By Alice Uribe 
 

SYDNEY--National Australia Bank Ltd. more than doubled its final dividend, after Australia's second-largest lender reported a surge in profit amid a strong lending performance.

The bank said net profit for the 12 months through September rose to 6.36 billion Australian dollars (US$4.72 billion), compared with A$2.56 billion a year earlier.

Cash earnings--a profitability measure tracked closely by analysts--rose by 77% to A$6.56 billion.

"Our results this year demonstrate we have navigated a challenging environment while delivering better experiences for customers and colleagues, resulting in safe growth across our business," said Chief Executive Ross McEwan.

"Our bank has momentum, our strategy is clear and as lockdown restrictions ease, a pick-up in activity is expected," he added. "While some uncertainties exist in the outlook including the impact of tapering support, our balance sheet settings are strong and we are well positioned for the expected economic rebound in Australia and New Zealand."

Helping to drive the result was a credit impairment write back for fiscal 2021 of A$217 million, versus a fiscal 2020 charge of A$2.76 billion, which the lender said was a significant improvement and reflected a reduction in charges for forward looking provisions and lower underlying charges.

The write back takes into account improved asset quality across both housing and business lending combined with the impact of higher house prices and other low charges, NAB said. Last year, the lender was hit by the impact of the coronavirus while also making provisions for customer remediation.

For fiscal 2021 NAB said it saw small-to-medium-sized enterprise lending grow above system at 7%, while Australian housing lending was up 4% over the year.

Still, NAB's net interest margin dropped by 6 basis points to 1.71%, while expenses rose by 1.8%.

The expense growth was consistent with NAB's 0-2% target, excluding large notable items, which the lender said reflects a "balance between cost discipline and investing for growth."

For fiscal 2022, NAB is targeting a broadly flat level of costs and investment spending. It said it continues to target lower absolute costs over 3-5 years relative to the fiscal 2020 base of A$7.7 billion.

For the divisions, business and private banking division cash earnings were up 0.3%, personal banking was up 14%, New Zealand was up 19% while institutional banking was down 15%.

Directors of the company raised its final dividend to A$0.67 per share, compared with A$0.30 in fiscal 2020.

The group's common equity tier 1 capital ratio was 13.00%, up from 11.47% the previous year. NAB said it plans to manage CET1 over time toward a target range of 10.75-11.25%.

 

Write to Alice Uribe at alice.uribe@wsj.com

 

(END) Dow Jones Newswires

November 08, 2021 17:23 ET (22:23 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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