National Australia Bank Ltd (ASX: NAB) just reported that its cash profit fell 14.2% to $5.7 billion in FY18.

National Australia Bank is one of Australia’s largest banks alongside Westpac Banking Corp (ASX: WBC), Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ).

NAB’s FY18 Report

NAB revealed that its headline cash earnings fell by 14.2% to $5.7 billion. A significant part of this related to $360 million of customer-related remediation as a consequence of the Royal Commission. The bank also recognised $755 million of restructuring costs. Cash profit per share fell by 15.6%.

Without the restructuring and RC costs, the bank said cash earnings would have fallen by 2.2% to $6.5 billion. The statutory profit actually grew by 5.1% to $5.55 billion according to NAB.

NAB CEO Andrew Thorburn was pleased with certain divisions of the bank, he said: “Performance of our Business & Private Banking division, our leading SME franchise, was a real highlight with strong revenue and business lending growth.”

NAB has made a number of decisions to try to win support from the public. It recently decided not to increase interest rates when its peers did. NAB also appointed popular politician Mike Baird to run the retail bank operations.

Mr Thorburn said that the bank would work hard on regaining trust, “We are listening and responding to customers, including to Royal Commission issues, and are proactively taking steps to be more customer focussed, as we strive to be Australia’s leading bank, trusted by customers for exceptional service.

NAB was pleased to report that its CET1 ratio, which is how much capital NAB has in reserve for tough economic times, grew from 10.06% in FY17 to 10.2% in FY18.

NAB Maintains Dividend

NAB decided to declare a final dividend of 99 cents per share, bringing the full year dividend to $1.98 per share. It has paid $1.98 per share in dividends every year since FY14.

Outlook

Turning to its outlook NAB believes there are still things to be positive about, including solid population growth and low unemployment, which continue to limit risks from a slowing housing cycle.

Although the consumer sector remains subdued the bank believes a modest increase in wages growth is expected with a tightening labour market.

NAB pointed to a few other reasons to be positive: “In Australia, solid economic growth is supported by strong government infrastructure spending, mining exports and improving non mining business investment. 

The NAB share price has fallen by almost 25% over the past year, according to Google Finance.

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