NAB’s Stable Distribution Signals Steady Capital Management but Raises Future Rate Questions
National Australia Bank Limited announces a fully franked distribution of AUD 1.1095 per NAB Capital Note 7, reflecting a 4.45% annualised rate for the upcoming quarter.
- Distribution amount of AUD 1.1095 per NAB Capital Note 7
- Distribution rate set at 4.4503% per annum for Q4 2025
- Fully franked dividend payable on 17 December 2025
- Record date on 5 December 2025 and ex-date on 4 December 2025
- Distribution rate based on 3-month Bank Bill Rate plus 2.80% margin
NAB's Latest Distribution Announcement
National Australia Bank Limited (NAB) has confirmed a fully franked ordinary distribution of AUD 1.1095 per NAB Capital Note 7, payable on 17 December 2025. This announcement, dated 17 September 2025, outlines the distribution details for the quarter ending 16 December 2025, providing clarity for investors holding these hybrid capital securities.
How the Distribution Rate is Calculated
The distribution rate for this period is set at an annualised 4.4503%, derived from the 3-month Bank Bill Rate of 3.5575% as of 17 September 2025, plus a fixed margin of 2.80%. This sum is then adjusted by multiplying by (1 - tax rate), where the tax rate applied is 30%, resulting in the final distribution rate. The 91-day distribution period forms the basis for the cash amount payable per note.
Fully Franked Dividend and Tax Implications
Importantly, the dividend is fully franked, meaning it carries a 30% franking credit, which can be advantageous for Australian investors by reducing their tax liability. NAB has confirmed that there are no additional tax components or foreign income considerations attached to this distribution.
Key Dates for Investors
Investors should note the critical dates associated with this distribution, the ex-dividend date is 4 December 2025, the record date is 5 December 2025, and the payment date is 17 December 2025. These dates are essential for shareholders to qualify for the distribution and plan their investment strategies accordingly.
Context Within NAB’s Capital Management
This distribution aligns with NAB’s ongoing capital management strategy, utilizing hybrid capital instruments like the NAB Capital Notes 7 to balance funding costs and regulatory capital requirements. The fixed margin of 2.80% remains unchanged from the initial bookbuild, providing predictability for investors. While the announcement does not provide forward guidance, it reinforces NAB’s commitment to maintaining steady returns on these securities.
Bottom Line?
As NAB delivers a steady, fully franked distribution, investors will watch closely for future rate movements and capital management signals.
Questions in the middle?
- Will NAB adjust the margin or distribution rate in upcoming periods amid changing market conditions?
- How might shifts in the 3-month Bank Bill Rate impact future distributions on Capital Notes 7?
- What are the implications for NAB’s capital structure if investor demand for these notes changes?
