The NAB’s full year cash profit rose 15.5% to $5.84 billion as its Australia business improved and it announced a timetable to float its UK business and the sale of most of its insurance unit.
The result was below analyst expectations of about $6.3 billion. But revenue was up 4.2% to $19.298 billion and statutory profit rose 19.7% to $6.34 billion.
The bank set February as the date for an IPO of its troubled UK business Clydesdale Bank. The bank this year has raised $5.5 billion, the biggest capital raising in Australian company history, partly to meet UK regulatory requirements for potential compensation costs to customers who were wrongly sold financial products.
And the NAB has sold 80% of its life insurance business to Nippon Life of Japan for $2.4 billion. NAB will keep the remaining 20% which is worth about $600 million.
The deal will mean the sale of MLC after the NAB pulls out its superannuation and investments business.
The insurance deal and the UK float will further improve the bank’s capital holdings to meet stricter new requirements designed to make Australia’s banks safer from any financial crisis.
The two key announcements are part of a strategy to jettison non performing businesses and pull back to concentrate on the core Australia and New Zealand business.
CEO Andrew Thorburn says the local business is now in better shape.
Australian Banking cash earnings were up 3% to $5.111 billion, reflecting higher revenue and lower bad debt charges.
Net interest margins in Australia declined 3 basis points as a result of lending competition.
“In 2015 we have been focused on delivering against our plan – driving improved performance in our Australian and New Zealand business, investing for growth, delivering significant technology milestones for our customers, building a stronger balance sheet and exiting our legacy and lower returning assets,” he says.
“Our wealth business has delivered significantly improved results since 2013 which has enabled us to secure the long term partnership we are announcing today with Nippon Life, one of the world’s leading life insurers.”
NAB Wealth cash earnings increased 27% to $464 million on the back of stronger insurance income and stable costs.
“Wealth products remain important to our business which is why today we are also announcing additional investment of at least $300 million in NAB Wealth over the next four years in our superannuation, platforms, advice and asset management business,” Thorburn says.
In 2016, Thorburn says the bank will be stronger and more focused on delivering for customers and shareholders.
“We know our people are also aligned to achieving these goals,” he says.
“We will have exited all our low returning offshore businesses, allowing us to fully focus on serving our priority customer segments and leveraging the investments we have made in Australia and New Zealand.”
A final fully franked dividend of 99 cents a share was announced.
NAB shares were down 1.9% to $31.79.