NAB half-year payout cut

Dividend to be 30c as capital raising launched

NATIONAL Australia Bank has slashed its interim dividend to 30 cents and launched a $3.5 billion capital raising after its first-half cash earnings more than halved amid coronavirus-fuelled economic uncertainty.

The big four lender’s statutory net profit for the half-year ended March 31 was down 51.3 per cent to $1.31 billion while cash earnings fell by 51.4 per cent to $1.46 billion in a surprise early release of the lender’s interim profit result yesterday.

The bank had been due to

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Change publish its half-year profit result on May 7.

Rivals ANZ and Westpac are due to deliver half-year results over the next week. NAB’s interim dividend cut from a fully franked 83 cents a year ago comes as the bank increased its collective provisions for forward-looking economic and targeted sector adjustments by $828 million to $2.14 billion.

NAB last week flagged first-half result would its be rocked by a $1.14 billion triple hit of extra charges and writedowns even before coronavirus impacts were factored in.

The bank said it was seeking to provide a buffer to assist with credit losses by raising $3 billion through a share placement at $14.15 per share – an 8.5 per cent discount to NAB’s adjusted last closing price on Friday. Another $500 million will be sought via a share purchase plan, with the combined package to increase the group’s Common Equity Tier 1 Capital ratio to 11.2 per cent from 10.39 per cent at March 31.

Chief executive Ross McEwan (pictured) yesterday said the bank was taking proactive steps to shore up its books as the nation faces a possible “prolonged and severe economic downturn”.

“There is much uncertainty as to how long this period of dislocation will last and the outlook for recovery,” Mr McEwan said.

NAB anticipates unemployment to rise from 5.2 per cent in early March to a peak of 11.7 per cent by mid-2020, before easing to 7.3 per cent by 2021.

GDP is expected to rebound in Q4 and return to pre-COVID levels by 2022.

To ease the pain for customers feeling the pinch from COVID-19, NAB said it had approved 70,000 payment deferrals on home loan balances worth $26.5 billion as well as 34,000 business loan payment deferrals on $17.4 billion.

NAB will pay a 30 cent fully franked dividend even after prudential regulator APRA this month advised the banks to suspend their payments until there was more certainty in the economic landscape.