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NAB Essential Life making it easier for Australians to protect their families

Sun, 07 Sep 2014 21:40:50 +0000

NAB Essential Life launches life insurance protection online process.

It’s now easier than ever for Australians to protect themselves and their loved ones with life insurance, with the National Australia Bank (NAB) launching the new online NAB Essential Life protection to coincide with MoneySmart Week.

Customers will be able to apply for the NAB Essential Life insurance protection online at nab.com.au in only a few simple steps and receive cover immediately.

To celebrate the launch of NAB Essential Life, customers who receive coverage online by 31 October 2014 will receive a 10 per cent discount on their premium for the life of the policy.

Unfortunately, many Australians don’t realise the importance of life insurance. According to the latest MLC Wealth Sentiment Survey, 50 per cent of Australians don’t want or don’t think they need life insurance to protect their family’s finances in the event something happens to them.

Retail Wealth Product Executive General Manager, David Hackett said NAB Essential Life was designed to make it simpler for Australians to protect their family’s future with life insurance.

“We are constantly looking at ways to make it easier for Australian families to protect their financial future, and address our nation’s underinsurance problem,” Mr Hackett said.

“We all know that life doesn’t always go according to plan and life insurance can help protect your loved ones if the unexpected happens.

“The launch of NAB Essential Life marks the first time our customers can apply for and receive life insurance protection quickly online at nab.com.au, and is an important part of our strategy to make quality financial advice and services accessible to more Australians.

“The last thing anyone wants is to leave their loved ones in financial difficulty after they are gone. NAB Essential Life gives you the peace of mind that your family will be protected.”

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NAB announces retirement of Cameron Clyne

Thu, 03 Apr 2014 20:50:34 +0000

The Chairman of National Australia Bank Limited, Michael Chaney, announced yesterday that Cameron Clyne had advised the Board that he will retire as Group Chief Executive Officer and Managing Director of the Bank in August this year.

The Board has appointed Andrew Thorburn as Group Chief Executive Officer and Managing Director, effective 1 August 2014, and he will be invited to join the NAB Board at this time. His appointment is subject to regulatory approvals.

Mr Clyne said leading more than 42,000 NAB employees and strengthening the culture and reputation of the organisation was the most rewarding role of his career. But he said the job had taken a personal toll and it was now time to retire from executive life.

“We have built a strong foundation for future growth with the revitalisation of the Personal Bank, grown our already strong position in business banking, and achieved material improvements in customer satisfaction and reputation. We have also worked methodically through our legacy issues while still making transformational change in our technology,” Mr Clyne said.

“I am leaving to spend some much-needed time with my young family. I am proud that I leave NAB as a strong, customer-focused bank.”

Mr Chaney paid tribute to the exceptional leadership of Cameron Clyne and said Cameron had advised the Board of his desire to retire from executive roles.

“Cameron took over as CEO during the global financial crisis and developed an effective strategy to steer the Bank through a challenging period during which it has undergone significant cultural and structural change,” Mr Chaney said.

“He is highly regarded throughout the Bank and externally, and we are sorry to see him leave at this time. Cameron has built strong leadership across the organisation, a stronger balance sheet, improved the Bank’s culture, enhanced its reputation and dealt with a number of legacy issues.”

“As a result of his efforts, NAB is well positioned for the future.”

Mr Chaney said he was pleased that the company’s succession planning processes had enabled the Board to choose someone from within the organisation who has the ability and the vision to take on the role of CEO of the Group.

He described Andrew Thorburn as an outstanding banking executive who has been part of the NAB Group Executive team that developed the Bank’s successful strategy focusing on building a stronger Australian and NZ franchise.

“Andrew Thorburn has done a superb job leading Bank of New Zealand (BNZ) since 2008 where he continued to build the bank’s performance, increasing cash earnings by more than 40 per cent, improving market share on the back of strong customer satisfaction and developing a strong leadership culture. As CEO of BNZ, Andrew has gained extensive experience in all of the component parts of running a full service commercial bank. BNZ has delivered consistently strong results, reflecting a focused and disciplined approach to implementation of the strategy. In the course of his time at the Bank, Andrew has also had responsibility for NAB’s Asian and US operations. As a member of the Group Executive team, his energy, vision and ability to motivate employees have been obvious as has his business acumen,” Mr Chaney said.

Before being appointed CEO of BNZ in 2008, Andrew was Executive General Manager, Retail Banking at NAB for three years. He is a career banker who has spent more than 27 years working in the industry in Australia and NZ.

A replacement for Andrew as Managing Director and CEO of BNZ will be announced in due course.

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Just how expensive are the banks?

Tue, 10 Dec 2013 21:00:12 +0000

Craig Young

Australian banks have been among the strongest performing stocks in the Australian share market this year. Attractive dividend yields have been a primary driver of the banking sector’s outperformance in this low interest rate environment.

With valuations now very stretched, what lies ahead for the banks, particularly when quantitative easing in the US comes to an end?

Banks are expensive on all traditional measures

National Australia Bank has been the strongest of the four major banks, rising 46% (including dividends) for the calendar year to 30 November 2013. ANZ and Westpac returned 34% and Commonwealth Bank gained 31%. This compares with the market’s1 rise of 19% over the same period.

The banks have become very expensive. Tyndall’s research shows that the average price to earnings ratio (PE) of the four major banks (whereby the earnings have been adjusted to reflect long-term bad debt charges rather than current low levels) is trading at around 33% above its long-term average (as shown in Chart 1).

At the end of November 2013, the four major banks were trading on an average adjusted PE of 14.5x, which is one standard deviation above the long-term average of 10.9x. This highlights the extreme variation of current valuations from historical levels.

The last time the banks traded at these levels was before the global financial crisis, after which the banks fell sharply and required capital raisings. Banks are more likely to underperform from current levels.

On a price to book (PB) valuation, Australian banks are among the most expensive in the world, even when their high return on equity (ROE) is considered. Chart 2 shows that the PB ratio (which is the market’s value of a company compared to the book value of its assets) for Australian banks is sitting above the average of other global banks for their respective ROE (as represented by the solid line).

For example, Commonwealth Bank (CBA), which is the most expensive of the four major banks, has an ROE of 17% and a PB of 2.7x, which is well above the 1.9x PB it should be trading on. This means the market is paying more for CBA’s assets than it should be – if taking into account its return on equity.

Record headline profits, but weak underlying results

The recent bank reporting season showed record headline profits for the banks and they delivered very pleasing dividends to shareholders. When adjusting for very low bad debt charges, the average profit growth (as measured by earnings per share) for the four major banks was 1.8% pa in the 2013 financial year. By comparison, profit growth for the market (excluding banks and resources) is forecast to be 5.2% pa2 for the same period.

Tyndall expects this trend to continue with adjusted earnings per share for the four major banks expected to grow on average by 2.4% in the 2014 financial year. This compares with IBES forecasts of around 8.2% for the market (excluding banks and resources)2. This reflects a relatively weak credit growth outlook – both in the household and business sectors.

Household debt remains elevated (with net debt at around 130% of income) compared with other developed countries that have de-levered – and the Reserve Bank of Australia won’t be keen to see this increase any further. Business credit growth hasn’t rebounded as yet (currently running at a seasonally adjusted annual rate of 1.0% pa versus the 10-year average of 7.5% pa) and a recovery isn’t expected to occur anytime soon.

Payout ratios unlikely to go higher

Banks have been able to increase dividends in recent years, reflecting low credit growth and higher payout ratios. Low credit growth created excess or ‘lazy’ capital for the banks, which has been paid out as dividends. Banks have subsequently increased their adjusted payout ratios to around 76% (as shown in Chart 3).

Banks should be able to maintain the current payout ratios, but not increase them. We expect credit growth to increase modestly from very low levels and banks need to maintain more capital to satisfy Basel III requirements. Accordingly, dividends should grow in line with earnings growth, as opposed to in excess of earnings as has occurred in recent years.

Where to from here?

While bank dividend yields continue to remain relatively attractive, particularly versus bond yields and cash, on a total return basis, we expect banks to underperform. There is more downside risk for the banks than upside risk in the near term.

Australian banks have been a major beneficiary of the low interest rate environment, due to an unprecedented level of monetary stimulus by global central banks. Once the US Federal Reserve commences tapering its asset purchase program, which is expected to occur early in the New Year, long bond yields will rise and high-dividend yielding stocks, such as banks, are likely to lose some of their appeal.

As mentioned above, expectations for a modest uptick in credit growth will restrict the banks’ ability to further increase their payout ratios and pay higher dividends.

If company earnings in the rest of the market outside of the banks rise more than is currently priced in and we see a beta (risk) rally, the banks may be used as a funding source to build positions in higher risk assets.

Portfolio positioning

Tyndall, as an active manager, has been steadily reducing its exposure to banks over the last 12 months and the flagship Australian equity strategy (including the Tyndall Australian Share Wholesale Portfolio) is currently underweight the banking sector.

Underweight positions in Westpac and Commonwealth Bank, which are the most expensive of the four majors, more than offset overweight positions in National Australia Bank and ANZ. While NAB and ANZ have outperformed the banking sector for the year to date, they continue to have higher expected returns than the other banks over three years.

By Craig Young

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Disclaimer: This document was prepared and issued by Tyndall Investment Management Limited ABN 99 003 376 252 AFSL No: 237563 (TIML). The information contained in this document is of a general nature only and does not constitute personal advice. It is for the use of researchers, licensed financial advisers and their authorised representatives. It does not take into account the objectives, financial situation or needs of any individual. The Tyndall Australian Share Wholesale Portfolio (TASWP) ARSN 090 089 562 is issued by Tyndall Asset Management Limited ABN 34 002 542 038 AFSL No: 229664 (TAML). Investors should consult a financial adviser and the information contained in the current Product Disclosure Statement available at www.tyndall.com.au before deciding to invest. Reference to individual stocks in this material neither promise that the stocks will be incorporated into TASWP nor constitute a recommendation to buy or sell. TIML and TAML are part of the Nikko AM Group.

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NAB Private Wealth tops private banking awards

Fri, 03 Jun 2011 01:17:16 +0000

NAB Private Wealth was honoured last night at the Australian Private Banking Council 2011 Awards ceremony in Sydney.

Private bankers from National Australia Bank won the categories of Outstanding Relationship Manager, Outstanding New Relationship Manager and Industry Thought Leader. In addition NAB Private Wealth itself was named runner-up in the category of Outstanding Institution ($10-$30m).

Leigh O’Neill was named Outstanding Relationship Manager, Vera Ou-Young was named Outstanding New Relationship Manager and NAB Private Wealth’s Executive General Manager Angela Mentis was presented with the Outstanding Industry Thought Leader award for a second time.

NAB Private Wealth topped the awards table winning more categories than any other private bank.

Speaking after the ceremony Angela Mentis said, “This honour from the Australian Private Banking Council reflects the dedication of all our relationship managers and our commitmentto placing the client at the centre of everything we do.
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“Winning both the Outstanding Relationship Manager and Outstanding New Relationship manager categories rewards the work we have done to enhance the capabilities and service levels available from private banks across Australia.
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”NAB Private Wealth’s emphasis over the last three years has been to introduce a more holistic, European style of private banking to Australia, an effort reflected in Ms Mentis winning the Outstanding Industry Thought Leader award, which she also won in 2009.
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“We have focused on developing talented individuals from a range of professions, providing them with a breadth and depth of banking and wealth management skills. We have done this by establishing a dedicated Development & Capability function to up-skill our managers, as well as introducing industry leading professionals to mentor our people.
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“NAB Private Wealth now has significant expertise in the European style of holistic private wealth management having recruited talented individuals from international private banks,including Michael Parsons (Deutsche Bank), Anna McCreery (Credit Suisse), Leigh O’Neill (Coutts) and Ingrid van Dijken Robinson (Union Bancaire Privée),” added Mentis.
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NAB Private Wealth winner of the Outstanding Wealth/Investment Advisor Award 2010, Catherine Robson, was a finalist in this year’s awards.

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