ASX-listed National Australia Bank Limited (AU:NAB) reported its FY24 results, hitting its profit targets driven by growth in business lending. The bank reported cash earnings (profit) of AU$7.1 billion, down from AU$7.7 billion in FY23. Nonetheless, it slightly surpassed analysts’ consensus forecast of AU$7.06 billion.
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However, the bank warned that inflation could stay elevated for a longer duration due to the return of Donald Trump as the U.S. President. NAB’s CEO Andrew Irvine said that Trump’s victory comes with his vow to impose steep tariffs on imports, sparking a potential trade war with China. This could further disrupt global trade, impacting export-dependent countries like Australia.
NAB Delivers FY24 Performance with Mixed Figures
In FY24, NAB’s net interest margin (NIM) fell 3 basis points (bps) to 1.71%. This decline was mainly due to competition in home lending and higher costs for term deposits, which were partially offset by increased earnings on deposits and capital, driven by the higher interest rate environment. Meanwhile, the bank’s statutory net profit fell 6.1% year-over-year to AU$6.96 billion.
Overall, the bank witnessed a challenging period for home loan profits due to years of intense competition. However, its lending business to enterprises was a profitable one in FY24. NAB’s Business & Private Banking (B&PB) segment saw its deposits grow by 7% and business lending by 8% during the year.
In terms of passive income for investors, NAB declared a final dividend of 85 cents per share. This resulted in a total dividend of AU$1.69 per share in FY24 and marks a cash-earnings payout ratio of 73.7%, in line with the bank’s target range of 65% to 75%.
Are NAB Shares a Buy?
Following the results, UBS reiterated its Sell rating on NAB stock, predicting a downside of 11%.
Overall, NAB stock has received a Hold rating on TipRanks based on nine recommendations from analysts. The NAB share price target is AU$33.61, which is 14.18% lower than current trading levels.
