Debts and charges hit solid NAB result
(28 October 2009 – Australia) Bad debts of A$3.8 billion and volatile items have offset a strong rise in underlying profit, to leave NAB's annual net profit down 42.9 percent to A$2.6 billion.
The bad and doubtful debt charge was $3.8 billion, a 53.3 percent increase from $2.5 billion in the previous year, due to higher specific provisions in the SME and corporate portfolios in all regions.
Just over A$2 billion of the bad debts occurred during the second half of the reporting year, though the bank said that the rate of increase in both the bad and doubtful debts expense and total provisions moderated during the second half of the year.
That left group cash earnings, a preferred measure of profitability because it leaves out volatile items, at A$3.8 billion, a fall of just 1.9 percent.
A number of volatile items over the year including a tax litigation charge of nearly A$1 billion, however, pushed net profit 42.9 percent lower than last year.
Despite the hits to the bank, underlying profit was up 14.6 percent to A$9.3 billion due in part to an increase in revenue of 9.7 percent to $16.9 billion and a 4.3 percent reduction in costs.
The Australian bank was the key contributor to the increase in underlying profit, gaining 16.1 percent, while the bank’s nabCapital division was the only one to add to last year’s cash earnings figure, though the retail arm of the Australian banking division also added to earnings.
NAB group chief executive officer, Cameron Clyne, said that the focus during the year was to responsibly position the group to provide business momentum and sustainable returns in what may be a slower growth environment.
Just over A$2 billion of the bad debts occurred during the second half of the reporting year, though the bank said that the rate of increase in both the bad and doubtful debts expense and total provisions moderated during the second half of the year.
That left group cash earnings, a preferred measure of profitability because it leaves out volatile items, at A$3.8 billion, a fall of just 1.9 percent.
A number of volatile items over the year including a tax litigation charge of nearly A$1 billion, however, pushed net profit 42.9 percent lower than last year.
Despite the hits to the bank, underlying profit was up 14.6 percent to A$9.3 billion due in part to an increase in revenue of 9.7 percent to $16.9 billion and a 4.3 percent reduction in costs.
The Australian bank was the key contributor to the increase in underlying profit, gaining 16.1 percent, while the bank’s nabCapital division was the only one to add to last year’s cash earnings figure, though the retail arm of the Australian banking division also added to earnings.
NAB group chief executive officer, Cameron Clyne, said that the focus during the year was to responsibly position the group to provide business momentum and sustainable returns in what may be a slower growth environment.
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