NAB (ASX: NAB) has reported its first-half results for FY20. We take a look at the company's headline figures, key commentary and guidance outlook, plus review the share market's reaction across the trading day.

Headline result

NAB has reported a drop in cash earnings of 51.4% compared with 1H19, reaching $1.436bn.The bank ended the half with a Group Common Equity Tier 1 (CET1) ratio of 10.39%.

In conjunction with its results, NAB has announced a $3.5bn capital raise at $14.15 per share.

Shareholders have been advised that the interim dividend for the half will be cut by 64%, consisting of 30 cents per share fully franked. The ex-dividend date will be Friday, May 1, followed by the record date on Monday, 4 May.

Shares in NAB were not trading today on account of the company being in a trading halt while it completes its equity raising.

Key commentary

Excluding large notable items, however, underlying cash earnings were $2.471bn, which was still 24.6% lower than the comparable result last year.Revenue declined by 3.4%, and if customer-related remediation is removed, this falls further to a decline of 4.4%. Net interest margin eased by 1 basis point to 1.78%, albeit flat if excluding Markets and Treasury. Low interest rates and competition influenced these figures. As the company continues to invest and commit to a restructure, expenses rose 1.6% excluding large notable items.Shaping the result were higher credit impairment charges and mark-to-market losses on the company's "high quality liquids portfolio within Markets and Treasury". In total, collective provisions are represented by $2.135bn of forward-looking adjustments.On account of subdued performance and a challenging and uncertain economic environment, the bank is strengthening its balance sheet through a $3.5bn raise. After making a provision for the funds that will be raised through this process, the proforma Group Common Equity Tier 1 (CET1) ratio is 11.2%. At the end of the quarter, NAB's leverage ratio was sitting at 5.2%, while its liquidity coverage ratio was 136% .

By division, 'business and private banking', as well as 'corporate and institutional banking', both dragged on operational performance with a year-on-year fall in cash earnings of 5.7% and 10.2% respectively. Consumer banking partially offset this, with cash earnings rising 26.4% due to "repricing and lower funding costs in the housing lending portfolio".

Guidance outlook

NAB has cast significant uncertainty over the outlook for the second-half of FY20. The company has noted severe operational disruption to sectors like retail, travel, hospitality and commercial real estate, which are among the factors that have underpinned its decision to increase collective provisions. With this, the bank expects a recession and significant increase in unemployment that will carry through into next year. It has forecast GDP to fall by 8.4% by September 2020.Despite the outlook ahead, NAB management have expressed confidence in its core portfolio of businesses, albeit with a need to improve efficiencies and better leverage its banking relationships. As part of optimisation efforts, the bank will streamline products and processes in the home and business lending segment. Further initiatives are in progress with regards to migrating IT applications to lower-cost cloud platforms, simplifying IT architecture and accelerating the separation of MLC Wealth. A new organisational structure will also be put into effect.