National Australia Bank Reports 3Q Profit Drop -- Update
By Alice Uribe
SYDNEY--National Australia Bank Ltd. warned the outlook remains
highly uncertain after volatile markets and low interest rates
combined to drive a decline in third-quarter earnings.
The bank saw its closely watched net interest margin stay
broadly stable, though it flagged further remediation costs, adding
that the "amounts and timing remain uncertain."
"The Covid-19 pandemic continues to challenge our customers and
our bank, with varied impacts across industries and communities.
The outlook remains highly uncertain," NAB said.
NAB, the country's fourth-largest bank by market value and the
biggest business lender, recorded an unaudited net profit of 1.50
billion Australian dollars (US$1.07 billion) for the three months
through June. No comparable figure was disclosed, but it compares
with a profit of A$1.70 billion reported by the bank a year
Cash earnings, a measure adjusted for fair value and hedging
movements and is the basis for calculating dividend payouts, was
A$1.55 billion, which NAB said fell by 7.0% against the same
quarter a year earlier.
Compared with its first-half quarterly average and excluding
large notable items, cash earnings increased by 24%, NAB said.
Third-quarter revenue was also up 10% on the average of the first
half on higher markets and treasury, and the bank said expenses for
the quarter rose 2%.
"Achieving our target of broadly flat fiscal 2020 expenses is
now increasingly challenging, in part reflecting Covid-19 related
effects such as additional customer support and workout resources,"
the bank said.
It noted that this is also expected to impact cost growth in
NAB in April launched a A$3.5 billion capital raising, while
also slashing its interim dividend by 64% as it responded to
upheaval caused by the coronavirus pandemic. Its peers, Westpac and
ANZ, both deferred making decisions on their interim dividends,
while Commonwealth Bank of Australia this week said its final
dividend would be A$0.98.
NAB said Friday that action to strengthen its balance sheet is
allowing it to support customers and keep the bank safe.
Credit impairment charges fell by 2% to A$570 million compared
with the first-half quarterly average. There was a rise in the
ratio of impaired assets and loans overdue by 90 days or more
against gross loans and acceptances by 9 basis points to 106%.
NAB said this was primarily due to increased delinquencies in
its Australian home loan portfolio, where customers were not part
of its pandemic-related loan deferral program.
NAB reported a 51% drop in cash earnings for the six months
through March to A$1.44 billion. The result was dragged down by
A$1.04 billion in one-off charges, including higher credit
impairment charges and mark-to-market losses on its liquids
portfolio within Markets and Treasury.
Write to Alice Uribe at firstname.lastname@example.org
(END) Dow Jones Newswires
August 13, 2020 19:23 ET (23:23 GMT)
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