No adverse effects on NAB’s capital after billion-dollar share buyback

Its core capital ratio remains at 11.75%, well-above the target range.

The National Australia Bank’s (NAB) is expected to retain a robust credit profile over the next two years, that not even its A$1.5b share buyback in 2023 tarnished.

The bank’s capital levels are expected to remain strong over the next two years, S&P Global Ratings said in a non-rating commentary. 

Notably, the bank’s Tier 1 (CET1) ratio is 11.75% as of 31 March 2024, even after the completion of the remaining A$200m in its A$1.5b share buyback announced last August 2023. This remains above the bank's 11%-11.5% target CET1 range. 

However, NAB’s cash earnings decreased by 3.1% for the six months ending 31 March, compared to the six months prior, although in line with S&P’s expectations.

The ratings agency expects low unemployment to keep NAB's credit losses low, and close to pre-pandemic levels, in line with those for other major Australian banks. 

“Nevertheless, banks in Australia, including NAB, remain exposed to a jump in credit losses due to high household debt, elevated interest rates and prices, and global economic uncertainties,” S&P said.