NAB tops-up provisions to cover bad loans
(22 October 2012 – Australia) National Australia Bank (NAB) warned the slowing Australian economy and ongoing problems in the United Kingdom forced the bank to top up provisions to cover bad loans by A$250 million, dampening its fourth quarter earnings.
NAB said its fourth quarter cash earnings of A$1.4 billion were flat on June quarter. This puts the bank on track for a full year cash profit of A$5.63 billion, up on last year’s A$5.5 billion.
"The Australian economy remains comparatively strong but lower global growth expectations, divergence in business conditions across sectors and low levels of consumer and business confidence have reduced the outlook for economic growth in 2013," NAB said in a statement.
"Furthermore, in the last three months, conditions in the UK have deteriorated and economic recovery is likely to be slower than previously expected," it added.
"The warning comes just weeks out from NAB’s scheduled full year profit announcement, prompting the bank to issue the quarterly earnings update.
NAB chief executive, Cameron Clyne said the A$250 million top-up in provisions was a "prudent response" to the economic conditions. The additional charges won’t impact the bank’s balance sheet, he added.
"The UK economy has now posted three consecutive quarters of declining GDP and expectations for recovery in 2013 have continued to be downgraded," he said.
"Considering the increased level of uncertainty, we feel that increasing the economic cycle adjustment on the collective provision is a prudent measure at this time".
"The Australian economy remains comparatively strong but lower global growth expectations, divergence in business conditions across sectors and low levels of consumer and business confidence have reduced the outlook for economic growth in 2013," NAB said in a statement.
"Furthermore, in the last three months, conditions in the UK have deteriorated and economic recovery is likely to be slower than previously expected," it added.
"The warning comes just weeks out from NAB’s scheduled full year profit announcement, prompting the bank to issue the quarterly earnings update.
NAB chief executive, Cameron Clyne said the A$250 million top-up in provisions was a "prudent response" to the economic conditions. The additional charges won’t impact the bank’s balance sheet, he added.
"The UK economy has now posted three consecutive quarters of declining GDP and expectations for recovery in 2013 have continued to be downgraded," he said.
"Considering the increased level of uncertainty, we feel that increasing the economic cycle adjustment on the collective provision is a prudent measure at this time".
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