National Australia Bank's cash earnings dip 51.4% amid pandemic

The National Australia Bank, one of the four major banks of the country, announced on Monday a 51.4 per cent fall in its cash earnings between October 2019 and March 2020, which it attributed to the impact of the ongoing COVID-19 pandemic.

Canberra, April 27 The National Australia Bank, one of the four major banks of the country, announced on Monday a 51.4 per cent fall in its cash earnings between October 2019 and March 2020, which it attributed to the impact of the ongoing COVID-19 pandemic.

The cash earnings of the bank, which halted trading of its shares at the Australian stock exchange on Monday, were A$1.436 billion ($922 million) during the six-month period between October and March, according to the bank's half-yearly results, released 15 days ahead of schedule, reports Efe news.

These results are attributed to the increase in its reserves by around A$1.2 billion to cover future bad debts, which are largely expected to be linked to the pandemic.

"We are taking decisive action to manage the rapid and unprecedented upheaval caused by COVID-19 while at the same time being clear about our long term strategy for NAB," the bank's CEO, Ross McEwan said in a statement.

Net profit from continuing operations was A$1.208 billion, a decline of 58.4 per cent from a year ago.

The bank also announced a plan to raise capital of A$3.5 billion through an underwritten A$3 billion institutional placement and non-underwritten share purchase plan targeting to raise approximately A$500 million.

In a letter to the Australian stock exchange, the NAB requested a halt in the trading of its ordinary shares on Monday.

"The trading halt is necessary as NAB expects to make an announcement to the ASX in connection with a proposed equity capital raising comprising an institutional placement (Placement) and share purchase plan," the bank said.

Trading would remain halted until "an announcement in relation to completion of the Placement, or until the open of trading on Wednesday", the bank added.

In its half-yearly report, the bank said that measures implemented in Australia to contain the spread of COVID-19 had had a negative impact on the country's economic activity and although support packages by the government "provide significant support in the recovery phase", the timing and pace of the recovery remained uncertain.

"For Australia, we expect GDP to decline 8.4 per cent by September 2020 compared to December 2019 and not return to pre COVID-19 levels until early 2022, while unemployment is expected to peak at 11.7 per cent in mid-2020 before partially recovering to 7.3 per cent by December 2021," the bank added.

There are currently 6,713 confirmed COVID-19 cases in Australia, with 83 deaths.

( With inputs from IANS )