NAB released their December 2016 trading update today.
It looks like revenue is running a bit below system, expenses are considerably higher, but the quarter was saved by a cut in bad and doubtful debt provisions. Impaired assets rose.
They say that un-audited cash earnings (their preferred measure although not a statutory financial measure, as it is not presented in accordance with accounting standards and excludes discontinued operations and “certain other items”) were about $1.6 billion, which is around 1% lower than the quarterly average of the September 2016 half year and 1% lower than the prior corresponding period.
They say revenue grew around 1%, thanks to higher trading income and growth in lending, whilst group net interest margin was broadly stable. Given mortgage system growth is running circa 6% annually at the moment though, this seems on the low side.
Expenses rose 5%, thanks to EBA, redundancies and project costs, and only partly offset by productivity savings which they say should deliver around $200m. They reduced FTE by 488.
They reduced the charge for bad and doubtful debts by 23% to $164m because the one-off provisions they made in September for mining and agribusiness were not repeated. However, impaired assets stood at 0.90% in December, up from 0.85% in September. Provision coverage of gross impaired assets rose from 38.3% to 43.0%.
The CET1 ratio was 9.5%, compared with 9.8% in September, reflecting final dividend payouts. They said they may issues new ASX-listed Subordinated Tier 2 capital security, depending on market conditions.
The group’s leverage ratio was 5.4% (APRA basis) and LCR was 124%.
