NAB CFO Nathan Goonan
National Australia Bank reported net profit of A$7.4 billion for the 12 months to September – an increase of 7.6 per cent over the previous corresponding period. On a cash basis, excluding notable items, profit was up 8.8 per cent to $7.7 billion.
All the gains were in the March half-year, with net profit down 13.1 per cent in the September half.
Income: Net interest income rose 13.2 per cent to $16.8 billion. Net operating income rose 12.9 per cent to $20.6 billion. Net operating income was down 3.8 per cent half-on-half. The bank said the second half decline was due to lending margin compression, higher deposit costs and changes to the deposit mix.
Expenses and cost to income: Operating expenses rose 9.1 per cent to $9 billion. The cost-to-income ratio fell from 45.2 per cent in 2021/22 to 43.7 per cent in the year to September but jumped back to 45.5 per cent in the September half.
Impairment expense: Impairments rose from $125 million in 2021/22 to $802 million in the year to September. The charge was made up of $560 million of new and increased specific impairments (up from $402 million the previous year), offset by $148 million of write-backs and $79 million of recoveries. The collective impairment charge was $469 million, compared with a $46 million write-back in 2021/22. The impairment charge as a proportion of gross loans and acceptances rose from 4 basis points in September last year to 12 bps a year later.
Credit quality: Australian home loan arrears (90 days or more past due) rose from 67 bps to 76 bps of outstandings over the six months to September. Loans in arrears represented 75 bps of gross loans and acceptances – up from 66 bps a year earlier.
Margin: Group net interest margin rose 9 bps to 1.74 per cent year-on-year. Half-on-half it fell from 1.77 per cent to 1.71 per cent. During the second half, the lending margin fell 7 bps and the deposit margin fell 4 bps. Higher earnings on capital offset some of this decline.
Return on equity: ROE rose from 11.3 per cent in 2021/22 to 12.3 per cent in the year to September. It was 13.3 per cent in the March half but fell back to 11.3 per cent in the second half.
Earnings per share: EPS rose from 205.6 cents share in 2021/22 to 228.7 cents a share in the year to September. It plunged to 107.3 cents a share in the September half.
Dividend: The bank declared a final dividend of 84 cents per share, taking the dividend payout for the year to $1.67 a share. The dividend payout ratio was 70.6 per cent, compared with 70.5 per cent in the previous year.
The divisions: NAB’s biggest division, business and private banking, reported cash profit of $3.3 billion – an increase of 10.1 per cent year-on-year. The personal banking division’s profit fell 9.1 per cent to $1.4 billion. Corporate and institutional banking was up 14.9 per cent to $1.9 billion. New Zealand was up 8.4 per cent to $1.4 billion.
Market share: Australian home loan share fell 20 bps to 14.7 per cent. Household deposit share was steady at 13.8 per cent. Business lending share rose 10 bps to 21.7 per cent. Business deposit share rose 30 bps to 20.4 per cent. In New Zealand, home lending share rose 30 bps to 16.6 per cent, business lending share was steady at 22.4 per cent and total deposit share rose 30 bps to 18.1 per cent.
Capital: The bank’s common equity tier 1 capital ratio rose 71 bps to 12.22 per cent year-on-year
Funding and liquidity: Customer deposits of $582 billion at the end of September funded 82 per cent of the bank’s gross loans and advances. Deposit funding rose from 81 per cent in September last year.
Customer remediation: Remediation payments rose 10 per cent in the year to September, totalling $2.2 billion since June 2018. The latest result included a charge of $88 million for customer remediation, which was well down on previous years.
Staffing and branches: Employee numbers (full-time equivalents) rose from 34,022 in 2021/22 to 38,128 in 2022/23. The number of Australian retail branches and business banking centres fell from 578 in September last year to 513 a year later – a cut of 11.2 per cent. In New Zealand, branch numbers fell from 136 to 130.