(Bloomberg) -- National Australia Bank Ltd.'s half-year profit doubled as the bank unwound bad debt provisions amid a strengthening recovery in the country's economy from last year's pandemic shock.
Cash earnings rose to A$3.34 billion ($2.6 billion) in the six months ended March 31, compared with A$1.4 billion a year earlier, according to a statement Thursday. That was in line with the A$3.3 billion estimate of three analysts surveyed by Bloomberg. The country's third-largest bank also doubled its interim dividend to A$0.60 per share from a year ago.
The bank will see a A$128 million impairment benefit after booking a A$1.16 billion charge a year ago.
“The rebound in the Australian and New Zealand economies from Covid-19 has been better than expected,” Chief Executive Officer Ross McEwan said in the statement. “This, along with the vaccine rollout and continued strong health outcomes make us optimistic about the outlook.”
But he said the bank would continue to be prudent in its capital management, with any share buyback a “medium-term” prospect. National Australia Bank shares were down 3% in late morning trade in Sydney on Thursday, paring gains this year to 17%. That compares with a 7% rise in the broader benchmark index.
NAB concludes a strong half-year reporting season for Australia's biggest lenders, after Australia & New Zealand Banking Group Ltd. and Westpac Banking Corp. posted big earnings gains earlier this week. The nation's central bank on Tuesday upgraded its outlook for the economy that's showing a continued rebound from the pandemic-induced recession.
Key Insights:
- Common equity Tier 1 ratio rose 90 basis points to 12.37%
- Net interest margin declined 4 basis points to 1.74%
- Expenses were down 18.6%
- Earnings fell 10% in business and private banking to $1.2 billion
What Bloomberg Intelligence Says:
“The bank is reporting a big uptick in overdue mortgages due to missed payments from borrowers coming off the loan-deferral program,” according to Bloomberg Intelligence analyst Matt Ingram. “That deterioration is worse than ANZ and Westpac.”
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