NAB reports full-year results; 30 cents per share dividend declared

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NAB reports full-year results; 30 cents per share dividend declared

 NAB reports full-year results; 30 cents per share dividend declared

Summary

  • NAB announced full-year results and declared a final dividend of 30 cents per share.
  • Cash profit of the bank was $3.71 billion for the year ended 30 September 2020. 
  • It is expecting to issue new AT1 security which replaces existing Convertible Preference Share II through repayment.

On 5 November 2020, National Australia Bank Limited (ASX:NAB) announced full-year results and declared a final dividend of 30 cents per share, taking full-year dividends to 60 cents per share. It has reported a statutory profit of A$2.56 billion and a cash profit of A$3.71 billion for FY20. 

Credit impairment charges in FY20 were A$2.76 billion compared to A$919 million in the previous year, showing an increase of 201%. This included A$1.85 billion to reflect expected COVID19 impact. Within this A$1.85 billion, it has kept A$388 million for sectors with elevated stress. 

Group CET1 ratio at the end of the year was 11.47%, an increase of 109 basis points from the last year. During the year, the bank completed an institutional placement and share purchase plan of A$4.25 billion. 

The bank has also announced the sale of MLC Wealth, which is expected to improve CET1 ratio by approximately 35 basis points. It is considering raising capital through a new Additional Tier 1 capital security, which would be listed on ASX. 

National Australia Bank would also repay Convertible Preference Share II. At the end of the year, the leverage ratio of the bank was 5.8%, the net stable funding ratio was 127%, and liquidity coverage ratio was 139% (quarterly average). 

Notable items that impacted cash profit after tax included customer and payroll remediation of A$261 million, capitalised software policy change of A$668 million, and impairment of property assets of A$94 million. 

Strategic review

In FY20, the bank finished its three-year transformation program, which saw an increase in investment by A$1.67 billion emphasising on technology, digital capability, and improving customer experience. 

Over the next five year, the bank is going to focus on fine-tuning processes in business and household lending, simpler transaction banking, growing UBank. NAB would also move IT application to the cloud. 

In August, the bank had announced the sale of MLC Wealth to IOOF Holdings for A$1.44 billion. This decision was consistent with the strategy to focus on core banking. NAB continues to explore opportunities for changes in its portfolio to divest the non-core business. 

FY20 group results 

Excluding customer remediation, net interest income for the year was A$13.92 billion, an increase of 2.2% over the previous year. Likewise, other operating income was A$3.39 billion down by 14.4% over the previous year. 

Net operating income after including customer remediation costs was A$17.19 billion, down by 1.4% over the previous year. Exclude large notable items, operating expense for the year were A$7.67 billion, up by 2% over the previous year.

Underlying profit for the year was A$8.18 billion, which includes large notable items aforementioned. The credit impairment charge was A$2.76 billion for the year. Net profit from continuing operations was A$3.49 billion, and loss from discontinuing operation was noted at A$939 million.  

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