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Thursday, 2 November 2017
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NAB Results view from Marcus Today

NAB Results are outThe stock is down 2.9% first thing.

NAB results are “in-line”. Fully a cash profit up 2.5% to $6.64 billion. As with ANZ they are cutting costs. 6000 job losses to happen over the next three years while employing 2000 people with digital skills in AI and robotics. They will take a $500 million-$800 million provision in the first half of next year to cover the job losses. They have also shuffled some management around. They are increasing investment by 1.5 billion over three years on top of the 3 billion of existing expenditure, the explanation being that they are going to “simplify” the bank. Loan losses are no problem. Bad and doubtful debt charges were up 1.3% to $810 million. They are paying a final dividend of 99c which is in line with last year bringing the full year dividend to $1.98 which will cost them $5.3 billion. Return on equity is a respectable 14%. Tier 1 capital ratio was up 29 basis points to 10.1%. Apra have set the “unquestionably strong” capital ratio of 10.5% by 2020. They say they are within “striking distance” of that, which they clearly are. The outlook statement is a bit cautious, they say “some slowing in the housing cycle and a moderation in housing credit is expected, but downside is likely to be limited by strong population growth and low unemployment”. They also say in a separate ASX statement that each member of the board and executive team will buy NAB shares. The CEO Andrew Thorburn is going to buy 10,000 shares. That’ll cost him $330,000. He was paid a total of $6.7 million last year and if I read it right he already owns around 160,000 shares. May be wrong. The bottom line is that this is a run-of-the-mill result which on balance, considering the rather cautious statement, the provision against job losses and the rather muted 2.5% growth (compared to the other majors), is not great. But it’s not going to be seismic in either direction. Its had a good rally and has recently become overbought on a daily RSI and triggered a short term sell signal. Think I'd hold on for the dividend - these are not trading stocks. This is not that terrible.

 

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