Later this morning National Australia Bank Ltd (ASX: NAB) will become the latest banking giant to release its results.
Investors are understandably nervous given the bombshells that were dropped by two of its rivals recently. Here's what to look out for:
Cash earnings.
According to a note out of Goldman Sachs, it expects NAB to deliver a sizeable decline in cash earnings from continuing operations (excluding one-offs) in FY 2019. The broker has pencilled in cash earnings of $5,243 million for the 12 months. This will be a decline of approximately 8% on the prior corresponding period.
Dividend.
All eyes will be on its dividend this morning. There were concerns that it might follow in the footstep of Australia and New Zealand Banking Group (ASX: ANZ) and reduce the franking on its payout. However, Goldman Sachs expects the bank to cut its dividend by 16.2% to a fully franked 83 cents per share. This is in line with the consensus estimate.
Capital position.
At the end of the third quarter NAB had a CET1 ratio of just 10.4%. This lifted to 10.65% when factoring in the $1 billion (25bps of CET1) of dividend reinvestment plan underwrite proceeds that were received after the quarter ended. Whilst this should mean that NAB finishes the financial year ahead of APRA's unquestionably strong benchmark of 10.5%, there has been speculation that it might follow the lead of Westpac Banking Corp (ASX: WBC) and raise capital. After all, Westpac raised capital when its CET1 ratio was at 10.7%.
Costs.
Another focus for investors will be NAB's underlying costs. Its ongoing productivity savings have been offsetting higher regulatory compliance costs. Goldman Sachs believes NAB is "well-placed in delivering on its 'broadly flat' FY19/20 cost target (ex-remediation costs) and forecast underlying cost growth of -0.1/-0.4% respectively in FY19/20E."
