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NAB first half net and cash drops

NAB first half net and cash drops

(29 April 2009 – Australia) NAB has announced a fall in both net and cash profits for the first half of the new reporting year, swayed by bad debt and higher funding costs, as well as increased revenue. Cash earnings, the profit measure that takes out volatile items, fell by 9.4 percent to A$2.0 billion. In a press release, NAB said that the fall in cash earnings was largely due to increased charges for bad and doubtful debts and higher funding costs.

Statutory net profit decreased marginally to A$2.66 billion from A$2.99 billion in the corresponding period last year.

Overall, group revenue increased by 11.5 percent to A$8.5 billion, primarily because of the strong performance of Australian banking and the Global Markets division of nabCapital. Revenue, however, fell in a tough UK market and also fell for MLC.

The rise in revenue was offset by further increased provisions, with a six monthly charge for bad and doubtful debts increasing from A$0.7 billion to A$1.8 billion.

The bank said that the main reasons for the increased provisions were downgrades in customer credit ratings across all businesses and precautionary management overlays related to the economic cycle.

Cash earnings for the Australian banking business made up three quarters of total earnings and increased by 7.5 percent in total to A$1.5 billion compared with the prior corresponding period.

NAB’s retail banking division saw cash profit rise 8.6 percent to $0.5 billion.

The Business & Private Banking unit saw revenue increase by 15.1 percent to A$2.7 billion, while underlying profit increased by 20.1 percent to A$1.8 billion and cash earnings increased by 7.1 percent to A$1.01 billion when compared to the March 2008 half year.

In Australia, the bank’s net interest margin rose to 2.53 percent from 2.36 percent a year ago, while margins were weaker in New Zealand and the UK.

For the wider group, average lending volumes increased by 9.5 percent to A$270 billion, while group deposits rose by 12.7 percent to A$340.6 billion.
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