Subdued profits ahead as the NAB kicks off full year results for the big banks tomorrow

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The NAB will tomorrow be the first of three big banks to report full year results.

And the profits are widely expected to be less than spectacular.

However, all four — NAB, Westpac, ANZ and Commonwealth — are anticipated to match last year’s combined cash profit of $30 billion.

The Commonwealth Bank, which is alone in the big four reporting its results in line with most of the market, in August posted a full year cash profit of $9.45 billion, a 3% rise.

The banks, which have been hit with a series of scandals and with their CEOs called before a parliamentary committee to explain why they didn’t pass on interest rate cuts to home loans customers, must now answer to their shareholders and to market forces as they announce their results.

Deutsche Bank sees a subdued reporting season for the three banks, with cash earnings growth of -1.8% for the ANZ, -1.5% for NAB and +1.0% for Westpac.

“We expect investors to focus on the outlook for margins, commentary about further actions on costs, and any comments on dividend outlook,” Deutsche Bank analysts write in a note to clients.

Analysts are watching closely to see whether the NAB reporting tomorrow can maintain its dividend levels to keep shareholders happy.

Analysts can’t agree on what to expect from dividends but many say the three banks reporting – NAB, ANZ and Westpac — will keep the payout to shareholders flat, for now.

Deutsche Bank analysts forecast NAB posting a $3.172 billion cash profit for the six months, down 1.5% from the first half result of $3.310 billion. Still, that’s a profit for the full year of more than $6.4 billion.

“We expect a (NAB) flat final dividend at 99 cps, although we continue to believe that the payout ratio is unsustainable at these levels,” says Deutsche Bank in a note to clients.

Next week, Deutsche Bank sees the ANZ reporting $3.326 billion in cash profit for the second half of the year, down 1.8%, mainly due to the one-off $145 million Oswal court case settlement.

This would give the ANZ a full year profit of $6.182 billion.

An Westpac the following week is forecast for a second half cash profit of $3.942 billion, up 1%, for a full year result of about $7.8 billion.

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