NAB says an increase in bad debts contributed to its weaker profit result.
“The ratio of non-performing exposures to gross loans and acceptances increased by 26 bp [basis points] from FY23 to 1.39% reflecting higher Australian arrears and broad-based deterioration in the B&PB business lending portfolio,” the bank wrote in its results announcement.
National Australia Bank has just released its full-year results, and they look slightly weak (on first impressions).
It reported a statutory net profit of $6.96 billion ( a fall of 6.1% compared to the previous year).
On another metric, its cash earnings fell 8.1% to $7.1 billion.
NAB will pay shareholders a fully-franked final dividend of 85 cents per share (marginally higher than last year).
“The Australian economy has remained resilient, however the impact of higher interest rates and cost of living is challenging for our customers, and we are here to help them” said NAB chief executive Andrew Irvine.
“Not unsurprisingly, asset quality deteriorated over FY24 but we have maintained prudent balance sheet settings.”
While the US stock market hit record highs after Donald Trump’s electoral win, commodity prices didn’t fare as well.
It’s largely due to the fact the US dollar has rallied to its highest level since September 2022.
Oil prices fell as investors weighed a strong US dollar against the potential that Mr Trump’s foreign policy plans could squeeze global oil supply.
Brent crude oil futures fell 0.8% to $US74.92 per barrel.
Gold fell 2.8% to $US2,666 an ounce, its weakest level in almost three weeks.
The US dollar hit a four-month high, making oil and gold more expensive for buyers holding other currencies (eg. Aussie dollars).
The price of the precious metal had surged to record highs in recent months on expectations the US Federal Reserve will cut interest rates quite aggressively in the months ahead.
While the Fed is still expected to slash rates by 25 basis points tomorrow morning (AEDT), markets are expecting fewer rate cuts next year — as Mr Trump’s policies (widespread tariffs and company tax cuts) are seen as inflationary.
The idea of ‘higher for longer’ interest rates can be seen in the US bond market.
America’s 10-year Treasury yield jumped 14 basis points to 4.43%, its highest level since July. (Bascically, it’s the return investors will get from lending money to the US government).
The local share market, meanwhile, is likely to have a relatively subdued start to its trading day.
ASX futures rose 0.1% to 8,216 points (practically flat).
It comes after yesterday’s solid rise of 0.8% on the ASX 200 index, as the US election vote count was pointing towards a Donald Trump victory.
The prospect of a Trump presidency, however, has led to the Australian dollar falling 0.8% to 65.8 US cents.
That’s because the US greenback surged on expectations Mr Trump’s policies (eg. trade wars with China and other nations, corporate tax cuts, larger budget deficits) will lead to interest rates remaining higher for longer.
Central banks are no longer expected to cut interest rates as aggressively.
Locally, money markets have delayed their bets on when the Reserve Bank will start cutting rates — from May to July 2025.
They’re also pricing in fewer rate cuts next year (40 basis points, instead of 50 basis points).
If you’re keen to know how a second Trump presidency might affect Australia’s economy (and its largest trading partner China), here’s an interesting analysis from Tom Lowrey:
Good morning! It’s going to be a very interesting day on markets, and I’ll be here to guide you through it.
There was rampant optimism on Wall Street, which hit new record highs after Donald Trump was declared the winner of the US Presidential election.
Mr Trump has promised to cut the US corporate tax rate to 15%(down from its current level of 21%), which would provide a significant boost to company profits.
It appears likely those tax cuts will be implemented, given the Republicans have already won a majority of seats in the US Senate, and are potentially on track to control the House of Representatives (which would deliver a “red sweep”).
By 3:30pm (local time), the Dow Jones index had surged 3.5% (or 1,472 points) to 43,705 points.
The last time the Dow jumped more than 1,000 points in one day was back in November 2022.
The S&P 500 also hit a new record, gaining 2.4% to 2,597 points.
The Nasdaq Composite rose 2.9% to 18,979 points, also its highest level ever.
Shares of Tesla leapt 13.6% as investors bet on the electric car maker benefiting from its billionaire CEO Elon Musk’s close ties with Mr Trump.
The US President-elect has said he would create a government efficiency commission, headed by Mr Musk, to cut federal spending.
Meanwhile, shares of Trump’s social media company Trump Media & Technology Group gained 3.6% to $US35.10 (after surging as much as 42% overnight).
The stock has halved in value since hitting a record high in March.
Price current around 7am AEDT
