The profit announcement was made a week early to coincide with the equity raising which will include a $3 billion institutional placement and a $500 million share purchase plan.

In a letter to shareholders the bank’s chairman Philip Chronican and chief executive Ross McEwan said NAB was drawing on its experience in dealing with the global financial crisis by taking early and decisive action.

The bank has also slashed its dividend by 64 per cent to preserve capital.

“Our result for the half-year ending March 31 has been materially impacted by the COVID-19 pandemic, with cash earnings (ex large notable items) declining 24.6 per cent relative to the first half of 2019,” the letter said.

“We entered this crisis in a robust position, with our capital significantly strengthened over recent years.

“Our regulators have provided guidance on dividends and capital to manage the overall stability of the financial system, and we have also had to make hard decisions on these matters with a long-term view.

“In light of the uncertain economic outlook due to the COVID-19 pandemic, we are taking proactive steps to build capital via an equity raising and a reduction in the interim dividend.

“These actions are intended to provide NAB with sufficient capacity to continue supporting our customers through the challenging times ahead, as well as increasing NAB’s capital level to assist to manage through a range of possible scenarios, including a prolonged and severe economic downturn.”

In its investor presentation, NAB said the duration and magnitude of impact from COVID-19 was “highly uncertain” and would depend on the timing and phasing of the recovery and the effectiveness of Government support.

It expects unemployment to rise sharply to 11.7 per cent by June and progressively reduce in 2021.

It said cutting the dividend was a “difficult decision which reflects a balance between returning capital to our shareholders and retaining a strong balance sheet in this environment”.

It forecast the Australian economy would not return to its pre-COVID 19 levels until 2022.

The offer is expected to increase the bank’s Common Equity Tier 1 Capital (CET1) ratio to 11.2 per cent from 10.39 per cent.

The institutional placement will be $14.15 compared with the closing price on Friday of $15.76.

About $12 billion has now been raised by ASX-listed companies to deal with the COVID-19 crisis. Charter Hall Retail REIT today announced would raise $275 million while Domain has increased its debt by $80 million.