National Australia Bank Ltd(ASX: NAB)
NAB Details
Focussing on acceleration of Strategy: National Australia Bank announced for a 2.5% rise in full year cash profit to $6.64 billion while there were challenges in the sector on improving margins, cutting costs and reserving cash with APRA imposed changes on capital requirements.While the group’s loan losses were low, bad and doubtful debt charges were up 1.3% to $810 million, but down as a percentage of gross loans by 1 basis point to 14 basis points. The group’s asset quality has improved with the ratio of over 90 days past due and gross impaired assets to gross loans and acceptances down 15 bps to 0.70% benefitting from better conditions for NZ dairy customers and successful work-out strategies across the Australian business lending portfolio.
Financial Indicators (Source: Company Reports)
In an attempt to reshape the bank to a digital platform, about $1.5 billion lift in investment over next three years and 6,000 job losses have been flagged for accelerating the group’s strategy. On the other hand, the redundancies have been indicated to result in a provision charge of $500 million to $800 million in the first half 2018.Nonetheless, with simplification and automation of processes and bringing a more efficient structure, NAB expects the cumulative cost savings from the new investment to be greater than $1 billion by the end of the full 2020 financial year.The group’s continuous efforts have helped it have Priority Segments Net Promoter Score (NPS) being the first of the major banks at 30 September 2017. NAB stock slipped by 2.8% on November 02, 2017 at the back of few limitations of the full year results, while we maintain a “Hold” at the current price of $31.95
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NAB Daily Chart (Source: Thomson Reuters)
Credit Corp Group Ltd (ASX: CCP)
CCP Details
Lift in guidance: Credit Corp Group’s stock surged up 5.5% on November 02, 2017 as the group delivered encouraging updates during the Annual General Meeting. The purchase of Cashfirst branded consumer loan book and associated assets from Thorn Group for about $13 million is expected to offer opportunities at attractive returns.
Growth in Consumer Lending (Source: Company Reports)
The group also indicated for a significant productivity improvement during FY2017. CCP’s Australia and New Zealand operations witnessed a 4% growth in collections, while the U.S. business saw a 32% growth. The group has upgraded its FY18 net profit after tax guidance in the range of $62 million to $64 million (from $60 million to $63 million) and earnings per share guidance between 130 and 134 cents (from 126 cents to 132 cents).Disciplined approach has led the group to witness earnings growth of 28% per annum after tax and return on equity of over 20% in last nine years. However, looking at the trading levels, we give an “Expensive” recommendation at the current price of $21.22
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CCP Daily Chart (Source: Thomson Reuters)
Suncorp Group Ltd (ASX: SUN)
SUN Details
Strengthening funding profile: Suncorp Group provided its quarterly update as at 30 September 2017, as required under Australian Prudential Standard 330, and reported fortotal lending growth of 2.4% driven by home lending owing to improved capability, simplified processes and improved retention. For a sustainable funding profile, Banking has maintained its measured approach to managing funding and liquidity risk to support balance sheet growth. Further, a $1.5bn capital effective Residential Mortgage Backed Security transaction was issued to support funding stability. Lately, the group indicated to issue Suncorp Capital Notes 2 to raise $250 million for funding one or more regulated entities, as well as general corporate and funding purposes.The stock has moved up about 14% in last one year and is trading at slightly higher levels. We maintain a “Hold” on the current price of $13.73
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SUN Daily Chart (Source: Thomson Reuters)
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