NAB - National Australia Bank

[Klogg]

Well Nab's results are in, a severe drop in earnings, as expected. It looks as though the result is already factored in to the price, as it held up today.
16% drop in dividend to $1.66, still about 6% at these prices.
https://www.abc.net.au/news/2019-11-07/nab-full-year-profit-2019-down/11676694?section=business

I do hold.

What's interesting this time is house prices are on the up, but there's no mortgage growth. House prices are going up on small volumes...
Not sure how the banks tackle this, other than to undo the tightened lending conditions introduced in the past 2 years. And if they do that again, you start to worry about the quality of the mortgage book...

I can't see much upside to this. Rates are basically at their effective lower bound (i.e. can't lower deposit rates), and the quality of the book will be compromised if they lend more freely. Hard to see how dividends hold up from here, even if there is a short term bounce in mortgages.

 

[sptrawler]

Good points Klogg. How they grow their loan books, will in reality, be in line with Australia's economic growth and that just ain't happening ATM.

 

[tinhat]

What's interesting this time is house prices are on the up, but there's no mortgage growth. House prices are going up on small volumes...
Not sure how the banks tackle this, other than to undo the tightened lending conditions introduced in the past 2 years. And if they do that again, you start to worry about the quality of the mortgage book...

I can't see much upside to this. Rates are basically at their effective lower bound (i.e. can't lower deposit rates), and the quality of the book will be compromised if they lend more freely. Hard to see how dividends hold up from here, even if there is a short term bounce in mortgages.

True, true and with immigration rates coming down we should expect property price growth to be more moderate at least around the mean house price and lower. Not withstanding your points, despite your outlook of dividends falling further, there will continue to be demand for shares in the major banks. I predict their prices will recover somewhat from here and trend sideways for some time. Why? They are high yielding bond proxies for investors seeking tax effective income.

 

[Sdajii]

I chose NAB for the April contest. Pretty obvious reasons. Big crash, possibility of dead cat bounce or stimulus rally. Probably a long shot, but hey, crazy times and NAB is hardly going to go belly up (and if it does, so will we all!).

 

[sptrawler]

NAB dividend 90c, that will help some of the struggling self funded grafters.
https://www.asx.com.au/asxpdf/20200407/pdf/44gsplp2zbn8v4.pdf

 

[sptrawler]

NAB dividend 90c, that will help some of the struggling self funded grafters.
https://www.asx.com.au/asxpdf/20200407/pdf/44gsplp2zbn8v4.pdf

My mistake, it looks like it was on the capital notes, just my luck excitement overtook me.

 

[PZ99]

It appears they haven't mentioned anything about the divvy. It's a double edged sword this one.

It's all very well for the regulator to say "ditch the divvy" but what are all those self funded retirees going to live on without their divvy ? Selling shares at this level to buy food is a permanent drain on your future income and I don't seem to remember the Govt offering any assistance to low income self funded retirees and it's not as if they can just go back to work.

Loosing the franking refunds is one thing - loosing / deferring the divvy altogether is pretty drastic.

 

[Belli]

The regulator has not specifically stated banks or insurers are required to "ditch the divvy'.

Read the APRA letter which is available on its website.

As usual, people will contort it and apply their own interpretation which may or may not be correct or even the actual outcome.

 

[PZ99]

The regulator has not specifically stated banks or insurers are required to "ditch the divvy'.

I never said they did.

 

[Sharkman]

no they didn't specifically state that they have to ditch it, but i took it to be a very strong hint that they are expecting the banks to do so, and won't be too impressed if the divs are not cut by at least half, if not more. it's definitely open to interpretation though.

i personally am not too worried about it from a shareholder's perspective, they would be retaining the divvy under such a scenario, it's not as though they are being asked to donate the divvy to relief efforts, or to pay it as a fine (WBC might have to later on however, but that's a separate story).

i get that it could have knock on effects for the broader economy though, if people relying on it for living expenses cut back their spending even further. but as for my own shareholdings - not terribly concerned.

 

[Belli]

The possible alternative canvassed in the APRA letter, after deep, deep discussions with APRA, is not to issue cash but maybe introduce a compulsory DRP and/or buy back the equivalent on market. Obviously this is "request" is to apply not only to NAB but all ADI's and insurers.

I can see how my post was interpreted as referring to a specific poster but it wasn't meant in that light. Sorry if it was read in that way.

 

[sptrawler]

It appears they haven't mentioned anything about the divvy. It's a double edged sword this one.

It's all very well for the regulator to say "ditch the divvy" but what are all those self funded retirees going to live on without their divvy ? Selling shares at this level to buy food is a permanent drain on your future income and I don't seem to remember the Govt offering any assistance to low income self funded retirees and it's not as if they can just go back to work.

Loosing the franking refunds is one thing - loosing / deferring the divvy altogether is pretty drastic.

Loosing both, would have meant no income and no ability to get any Govt support.
But hey that's o.k, that's why you save instead of spending, all your working life.
It is quite funny when you talk to your ex workmates who are on Govt support and they are raving about the beano they are having. It does make you wonder what the saving was all about, the rows with the missus, accounting for every cent and always buying what you could afford, not what was best, carpeting the house when you sold it, not when you lived in it etc.

 

[InsvestoBoy]

nit's not as though they are being asked to donate the divvy to relief efforts

It kind of is that though.

Don't pay the dividend out, because you will need that capital to offer loans you otherwise wouldn't, take hits on mortgages where you normally wouldn't (so you don't have to mark them as impaired), etc.

I'm not for or against, but let's be real, the banks are being asked to retain that capital for the inevitable bonfire they will need to throw it onto.

 

[PZ99]

Loosing both, would have meant no income and no ability to get any Govt support.
But hey that's o.k, that's why you save instead of spending, all your working life.

The scary thing for many is as we transition to an automated economy where retrenchments put a lot of long term employees out of work they may be forced to invest in high yield stocks to pay their bills if they can't reskill into something else.

If the divvies are cut then "doing for the greater good" can have many ambivalent meanings; none of which are good for the low income retiree. And as we know from the election - there are many such people.

 

[sptrawler]

The scary thing for many is as we transition to an automated economy where retrenchments put a lot of long term employees out of work they may be forced to invest in high yield stocks to pay their bills if they can't reskill into something else.

If the divvies are cut then "doing for the greater good" can have many ambivalent meanings; none of which are good for the low income retiree. And as we know from the election - there are many such people.

Don't get me wrong, if I had my time over I still would have done it the same way, I would rather lop myself than live hand to mouth or queue up in centerlink to answer stupid questions and be treated like $^&t.
It is just annoying, when people make out that you don't deserve what you have worked and saved for and try to make out someone who spent all their money is more deserving and special.
I'm not a more deserving person if I go and spend all my money at the casino, to qualify for my franking credits, but apparently that would have been fine, I struggle with that ideology.
A Government hand out is a Government hand out, one person doesn't deserve it more or less than another, except for the rare circumstances that mean a person can't care for themselves as in incapable.
Just my opinion.

 

[sptrawler]

NAB to reduce dividend from 83c to 30c, Ouch, that's gonna hurt .

 

[PZ99]

NAB to reduce dividend from 83c to 30c, Ouch, that's gonna hurt .

It also means their SP will go down by 30c instead of 83c on the day - maybe not all bad.

The Cap raising is the real killer - that's why I invested in banks that had already raised before the crash.

 

[Sharkman]

It also means their SP will go down by 30c instead of 83c on the day - maybe not all bad.

The Cap raising is the real killer - that's why I invested in banks that had already raised before the crash.

the payout ratio was also significantly dropped to 61%. it just wasn't sustainable (in my view) previously when the divs were at 99c and even at 83c (it was over 100% in the half year prior to the one just reported). i think this cut makes sense, do a bit of a reset to get that ratio back down to sustainable levels, but also don't cut the div completely so those relying on it for income still have something. might help slowly build up their franking account for a potential tax friendly buyback once things have recovered (whenever that might be) as well.

 

[how02]

I purchased NAB shares on the 24th. I figure that even if they don't rise in the short term, over the long term they are surely going to go back up. I don't understand why NAB shares aren't trading today though because every other share seems to be trading.

 

[PZ99]

I purchased NAB shares on the 24th. I figure that even if they don't rise in the short term, over the long term they are surely going to go back up. I don't understand why NAB shares aren't trading today though because every other share seems to be trading.

Shares will stay in trading halt to comply with the regulations...

"For the purposes of Listing Rule 17.1, NAB provides the following information:

1. The trading halt is necessary as NAB expects to make an announcement to the ASX in connection with a proposed equity capital raising comprising an institutional placement (Placement) and share purchase plan.

2. NAB requests that the trading halt continue until the earlier of NAB releasing an announcement in relation to completion of the Placement, or until the open of trading on Wednesday, 29 April 2020.

3. NAB expects that the trading halt will be ended by it making an announcement to the ASX in relation to completion of the Placement."


There is a 4th but it's fluff that all companies post "not aware of any reason why the trading halt should not be granted". Can't see the point of that at all.