US mortgage losses blight NAB results

TheNational Australia Bank (NAB)has reported a 36 per cent slide in its profit for the full year to the end of September, despite a healthy operating profit from its wealth management division.

NAB chief executive Frank Cicutto announced today that NAB’s net profit had slumped to $2.083 billion, after the bank was hit heavily by almost $4 billion in writedowns from its US-based mortgage business Homeside and the sale Michigan National.

“Our Group result has been affected significantly by the sale of Michigan National and the writedown in value of HomeSide,” Cicutto says.

But the bank’s wealth management division delivered solid performance in a year that saw it managing the integration of MLC.

The operating profit of the division was up by 137 per cent, rising to $344 million before revaluations and outside equity interests.

Sales levels in the wealth management division were also up, growing 27 per cent faster than the previous year.

The bank also posted a record profit of $685 million from its wholesale financial services group, 15 per cent up on the previous year.

Cicutto says the bank is expecting the current momentum in wealth management to continue, but has warned of subdued market conditions over the coming year.

"The outlook for the economic environment during the coming year is heavily influenced by the performance of the global economy, particularly the US. We expect conditions across all markets to be subdued during the first half of the financial year,” he says.