NAB (ASX:NAB) share price on watch after reporting $3.34bn cash profit

The National Australia Bank Ltd (ASX:NAB) share price will be on watch today following the release of its half year results…

| More on:
woman watching asx share price on digital screen

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The National Australia Bank Ltd (ASX: NAB) share price will be on watch today.

This follows the release of the banking giant's half year results this morning.

How did NAB perform in the first half?

As with the other banks that recently reported, NAB's performance improved significantly during the first half of FY 2021.

According to the release, NAB reported cash earnings of $3,343 million for the six months ended 31 March. This was up 94.8% on the prior corresponding period. It is also a 35.1% increase if you exclude large notable items.

This was driven by earnings growth across its Personal Banking, Corporate & Institutional Banking, and New Zealand Banking businesses, which offset weakness in its Business & Private Banking segment.

Personal Banking reported cash earnings of $859 million, up 14.1% on the prior corresponding period. The segment benefitted from reduced credit impairment charges, home loan repricing, lower funding costs, and lower operating expenses.

The Corporate & Institutional Banking segment delivered a 15.7% increase in cash earnings to $782 million. This reflects improved outcomes across most key drivers and increased margins from risk and pricing discipline.

New Zealand Banking achieved a 9.6% increase in cash earnings to NZ$616 million. This was due to growth in lending and improved margins, combined with lower credit impairment charges.

Finally, the Business & Private Banking reported a 10.3% decline in cash earnings to $1,216 million. This reflects lower revenue due to low interest rates and higher operating expenses.

Asset quality improves

A key driver of its result was the writeback of a credit impairment charge of $128 million. This compares to a charge of $1,161 million in the prior corresponding period.

Management advised that this improvement reflects the partial release and non-repeat of forward-looking collective provisions for potential COVID-19 impacts and lower underlying charges.

Excluding forward-looking provisions, underlying charges reduced $447 million due to lower level of individual impairments and reduced charges for Australian retail exposures.

Dividend

Pleasingly for investors that see the NAB share price as an income option, the banking giant has increased its dividend.

The bank's board has declared a fully franked interim dividend of 60 cents per share. This is double last year's interim dividend.

The NAB share price will trade ex-dividend for this on 13 May.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Bank Shares

$10,000 invested in NAB shares 5 years ago is now worth…

NAB shares have delivered some benchmark smashing returns over the past five years.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Bank Shares

Will CBA shares continue to outperform BHP shares over the next 5 years?

Which of these two giants will perform best? Let's find out.

Read more »

Bank building with the word bank in gold.
Bank Shares

What price targets does Macquarie have on the big 4 banks?

Here's what the broker has to say about the big 4 bank share prices.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Should I buy ANZ shares today?

With a 5.7% dividend yield, are ANZ shares a good buy right now?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Bank Shares

Can Bank of Queensland shares keep outperforming the other ASX 200 bank stocks into 2026?

A leading expert offers his verdict on what’s ahead for Bank of Queensland shares.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

Forget CBA shares, Ord Minnett says this ASX bank stock could rocket 50%+

Let's see which bank stock could be a better buy.

Read more »

ASX 200 shares broker downgrade origami paper fortune teller with buy hold sell and dollar sign options
Broker Notes

Are Bendigo Bank shares a buy, hold or sell? Here's Macquarie's latest recommendation

Should I buy the dip on Bendigo Bank shares today?

Read more »

A man thinks very carefully about his money and investments.
Bank Shares

Why these experts say sell CBA shares now

These two investment experts recommend selling CBA shares today. But why?

Read more »