Invest
3 of the big 4 banks take earnings hit
Another Australian big four bank has seen its cash profits reduced as pandemic relief hits its bottom line.
3 of the big 4 banks take earnings hit
Another Australian big four bank has seen its cash profits reduced as pandemic relief hits its bottom line.
NAB has recorded a $3.7 billion in cash earnings for the full year, a drop of 36.6 per cent year-on-year.
Excluding large notable items of $1 billion, the group’s cash earnings came to $4.7 billion, down 25.9 per cent on the prior year.
Net profit from continuing operations came to $3.4 billion, a 40.8 per cent plunge from the year before.
Revenue was down 1.4 per cent to $17.1 billion, while expenses rose by 2 per cent (excluding large notable items) to $7.6 billion.
NAB chief executive Ross McEwan pointed to a difficult environment for the bank moving forward.
“Certainly, the impacts from COVID have meant that we’ve had to do quite a bit of forward provisioning, which has hurt the results this year,” he said during a media call.
“A very low interest rate environment that we’ve had throughout the last 12 months has impacted our earnings, and the third impact, of course, is less people wanting to borrow because of uncertainty. Again, this hurts the bank’s revenues.”
The CEO noted the bank had felt the impacts of total forward-looking provisions of $1.8 billion, after the bank added $1 billion in the second half for extra cover around COVID.
“Stronger provisions are the right thing to do but have impacted FY20 cash earnings, which are down 25.9 per cent compared with FY19,” Mr McEwan said.
“In addition, low interest rates and lower fee income contributed to a decline in revenue. While we are acutely aware of the need for disciplined cost management, costs rose in FY20 as we adjusted to the COVID-19 environment and started implementing our strategy refresh announced in April.”
Across the segments, personal banking was the division to see a rise in cash earnings, increasing 9.5 per cent to $1.3 billion.
The business and private banking business saw an 11.6 per cent drop to $2.4 billion, while corporate and institutional banking fell by 2.6 per cent to $1.4 billion, and the New Zealand bank declined by 1.8 per cent to $1 billion.
Looking forward, Mr McEwan pointed to the stimulus for households and businesses in the federal budget, as well as a strong result on the health front allowing the economy to reopen.
“Well, today we’ll be saying there’d be two countries in the world that you’d really like to be in,” the CEO noted.
“One of those is Australia and the other is New Zealand. And in both of those we’ve got very large banks and very strong business banks in both of those economies. We want to be part of the recovery, and I think banks have to take their part now and help businesses get back on their feet and really get going in both Australia and New Zealand.”
The final dividend came to 30¢ per share, making the full-year payout 60¢, in contrast to last year’s $1.66.
Westpac and ANZ have also previously announced drops in profits.
About the author
About the author
Shares
Hope for investors scared by share and crypto crashes
As share markets and cryptocurrency take a beating following the tightening of monetary policy across the world, investors are contemplating their next move. ...Read more
Shares
Cannon-Brookes tries to block AGL demerger
Mike Cannon-Brookes is not giving up on AGL after the latter announced 15 June as the date of the demerger vote. ...Read more
Shares
Qantas set to acquire Alliance Aviation
The two airlines have entered into a scheme implementation deed. ...Read more
Shares
Bond and share investors may shrug off RBA’s rate hike
As mortgage holders reel from the prospect of having to reach deeper into their hip pockets to make bigger repayments following the Reserve Bank of Australia’s (RBA) interest rate hike from 0.1 per ...Read more
Shares
How to buy Shares: A beginner’s guide in 2022
So you want to get in on the stock market action? Congratulations, that’s an exciting step! But first, there are a few things you should know before you buy your first shares. ...Read more
Shares
Elon Musk chokes up on bid to swallow Twitter
The battle of the bird has intensified over the last week, as Tesla and SpaceX founder Elon Musk has ramped up his aggressive campaign to buy the entirety of social media giant, Twitter. ...Read more
Shares
How to Make Money in Short Selling
What is short selling? There is a common practice for people who actively trade in the stock market, which is to “buy low and sell high”, but what if you can still make money by doing the opposit...Read more
Shares
Tesla boss becomes biggest Twitter shareholder
Elon Musk, head of Tesla Inc. and the world's wealthiest individual, has swallowed up a bundle of shares in the social media giant, Twitter. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Shares
Hope for investors scared by share and crypto crashes
As share markets and cryptocurrency take a beating following the tightening of monetary policy across the world, investors are contemplating their next move. ...Read more
Shares
Cannon-Brookes tries to block AGL demerger
Mike Cannon-Brookes is not giving up on AGL after the latter announced 15 June as the date of the demerger vote. ...Read more
Shares
Qantas set to acquire Alliance Aviation
The two airlines have entered into a scheme implementation deed. ...Read more
Shares
Bond and share investors may shrug off RBA’s rate hike
As mortgage holders reel from the prospect of having to reach deeper into their hip pockets to make bigger repayments following the Reserve Bank of Australia’s (RBA) interest rate hike from 0.1 per ...Read more
Shares
How to buy Shares: A beginner’s guide in 2022
So you want to get in on the stock market action? Congratulations, that’s an exciting step! But first, there are a few things you should know before you buy your first shares. ...Read more
Shares
Elon Musk chokes up on bid to swallow Twitter
The battle of the bird has intensified over the last week, as Tesla and SpaceX founder Elon Musk has ramped up his aggressive campaign to buy the entirety of social media giant, Twitter. ...Read more
Shares
How to Make Money in Short Selling
What is short selling? There is a common practice for people who actively trade in the stock market, which is to “buy low and sell high”, but what if you can still make money by doing the opposit...Read more
Shares
Tesla boss becomes biggest Twitter shareholder
Elon Musk, head of Tesla Inc. and the world's wealthiest individual, has swallowed up a bundle of shares in the social media giant, Twitter. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
