National Australia Bank launches $1.5b buyback as profit dips

Harry Brampton
The Nightly
2 Min Read
Cash earnings fell 13 per cent to $3.55b in the six months ended March 31.
Cash earnings fell 13 per cent to $3.55b in the six months ended March 31. Credit: Brendon Thorne/Getty Images

National Australia Bank says it will buy back up to $1.5 billion of its own stock as profit at the lender came in line with expectations.

Cash earnings fell 13 per cent to $3.55b in the six months ended March 31 compared to year earlier the bank reported on Thursday. That compared with the $3.58b estimate in a Bloomberg survey of analysts.

It was down 3.1 per cent on the second half of the last financial year.

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Disciplined execution of the firm’s strategy in a challenging environment “has helped us manage the impacts of slowing economic growth and competitive pressures”, chief executive Andrew Irvine said.

Bank stock investors will be parsing the commentary from NAB as recent sticky inflation data signal that Australian interest rates may need to remain higher for longer.

Mr Irvine took charge of NAB last month and has installed Rachel Slade to head the firm’s business bank, its biggest division.

“We remain optimistic,” he said.

“Our bank and most customers are in good shape and the outlook for the Australian economy remains resilient. We are well placed to continue managing our business for the long term.”

The result from the largest of the nation’s four big lenders to the business sector was helped in particular by strong year-over-year growth of 8.6 per cent in the small-to-medium enterprise lending.

Meanwhile, net interest margin — the closely watched difference between the interest rate depositors receive versus the average rate the bank charges on loans — fell by five basis points to just 1.72 per cent. The bank cited the intense competition in mortgages that exceeded the tailwinds from higher interest rates.

Home loan arrears only slightly ticked upward, with loans more than 90 days past due and other impairments rising 0.13 basis points to 0.79 per cent of its book.

The bank said its technology spend grew by almost 6 per cent, mainly on account of dealing with cyber attacks, fraud and compliance, which were only partially productivity boosts.

Bloomberg

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