A flat result for NAB’s first quarter
National Australia Bank posted a first quarter cash profit of $1.70 billion on Thursday - up 2 per cent on the year ago same period.
However, first quarter unaudited cash profit slipped 3 per cent when compared with the quarterly average of the 2018 second half.
Revenue was stable with volume growth offset by lower markets and treasury revenue
Net interest margin was down on the back of pressures on housing lending and lower markets and treasury earnings.
Expenses fell 3 per cent underpinned by productivity initiatives and lower spend on the Royal Commission.
The numbers were slightly ahead of UBS calculations mainly due to “the timing of remediation costs and compliance programs as well as low credit impairments”.
CET1 of 10 per cent was slightly down compared to 10.2 per cent in September 2018, largely reflecting the timing of final 2018 dividend declaration – at 45 basis points net of DRP
The bank also announced that it would delay the sale of its MLC business arm because of “current regulatory and operating environment for wealth businesses remain challenging”.
The sale is slated for fiscal 2020.
The trading update coincided with the resignation of both CEO Andrew Thorburn and chair Ken Henry, with Phil Chronican taking on the job as interim CEO.
“We see these announcements as necessary following the Royal Commission's findings.
“NAB and the other major banks face a number of material challenges going forward as house price deflation accelerates and economic activity slows,” UBS analysts Jon Mott and Rachel Finn said in a client note.
“We fear that NAB's "Accelerate" restructuring strategy is geared to a more positive environment and an even larger focus on operating expenses may be required by the new management team.”
The investment house also acknowledged that that the bank has a number of solid internal candidates for the role of the CEO adding that Mike Baird – head of consumer banking and former Premier of New South Wales – is “a lead contender in our view”.