NAB’s British business drags down profits
NATIONAL Australia Bank (NAB), the country’s top lender by assets, yesterday posted record first half earnings as higher trading, fee income and a rising share of the mortgage market countered losses in its UK operations.
While NAB and rivals ANZ and Westpac have reported strong headline numbers for the half-year, all saw margins squeezed as funding costs remained high due to the Eurozone debt turmoil, subdued credit growth and fierce competition for deposits.
Overall, NAB, which offers the lowest mortgage rate among its peers as it tries to raise its market share, reported a record cash profit up six per cent at A$2.83bn (£1.77bn) in the six months to March, from A$2.67bn a year ago. Cash profit excludes one-offs and non-cash accounting items, and is closely watched by investors.
NAB’s British business plunged to a loss in the first-half, hit by increased bad debt charges and rising wholesale funding costs, illustrating the difficulties facing UK retail banks in a worsening economic environment.
In the UK, the bank operates 337 Clydesale and Yorkshire bank branches and last month it scrapped plans to sell its British operation, saying it was too hard to find a buyer in the current market, opting instead to shrink it and cut 1,400 jobs. “The UK (operation) has been an underperforming asset for us for some time. What we are trying to do is improve the returns for shareholders. We’ve always maintained a fire sale is not the basis to do that,” said chief executive Cameron Clyne.