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In this episode of The nestegg Podcast, host Maja checks in with our three experts to discuss this week’s biggest conversations about super, property and investment.

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Steve Waters, director of Right Property Group, talks about the current market and its growth prospects, hinting at a “revenge spend” period post-lockdown. Could property prices really inflate by a further 20 per cent?

Meanwhile, RMIT’s senior lecturer of finance, Dr Angel Zhong, talks about the earning season and dividends, delving into how companies decide distribution policy. Find out what is happening in the recent dividend announcements.

Last but not least, tax and super guru Timothy Munro talks us through the results of APRA’s inaugural super test and how engaged members should really be with their super. Timothy also touches on the super splitting law and what it means for relationship breakdowns.

Have a question for our experts? Get in touch at [email protected] and you might get featured in the next episode.

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3 of the big 4 banks take earnings hit

By Cameron Micallef

November 05 2020
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Invest

3 of the big 4 banks take earnings hit

By Cameron Micallef
November 05 2020

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

By Cameron Micallef

November 05 2020
Share

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.

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About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron Micallef

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