Hot on the heels of the release of a full year result by Westpac Banking Corp (ASX: WBC) on Monday, later this week National Australia Bank Ltd (ASX: NAB) will be releasing its own.
Ahead of the release on Thursday, I thought I would take a look to see what is expected of the banking giant in FY 2020.
What to look for with the NAB result?
According to a note out of Goldman Sachs, it is expecting the banking giant to post cash earnings before one-offs of $3,988 million in FY 2020. This will be a 31.9% decline on the prior corresponding period.
The broker has also forecast a fully franked final dividend of 30 cents per share. This will bring its full year dividend to 60 cents.
And following its recent remediation update, it now expects its second half CET1 ratio to come in at 11.75%. This will mean 13.4% for the full year.
What else should you expect?
Goldman Sachs is going to be looking for signs of a turnaround in home loans in recent months following a slowdown late in the financial year.
It commented: “NAB’s housing momentum continued to slow in Aug-20, while its business trends have stabilized. Across the group, we currently forecast flat housing and non-housing loans growth and so will be looking out for signs of a turnaround in the momentum of the franchise, which might come off the back of the recent Federal Budget and the federal government’s evolving stance on responsible lending.”
Another thing to keep your eye on is the bank’s underlying cost performance and any commentary on its post-COVID expectations.
Goldman explained: “Our FY20E expense (ex notables) forecast of A$8,242 mn implies cost growth of 1.1%. NAB acknowledged its ‘broadly flat’ expenses target for FY20E (ex- notable items) will become increasingly challenging in part reflecting the cost required to support customers in response to Covid.”
“As such we will be particularly interested to hear management commentary around its future outlook and see whether they extend their three-year cumulative cost savings target of >A$1 bn (A$934 mn to date),” it added.
Goldman Sachs has a conviction buy rating and $20.89 price target on NAB’s shares.
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Returns as of 6th October 2020
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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