National Australia Bank Soured Loans Fall But Expenses Rise
By Robb M. Stewart
MELBOURNE, Australia--National Australia Bank Ltd. (NAB.AU) recorded a sharp fall in charges for soured loans in the last quarter but said a rise in expenses for the period outpaced revenue growth.
NAB, one of Australia's four largest banks, said Thursday its unaudited net profit was about 1.65 billion Australian dollars (US$1.30 billion) for the three months through December. No comparison figure was disclosed, but it compares with a first-quarter profit of about A$1.6 billion last year.
Cash earnings, a measure followed by analysts that strips out discontinued operations, hedging and other items, were about A$1.65 billion for the quarter, which NAB said represented a 3% rise on a year earlier.
Revenue on the same cash-earnings basis was 1% higher against the quarterly average of the period half year, which the bank said reflected good growth in business and private banking and by its corporate and institutional banking operation. However, expenses rose by 4% due to higher investment spend and personnel costs, and NAB said it expected expenses to grow by 5-8% for the financial year and remain broadly flat over the following two years.
The bank's charge for bad and doubtful debts fell 23% to A$160 million and it said asset quality improved, thanks in part to improved conditions for New Zealand's dairy customers.
The bank is on track to deliver on a targeted A$1 billion in cost savings by the end of fiscal 2020, Chief Executive Andrew Thorburn said.
"Against a favorable economic backdrop, including improving business confidence and continued strength in business conditions, we are optimistic about growing our bank," he said.
Like the country's other major banks, NAB has moved to tighten its focus on its core franchises in Australia and New Zealand and shed capital-intensive operations to tackle a sluggish revenue environment and more recent signs a booming property market has begun to cool in big cities including Sydney. Since taking over as chief executive in late 2014, Mr. Thorburn has spun off and listed CYBG PLC (CYBG.LN), a company housing Clydesdale and Yorkshire Bank in the U.K., sold an 80% stake in its life-insurance arm and also listed regional U.S. lender Great Western Bancorp Inc. (GWB).
In the last financial year, NAB's net profit surged to A$5.29 billion from A$352 million the year before, when it absorbed losses on its exit from its British banking assets and insurance business.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
February 07, 2018 16:34 ET (21:34 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.