NAB posts strong Q3 earnings
(11 August 2017 – Australia) National Australia Bank (NAB) has reported strong growth in cash profit driven lending, improved margins and a drop in bad debts.
The bank reported cash earnings of A$1.7 billion for the third quarter, up five percent on the year-earlier period, and two percent on the previous quarter.
Chief executive Andrew Thorburn said he was pleased with the results, achieved amit tightening regulations, and the incoming bank levy.
"Cash earnings and revenue are both higher, asset quality has improved and out capital and funding positions remain sound" he said.
NAB said its net interest margin (NIM) was higher reflecting "loan repricing and more favourable funding conditions". It posted a NIM of 1.82 percent for the first half, down 11 basis points from the prior corresponding period in 2016.
Bad and doubtful debt charges decreased by 12 percent to A$173 million. The bank pointed towards higher asset quality trends and a decision not to repeat the commercial property overlay provisions announced at the half year.
Expenses at the bank rose two percent, however Thorburn said NAB was committed to achieving savings of A$200 million promised at the full year results last October.
"For the full year we remain confident of achieving more than $200 million in productivity savings and, excluding the impact of the bank levy, we expect to deliver positive 'jaws'" Thorburn said.
The bank estimates the cost of the bank levy at A$375 million annually, or A$265 million post-tax.
The bank's Common Equity Tier 1 (CET1) ratio dropped to 9.7 percent, from 10.1 percent at the half year.
The bank stated that it expected to meet the industry regulator’s new "unquestionably strong" CET1 benchmark of 10.5 percent "in and orderly fashion given the existing capital position and the timelines involved".