Flat Euro outlook takes gloss off NAB result
(18th November 2003 – Australia) Despite delivering the second largest profit in Australian corporate history, investors remained cool on National Australia Bank, fearing its UK operation could impact profits over the coming year.
NAB’s cash earnings for the year ended 30 September 2003 jumped almost six percent to A$4.07 billion – only Telstra has posted a bigger profit – up from A$3.85 billion in 2001/02.
NAB chief executive Frank Cicutto said the bank’s British and Irish operations had been undermined by high pension costs and an unfavourable exchange rate caused by the stronger Australian dollar.
He said the UK business had "gathered pace" in 2003 but he expected European earnings to remain flat in local currency terms before absorbing increased pension costs.
"The combination of strong domestic activity and better global economic news mean that interest rates are likely to rise in all of the major economies in which we operate," Cicutto said.
"The global recovery and increased commodity prices are also likely to mean a higher Australian dollar against both the US dollar and Sterling."
Cicutto made no further comment on the bank’s interest in AMP.
NAB chief executive Frank Cicutto said the bank’s British and Irish operations had been undermined by high pension costs and an unfavourable exchange rate caused by the stronger Australian dollar.
He said the UK business had "gathered pace" in 2003 but he expected European earnings to remain flat in local currency terms before absorbing increased pension costs.
"The combination of strong domestic activity and better global economic news mean that interest rates are likely to rise in all of the major economies in which we operate," Cicutto said.
"The global recovery and increased commodity prices are also likely to mean a higher Australian dollar against both the US dollar and Sterling."
Cicutto made no further comment on the bank’s interest in AMP.
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