NAB has reported cash earnings of $7.1 billion for the financial year ended 30 September (FY2023–24), an 8.1 per cent decrease on FY22–23.
In its full-year results released on Thursday, the bank said its statutory net profit was down 6.1 per cent to $6.96 billion, while its underlying profit slipped 6.9 per cent to $10.82 billion.
On the latter, NAB highlighted this was mainly reflecting margin pressure related to home lending competition.
By midday on Thursday, the bank’s shares had dipped 2.9 per cent to $38.11.
Andrew Irvine, who became group chief executive earlier this year, noted that while the Australian economy has remained resilient, the impact of higher interest rates and cost of living has remained a challenge for customers.
“We are making deliberate decisions about where to invest to achieve the best outcomes for customers and the bank,” Irvine told shareholders.
“Despite headwinds, Australia’s economy is in reasonable shape and we are optimistic about the longer-term outlook for Australia.
“In the meantime, we know some customers are finding the higher cost of living challenging and we are here to help.”
Cash earnings in NAB’s personal banking division fell by 19.6 per cent during FY23–24 to $1.17 billion.
According to the group, this was primarily due to a decline in underlying profit given lower revenue and modest operating expense growth.
In contrast, cash earnings in NAB’s business and private banking division remained largely stable, while corporate and institutional banking, and New Zealand banking, saw declines of 3.7 per cent and 4.6 per cent, respectively.
“While operating in a challenging environment, we continue to deliver a sound financial performance across each of our divisions,” Irvine said.
Over FY23–24, revenue decreased by 2 per cent, which NAB said mainly reflected lower net interest margins (NIM) and lower markets and treasury (M&T) income, partially offset by volume growth and higher fee income. Gross loans and advances increased by 4.2 per cent and deposits increased by 4.3 per cent.
Moreover, the bank’s net interest margin decreased three basis points (bps) to 1.71 per cent thanks to home lending competition, higher term deposit costs and deposit mix impacts, partially offset by higher earnings on deposits and capital.
Meanwhile, expenses increased by 4.5 per cent, with key drivers including higher personnel expenses primarily due to salary-related and restructuring-related costs, combined with continued investment in technology modernisation and compliance capabilities, including fraud and cyber security.
NAB reported a group common equity tier 1 (CET1) ratio of 12.35 per cent, 13 bps higher than a year earlier. It also declared a final dividend of 85 cents per share (cps), taking its total dividends for FY23–24 to 169 cps, two cps higher than FY22–23.
However, Irvine said the execution of its strategy since FY19–20 has served the bank well despite significant shifts in the operating environment.
“To build on this, we have evolved our strategic priorities with a focus on becoming a more customer-centric, simpler and fast-paced organisation,” the CEO said.
“Executing these evolved priorities with discipline while maintaining strong foundations will see us well placed to deliver continued sustainable growth and attractive shareholder returns over time.”
