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The National Australia Bank has reported a 37 per cent fall in full-year cash earnings to $3.7 billion for the year and has committed to paying shareholders a scaled back dividend in another challenging set of results from the banks.
The big four bank's profit slide was not as large as ANZ’s or Westpac’s, as reported last week, in what chief executive Ross McEwan attributed to "decisive actions" taken in April, where the business bank launched a $3.5 billion capital raise.
“While economic activity has been materially impacted, the significant stimulus for households and businesses provided in the Federal Budget, combined with an expected more complete re-opening of domestic state borders, provide a bridge to economic recovery as support is reduced: NAB chief Ross McEwan.Credit:Eddie Jim
The fall in cash earnings was mostly caused by mounting provisions, as customers continue to apply for loan relief to deal with the economic impact of the coronavirus pandemic, and income pressure from record low interest rates.
NAB's expenses rose by 10.7 per cent over the year and Mr McEwan said the bank's balance sheet was critical while praising the government's stimulus packages.
"While economic activity has been materially impacted, the significant stimulus for households and businesses provided in the Federal Budget, combined with an expected more complete re-opening of domestic state borders, provide a bridge to economic recovery as support is reduced," he said.
The final dividend of 30 cents per share is welcomed by analysts, but down from 83 cents paid the same period last year.
NAB's credit impairment charges increased 201 per cent to $2.76 billion and topped up its COVID-19 impairment provision by $1.5 billion and $388 million for customers working in the hardest hit industries including aviation, tourism, hospitality, retail and commercial property.
Three out of NAB's four divisions saw cash earnings fall – business, institutional and New Zealand banks – however the personal banking arm saw a 9.5 per cent rise in cash earnings due to lower funding costs in the housing lending portfolio.
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