The National Australia Bank Has Just Announced A $1 Billion Writedown

Getty/Cameron Spencer

The NAB announced $1 billion in writedowns mainly due to losses in its UK business.

And the banked has warned its cash profit will fall by about 14%.

The bank will take a £420 million provision relating to a compensation scheme for customers of its UK Payment Protection Insurance and is setting aside 250 million pounds for a compensation program for interest rate hedging products.

Both add up to about $964 million.

The bank also says there will be an impairment charge of $297 million ($220 million after tax) over software investments.

CEO Andrew Thorburn says the larger UK conduct charges and impairments is disappointing but is being dealt with transparently and quickly and the underlying performance of the NAB Group remains strong.

“Taking these decisions gives us more clarity going into the future and allows us to focus on the core Australian and New Zealand franchises, which remain in good shape,” he says. “NAB is committed to including these types of adjustments within cash earnings now and in the future.”

The bank expects cash earnings for the year to the end of September will be in the range of $5.1 to $5.2 billion.

NAB intends to pay a final dividend of 99 cents per share, fully franked, a 2.1% increase on 2013.

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