National Australia Bank posted a 2.3 percent rise in interim cash earnings Thursday and swung back into net profit after offloading loss-making British banking operations.
The lender’s cash profit in the six months to March 31, the financial industry’s preferred measure which strips out volatile items, came in at Aus$3.29 billion (US$2.44 billion), in line with expectations.
Net profit spiked to Aus$2.55 billion from a loss of Aus$1.74 billion previously, with last year’s result impacted after spinning off its troubled British asset Clydesdale.
The underperforming Clydesdale unit was divested with 75 percent going to NAB shareholders and the rest sold through an initial public offering to institutional investors.
“Revenue is up, our asset quality remains sound and we have further strengthened our funding and capital positions,” said chief executive Andrew Thorburn.
“There have been solid contributions across the business, in particular our priority segments of small and medium business where we have maintained or grown our leading market shares.”
NAB said bad loan charges rose 5.1 percent to Aus$394 million over the six months, while revenue increased 1.8 percent due to a growth in lending and stronger trading income.
All of Australia’s big banks are battling higher funding costs and lower interest margins, with rules now demanding they hold more reserves as a buffer against mortgages and fears over rising bad loans.
Thorburn said the operating environment remained “challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations”.
“But Australia´s economic fundamentals provide a favourable backdrop including strong population growth and improving business conditions,” he added.
ANZ Bank reported a 23 percent spike in cash profit to Aus$3.41 billion on Tuesday, with Westpac Bank releasing its results next week.
The Commonwealth Bank — Australia’s biggest — uses a different reporting schedule and posted a record interim cash profit of Aus$4.91 billion in February.
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