The National Australia Bank Ltd (ASX: NAB) share price will be one to watch on Wednesday.
That's because the big four bank has just released its eagerly anticipated full year results for FY 2024.
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NAB share price on watch following results release
Here's a quick summary of how the bank performed during the 12 months:
- Revenue down 2% year on year to $20.65 billion
- Statutory net profit down 6.1% to $6.96 billion
- Cash earnings down 8.1% to $7.1 billion
- Fully franked final dividend of 85 cents per share
What happened in FY 2024?
For the 12 months ended 30 September, NAB reported a 2% decline in revenue and an 8.1% fall in cash earnings.
This mainly reflects lower net interest margins (NIM) and lower Markets & Treasury (M&T) income, partially offset by volume growth and higher fee income.
The company's key Business and Private Banking segment had a flat year, generating cash earnings of $3,257 million. Management advised that higher revenue and lower credit impairment charges were offset by increased operating expenses.
In the Personal Banking segment, its cash earnings fell 19.6% to $1,174 million. This reflects a decline in underlying profit given lower revenue and modest operating expense growth. Segment revenue was hit by lower margins mainly impacted by competitive home lending pressures and deposit mix. Volume growth was broadly stable given its disciplined approach to growth in housing lending and a focus on sustainable returns.
NAB's Corporate and Institutional Banking posted a 3.7% decline in cash earnings to $1,772 million. This was driven by a higher effective tax rate partially offset by lower credit impairment charges.
Finally, the New Zealand Banking segment reported a 4.6% decline in cash earnings to NZ$1,444 million. This reflects lower underlying profit and higher dividend payments on perpetual preference shares, partially offset by lower credit impairment charges.
Despite its weaker profits, the NAB board increased its final dividend by 1 cent to 75 cents per share. This means that total dividends for FY 2024 came to $1.69 per share.
How does this compare to expectations?
As we covered here last week, the team at UBS was expecting NAB to deliver revenue of $20.3 billion.
This was then expected to lead to a pre-tax profit of $9.87 billion and a net profit of $6.9 billion for FY 2024. The market was also expecting total dividends of $1.68 per share for the year.
Management commentary
NAB's CEO, Andrew Irvine, was pleased with the bank's performance. He said:
Our FY24 performance has benefitted from focused execution of our strategy and a more stable operating environment over the second half of the year. Cash earnings were 8.1% lower than the strong levels of FY23, but stable over 2H24 compared with 1H24.
The Australian economy has remained resilient, however the impact of higher interest rates and cost of living is challenging for our customers, and we are here to help them. Not unsurprisingly, asset quality deteriorated over FY24 but we have maintained prudent balance sheet settings. We will continue to focus on keeping our bank and customers safe through the cycle.
