- POSTED: 08 May 2014 07:54
National Australia Bank posted a 15.8 per cent rise in half-year net profit Thursday to Aus$2.86 billion (US$2.66 billion) on the back of a significant fall in charges for bad debt.
SYDNEY: National Australia Bank posted a 15.8 per cent rise in half-year net profit Thursday to Aus$2.86 billion (US$2.66 billion) on the back of a significant fall in charges for bad debt.
The cash profit for Australia's fourth biggest lender, the financial industry's preferred measure which strips out volatile items, jumped 8.5 per cent to Aus$3.15 billion in the six months to March 31.
The result was boosted by charges for bad and doubtful debts dropping 52 percent, or Aus$528 million, from the previous corresponding period.
Lower loan losses in Australian banking and its British businesses were the main contributors to the reduction.
Chief executive Cameron Clyne said there had been progress "on a number of fronts".
"The economic environment continued to improve during the period," he said. "This is evident in the UK where confidence and economic growth have risen again and become more broad based.
"In Australia, the housing sector has strengthened further, and improved business confidence, along with corporate gearing at near 20 year lows, makes us optimistic about the business sector and potential for a recovery in business credit growth."
Against this backdrop, he cautioned that competition remained fierce in the bank's main markets while regulatory costs were rising.
NAB has been restructuring its struggling British businesses, particularly the Clydesdale and Yorkshire banks, and has previously said it was planning to slash more than 1,400 jobs by 2015.
Clyne said cash earnings from its UK banking operations improved 121 percent to 73 million pounds (US$123.7 million) as they continued to benefit from the restructure announced in 2012 and a recovery in the British economy.
"A major contributor to this result is the significant work undertaken over the past five years to reduce risk in our business," he said.
"We have reduced exposure to higher risk segments including NAB UK Commercial Real Estate and parts of Australian business lending, and increased home lending exposure."
NAB declared an interim dividend of 99 cents a share, a six cent rise.
Its strong result follows fellow banking heavyweight Westpac announcing a 10 per cent jump in first-half net profit on Monday to Aus$3.62 billion.
Last week, the Australia and New Zealand Banking Group's interim profit came in at Aus$3.38 billion, a 15 per cent spike.