My take on the NAB leadership changes

Here's my take on the National Australia Bank Ltd (ASX:NAB) leadership changes.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Perhaps unsurprisingly, the personal criticism of National Australia Bank Ltd (ASX: NAB) CEO Mr Thorburn and Chairman Dr Henry in the Royal Commission led to their resignations.

It's not as though Commissioner Hayne gave Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ) or Westpac Banking Corp (ASX: WBC) a clean bill of health. But, at least the CEOs seemed completely contrite about what had happened.

Some cynical people may say that the management and boards of the other big banks felt like the NAB leadership, but they put on the right PR face.

NAB has had a tough start to the year. Its CEO was on long service leave for a long time, it was the sole bank to increase interest rates recently (following the others a few months ago) and now it doesn't have its CEO or Chairman.

But I don't think it's actually going to change that much for NAB. The banking divisions will continue as normal, the remediation will continue and ASIC & APRA will supposedly increase their oversight.

The vast majority of the public would say that CEOs are paid too much. Perhaps they are. But they are paid to make the a small number of important decisions. They are not frontline staff nor day-to-day managers.

Mr Thorburn was at the helm for the divestment of Great Western Bank and CYBG Plc (ASX: CYB). In terms of business decisions I think he probably made the right moves.

In terms of the rest of the bank, NAB will keep on going.

Is NAB a buy?

Compared to the other big banks NAB clearly has the biggest grossed-up dividend yield of 11.5%. If all banks continue to hold their dividends for the next couple of years then NAB will pay the best dividends during that time.

A new (external) CEO and Chairman will help NAB reset its business and perhaps win back favour. Whilst NAB may be one of my preferred major banks, I can think of many other ASX shares I'd rather buy for income with the headwinds like falling house prices, remediation, class actions and competition hurting NAB.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Scott Phillips.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »