NAB – Warning Plays Out

National Australia Bank 1H2020 profit falls by 51%.

The company also moved quickly to shore its balance sheet following the initial impact of COVID-19 related business provisions. NAB will raise $3.5bn via an institutional placement at $14.15 per share.

The placement will be done at a 10.5% discount.

Our bearish warnings on NAB are still yet to play out completely, as we see further raisings likely in the Sept quarter.



NAB – Profit Hit

We expect National Australia Bank to run into selling pressure at $16.50. We favour the short side of this trade.

Today NAB announced first-half earnings will take a $1.14 billion after-tax hit – even before the impact of the coronavirus is accounted for.

NAB said investors will have to wait until it reports its half-year numbers on May 7 to see the impact of the pandemic on its “earnings and balance sheet including provisions, combined with capital and dividend implications”.

NAB – Algo Buy Conditions

National Australia Bank is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

NAB reported FY19 cash earnings of $5.1bn and opted to operate a discounted DRP as well as partially underwrite the DRP, instead of discounted equity raising, as was the case with WBC.

ANZ, WBC, NAB and MQG all offer yield support but little in the way of near -term earnings growth.




ANZ, NAB & Bank ETF Continue To Probe Lower

ANZ is expected to report its FY18 result on 31 October.

The share price has now broken the June low support area and looks vulnerable to more downside pressure.

NAB is scheduled to report its FY18 result on the 1st of November. The next downside target is near the $24.00 area.

Vaneck Vestors Australian Bank ETF has been under ALGO Engine sell conditions since early July. The sell-off so far represents a 20% correction.


Banks Brace For Round 5 Of The Royal Commission

The Big four banks will be in the spotlight this week as the Banking Royal Commission commences round five today in Sydney.

The main topic for this round of examination will be the fees, charges and weak performance of bank-managed superannuation funds.

One Melbourne-based think tank has estimated that excessive fees and poor performance can cost superannuation investors up to $12 billion per year.

Australia’s largest superannuation provider, AMP, felt the wrath of the Royal commission during the last round of testimony, which saw their share price drop over 30% and the sacking of its chairman, CEO and three other directors.

The chart below illustrates the performance of AMP’s share price relative to the other Big 4 banks.

We don’t have ALGO buy signals for any of the domestic banks and we’re not holding any banking names in our ASX Top 100 portfolio. However, we will look for signals as the share prices approach the June lows.