Australian earnings preview – National Australia Bank

Australia

Q3 Update:

National Australia Bank (NAB) is one of the four largest financial institutions in Australia and provides a comprehensive and integrated range of banking and financial services, including wealth management. It reports a third-quarter trading update on the 14th of August.

While Coronavirus has impacted most sectors, the Australian banking industry has been particularly hard hit. NAB’s first quarter 2020 profit dropped by 51%, it raised $3.5B from investors and has set aside $807 million in provisions for bad debts from the economic slowdown.

Credit rating agencies have downgraded the outlook for the big 4 banks, while the banking regulator APRA confirmed banks should “cap dividends at 50% of earnings”. This comes as a relief to investors after APRA previously suggested banks should defer dividend payments entirely.  

As a guide, if NAB were to declare dividends at 50% of consensus statutory EPS estimates of 120 cents per share then the FY20 dividend will come in around 58.5 cents per share or 3.2% fully franked.

Technically, the rally from the March $13.44 low, displays corrective characteristics after an impulsive fall from the $27.49 Feb high. The break and close below trend channel support $17.75/70 area was a negative development and should NAB see a sustained break below $17.00 the next level of support is not until $15.00.  

To negate the weak technical backdrop, the NAB share price would need to return to the safety of the trend channel and then break/close above the resistance coming from recent highs $18.40/$18.50 area.

Australian earnings preview – National Australia Bank

Source Tradingview. The figures stated areas of the 4th of August 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.