NAB Launches A$3.5 Billion Capital Raising, Slashes Interim Divided

   By Alice Uribe

SYDNEY--National Australia Bank Ltd. has launched a 3.5 billion Australian dollar (US$2.23 billion) capital raising, while also slashing its interim dividend by 64% as it responds to upheaval caused by the coronavirus pandemic.

NAB, one of Australia's largest lenders, said it would raise A$3 billion from a placement of shares to institutional investors and seek to raise a further A$500 million from a Share Purchase Plan. New shares would be issued at A$14.15 each, representing a 10% discount to Friday's closing price.

On Monday, NAB also reported a 51% drop in cash earnings for the six months through March to A$1.44 billion. The result was dragged down by A$1.04 billion in one-off charges, including higher credit impairment charges and mark-to-market losses on its liquids portfolio within Markets and Treasury.

The bank said it would cut its interim dividend by 65% to 30 cents per share. It also increased collective provisions by A$828 million to A$2.14 billion.

"We entered this challenging period in a robust position, with capital, funding and liquidity significantly strengthened over recent years," said Chief Executive Ross McEwan. "However, given the uncertain outlook, we have taken proactive steps to further strengthen our balance sheet."

The bank said the capital raising would increase its proforma CET1 ratio to 11.2%, while the decision to reduce its interim dividend is equivalent to another A$1.6 billion or 37 basis points of CET1.

NAB's chairman and directors will forego 20% of their base fees for the second half of fiscal 2020, while Mr. McEwan will forego 20% of his fixed remuneration for the second half.

Write to Alice Uribe at alice.uribe@hotmail.com

(END) Dow Jones Newswires

April 26, 2020 19:14 ET (23:14 GMT)

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