Samir Maneka
(Reuters) – National Australia Bank reported on Thursday that its first-half cash earnings fell about 13% as it faced high operating costs and fierce competition, but announced a share buyback program worth A$1.5 billion ($979 million).
NAB, the country’s largest commercial lender, reported that its common equity tier 1 ratio, a closely watched measure of idle cash, was 12.15% at the end of March, well above its target of 11% to 11.5%. Ability to repurchase shares.
However, rising borrowing costs and increased competition for new business in the lending industry have prompted banks to offer competitive lending rates while paying higher deposit rates, squeezing banks’ net interest margins.
NAB’s net interest margin, a closely watched key profitability metric, fell to 1.72% from 1.77% a year ago, but still beat the Visible Alpha consensus forecast of 1.69%.
“This primarily reflects competitive pressure on loan margins, primarily related to home loans, as well as higher term deposit costs and the impact on deposit mix,” the bank said in its results report.
Its cash earnings for the six months to March 31 were A$3.55 billion ($2.32 billion), in line with a consensus estimate of A$3.55 billion according to Visible Alpha compiled by UBS Group AG, but down from A$4.07 billion last year.
NAB raised its interim dividend by 1 cent to 84 cents per share.
(USD 1 = AUD 1.5319)
