The apology fest seems to be doing the trick for the National Australia Bank Ltd. (ASX: NAB) share price as senior managers from the bank fronted shareholders at its annual general (AGM) meeting this morning.
The NAB share price jumped 0.9% to $23.34 and it's the best performer among the big four banks with the Commonwealth Bank of Australia (ASX: CBA) share price gaining 0.7% to $69.15, Australia and New Zealand Banking Group (ASX: ANZ) share price rising 0.8% to $23.88 and Westpac Banking Corp (ASX: WBC) slipping 0.2% into the red at $24.27 in after lunch trade.
In contrast, the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) lost 0.3% as rising worries about a material global economic slowdown sent investors scurrying for the exits.
NAB's share price outperformance comes despite having more than 88% of votes against its controversial remuneration report at its AGM – which is the largest protest vote for a mid- to large cap stock in the ASX's history.
The bank's besieged chairman Ken Henry held out an olive branch to shareholders by admitting that its new pay restructure was flawed and apologising for the banks immoral, if not illegal, behaviour that was exposed at the Banking Royal Commission.
His tone stood in sharp contrast to his defiant attitude when being questioned at the Hayne Royal Commission, which arguably incensed shareholders even more.
The bank at least now looks ready to put through difficult reforms as quickly as possible although Dr Henry said he wants to wait for the final report from the Royal Commission before putting forward a new pay deal for bankers.
It's bee a torrid year for bank shareholders with the sector hit by the property slump, a credit squeeze, allegations of wrongdoing and risks of having their capital adequacy ratios increased by New Zealand and Australian regulators.
While some experts believe the sector is looking like good value after the big de-rating, I am less sure that now is the time to be buying bank stocks.
NAB faces the risk of having to cut its dividend (click here to find out why) while the chance of the other banks doing a capital return is diminished as they could be called to put aside more capital as a safety buffer.
There's just no reason to jump into the sector now given the banks' tightening balance sheet and weak prospects for earnings growth.
Let's hope 2019 will be a kinder year for ASX bank investors.
