NAB profit down 46.7%
National Australia Bank’s statutory net profit for FY20 is down 46.7% as credit impairment charges increased 201% to $2.76 billion and expenses rose 10.7%.
In an announcement to the Australian Securities Exchange (ASX), the bank said its cash earnings were down 36.6% from FY19. The bank also announced a final dividend of 30cps 100% franked.
NAB chief executive, Ross McEwan, said costs rose in FY20 as the bank adjusted to the COVID-19 environment and started its “strategy refresh” in April.
“Revenue down 1.4%. Excluding customer-related remediation, revenue declined 1.5% mainly reflecting lower fee income given COVID-19 fee waivers and reduced transaction volumes in merchant acquiring and cards activities, combined with the non-repeat of asset sale gains in the prior year,” it said.
“Expenses rose 10.7%. Excluding large notable items, expenses were up 2% primarily reflecting costs associated with the implementation of our strategy refresh, combined with higher technology-related costs associated with the compliance and control framework, salary increases, and COVID-19 related costs. This was partly offset by productivity benefits, lower performance-based compensation, and reduced travel and entertainment costs.”
On its credit impairment charges, $1.86 billion was to additional forward-looking collective provisions to reflect potential COVID-19 impacts. Also, the percentage of gross loans and acceptances rose 31bps to 46bps.
The sale of MLC Wealth in August was expected to provide additional 35bps of common equity tier 1 with the group CET1 ratio at 11.47%, up 109 bps from September 2019.
Only personal banking cash earnings were up at 9.5% due to home loan repricing and lower funding costs in the housing lending portfolio, combined with lower credit impairment charges.
Corporate and institutional banking was down 2.6% and New Zealand banking was down 1.8%, both mainly due to higher credit impairment charges.
Business and private banking was down 11.6% due to the low interest rate environment and higher operating expenses.
“Our priorities over the next three to five years include simplifying processes and policies for home and business lending, creating simpler transactional banking, providing enhanced data and analytics to customers and colleagues and growing our digital bank UBank,” it said.
Recommended for you
For advisers considering their clients’ fixed income allocations, VanEck research has detailed which elements of fixed income and credit have performed the best since the start of 2024.
There is a role for advisers to include capital securities in portfolios to provide diversification within clients’ fixed income allocations, according to fund manager Wellington Management.
BlackRock’s iShares fixed income ETFs have reached US$1 trillion in assets under management across the globe, a year after the global bond ETF industry hit US$2 trillion.
Platinum Asset Management’s funds under management was $12.23 billion at the end of August, down from $13.03 billion in July.
