Ross McEwan yesterday achieved what no permanent CEO of the National Australia Bank has managed since Don Argus was punching out record profits in the 1990s – an accolade from hard-bitten Sydney banking analyst, Brian Johnson.
The veteran industry badass is renowned for taking it up to senior executives of the Melbourne banks whose errant ways for more than 20 years have plied him with shedloads of fireworks to set off at result announcements.
But Johnson’s tone was noticeably softer on Tuesday after NAB chief Ross McEwan and his CFO Gary Lennon finished spruiking the bank’s latest set of full year numbers.
There was absolutely no hint of pending interrogation or menace from the browbeating Jefferies Group analyst when he was invited by the teleconference mediator to present questions to the NAB top brass.
“Congratulations on an excellent slide package and on a pretty good result despite the market’s reaction,” swooned Johnson down the line from Sydney.
The sentiment was shared by others at the briefing including Evans & Partners analyst Matt Wilson who said he struggled to recall the last time NAB had delivered consecutive six month results without any extraordinary items to crush the bottom line.
In a report issued to clients last night, Wilson revealed it was first set of clean results dished out by a NAB CEO in more than two decades.
“This was a clear and clean result,” Wilson said.
“Right now NAB is the best balanced banking franchise in the country.”
After only 18 months at the helm of Australia’s most accident-prone bank, investment analysts sense that McEwan is actually delivering on his promise to remove the self-destructive culture that for so long have disfigured NAB’s public standing and financial performance.
Johnson was particularly impressed by the swift transformation of NAB’s mortgage origination platform, which is now exploiting automated processing to reduce loan approval and settlement times for brokers and their clients.
While ANZ and Westpac continue to bleed market share in mortgages mostly because of failing origination platforms that have forced brokers to direct their business elsewhere, NAB is now growing faster than system.
“It’s rare to see a result where a bank can actually show it is fixing problems like NAB has with their mortgage process, “ Johnson told Banking Day last night.
“After generational management failure there’s now a lot of latent potential within the company.”
While McEwan needs to hit many more home runs to dislodge CBA’s valuation premium in the sector, his methodical style and carefully parsed rhetoric seems to be winning investors over.
The rhetoric is unexciting, likely to garner few headlines and pitched squarely at recasting NAB as a “safe bank” that can generate consistent investment returns.
McEwan spent most of Tuesday repeating his key messages to stakeholders: “getting the basics right”, “disciplined growth” and “executing with focus”.
By the end of the day the juxtaposition of his mundane rhetoric alongside the bank’s impressive performance metrics managed to shore up the share price.
On a negative day for ASX banking stocks, NAB scrip recovered from a sharp fall in the morning to close the strongest