Bank results will show revenue pressure
Revenue trends among the big banks reporting their half-year results over the coming week will be weak, according to one analyst's preview of the results. And NAB will cut its dividend. Macquarie Securities expects all three of the banks - ANZ, NAB and Westpac - to report lower net interest income and non-interest income.This weak revenue growth is due to soft non-interest income in areas such as markets and a combination of slow growth and margin pressure in their mortgage businesses.Mortgage balances are growing at a little over 4 per cent a year, their lowest rate of growth for many years. ANZ lost share during the March half.Funding costs are coming down but Macquarie says the impact of lower spreads will only start to come through in the second half.Remediation charges are expected to be an ongoing drag on profits. "While banks, except ANZ, have pre-announced large remediation provisions, we expect further charges in the September half and in 2019/20," Macquarie says.There is also a chance that banks will increase their impairment charges to make allowance for more challenging economic conditions.ANZ will release its half-year financial report on Wednesday. Macquarie has forecast net interest income of A$7.26 billion - down from $7.35 billion in the previous corresponding period. Non-interest income will fall from $2.45 billion to $2.07 billion.Macquarie says ANZ's net interest margin will fall from 1.93 per cent to 1.84 per cent. Its net profit will be around $3.19 billion, compared with $3.32 billion in the previous corresponding period.It expects ANZ to leave its dividend unchanged at 80 cents a share, with the payout ratio rising from 70.5 per cent to 74.4 per cent. The bank's return on equity will fall from 11.8 per cent to 10.6 per cent.NAB reports on Thursday. Macquarie has forecast net interest income of $6.72 billion - down from $6.75 billion in the previous corresponding period. Non-interest income will fall from $2.34 billion to $2.09 billion.Macquarie says NAB's net interest margin will fall from 1.87 per cent to 1.82 per cent. Its net profit will be around $2.81 billion, compared with $2.87 billion in the previous corresponding period.It expects NAB to drop its dividend from the 99 cents a share it paid in the last two halves to 80 cents, with the payout ratio dropping from 100 per cent to 77.4 per cent. The bank's return on equity will rise from 10.7 per cent to 11 per cent.Westpac reports on Monday, May 6. Macquarie has forecast net interest income of $8.19 billion - down from $8.3 billion in the previous corresponding period. Non-interest income will fall from $2.85 billion to $2.27 billion.Macquarie says Westpac's net interest margin will fall from 2.17 per cent to 2.07 per cent. Its net profit will be around $3.45 billion, compared with $4.19 billion in the previous corresponding period.It expects Westpac to keep its dividend unchanged at 94 cents a share, with the dividend payout ratio rising from 77.6 per cent 96.4 per cent. The bank's return on equity