The major bank has announced a $2.5 billion buy-back to commence next month, as the sale of its wealth arm to IOOF provides a chance to return capital to shareholders.
In a statement, NAB said it intended to buy back $2.5 billion of ordinary shares commencing in mid to late August.
The bank said its capital weightings were considerably above APRA’s “unquestionably strong” benchmark rate of 10.5 per cent, and it would look to reduce its common equity tier 1 rate from the current 12.37 per cent to between 10.75 per cent and 11.25 per cent.
“Through the pandemic, NAB has continued to build its financial strength while providing significant support to our customers and colleagues,” NAB chief executive Ross McEwan said.
“At the same time, NAB’s strong financial performance, combined with the divestment of MLC Wealth, has created an opportunity for NAB to reduce our surplus capital while retaining a strong balance sheet during these uncertain times.
“Our target CET1 range reflects a balance between retaining a strong balance sheet through the cycle, supporting growth and recognising the importance of capital discipline to improve shareholder returns.”
The news follows the completion of NAB’s sale of MLC to IOOF in May.
The bank said it would also consider “various options to return capital to shareholders” at the conclusion of the buy-back.
“The finalisation of APRA’s regulatory capital framework over the course of 2021 and 2022 will provide NAB with improved clarity to consider further capital management initiatives, alongside an assessment of the continued medium-term economic impacts of COVID-19,” NAB said.
“The exact nature, amount and timing of any further capital returns beyond the buyback will be dependent upon market conditions and capital outlook.”
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