National Australia Bank (NAB) has posted an overall net profit for the first half of the financial year of $2.5 billion which, while falling short of expectations, has marked a dramatic improvement on the $1.7 billion loss posted this time last year.
NAB’s cash profit, which is the bank’s preferred performance measure since it is more indicative of the genuine financial situation of the bank, was recorded at $3.29 billion for the six months preceding March 31 2017. This figure represents an increase of only 2%.
NAB chief executive Andrew Thorburn said the banking sector is still facing difficulties as a result of governmental regulations and the natural progression of the industry, but is confident that this problem should not be a long-term concern for shareholders.
“[The banking industry] remains challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations,” he said.
“But Australia’s economic fundamentals provide a favourable backdrop including strong population growth and improving business conditions. In this environment, we are well placed to deliver for our customers and our shareholders.”
Despite positive news coming as a result of NAB’s financial results, the bank’s shares dropped 2.7% on the eve of the announcement. This was partly due to the continued fallout from ANZ’s announcement of a disappointing half-year cash profit which has led to widespread sales of banking stocks. There are also fears that the Australian housing market has peaked in recent times, which is contributing to shareholder uncertainty.
The interim dividend on NAB’s shares was held steady at 99 cents per share for the period.