MLC helps NAB to record profit
Although National Australia Bank chief executive John Stewart told investors yesterday that the bank is “not out of the woods” despite posting a record profit, a strong share market helped its wealth management operation to shine last year.
In the 12 months to September 30 Australia’s biggest bank said its investment and insurance division earned an extra $414 million, or 29.4 per cent on the year before.
Wealth Management arm MLC performed well with total funds under administration rising 14 per cent to a whopping $85 billion. NAB did, however, concede that the boost was largely attributed to benevolent market conditions rather than new inflows.
“The [overall NAB result] reflects solid growth in the investment business despite the loss of transitional tax relief, and strong investment earnings on shareholder’s retained profits and capital,” NAB said in its annual report.
Strong returns in wealth management helped NAB to post a record $4.1 billion profit, boosted in February with the sale of its Irish banking operations, which contributed just over $1 billion.
But Stewart has warned that a slowing of the Australian economy and expenses incurred in its three year recovery strategy initiated last year would force the bank to cut close to 500 more employees than it had already planned.
Excluding a number of one-off items, including the sale of its Irish operations, Stewart said NAB’s underlying earnings had actually declined during the year.
And the bank has uncovered another case of overcharging, this time discovering errors in its fixed interest business loans dating back to 1992 and affecting 50,000 customer accounts. NAB said yesterday it would have to reimburse the customers a total of $21.6 million.
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