NAB cash profit lifts in first half

By a staff reporter, with AAP

National Australia Bank Ltd (NAB) says continued growth in the Australian and New Zealand businesses and a stronger balance sheet helped it deliver a lift in first-half cash profit.

For the six months to March 31, NAB's cash profit was $2.915 billion, a 3.1 per cent lift on the $2.828 billion recorded in the previous corresponding period.

In the same period net profit was $2.52 billion, a significant 22.8 per cent lift on the $2.052 billion recorded in the first half of 2012.

Shares in the group shed 2.07 per cent to $32.68 at the 1615 AEST official market close, against a benchmark fall of 0.03 per cent. 

Revenue took a slight 0.9 per cent hit to $8.882 billion.

The lender declared a full-franked interim dividend of 93 cents, a lift of three cents on the prior interim dividend, payable on July 16.

The record date for the dividend is June 5.

The result was buoyed by a strong performance in the personal banking division, which earned $553 million in the half, a 19.2 per cent lift on the $464 million recorded in the previous corresponding period.

Business banking came in at $1.24 billion for the half, a slight 1.9 per cent fall on the $1.264 billion posted in the March 2012 half.

Cash earnings in the wholesale banking division were $615 million, a strong 18.7 per cent lift on the $517 million recorded in the previous corresponding period.

Clyne praises groups performance across all divisions

NAB chief executive officer Cameron Clyne said the lender's result was underpinned by continued growth in the Australian and New Zealand businesses and a stronger balance sheet.

"Personal banking again delivered a good result, further strengthening its position in housing lending and customer deposits as the business continued to build on its differentiated customer proposition," he said.

"Wholesale banking was also a key contributor to the group’s positive result as it increased cross-sell to the group’s customers.

"Business banking maintained its market leading position in business lending and the Wealth Investments business also performed well with stronger client acquisition."

Mr Clyne provided no outlook for the bank, but said its recently updated business strategy and technology upgrade would improve customer service, reduce errors and cut costs.

Period of low interest rates needed to boost economy

The lender said an extended period of low interest rates was needed to boost activity in some areas of the economy.

"Lifting the mood of consumer caution and improving the sluggish performance of housing markets seen in the last few years would certainly help sustain domestic economic growth as the stimulus from the mining investment boom fades," NAB said.

The bank's overall bad debt charges were down 3.4 per cent from the same period in the previous year, it said.

Income from interest in its retail banking operations rose by 2.2 per cent from the same period in the previous year, due to growth in home lending and the changes to its interest rates.

NAB also revealed it had cut 668 full-time workers in the six months to March 31, as part of measures to improve efficiency.

That takes its full-time workforce to 42,668.

Result may be disappointing: economist

"The NAB results were expected to be solid and it has managed to deliver this," IG market strategist Evan Lucas said.

"However, considering market expectations after stellar results from ANZ and (Westpac), this might be taken as a disappointment.

"Once more NAB is playing catch up - every time the bank takes a good step forward, its peers continue to skip away."