Financial Data and Key Metrics Changes - The company reported a strong financial performance with a revenue growth of 11.2% compared to the second half of 2022, driven by higher margins and volume growth [7][24] - Underlying earnings increased by 18.4% and cash earnings rose by 12.3% over the half, with cash earnings up 17% compared to the same period last year [8][9] - The interim dividend was increased by $0.05 to $0.83, representing 64% of cash earnings, slightly below the target range for the dividend payout policy [8] Business Line Data and Key Metrics Changes - Business and Private Banking saw a 14.8% increase in underlying profit, contributing over 40% to the total growth in the group's underlying profit [9] - Corporate and Institutional Banking experienced a 20% increase in underlying profit, driven by increased revenue in the markets business [9] - Personal Banking and New Zealand Banking delivered good results despite a challenging environment [9] Market Data and Key Metrics Changes - The company's CET1 ratio increased by 70 basis points to 12.21%, well above the target range of 11% to 11.5% [10][42] - The collective provision balance as of March 31 was 1.42% of credit risk-weighted assets, with $1.4 billion of forward-looking provisions added since September 2019 [11][32] - The housing portfolio has an average dynamic LVR of 43%, with only 1.1% of loans in negative equity [11] Company Strategy and Development Direction - The company is focused on executing a long-term strategy aimed at delivering sustainable and safe growth for shareholders, with deliberate choices about where to invest [7][12] - Investment in private banking and other target segments continues, while growth in home lending is being moderated due to current market dynamics [7][12] - The integration of previous acquisitions, including Citi Consumer Business and 86 400, is a priority to deliver transaction benefits [48] Management's Comments on Operating Environment and Future Outlook - The management acknowledged that higher rates and inflation are expected to weigh on household budgets and slow the Australian economy, but the pace and timing of the slowdown remain uncertain [6][46] - The company remains cautiously optimistic about the Australian economy, forecasting around 1% GDP growth for the next two years [46] - Supporting customers and colleagues remains the top priority, with a strong balance sheet positioned well for future volatility [47] Other Important Information - The company has seen a 10.3% growth in business lending in Business and Private Banking over the past 12 months [16] - The private wealth business is a key differentiator, ranking number one for high net worth customers among major peers [14] - The company is actively addressing increased fraud and scams, which have become a significant concern for customers [15][16] Q&A Session Summary Question: NIM trends and competitive pressures - The NIM was down 4 basis points in the second quarter, with competitive pressures impacting the second quarter NIM significantly [50][51] - The decline in NIM was primarily due to back book repricing and increased competition in savings accounts [52][54] Question: Retention pricing pressures - Approximately 20% of the book may not be impacted by repricing due to being ahead of schedule, with back book repricing about one-third complete [59][60] Question: Capital position and buyback considerations - The company is in a strong capital position but has decided to pause on further buybacks to assess market conditions [70][72] Question: Cashbacks and loan length trends - The company prefers to compete on service delivery rather than cashbacks, and there are early signs of lengthening loan tenors [76][78]
NAB(NABZY) - 2023 Q2 - Earnings Call Transcript