Financial Data and Key Metrics Changes - Cash earnings decreased by 8.1% year-over-year, primarily due to a 6.9% decrease in underlying earnings resulting from lower revenue and higher costs [7][34] - The cash return on equity declined to 11.6%, aligning with returns achieved in 2022 [11] - The final dividend of $0.85 brings the full-year dividends to $1.69, representing 73.7% of cash earnings for the year [12] Business Line Data and Key Metrics Changes - Business and Private Banking saw a 42% growth in lending balances over the past four years, with a solid half showing underlying profit growth of approximately 2% to 2.5% [10][36] - Personal Banking experienced a 5.6% growth in underlying profit as margins stabilized [37] - Home lending strategy focuses on delivering a seamless customer experience, with returns gradually improving due to stable pricing and lower funding costs [28] Market Data and Key Metrics Changes - Business credit growth was 7.5% in 2024, expected to moderate to around 5% in 2025, remaining stronger than housing credit growth [74] - The New Zealand economy faced challenges, but BNZ has grown market share in both lending and deposits [11] Company Strategy and Development Direction - The company aims to be the most customer-centric organization in Australia and New Zealand, focusing on improving customer experiences and simplifying processes [15][18] - There will be a modest increase in investment spend to approximately $1.8 billion in FY '25, targeting improved customer advocacy and technology modernization [50] - The company maintains a disciplined approach to managing costs while prioritizing major projects like the AUSTRAC EU and Citi migration [77] Management's Comments on Operating Environment and Future Outlook - The Australian economy is expected to remain resilient, with a gradual easing cycle anticipated from early 2025 [72] - Despite challenges, business activity levels remain robust, supported by high levels of capacity utilization [73] - The company is optimistic about managing through economic cycles while finding opportunities for long-term growth [75] Other Important Information - The total collective provision balance at September was $5.2 billion, including around $1.9 billion of forward-looking provisions [13] - The liquidity coverage ratio and net stable funding ratio are well above minimum requirements, with a focus on growing customer deposits [14][69] Q&A Session Summary Question: Margin outlook and deposit pricing - The company noted a four basis point headwind to NIM from deposits, with a split of two basis points from deposit mix and one from term deposit pricing [80][82] - Deposit pricing in Australia has been stable, with some lag in New Zealand [83] Question: Credit quality in Retail and SME Banking - Hardship requests peaked in mid-year but have since plateaued, indicating a potential stabilization in housing asset quality [84][85] - The SME cycle is expected to lag the consumer cycle, with the company prepared for potential deterioration in asset quality [87] Question: Business Banking margins and competition - The decline in Business Bank margin is primarily due to deposit side pressures, with strong competition in the sector [89][91] - The company remains confident in its long-term relationships and market position despite competitive pressures [92] Question: Trends in deposit mix - A healthy majority of savings balances are in higher rate accounts, with approximately 70% earning higher rates [95][96] - The Business Bank also has significant balances in high net worth offerings, contributing to the overall deposit mix [97]
NAB(NABZY) - 2024 Q4 - Earnings Call Transcript