Na­tional Aus­tralia Bank cash profit rises 8pc af­ter UK spinoff

The Pak Banker - - COMPANIES/BOSS -

Na­tional Aus­tralia Bank Ltd. posted an 8 per­cent in­crease in first-quar­ter earn­ings af­ter spin­ning off its trou­bled UK busi­ness and squeez­ing more profit from home loans. Unau­dited cash profit, ex­clud­ing the U.K. divi­sion, climbed to about A$1.7 bil­lion ($1.2 bil­lion) in the three months ended Dec. 31, the Mel­bourne-based len­der said Tues­day in a state­ment. Net in­come for the quar­ter was A$1.5 bil­lion. That's down from A$1.80 bil­lion the bank re­ported a year ear­lier.

NAB's quar­terly up­date is the first since the len­der ex­ited the U.K this month. Chief Ex­ec­u­tive Of­fi­cer An­drew Thor­burn is re­turn­ing the len­der to its roots in Aus­tralia and New Zealand to boost re­turns that have lagged com­peti­tors for years. The cur­rent chal­lenge is to ex­pand mar­ket share in Aus­tralian mort­gages and busi­ness loans.

"Now, Na­tional Aus­tralia's man­age­ment needs to show how well they can run their do­mes­tic busi­ness," Brett Le Mesurier, a Syd­ney-based an­a­lyst at APP Se­cu­ri­ties Pty, said by phone be­fore the mar­ket up­date.

Na­tional Aus­tralia shares gained 0.5 per­cent to A$24.88 at 10:38 a.m. in Syd­ney, trim­ming this year's loss to 15 per­cent. The bench­mark S&P/ASX 200 in­dex rose 0.2 per­cent.

The loss from the U.K. exit will be about A$4.2 bil­lion, the bank said Tues­day. That's at the top end of a range of A$1.71 bil­lion to A$4.67 bil­lion that the bank es­ti­mated in De­cem­ber. The loss won't af­fect Na­tional Aus­tralia's div­i­dend pol­icy, it said.

Na­tional Aus­tralia's quar­terly earn­ings come af­ter Com­mon­wealth Bank of Aus­tralia on Feb. 10 posted its slow­est first-half profit growth since the fi­nan­cial cri­sis and warned of the risks posed by global eco­nomic tur­bu­lence.

"Our as­set qual­ity and bal­ance sheet re­main strong, not­with­stand­ing re­cent volatil­ity in mar­kets and com­mod­ity prices," CEO Thor­burn said in the state­ment.

Na­tional Aus­tralia said its net in­ter­est mar­gin climbed as the bank repriced mort­gages, though the ben­e­fit was partly off­set by higher fund­ing costs and com­pe­ti­tion for busi­ness lend­ing. Aus­tralia & New Zealand Bank­ing Group Ltd. re­ports first quar­ter re­sults Wed­nes­day. West­pac Bank­ing Corp. doesn't dis­close quar­terly earn­ings.

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