NAB result reflects UK exposure
National Australia Bank (NAB) has paid a price for its UK banking exposures, reporting a 15.5 per cent decrease in net profit to $2.052 billion for the six months to 31 March.
Announcing the half-year result to the Australian Securities Exchange (ASX) today, the big banking group said the reduced profit was primarily due to the charges relating to the outcomes of the UK Banking strategic review, the outcome of which was announced a week ago.
However NAB Wealth also took a hit, with the bank reporting that cash earnings were down $10 million or 3.7 per cent compared to the same period last year, largely as a result of an increase in insurance lapses.
However the bank's analysis claimed "adviser interest in NAB Wealth's progressive business model remains strong and led to an 8.7 per cent increase in aligned financial advisers since March, 2011".
It said the business continued to develop new products and services over the half, including the launch of a new insurance product, MLC Insurance, and the acquisition of direct funds management business Antares Capital Partners, formerly known as Aviva Investors Australia.
Commenting on the result, NAB chief executive Cameron Clyne claimed the banking group was continuing to make progress against its strategic agenda.
Referring specifically to NAB Wealth, he said that despite sluggish investment markets and an increase in insurance lapses, the group had grown both funds under management and premiums inforce.
"The business continued to invest in the development of new products and services during the half, releasing a new insurance product, MLC Insurance, and a refresh of MasterKey fundamentals," Clyne said.
He said adviser numbers had grown, with 84 net new financial advisers joining aligned networks, while costs had been tightly managed.
The company declared a fully franked interim dividend of 90 cents per share.
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