National Australia Bank (NAB)

  By Jason Fittler

NAB reported its half-year results this week.

The price has pulled back heading into the announcement, but recovered a little post announcement.

Key points are:

Net profit attributable to owners of the Company was $2.86 billion, an increase of $390 million or 15.8%.

Cash earnings were $3.15 billion, an increase of $247 million or 8.5% on the March 2013 half year.

Revenue increased by 2.6%, but decreased by 1.2% if foreign exchange movements are excluded.

Group net interest margin was 1.94%, down or 9 basis points on the March 2013 half year.

Customer net interest margin was flat reflecting lower deposits, funding and liquidity costs, offset by increased lending competition.

Expenses at a headline level rose 11.6%, largely driven by movements in foreign exchange rates and higher UK conduct related charges. Excluding these items operating expenses increased by 2.9% and compared to the September 2013 half year increased by 0.4%.

The charge for bad and doubtful debts (B&DDs) was $528 million, a 52% reduction from the prior corresponding period and 37% lower than the charge for the September 2013 half year.

The Group’s Basel III Common Equity Tier 1 (CET1) ratio was 8.64% as at 31 March 2014, an increase of 21 basis points from 30 September 2013. NAB intends to operate a CET1 ratio between 8.75% and 9.25% from 1 January 2016.

The interim dividend is 99 cents per share fully franked, an increase of 6 cents per share on the prior interim dividend. 

The current yield is 8% gross which is far better than a term deposit for those with the right risk profile.

I am comfortable to continue to accumulate the company for the high dividend yield and long-term growth. 

For more information about National Australia Bank (NAB) please contact us on 07 4771 4577.