National Australia Bank Limited

NAB Details

Issue of Subordinated Notes: National Australia Bank Limited (ASX: NAB) provides banking, financial and related services. The market capitalisation of the bank stood at ~A$79.72 Bn as on 12^th August 2019. Recently, the bank via a release announced that National Australia Bank Limited and its associated entities have become an initial substantial holder of Healius Limited with the voting power of 5.015% since 5 August 2019. Today, on August 12, 2019, the bank stated that it has become a substantial holder of Link Administration Holdings Limited with the voting power of 5.084%, effective from August 7, 2019. As per the release dated 2^nd August 2019, the bank stated that it has issued US$1,500,000,000 3.933% subordinated notes, which will due in 2034, pursuant to its US$100,000,000,000 global medium-term note programme.

It added that the Subordinated Notes convert into fully paid ordinary shares of NAB where the Australian Prudential Regulation Authority determines this to be necessary on the grounds that the National Australia Bank Limited would otherwise become non-viable. 

The bank with the help of a release dated 30^th July 2019 announced the appointment of Susan Ferrier as Group Chief People Officer. Ms Susan Ferrier will join National Australia Bank Limited on 1^st October 2019.NAB reported a rise of 20.4% to $449 Mn in credit impairment charges in 1H FY19 on a YoY basis.


Credit Impairment Charges (Source: Bank Reports)

What to Expect: The bank stated that, moving forward, the operating environment is expected to be challenging. The economic growth is slowing, but it has been forecasted to remain above 2% in 2019. The bank continues to target broadly flat expense growth for FY19 and FY20, which excludes large notable expenses.

and net operating income of A$ 9,218 Mn for the same time period as compared to A$ 9,133 Mn in Sep 2018. The bank posted a cash return on equity of 13.0% and group’s common equity tier 1 ratio stood at 10.4%. Coming to the stock’s performance, it provided returns of 3.64% and 6.72% in the time span of one month and three months, respectively. Hence, considering the above-stated facts and decent outlook, we maintain our “Buy” recommendation on the stock at the current market price of A$27.750 per share (up 0.362% on 12^th Aug 2019).


NAB Daily Technical Chart (Source: Thomson Reuters)
 

Australia And New Zealand Banking Group Limited

ANZ Details

Amendment in Trading in ANZ Securities Policy: Australia And New Zealand Banking Group Limited (ASX: ANZ) provides banking and financial products and services to individual and business customers. The market capitalisation of the bank stood at ~A$76.53 Bn as on 12^th Aug 2019. Recently, the bank released a document titled “Trading in ANZ Securities Policy” wherein it highlighted that the trading in ANZ securities policy provides a globally consistent approach to Trading in ANZ Securities by ANZ Directors and staff. This policy requires that ANZ Group requirements are complied with, and all appropriate legal obligations are met, and individuals act with honesty and integrity. The bank added that the insider trading is illegal and it was stated that the individuals would maintain, and request that their Associated Persons maintain, records of all Trading in ANZ Securities for 12 months.

Recently, the bank updated the market that new risk weight floors would be applied to the New Zealand mortgage and farm lending portfolios for Level 2 reporting, following notification by the Australian Prudential Regulation Authority (or APRA).The impact is equivalent to a 20-bps reduction in the bank’s Level 2 Common Equity Tier 1 capital ratio. Additionally, it was stated that there is no impact on the bank’s Level 1 capital ratio, and higher risk-weights for New Zealand were effectively incorporated into Level 1 ratio as at March 31, 2019.

The following picture provides an idea of 2019 half year results:

Half Yearly Results (Source: Company Reports)

Future Aspects: The bank is committed to the United Nations’ Sustainable Development Goals. The bank is also improving the financial wellbeing of its customers, employees and the community by helping them make the most of their money throughout their lives.

Stock Recommendation: In 1H FY19, the bank posted a return on equity of 12.0%, which can be considered at respectable levels and might attract the attention of the market players. When it comes to liquidity, the bank delivered average liquidity coverage ratio of 137%. Its net stable funding ratio stood at 115% at the end of March 2019. Hence, considering the above-stated facts and decent outlook as well as return on equity, we give a “Buy” recommendation on the stock at the current market price of A$27.160 per share (up 0.593% on 12^th Aug 2019).


ANZ Daily Technical Chart (Source: Thomson Reuters)

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