Markets: Putting Drummond to work

Morgan Stanley analyst Richard Wiles has a few questions for the next chief financial officer of National Australia Bank, Craig Drummond.

There is speculation Drummond, the former Goldman Sachs JB Were and Bank of America Merrill Lynch Australia chief executive, may become NAB’s next chief executive, succeeding Cameron Clyne.

Wiles, however, has more immediate concerns and asks:

1) Are the dividend payout ratio and capital levels appropriate given NAB’s business mix and return profile?

2) Are provision levels adequate, and is there scope to release management overlays, particularly in relation to the UK CRE portfolio?

3) Are further improvements in NAB’s funding mix necessary?

4) Should the scope and timing of the Technology and Operations Transformation be accelerated to improve NAB’s long-term competitive position in Australian retail and business banking?

5) Should NAB be more aggressive in growing its market share in high ROE retail banking?

6) Should the business banking division be broken up into commercial and institutional banking?

7) Should NAB invest more in institutional banking and markets given its underweight position?

8) Do changing customer habits and a lower volume growth environment warrant a smaller sales and service footprint or should NAB re-invest in the front line to leverage an eventual rebound?

9) Should NAB change its Asian strategy, and should it expand or exit its niche US presence?

10) Should NAB re-visit strategic options in relation to its UK banking operations?

11) Should NAB re-evaluate its wealth management strategy?

At 1441 AEST NAB shares were up 24 cents or 0.8 per cent at $30.91. The stock has gained 24 per cent this year compared with the 8.1 per cent rise in the S&P/ASX200 Index.

ANZ shares have risen 16 per cent this year, Commonwealth Bank has added 18 per cent and Westpac has increased 15 per cent.