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Capital Calls: Aussie bank’s good deeds punished

2 minute read

A man walks past ATM machines at a National Australia Bank branch in Sydney, Australia April 20, 2018. REUTERS/Edgar Su

MELBOURNE, May 6 (Reuters Breakingviews) - Concise insights on global finance.

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SMASH AND NAB. Disappointment comes in a strange form for shareholders of National Australia Bank (NAB.AX). The country’s third-largest lender by market value didn’t just exceed earnings estimates for the six months through March 31. It also doubled its dividend, following increases by rivals ANZ (ANZ.AX) read more and Westpac (WBC.AX). Yet investors pouted, sending the shares down more than 3% in morning trading.

As Australia’s biggest business lender, NAB is heavily exposed to troubled sectors like travel. That meant the bank run by Ross McEwan released less from loan-loss reserves – $235 million ($182 million) – than its two peers; investors probably should have factored that in already. Its markets business also was a tad disappointing, but one flagged earlier by ANZ.

The issue seems to be the lack of a share buyback to reverse the A$3.5 billion in equity NAB raised at the start of the pandemic. How quick investors are to throw caution to the wind. (By Antony Currie)

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Earlier in Capital Calls:

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