NAB shares fall after drop in full-year profit
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More news: Shares in National Australia Bank are down 2.5% to $38.28 after the country's second-biggest lender reported an 8.1% slump in full-year cash profit, with its margins hurt by intense competition in the home loan market and higher costs.
UBS analysts said while the result was broadly in line with expectations, "asset quality metrics meaningfully deteriorated during the period" and divisionally, it was "a weaker performance outside of personal banking in 2H24".
The brokerage holds a 'sell' rating on the stock, with a 12-month price target of $35 a share.
NAB full-year profit falls, dividend up
The news: National Australia Bank has posted a drop in full-year profit as margins narrowed in a competitive home loan market, but the lender lifted its final dividend.
The numbers: Australia's largest business bank reported cash earnings of $7.1 billion for the year to 30 September, down 8.1% from the year ago and broadly in line with analyst estimates. Statutory net profit was down 6.1% to $6.96 billion. The lender lifted its final dividend to 85 cents a share, from 84 cents a year ago.
The context: NAB said net interest margins, a core measure of bank profitability, fell 3 basis points to 1.71%, reflecting home lending competition and higher term deposit costs. Earnings at its business banking unit were stable with higher revenue and lower credit impairment offset by higher operating expenses.
NAB chief executive Andrew Irvine said the impact of higher interest rates and cost of living remained challenging for customers, but the bank saw a more stable operating environment over the second half of the year.
What they said: "As asset quality continued to deteriorate over FY24, consistent with challenges in the economic environment, we have maintained prudent levels of forward looking provisions," Irvine said.
"This primarily reflects uncertainty over the impact of global instability and the ability of customers to manage high interest rates and inflationary pressures."
The source: ASX announcement
