NAB’s Cash Earnings Decrease by 16.9%, But Exceed Market Expectations

National Australia Bank (NAB) has announced a decrease in cash earnings for the first quarter of 2024. However, despite the decline, the results exceeded market expectations and the bank’s share price rose on the Australian Stock Exchange (ASX).

NAB reported unaudited cash earnings of $1.8 billion, a 16.9 percent decrease compared to the prior corresponding quarter. Despite this decline, the bank’s share price rose by 0.36 percent, closing at $33.61 on the ASX. In comparison, Commonwealth Bank of Australia shares fell by 1.99 percent and Westpac shares fell by 0.04 percent on the same day.

NAB experienced growth in lending balances during the quarter, with a 1 percent increase overall. This growth was driven by a 2 percent increase in small and medium enterprise lending and a 1 percent boost in Australian home lending. Additionally, the bank reported a 2 percent higher customer deposit balance across business, private, and personal banking.

The bank noted that the cash earnings for the first quarter of 2024 only fell by 3 percent when compared to the quarterly average in the second half of 2023. This stability was attributed to NAB’s disciplined approach to growth during a competitive period and its emphasis on productivity to counteract cost pressures.

NAB CEO Ross McEwan expressed satisfaction with the bank’s financial performance, stating that there is “good momentum” across the organization. McEwan also highlighted the resilience of the Australian economy and the majority of NAB’s customers.

NAB’s common equity tier 1 ratio, which measures the bank’s capital against its assets, remained strong at 12 percent compared to 12.2 percent in September 2023. McEwan emphasized that this ratio remains above the bank’s target range of 11 to 11.5 percent, even after considering a market share buy-back.

In comparison, fellow Big Four bank Westpac reported a $1.5 billion profit for the first quarter of 2024, representing a 6 percent decline from the average profit in the second half of 2023. Westpac attributed the decrease to notable items related to hedge accounting, which are expected to reverse over time. CEO Peter King highlighted the bank’s focus on maintaining a strong financial position and supporting customers facing cost-of-living pressures.

Similarly, the Commonwealth Bank of Australia reported a statutory net profit after tax of $4.8 billion in the first half of the financial year, down 8 percent. CEO Matt Comyn acknowledged the resilience of the economy and emphasized the bank’s commitment to supporting customers through challenging times.

In conclusion, NAB’s cash earnings for the first quarter of 2024 may have decreased, but they surpassed market expectations. The bank’s focus on growth, productivity, and maintaining a strong financial position has contributed to its stable performance. Despite economic challenges, NAB remains optimistic about the future and is confident in delivering sustainable growth and improved shareholder returns.