Interim Dividend, page-2

From the NABTRADE site dated 29/12/20.
https://www.nabtrade.com.au/investor/insights/latest-news/news/2020/12/what_dividends_canb

3. National Australia Bank (NAB)

NAB raised $4.25bn of capital at $14.15 per share at the heights of the Covid-19 crisis. This helped increase NAB’s CET1 ratio to 11.47% (as of 30 September), which will rise to 11.82% post the completion of the sale of MLC.

But it also increased the number of ordinary shares on issue by approximately 10%.

In FY19, NAB paid dividends totalling 186c – two dividends of 83c each. In FY20, NAB paid two dividends of 30c each, the final on the enlarged share base.

Commenting at the AGM last Friday, CEO Ross McEwan said: “we are a dividend-paying stock and we will resume paying at higher levels when it’s right to do so”. He was quite optimistic about the strength of the recovery, and said that the current economic picture reflects what “we considered to be best case In our scenario planning from earlier in the year.” He emphasised that “achieving double-digit cash returns on equity will be a key measure of our success” and that “cost and capital discipline are essential to delivering better returns”.

On consensus, the brokers have NAB paying a dividend of 91.6c in FY21 (range low of 74c to high of 117c per share), and in FY22, 112.4c per share. I favour 100c in FY21 and 115c in FY22. This puts NAB on a prospective yield of 4.3% and 4.9% for FY22.

Although the capital ratio is healthy, it is difficult to envisage a capital return so shortly after a substantial capital raising.