Insights

Sustainable change? NAB (ASX:NAB) share price spikes after AGM today

Here’s what the bank’s chair and CEO had to say at its AGM.
The post Sustainable change? NAB (ASX:NAB) share price spikes after AGM today appeared first on The Motley Fool Australia. –

“Meaningful and sustainable change has been made to the way the bank operates” according to National Australia Bank Ltd. (ASX: NAB) chair Phillip Chronican in his address to shareholders today.

This comes as the result of a series of structural reforms made in consequence to the bank’s internal review into governance, accountability and culture in 2018, and following the Financial Services Royal Commission, Chronican says.

The address also confirmed the bank is changing the way it pays its “colleagues”, shifting 12,000 bankers onto “100% fixed pay”, whilst holding senior leaders accountable by keeping a sum of their pay at risk.

In a lengthy dialogue, NAB’s chair and CEO, Ross McEwan, gave an extensive overview of the bank’s cultural and structural shifts that are ongoing, and what to expect for the future. Here are some of the key takeouts.

Scaling up, sustainably?

NAB’s acquisition of ‘neobank’ 86 400, and the proposed acquisition of Citigroup’s Australian consumer business will enable it to quickly build scale up its digital and consumer offerings, the bank says.

Not only that, but NAB’s Strategic Net Promoter Score increased four points to -7 in FY21. This is equal first amongst its peers and marks a 10-point increase from -17 in 2019, the release notes.

NAB also noted that future dividends will be guided by a target payout ratio in the range of 65% to 75% of
sustainable cash earnings, subject to circumstances at the time.

Shareholders enjoyed a cash Return on Equity (ROE) of 10.7% in FY21, a 2.4 percentage point gain over the last year. However, this is still behind its pre-pandemic figures.

Its capital ratio at the end of September 2021 was 13%, and thus above the target range of 10.75% to 11.25%. As such, NAB’s “preference” is to reduce its share count, so it can deliver “better earnings and dividends per share over the long term”.

This is already underway through its $2.5 billion share buy-back, which started in August and is approximately 40% complete already.

NAB also says that it is winding down its financing of fossil fuels over time, while at the same time growing exposure to renewable energy finance. For instance, it notes that it is the only major Australian bank so far to “have set an upper limit on oil and gas extraction and production exposures, and to put restrictions on lending to greenfield gas projects”.

Specifically, Chronican noted that NAB “will not directly finance any greenfield oil extraction project or onboard new customers predominantly focused on oil extraction [nor] we will not lend to new thermal coal mining projects or take on new thermal coal mining customers”.

Target exposures to thermal coal mining are set to be effectively zero by 2030, aside from residual performance guarantees to ensure site rehabilitation, according to the release.

For its own actions, NAB is also “well progressed in [its] target to source 100% of [its] own electricity from renewable sources by 2025”.

Management commentary

Speaking on the announcement, Ross McEwan, NAB’s Managing Director & CEO said:

About half of our 1.3 billion dollar investment spend in the 2022 financial year will be discretionary and will be directed to key strategic initiatives such as further simplification and automation of our systems, as well as enhanced use of data and analytics, to help customers and our bankers. Partnerships in Australia and globally are helping us innovate faster and develop world-class products and services for our customers. We are working with international non-competing banks, big tech and fintech to access global scale and ideas, looking beyond domestic peers as a competitive benchmark. We are investing heavily to protect customers, the bank, and the broader financial system from the growing threat of cyber security, fraud and financial crime.

NAB shares have gained 22% in the last 12 months after rallying around 28% this year to date.

The post Sustainable change? NAB (ASX:NAB) share price spikes after AGM today appeared first on The Motley Fool Australia.

Should you invest $1,000 in National Australia Bank right now?

Before you consider National Australia Bank, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and National Australia Bank wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

5 things to watch on the ASX 200 on Friday

Why ASX 200 shares could add ~$70bn during the Santa Rally

Leading broker names the ASX bank shares to buy in 2022

December has been a great month so far for the NAB (ASX:NAB) share price

Could the CBA share price peak have been and gone?

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!