👉 Background: NAB (FKA National Australia Bank) is one of the Big Fourbanks in Australia. Here's a fun fact for you: the red NAB logo has two lines through it — which were meant to signify its NAB business and MLC wealth management business... which is kinda awkward because it sold off MLC in 2021.

👉 What happened: Now, NAB has just announced $1.9 billion in cash earnings over the June quarter. While its net interest margin dropped by 0.05%, it saw its business lending division jump by 4%.

👉 What else: And with that whopping amount of cash earnings, NAB has so many opportunities at hand. It could:

• Invest in a streaming service
• Launch a new cryptocurrency
• Buy a remote island off the coast of Queensland

But now, NAB has decided to buy back $1.5 billion worth of shares. Did somebody say boring?!

What's the key learning?

💡Share buybacks are when a company purchases its own shares from the open market. This reduces the number of shares available and generally makes the overall 'metrics' look better.

💡There are a number of reasons why companies may choose to buyback shares:

• It can send a strong signal to the market - "we back ourselves so much that we want even more of our own company."
  
• It's a way to return excess capital to shareholders.

💡 But for banks, it's largely because there just aren't enough growth opportunities out there.

• Investing in a wealth management business has proven to be unsuccessful, and pretty scandalous (ahem Royal Commssion)
• Overseas expansion has also proven to be unsuccessful.

So, many investors would just prefer the banks to focus on their core strengths in business banking and home loans.