From Macquarie:
Event
- NAB delivered a credible result of $3.26bn vs our forecast of $3.17bn. On an underlying basis the result was broadly in-line with our expectations ($5.04bn vs MRE of $5.02bn). In our view, the key positives in this result were (i) flat underlying margins, (ii) improving capital position (proforma 9.6%), (iii) supportive credit quality, and (iv) well managed costs. In our view this is a favourable result for both the sector and for NAB and we maintain our overweight view on the sector.
- We note that mortgage margins were under pressure in this period (~8bps decline HoH) which is consistent with our earlier research around aggressive competition in that space. While NAB was able to offset its margins pressures and deliver flat margins HoH, we believe mortgage overweight banks (ie. CBA and WBC) are likely to be more impacted by declining mortgages margins.
