National Australia Bank (NAB) reports higher costs and weaker margins, what’s next for stock prices?
NAB -2.93%: The business focussed bank reported 3Q results today that signalled higher costs and weaker margins while unaudited cash profit came in at $1.8bn, pretty much in line with the run rate required to meet full year expectations. The bank said that FY22 will see costs up about 3-4% above their previously guided range of 2-3%, although that did include an uptick in remediation, while they guided net interest margin (NIM) lower. It is worth keeping in mind the recent nature of cash rate increases that (will ultimately) have a positive impact on margins – most of the hikes came late in the quarter so will be felt more acutely in Q4. Like other banks we have spoken to recently, they talked to good asset quality, more than 70% of borrowers ahead on repayments while low unemployment and healthy household and business balance sheets are helping mitigate the impacts of higher inflation and higher interest rates.
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