National Australia Bank has lifted dividend payout to shareholders faster than its improvement in earnings after it successfully exploited the Reserve Bank’s succession of rate rises in the past year and a half.
The bank rode out a second half slow down in activity as customers and businesses grappled with weakening demand, the impact of the succession of rate rises and inflationary pressures.
The higher profit came despite a surge in the bank’s credit impairment charges to more than $800 million from $125 million the year before. The latest charge included $218 million released from reserves to cover the impact of write downs.
Total revenue rose 12.9% to more than $20.6 billion.
The NAB’s key measure - its net interest margin rose 9 points to 1.74% in the year to September from 2021-22. Including a 5 point detraction from lower NIM in markets and Treasury, total NIM was $1.79 for the year to September.
Total interest income rose 13% to $16.8 billion, thanks also to a 7% rise in interest earning assets
NAB lifted full year dividend 10.5% to $1.67 a share with a final of 84 cents a share, up from 78 cents a share paid a year ago.
The full year payout of $1.67 a share is one cent higher than the pre-pandemic payout for the 2018-19 financial year.
That compares to the slower rise of 7.6% rise in statutory profit and 8.8% rise in cash earnings
The NAB reported statutory earnings of $7.41 billion, up 7.6% and an 8.8% rise to $7.73 billion on a cash earnings basis.
Both were the second largest for 202-23 for the big four banks behind the Commonwealth’s record $10.1 billion for the year to June 30.
NAB’s statutory result just topped the $7.2 billion net profit reported on Monday by Westpac.
The country's 4th major, the ANZ, reveals its 2022-23 results next Monday.
Revenue rose 12.9%, faster than a 9.1% rise in expenses, leading a a 16.1% rise in underlying profit.
CEO Ross McEwan said in Thursday’s statement the results have benefitted from consistent investment in our strategic priorities.”
"This has supported another year of strong growth in our leading SME franchise with Business & Private Banking increasing lending 9% and deposits 8%, underpinning a 22% rise in underlying profit in FY23.
"In other sectors such as Australian housing, we took a more measured approach to growth this year with a focus on returns,” he said.
"Challenges in our operating environment became more evident as FY23 progressed with the impacts of monetary policy tightening and inflationary pressures increasingly weighing on households and the economy.
"This has seen our financial results soften in 2H23 compared with 1H23.
"While the economic transition has further to go, we are well placed to navigate this environment. We continue to see attractive growth options and productivity is helping us manage inflationary pressures.
"We also have prudent balance sheet settings consistent with a focus on keeping the bank and customers safe through the cycle.
"Collective provision coverage has been maintained well above pre COVID-19 levels and proforma capital levels are above our target range of 11.0-11.5% after allowing for completion of our current $1.5 billion on- market buy-back, and liquidity is strong,” Mr McEwan said in Thursday’s statement.