National Australia Bank Limited (NAB)
HOLD

Clean result

 9 Nov 2022
Sector: Financials

FY22 RESULT

Need To Know

  • Result in-line with market.
  • Net interest margins improved during the 2H.
  • Expect minimal change to forward estimates for FY23.

FY22 cash earnings of $7.1bn in-line with market.

FY22 dividend 151cps vs 150cps market.

Net interest margins 1.67% vs 1.63% (Mar 22). Exit run-rate 1.72%.

CET1 (pro-forma) 11.8% equal the highest of the major banks.

No extension of the on-market buy-back. $0.6bn of $2.5bn remaining.

NAB guides further increases in the cost base for FY23, with cost to income ratio showing further improvement.

Overall, a clean in-line Result. We expect a neutral price reaction today.   

Investment Implications

NAB continues to make progress with turning around the operating performance of the Bank. Today’s result provides further evidence of that with cash ROE 12.1%.

Ultimately, there is not enough in today’s Result in our view to drive earnings upgrades for FY23 from the market.

NAB has been the strongest-performing major bank over the last 12 months. NAB offers ~4.5% EPS CAGR into FY24E, which is in-line with major banks ex Westpac Banking Corp (WBC) which has the strongest EPS growth profile as they look to turn around the bank.  

We see NAB as fairly priced at present. We rate NAB a Hold.

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Stock overview

Share Price

Company overview

NAB is among Australia’s top four retail banks.

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