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NAB lifts half-year cash profit to $3.3bn

Nicholas Grove  |  04 May 2017Text size  Decrease  Increase  |  

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The major bank delivers a 2.3 per cent rise in half-year profit and a steady 99-cent dividend for the half year to the end of March, broadly in line with Morningstar's expectations.

 

National Australia Bank (ASX: NAB) on Thursday announced a cash profit before one-off items of $3.29 billion for the first half of fiscal 2017, up 2.3 per cent on the same half in the previous year and broadly in line with Morningstar's forecast.

Statutory net profit stood at $2.55 billion, compared to a loss of $1.74 billion for the first half of fiscal 2016 which primarily reflected reduced losses from discontinued operations, the bank said in a statement to the ASX.

NAB declared a half-year dividend of 99 cents a share fully franked, steady on the previous six half-year periods and also in line with Morningstar's expectations.

The dividend will be paid on 5 July 2017 to shareholders on record as of 17 May 2017, NAB said.

"This is another solid result and reflects improving momentum as we execute on our strategy," NAB Group CEO Andrew Thorburn said.

"Revenue is up, our asset quality remains sound, and we have further strengthened our funding and capital positions.

"There have been solid contributions across the business, in particular our priority segments of small and medium business, where we have maintained or grown our leading market shares."

The bank's net interest margin--the difference between interest income generated by NAB and the amount of interest paid to lenders, relative to the amount of interest-earning assets--fell 11 basis points.

Costs for the half rose 0.8 per cent, which NAB said reflected higher redundancy and technology depreciation costs.

The bank announced a total bad debt charge of $394 million, up $19 million on the prior corresponding period and including an increase in provision overlays of $89 million for potential risks relating to the commercial real estate portfolio.

The bank said its Common Equity Tier 1 (CET1) ratio was 10.1 per cent as at 31 March 2017, an increase of 34 basis points from 30 September 2016. The bank's CET1 target ratio remains between 8.75 per cent to 9.25 per cent.

While not providing any specific earnings guidance, for the full fiscal year Thorburn said he expects NAB to achieve "positive jaws," or for the bank's revenue growth to outstrip growth in costs.

"The operating environment for banks remains challenging, including heightened regulatory change, digital disruption, and increasing stakeholder expectations," he said.

"But Australia's economic fundamentals provide a favourable backdrop, including strong population growth and improving business conditions.

"In this environment, we are well placed to deliver for our customers and our shareholders."

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Nicholas Grove is a Morningstar journalist.

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