The upcoming offer, anticipated to secure an initial funding of $750 million, enables investors to partake in distinctive convertible subordinated notes, featuring a margin ranging from 2.6 per cent to 2.8 per cent.
The offer is structured to attract both institutional and retail investors, with Australian resident clients of syndicate brokers eligible under the broker firm offer. This includes wholesale clients or retail investors within the notes target market who receive personalised advice and can apply for allocations through their syndicate broker. Additionally, certain institutional investors invited by NAB can participate in the bookbuild process.
The NAB Capital Notes issue offers conversion into ordinary shares or redemption by NAB in March 2032, with mandatory conversion in December 2034. The margin will be determined on 20 May after a bookbuild, and the issue date is set for 6 June.
Joint lead managers on the offer include NAB, ANZ Securities Limited, Bell Potter Securities, and Commonwealth Bank of Australia.
Earlier this month, the big four bank announced that compared with a “very strong” first half in 2023, NAB’s cash earnings came in 12.8 per cent lower at $3.5 billion amid competitive pressures.
NAB reported a revenue decrease of 3.7 per cent to $10.1 billion in the six-month period, alongside a fully franked $0.84 per share interim dividend.
Commenting on the results, the bank’s new chief executive officer, Andrew Irvine, said: “Our 1H24 financial performance has benefited from the disciplined execution of our strategy in a challenging environment.
“This has helped us manage the impacts of slowing economic growth and competitive pressures while also absorbing a higher effective tax rate. Compared with a very strong 1H23 result, cash earnings were 12.8 per cent lower, but the decline was more modest versus 2H23, down 3.1 per cent.”
Also at the time, NAB announced a $1.5 billion increase in the on-market share buy-back program.
The increased buyback is aimed to allow NAB to continue managing its Common Equity Tier 1 (CET1) ratio towards its target range of 11.00–11.50 per cent.
NAB commenced the current buyback in late August 2023 and has completed $1.3 billion as at 31 March 2024.
“Our continued focus on capital generation supports our objective to reduce our share count over time through on-market buybacks, while maintaining a strong capital position,” Irvine said.
