NAB flags higher loan losses, unveils $1.5b buyback
National Australia Bank raked in $1.9 billion in cash earnings over the June quarter, while reporting a “modest” deterioration in the quality of loans and lower margins from home loan competition.
But the bank still announced a new on-market share buyback worth up to $1.5 billion over the next 12 months, reflecting its strong capital position.
NAB CEO Ross McEwan. “We know this environment is challenging for our customers,” he said on Tuesday. Elke Meitzel
Third-quarter cash earnings came in just above expectations, and its share price opened stronger, with the stock up 1.6 per cent to $28.80 at 10:30am AEST.
Cash earnings were 5.8 per cent higher year-on-year – but down 5 per cent on the quarterly average over the first half. Revenue declined 2 per cent, mainly due to lower margins.
The number of loans more than 90 days overdue increased by 0.05 of a percentage point to 0.71 per cent. NAB said this “mainly reflects a modest deterioration in delinquencies across the group’s home loan and business lending portfolios”.
The closely watched net interest margin contracted by 0.05 of a percentage point to 1.72 per cent over the quarter, reflecting ongoing home lending competition combined with higher deposit costs. This was partly offset by the benefits of the higher official cash rate.
The largest business bank by loans said SME business lending rose 4 per cent over the quarter, but home lending grew below the average of the other banks at 1 per cent.
NAB’s total provisions against loan losses of $5.7 billion was also higher quarter-on-quarter relative to the size of its loans.
“We know this environment is challenging for our customers, but pleasingly, most are proving resilient with only a modest deterioration in asset
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