NAB’s results for the first half of its 2020 financial year, released on Monday, revealed the bank’s cash earnings were down 51.4 per cent from the prior corresponding period to around $1.44 billion.
The bank revealed credit impairment charges had increased by over 150 per cent during the half, as it put $828 million towards writing off bad debts that were likely to arise as a result of the COVID-19 crisis.
“We have been talking to tens of thousands of businesses and they are hurting very badly,” NAB chief executive Ross McEwan said in a media teleconference on Monday.
“Their income has essentially stopped over the course of a week, which has been very hard, although we believe the closedown was the right thing to do and the government has been stepping in, as banks have, to be helpful.”
The bank said it had taken over 650,000 calls for assistance from customers and had approved over $40 billion in repayment deferrals across its business and mortgage books.
It also announced it would seek $3.5 billion in additional funding from institutions and existing shareholders to provide a buffer for potentially worsening economic conditions to come, with the bank’s economists predicting unemployment would peak at more than 11 per cent in June.
“In these [worst case] circumstances we believe the bank would be better positioned to have capital so we can support customers and come out of this strongly,” Mr McEwan said.
“Banks who have a strong position will come out best at the end this crisis and that’s what I want to position the bank for.”
The bank also provided an update on its wealth remediation program, noting it had paid out $297 million across NAB and MLC Wealth since June 2018. Wealth remediation costs declined significantly in the half to $202 million from $709 million in the previous half.
In its investor presentation, NAB noted the completion of its separation of MLC Wealth would line up with its long term strategy of “working on what matters most, not everything”.
“Our execution capability is far too complicated – we’ve been trying to do too many things for too many people,” Mr McEwan said.
“But we’ve gone from 467 projects to now concentrating on 20, so this is what I think will make the difference [long-term].”
This announcement probably spells the end of fake “fee for no service remediation programs” the banks have been running. Banks have been throwing “remediation” money at lots of financial advice clients who were never disadvantaged or short changed in any way. It has been a huge PR stunt.
Well it looks like the banks are going to need all their spare change for genuine business issues now. All those compliance bureaucrats working in “remediation” at banks better start looking for real jobs. The party’s over.
Fake remediation? I’m guessing you charge 1% pa for doing nothing as well.
AFCA will be working overtime to find in favour of clients wrongfully blaming advisers that they should’ve seen this coming.
Yeah rightly so
I heard ASIC reported Advisers to the WHO, as the originators of Covid-19….. designed and released in the Advisers quest to bring down Industry Super.