NAB has released its brief 3Q16 trading update and capital proforma. Unaudited cash earnings were around $1.6 billion, 3% lower than the quarterly average of the March 2016 half year, and 3% lower than the prior corresponding period. Statutory net profit was similar at $1.6 billion.
Revenue was broadly stable, but Net Interest Margin (NIM) was lower. Group NIM was 1.89% in March, no update was given today. Expenses fell 1%. The charge for bad and doubtful debt for the quarter rose 21% to $228 million. This included increased charges from mining and agricultural collective provisions, and changes from the low 1Q16 provision base. The ratio of 90+ days past due and gross impaired assets to gross loans was 0.81%, up from 0.78% in March.
The Group’s CET1 ratio was 9.5% at 30 June 2016, compared with 9.7% at March, reflecting the interim dividend payout. Tier 1 ratio was 11.5%, down from 11.8% in March.
The Group leverage ratio on an APRA basis was 4.9%, down from 5.3% in March and 5.5% last September. The quarterly average liquidity coverage ratio was 125%.
They did not comment specifically on the impact of the 25% IRB mortgage risk weighting, but a quick estimate suggests a circa 9% CET1 outcome.
Overall, not surprises, although growth in revenue was slower than expected, and margin is under pressure, with provisions rising as little.
Of course the bank is now insulated from UK/Brexit issues after the split last year.
