Zombie NAB adds to banking profits shocker

NAB just posted another banking profits shocker with earnings crushed and the divvy slashed:

Asset quality is still deteriorating low off a low base:

Remediation bills are huge and ongoing:

Revenue ain’t growing and NIM is falling:

With more troubles ahead:

That credit growth is faciful as consumer accelerate their repayments at ZIRP. As for business, pfft!

This is at least as bad as WBC and probably worse. UBS sums it nicely:

FY20E NIM impact from the last 3 rate cuts is expected to be -3bps, including the impact of repricing and the replicating portfolio. Another 25-50bps rate cut with no offsets would reduce NIM by a further 3-6bps. FY20E ‘broadly flat’ expense target excluding large notable items.

Soft result with revenue headwinds accelerating and asset quality slipping. Capital remains a concern, with NAB’s low CET1 now an outlier, even post today’s $1.55bn raise. We would expect consensus downgrades and ongoing concerns over capital.

Ken Henry clawbacks anyone?

David Llewellyn-Smith

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 founding 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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