Asset sales hit annual net profit at Australia’s NAB
National Australia Bank posted Thursday a 94.4 percent plunge in annual net profit due to sales of loss-making assets, but cash earnings rose.
The lender’s profit slumped to Aus$352 million (US$269 million) following the spinning off of troubled British asset Clydesdale and most of its life insurance business to Japan’s Nippon.
Excluding these expected losses, NAB said net profit decreased 5.6 percent to Aus$6.42 billion.
Cash profit in the year to September 30, the financial industry’s preferred measure which strips out volatile items, rose 4.2 percent to Aus$6.48 billion, slightly higher than expectations.
Chief executive Andrew Thorburn said divestments over the year meant the bank was a leaner business moving forward.
“This has been a milestone year for the group with the completion of major divestments including our exit from Clydesdale and the sale of 80 percent of our life insurance business to Nippon Life,” he said.
“NAB moves into 2017 a reshaped business -– stronger, simpler and focused on helping our customers in Australia and New Zealand.
“These changes have been achieved while delivering an improved operating performance and maintaining a strong balance sheet, sound asset quality and tight control of costs.”
The bank spun off Clydesdale earlier this year, which involved a one-off Aus$4.22 billion hit from the demerger and float, with its insurance arm offloaded to Nippon Life soon after.
The bank kept its dividend steady at 99 cents, contrary to many analyst expectations that it would slice the payout to shareholders to bolster capital.
ANZ and Westpac banks also report annual results over the next two weeks with all of them battling higher funding costs, lower interest margins and rising bad-debt charges.
NAB said its charge for bad loans rose 7.0 percent to Aus$800 million over the year.