The National Australia Bank Ltd (ASX: NAB) share price has been pushing higher on Thursday.
The banking giant's shares rose as much as 3% at one stage. They are now trading just under 2.5% higher at $28.45.
Why is the NAB share price pushing higher?
Investors have been buying the bank's shares today following the release of its full year results. For the 12 months ended September 30, NAB reported a 10.6% decline in cash earnings to $5.1 billion.
Whilst this was actually a miss on the market's expectations, I suspect that some investors were fearing even worse or expecting another bombshell like those dropped by rivals Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).
In case you missed those results. ANZ decided that it would cut the franking on its dividend to just 80%, whereas Westpac announced a $2.5 billion capital raising to shore up its balance sheet and improve its CET1 ratio.
NAB did neither of those. It declared an 83 cents per share fully franked final dividend, which was down 16% on the last year's final dividend but in line with the consensus estimate.
Though, with a CET1 ratio of 10.4%, this is short of APRA's unquestionably strong benchmark of 10.5%. And whilst the discounted and partial underwriting of its DRP will boost its CET1 up to ~10.75%, it doesn't have much of a buffer.
Especially given the potential for further remediation charges and the RBNZ likely to amend capital requirements in New Zealand. As a result, I wouldn't be surprised if NAB launches a capital raising in the very near future.
What was the response to the result?
Analysts at Goldman Sachs appear a touch disappointed with NAB's result. Though, its shares remain on the broker's conviction buy list with a $30.26 price target.
The broker commented: "The quality of the result was a little soft, with FY19 PPOP missing our estimates by 4%, largely on account of weaker non-interest income, with net interest income and expenses broadly in line. While most lines across non-interest income were softer-than-expected, trading income was the main driver (similar to trends from ANZ and WBC FY19 results), and we note when adjusting for the 8% trading income miss, NAB's FY19 PPOP would've missed our forecast by 2.5%. CET1 of 10.4% (internationally harmonized ratio of 14.34%) was flat hoh and came in softer than our 10.6% estimate."
Nonetheless, the broker believes it was still the strongest performer of the big four and remains bullish.
