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National Australia Bank - Annual General Meeting 2019

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

National Australia Bank (ASX: NAB) is one of the largest publicly listed banks in Australia. NAB has a market capitalisation of A$74.5 billion.

NAB AGM 2019

What are the key points from NAB 2019 AGM?

NAB has endured a rough year that consisted of low interest rates, increase regulatory pressures, slow economic growth, increased competition and worrying findings from the Royal Commission.

NAB announced in their 2019 full year results that cash earnings were down 10.6% compared with the previous period and Statutory profit was down 13.6% compared with the previous period. 

NAB’s Chairman Philip Chronican and NAB’s CEO Ross McEwan yesterday (18 December 2019) gave their address to shareholders at NAB’s 2019 AGM and made a few comments about the banks performance this year and around the outlook. The key points are as follows:

  • NAB is committed to address the findings from the Royal Commission. Of the 39 recommendations that related to NAB, NAB have completed five and are currently working on the other 34.
  • Chairman Philip Chronican acknowledged that NAB has not always met 100% of AUSTRAC’s requirements.
  • CEO Ross McEwan notes:
An example of this is the civil legal action taken this week by ASIC against NAB in relation to alleged breaches concerning ongoing fee arrangements with clients of NAB Financial Planning
As we said, we take this action seriously and will continue to work cooperatively with ASIC to deal with this issue.
  • CEO Ross McEwan also notes that the Australian economy is sound. However, there are a number of challenges facing the economy such as low private sector demand and weak credit growth.

What is the outlook for NAB?

NAB CEO Ross McEwan notes:

In our own business, we are the facing the challenges of low interest rates, higher regulatory compliance and capital requirements.


The major banks such as NAB, Australia and New Zealand Banking Group (ASX: ANZ) Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC) face significant headwinds of slow credit growth (also reflecting weak economic growth as shown from the national accounts in the June and September quarters), pressures on net interest margins (which could lower profitability) and increased regulatory requirements (both capital and lending requirements). That is, in the short term at least, the major banks may have lower growth prospects than other sectors of the market.

Overall, the Australia’s banking sector is on a double-edged sword. On one edge, availability of credit to consumers and businesses should increase due to low interest rates and an easing in lending regulations and capital requirements. However, on the other edge, the net interest margins for each bank could be squeezed even more. It is clear that NAB fell this year on one side of the sword, where the squeezing of the net interest margin had a greater negative effect than the positive of an increase in potential borrowers.

What is the market reaction?

The market reaction to NAB’s AGM has been negative. NAB’s share price is down around 2% since the AGM yesterday and is currently trading at A$24.97. NAB has a forward P/E ratio in the low-teens and an annual dividend yield of around 6.6%.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.


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