NAB raises dividend after online profit, warns of costs

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The National Australia Bank logo is displayed in central Sydney, Australia August 4, 2017. REUTERS/David Gray

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  • H1 cash profit increased by 4.1%
  • AUSTRAC regulations will cost A$80-120m/year
  • RBA rate hikes will be moderately positive for H2 margins

May 5 (Reuters) – National Australia Bank (NAB.AX) on Thursday met first-half cash profit expectations and raised its dividend by more than 20% as strong loan volume growth and rising commission income helped to offset the impact of fierce competition. on its margins.

NAB – the country’s second-largest bank by market value and largest corporate lender – has joined its Australian counterpart and New Zealand Banking Group (ANZ.AX) in predicting the benefits of rising interest rates in the country, but warned of higher costs as it pursues growth against the backdrop of runaway inflation. Read more

Australia’s ‘big four’ banks have seen a housing lending boom amid historically low rates and a pandemic-fueled shift to remote working that has boosted property markets. But their margins are suffering from competition and borrowers are turning to fixed rate loans.

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NAB’s net interest margin declined 11 basis points to 1.63% in the six months to March.

NAB said its deal with Australia’s financial crime regulator to address concerns over alleged serious breaches of anti-money laundering and anti-terrorism laws would cost the bank between A$80 million and A$120 million a year until fiscal year 2024.

That, combined with a flurry of banker hiring and broader inflation, prompted the bank to raise its annual cost estimate to around 2-3% from roughly flat previously, and abandon its target of cutting absolute costs over the next three years.

“The outlook has now shifted to higher growth, higher inflation and higher rates, prompting a reconsideration of our targets to ensure we appropriately balance cost discipline against growth opportunities,” said NAB in a statement.

It reported cash income of A$3.48 billion ($2.53 billion), up from A$3.34 billion a year earlier and Refinitiv IBES estimates of A$3.48 billion .

NAB’s interim dividend of 73 Australian cents per share was up from 60 cents a year earlier.

($1 = 1.3782 Australian dollars)

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Reporting by Shashwat Awasthi and Indranil Sarkar in Bengaluru; Editing by Aditya Soni and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

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