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, the big four bank said in an ASX filing.
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.”
Irvine said the bank’s “consistent investment in our better returning segments is supporting good growth over the 12 months to March 2024”.
“This includes 8.6 per cent growth in Australian SME business lending and 6.4 per cent growth in personal banking and business and private banking customer deposits. In other areas where returns are less attractive, a selective approach has resulted in more subdued growth including 3.7 per cent in Australian home lending.”
He added that NAB remains “optimistic” amid a “resilient” outlook for the Australian economy.
“We are well placed to continue managing our business for the long term.”
In a separate statement, NAB announced it has increased its on-market buy-back of ordinary shares by $1.5 billion, which is expected to be undertaken over the next 12 months from Thursday.
The increased buy-back 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 buy-back 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 buy-backs, while maintaining a strong capital position,” Irvine said.
Saxo Asia-Pacific senior sales trader Junvum Kim said NAB’s share buy-back can be viewed as a counterbalance to a “somewhat disappointing” dip in first-half cash profits.
“This decline was further compounded by a shrinking net interest margin. Looking ahead to FY2024, the bank’s cautious outlook acknowledges the uphill battle it faces amid a softening economy and lending margin competition, signalling that NAB is bracing for a challenging fiscal landscape while striving to deliver value to its shareholders,” Kim said.
