National Australia Bank Faces Criticism and Downgrades Following Disappointing Interim Results

Strategic Insights -

National Australia Bank has faced widespread criticism and downgrades from major analysts following its disappointing interim results. The bank's underperformance has raised concerns about its ability to turn around its fortunes, with many analysts questioning how long it will take to recover. Despite chief executive John Stewart's efforts to bring in international talent, the bank's core businesses are struggling, and analysts are warning of further challenges ahead.

Key Takeaways:

  • Citigroup downgraded NAB's cash earnings per share by 3% for 2004, and by 5% and 6% for the following two years.
  • The bank's financial services division, often described as the "jewel in the crown", is performing poorly, contributing to pressure on margins.
  • UBS noted that NAB's guidance appears conservative, but the bank's share price is below its price five years ago.
  • Goldman Sachs reduced its full-year earnings forecast by 5.4% and maintained an "underperform" rating, with a valuation of $27.80.
  • The bank is expected to take between 12 and 18 months to turn around its fortunes.

Statistics:

  • NAB's share price ended at $28.76, a loss of nearly 4% for the year.
  • Citigroup downgraded NAB's cash earnings per share by 3% for 2004.
  • NAB's valuation is $27.80, according to Goldman Sachs.
  • The bank's financial services division has been described as the "jewel in the crown".
  • NAB's guidance appears conservative, according to UBS.

Sources:

  • Citigroup
  • UBS
  • Goldman Sachs
  • National Australia Bank's interim results statement