National Australia Bank (ASX: NAB) has today announced a solid set of results for the year ending 30 September 2013. Cash earnings, which adjust for items including changes in fair value of hedges and a provision raised for costs associated with UK payment protection insurance, increased by 9.3% or $503 million to $5.936 billion. On a fully diluted earnings per share (EPS) basis, NAB increased EPS from 238.8 cps to 250.6 cps over the year.
The higher earnings have in turn allowed the board to recommend a fully franked final dividend of 97 cents per share (cps), an increase of 7 cps on the prior year. The final dividend brings the full year dividend to 190 cps, up 10 cps on the prior year.
While profit growth was solid, the sticking point for many investors will be the lack of revenue growth driving the result. Revenues across the group increased by just 2% while operating expenses increased by 1.9%, excluding restructuring costs and foreign exchange movements. As a consequence the major boost to the bottom line actually came from lower loan losses, which fell by $681 million to $1.9334 billion, reflecting improved asset quality trends.
NAB's results follow on from ANZ Bank (ASX: ANZ) and Commonwealth Bank (ASX: CBA), which have both already handed down impressive full-year results. Just this week ANZ reported a $6.5 billion cash profit, while in August, Commonwealth reported a $7.8 billion cash profit.
Foolish takeaway
The major banks' share prices have each risen by over 30% compared with the 20% return from the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) in the past 12 months; these exceptional gains do make them somewhat prone to profit taking. By late morning after NAB's results release, its shares were down around 2.5% to $35.34. Based on the financial year 2013 of diluted cash EPS, the bank is still trading on a hefty 14.1 times earnings.
