NAB reported a net profit of A$6.9 billion for the year to September – an increase of 8.3 per cent over the previous year. On a cash basis, after adjusting for a loss from a discontinued operation plus acquisition and disposal costs, profit rose 8.3 per cent to $7.1 billion.
In June, NAB completed the acquisition of Citi’s Australian consumer banking business. The $1.2 billion deal delivered mortgage balances of $8.8 billion an unsecured loan portfolio of $3.9 billion and deposits of $9.4 billion.
The discontinued operation impacting the result is MLC Wealth. The sale of the business was completed in May last year but the financial outcome of the sale remains subject to the finalisation of the “completion accounts process and other contingencies”.
Income: Net interest income rose 7.6 per cent over the year to $14.8 billion. Other operating income rose 14.5 per cent to $3.4 billion. Net operating income rose 8.9 per cent to $18.3 billion. Excluding the Citi business, net interest income rose 6.6 per cent.
The bank said higher net interest income was driven by higher lending volumes and higher earnings on deposits as interest rates rose.
Expenses and cost to income: Operating expenses rose 5.8 per cent to $8.3 billion. Excluding the Citi business, operating expenses increased by 3.9 per cent. The cost-to-income ratio fell from 46.5 per cent in 202/21 to 45.2 per cent in the year to September.
Impairment expense: The credit impairment charge was $125 million, compared with a benefit of $217 million in the previous year.
Credit quality: The proportion of overdue (90 days or more) and impaired loans fell from 94 bps of gross loans and acceptances in 2020/21 to 66 bps in the year to September.
Margin: The net interest margin fell 6 bps over the year to 1.65 per cent but rose 4 bps in the September half to 1.67 per cent. Deposit pricing contributed 18 bps to higher NIM in the second half, offset by lower lending margins and higher funding costs.
NAB chief financial officer Gary Lennon said NIM reached 1.72 per cent in the September quarter and is likely to peak in the first half of 2022/23.
Return on equity: ROE rose 90 bps to 11.3 per cent. On a cash basis, ROE rose 100 bps to 11.7 per cent.
Earnings per share: EPS rose 21.1 per cent over the year to $2.14 a share. On a cash basis, EPS rose 21.4 per cent to $2.20.
Dividend: The bank declared a fully franked final dividend of 78 cents a share for the September half, up from 73 cents in the March half. The total dividend payout for the year of $1.51 a share is up from $1.27 in 2020/21. The dividend payout ratio rose from 65.8 per cent in 202/21 to 70.5 per cent in the year to September.
The divisions: The bank’s biggest division, business and private banking, made a cash profit of $3 billion – an increase of 21.5 per cent over the previous year. The personal banking division’s profit fell 3.6 per cent to $1.6