The ASX 200 (ASX: XJO) is currently up 0.5% as reporting season winds down to the weekend.
National Australia Bank Ltd (ASX: NAB)
The NAB share price is up 0.7% after the big bank announced its third quarter update.
NAB said that it generated $1.5 billion of unaudited statutory net profit and $1.55 billion of unaudited cash earnings.
Compared with the quarterly earnings average from the first half of FY20 (and excluding large notable items), cash earnings rose by 24% and cash earnings before credit impairment charges increased 17%.
NAB’s third quarter revenue rose 10% thanks to higher Markets & Treasury income including the reversal of unrealised investment losses, meaning NAB’s assets rose in value over the quarter so it wasn’t showing a loss on paper.
The net interest margin (NIM) was largely stable, but after excluding Markets & Treasury it declined due to the low interest rate environment and competitive pressures. Lower funding costs partly offset this.
NAB’s expenses in the quarter increased by 2% with higher annual leave accruals and remuneration according to the bank. It said its target of flat expenses in FY20 is increasingly challenging, partly due to COVID-19 impacts such as additional customer support.
NAB recognised another $570 million of credit impairment charges after the $976 million charge in the second quarter. Remember that the 2020 first quarter had a $185 million charge and the third quarter of 2019 had a $247 million charge.
The NAB ratio of loans overdue by more than 90 days has increased again to 1.06%, up from 0.97% in the second quarter.
Baby Bunting Group Ltd (ASX: BBN) share price up 8%
The Baby Bunting share price is up around 8% after reporting its FY20 result.
Baby Bunting announced that total sales rose by 11.8% to $405.2 million. It generated comparable store sales growth of 4.9% which includes the online store. Online sales growth (including click and collect) was 39.1%, with 66.1% growth in the second half. Private label and exclude product revenue grew by 47.9% and represented 36.5% of sales, compared to 27.6% in the prior year.
The baby product retailer reported higher profitability on its sales. Its gross margin improved by 120 basis points (1.2%) to 36.2%.
Baby Bunting pro forma EBITDA (click here to learn what EBITDA means) grew by 24.1% to $33.7 million and its pro forma net profit after tax (NPAT) increased by 34.1% to $19.3 million.
‘Pro forma’ is a term to describe the company’s attempt to provide a useful number for investors, even if it isn’t the statutory number in the accounts. Baby Bunting’s pro forma numbers exclude the significant costs with business transformation projects and also exclude the impairment of its investment in its digital commerce technology of $3.2 million and the impairment of brand assets of $2.6 million. The pro forma EBITDA also excludes the impact of AASB 16 lease accounting.
When including all of the above things that were excluded, statutory net profit was down 14% to $10 million.
Baby Bunting’s board decided to declare a final fully franked dividend of 6.4 cents per share, up 25%. That brought the full FY20 dividend to 10.5 cents, also up 25%.
Mesoblast Limited (ASX: MSB)
The Mesoblast Limited (ASX: MSB) share price has soared 38.2% after announcing positive US news.
The company announced that the Oncologic Drugs Advisory Committee (ODAC) of the US Food and Drug Administration (FDA) voted overwhelmingly in favour that the available data supports the effectiveness of its remestemcel-L (RYONCIL) in pediatric patients with steroid-refractory acute graft versus the host disease.
The ODAC is an independent panel of experts that evaluates the efficacy and safety of data and makes recommendations to the FDA. Although the FDA will consider the recommendation, the final decision is made solely by the FDA. The recommendations by the panel are non-binding.
Mesoblast chief medical officer Dr Fred Grossman said: “Steroid-refractory acute graft versus host disease is an area of extreme need, especially in vulnerable children under 12 years old where there is no approved therapy. We are very encouraged by today’s outcome and are committed to working closely with the FDA as they complete their review of our submission regarding approval of RYONCIL for this life-threatening complication of an allogenic bone marrow transplant.”
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