NAB posts record profit but faces more pain in Britain

  • Business
  • Wednesday, 12 Nov 2003

SYDNEY: National Australia Bank (NAB) reported yesterday a record profit that was fuelled by strong home lending, but warned of an uphill battle in Britain and Ireland as pension co s would continue to bite in Europe, where it earns a quarter of its profits. 

“The outlook statement was a little bit muted. I am concerned because there certainly does seem to be a bit of slippage in the outlook statement,” commented J.P. Morgan analyst Brian Johnson. 

NAB said its net profit had doubled to A$2.08bil for the second half to Sept 30, in line with analysts’ forecasts. The result was buoyed by a record 20% growth in Australian home lending, while the year-earlier period suffered from big one-off redundancy charges and technology write-downs. 

However, a strong Australian currency and British pension costs hit earnings at NAB's British and Irish banks. 

For the full year, NAB's net profit was 17.3% higher at A$3.96bil. 

A firming Australian dollar cost the bank A$65mil in net earnings for the year, while pension costs amounted to £42mil following a review of its British pension scheme in the wake of equity market declines. 

Chief executive Frank Cicutto said the European operations would be hit by more exchange rate impacts this year as the Australian dollar continued to strengthen and by £85mil in pension costs, although all other businesses were expected to see “solid” cash earnings growth. 

In Australia, housing growth was expected to moderate to 15%, although business lending would improve, Cicutto later told reporters. NAB's cash net profit for the second half, which excluded wealth management write-downs and added back amortisation of goodwill and one-offs, was A$2.04bil versus A$1.86bil previously. – Reuters  

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