The National Australia Bank Ltd (ASX: NAB) share price is on the move on Wednesday morning.
At the time of writing, the banking giant's shares are up over 3.5% to $36.59.
This follows the release of NAB's half year results before the market open.
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NAB share price jumps on results day
For the six months ended 31 March, NAB reported net operating income of $10,281 million, which was up 1.7% half on half and 1.4% year on year. Management advised that this reflects higher Markets and Treasury (M&T) income. Excluding M&T, revenue was 1.1% lower half on half due to lower margins partially offset by volume growth.
The bank's net interest margin (NIM) was stable at 1.7%. Though, excluding a 3 basis points increase from M&T, its NIM declined 3 basis points as a result of deposit impacts, higher wholesale funding costs, and lending competition. This was partially offset by higher earnings from deposit and capital replicating portfolios.
On the bottom line, NAB's cash earnings came in a $3.58 billion. This is up 0.8% on the second half of FY 2024 and 1% on the prior corresponding period. It is also comfortably ahead of what Macquarie Group Ltd (ASX: MQG) was expecting: $3.49 billion.
In light of the above, the NAB board elected to keep its dividend on hold at a fully franked 85 cents per share.
Finally, NAB finished the half with a CET1 capital ratio of 12.01%, down 34 basis points, largely due to loan growth and the completion of its $3 billion share buyback. A pro-forma CET1 of 12.13% includes the expected sale of NAB's remaining 20% stake in MLC Life.
Management commentary and outlook
NAB's CEO, Andrew Irvine, was pleased with the bank's performance in a challenging environment. He said:
We are managing our business well in continued challenging operating conditions. Cash earnings were 0.8% higher than 2H24, with underlying profit growth and lower credit impairment charges partially offset by a higher effective tax rate.
Execution of our refreshed strategy is underway. We are focused on driving much stronger customer advocacy across our Bank, along with greater speed and simplicity, and ongoing modernisation of our technology. This will support our key priorities of continuing to drive performance in deposits, improving proprietary lending, and growing business banking.
Commenting on the bank's outlook, Irvine added:
We are optimistic about the underlying growth outlook for the Australian and New Zealand economies. However, escalating global trade tensions are a key source of uncertainty. Against this backdrop, we have maintained strong balance sheet settings. Collective provisions represent 1.42% of credit risk weighted assets, our CET1 ratio sits at 12.01% and our FY25 term funding task is well progressed with over $20 billion raised in 1H25.
Our Bank is in good shape and we have a clear strategy. We are well placed to manage our business for the long term and deliver sustainable growth and attractive returns for shareholders.
