New NAB boss just like the old NAB boss

That is, he can’t do jack to fix the bank when the system itself is busted, via Jonathon Mott at UBS:

The right banker for a very challenging outlook in Australia
In many ways the banking environment in the UK is 3-5 years ahead of Australia, with: ultra-low interest rates; intense mortgage competition; Open Banking; FinTech penetration; accelerated technology investment; reputational challenges; heightened regulation and Government focus; BEAR; and ongoing mis-selling concerns. We believe Ross McEwan’s experience in turning around RBS in this environment gives him a unique insight into the challenges ahead. As a result, we believe NAB’s restructuring initiatives are likely to accelerate once he commences in 2020 and are centred around the customer. We do not expect a simple continuation of NAB’s current strategy.

Valuation: Sell. PT $23 (GGM plus franking)
We have been very encouraged by NAB’s announcements to cut its dividend and raise equity with its 1H19 Result, as well as the appointments of Ross McEwan as CEO and Phil Chronican as Chairman. NAB has had a challenging period, underperforming peers for the last 20 years. We believe there is a lot of work to do to turn NAB around which is very likely to have a drag on shareholder returns. However, we see today’s announcement as a big step in the right direction.

Check out those falling profits and ROE.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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