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Why the National Australia Bank Ltd share price is falling today

Credit: NAB

This morning National Australia Bank Ltd (ASX: AMP) reported its profit result for the quarter ending June 30, 2017. Below is a summary of the results with comparisons to relevant prior corresponding periods.

  • Unaudited statutory net profit of $1.6 billion
  • Cash earnings of $1.7 billion, up 2% versus March 2017 half-year quarterly average & 5% versus pcp
  • Revenue up 2%
  • Higher net interest margin reflects cheaper funding and favourable loan repricing
  • Bad and doubtful debts fell 12% to $173 million
  • CET 1 ratio 9.7%, compared to 10.1% for March 2017
  • Major bank levy effective from July 1, estimated to cost bank $265 million post-tax annually

The NAB share price has opened 1.6% lower on its result at $29.99, with the wider S&P/ASX 200 (Index: ^AJXO) (ASX: XJO) index down 1.3%, as investors hit the sell button going into a weekend of escalation political tensions on the Korean peninsula.

The NAB’s chief executive flagged it expects to make “$200 million in productivity savings” over the year and that the Australian economy remained in robust shape over the long term thanks to low unemployment and strong population growth.

The NAB and its rivals like Westpac Banking Corp (ASX: WBC) are also facing regulatory pressures from multiple directions as can be seen from the impact of the major bank levy and ongoing Basel capital adequacy requirements.

Other risks including rising household debt, flat wage growth, and inflated property markets, as such investors not solely focused on income may get a better price to snap up NAB shares at over the 12 months ahead.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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