equity Tier 1 (CET1) ratio of NAB was 10.20% which is 14bps higher than September 2017.
As per the company’s report, the outlook for the Australian and New Zealand economies remains positive. In Australia, solid economic growth is expected due to the support of strong government infrastructure spending, mining exports and improving non-mining business investment. Solid population growth and low unemployment continue to limit risks from a slowing housing cycle, and while the consumer sector remains subdued, a modest increase in wages growth is expected with a tightening labour market.
On 1 November 2018, NAB board declared a dividend of 99 cents per share, fully franked. Further, the company also announced that it has updated the DSP and BSP terms and Conditions.
In the last six months, the share price of the company decreased by 14.40 percent as on 31 October 2018. NAB shares traded at $25.560 with a market capitalization of circa $68.93 billion as on 1 November 2018 (12:55 PM AEST).
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