NAB reported a net profit of A$3.55 billion for the six months to March – and increase of 10.7 per cent over the previous corresponding period. After adjusting for hedging, amortisation of acquired intangible assets and acquisition costs, cash earnings were up 4.1 per cent to $3.48 billion.
Income: Net interest income rose 3.6 per cent over the previous corresponding period to $7.1 billion. Other operating income rose 8.9 per cent to $1.7 billion. Net operating income rose 4.6 per cent to $8.8 billion.
Expenses and cost to income: Operating expenses rose 2.6 per cent to $3.9 billion. The cost-to-income ratio fell from 45.8 per cent to 44.9 per cent.
Impairment expense: After benefiting from releases from the collective provision in 2020/21, the bank reported an impairment charge of $2 million for the half.
Credit quality: In its presentation the bank combined loans past due by 90 days or more and gross impaired assets to gross loans and acceptances into a single metric. That number fell from 1.23 per cent to 75 basis points year-on-year. The value of new impaired assets fell from $271 million to $223 million year-on-year.
Margin: The net interest margin fell 11 basis points to 1.63 per cent. The decline was driven by higher holdings of liquid assets, and weaker markets and treasury business.
Return on equity: On a cash basis, ROE fell from 11.1 per cent in the March half last year to 10.3 per cent in the September half, before rising to 11.3 per cent in the latest half.
Earnings per share: EPS was up 12 per cent to 109.1 cents a share (106.9 cents on a cash basis).
Dividend: The bank declared an interim dividend of 73 cents a share, compared with an interim dividend of 60 cents a share in the March half last year and a final dividend of 67 cents a share. The dividend payout ratio is 66.9 per cent (68.3 per cent on a cash basis) – up from 61.8 per cent for the previous corresponding period.
The divisions: The biggest of the bank’s divisions, business and private banking, made a cash profit of $1.4 billion – up 17.5 per cent over the previous corresponding period. The personal banking division’s profit fell 8.3 per cent to $788 million. Corporate and institutional banking profit was up 3.1 per cent to $806 million and the New Zealand result was up 9.4 per cent to $630 million.
Market share: Australian housing loan share rose from14.4 per cent to 14.5 per cent year-on-year and business lending share rose from 20.6 per cent to 21.3 per cent. Household deposit share was steady at 13.3 percent, while business deposit share rose from 19.2 per cent to 20.1 per cent. In New Zealand, housing loan share rose from 16.2 to 16.5 per cent, business lending share rose from 22.3 per cent to 22.5 per cent and retail deposit share rose from 17.7 per cent to 17.9 per cent.
Capital: The group common equity tier 1 capital ratio rose from 11.47 per cent in the March half last year to 13 per cent in the September half, before falling back to 12.48 per cent in the latest half. This reflects the $2.5 billion on-market share buyback, which was completed earlier this year.
Liquidity and funding: Total assets rose 9.4 per cent to $956.4 billion and gross loans and advances rose 10.2 per cent to $659.7 billion. Customer deposits rose 11.5 per cent to $530 billion, making up 80 per cent of loan funding. The bank raised $21 billion of term wholesale funding during the half. The net stable funding ratio is 123 per cent and the liquidity coverage ratio is 134 per cent.
Customer remediation: The remediation cost was just $21 million during the half – down from $137 million in the September half last year. The bank has paid $1.9 billion in remediation to 1.8 million customers since June 2018 and at March 31 had a provision of $569 million. The bank said all major programs would be “materially completed” by the end of this year.