NAB, fresh from the $3.2 billion demerger its UK business, has posted an 8% rise in cash profit to $1.7 billion for the December quarter.
The unaudited results for the bank’s first quarter show expenses, up 5%, overshadowed the 2% revenue increase.
The cash profit is approximately 3% above the quarterly average of the September half year result and puts the bank well on track to beat last year’s $5.84 billion full year cash profit.
Bad debts fell by 52% to $84 million because of a lower impact from the mining industry.
On a statutory basis, unaudited net profit was approximately $1.5 billion.
The main difference between statutory and cash earnings relates to fair value and hedge ineffectiveness, elimination of treasury shares, and sale and demerger costs consistent with previous disclosures.
CEO Andrew Thorburn says Australian banking, a key focus, recorded improved revenue growth on higher volumes and stronger margins.
However, business banking remains intense and funding costs have risen.
“NAB is a stronger, more focused bank, positioned to deliver growth for shareholders in its core markets, as we drive towards our vision of becoming Australia and New Zealand’s most respected bank,” says Thorburn.
Part of the reason why NAB raised $5.5 billion last year, the biggest capital raising in Australian company history, was to support the UK IPO and demerger of he Clydsdale bank. The other reason was to meet stricter capital rules designed to make Australian banks safer from any future financial crisis.
UK authorities require capital support of £1.7 billion ($A3.6 billion) to cover any future claims against the business for “miss-selling” insurance products to small businesses.
The float is part of the NAB’s strategy to get rid of non-performing assets and concentrate on the business in Australia and New Zealand.
Last year the bank completed the sale of the final holding in the Great Western Bank in the US, the $2.4 billion sale of 80% of the insurance business and the sale of most of the NAB’s commercial real estate portfolio.
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