NAB flags earnings fall
National Australia Bank has flagged a slide in its full year earnings of up to 14 per cent after taking a more than $1 billion hit to its books.
The bank on Thursday unveiled a string of write-downs and provisions, chiefly linked to misconduct by its troubled UK business.
NAB expects its cash earnings for the year to September 30 to be between $5.1 and $5.2 billion, down from $5.94 billion a year ago.
But, it said, it would lift its fully-franked final dividend two cents to 99 cents.
Chief executive Andrew Thorburn said the impairments and provisions were disappointing but necessary.
“Taking these decisions gives us more clarity going into the future and allows us to focus on the core Australian and New Zealand franchises, which remain in good shape,” he said.
“NAB is committed to including these types of adjustments within cash earnings now and in the future.”
The new charges include provisions of STG420 milion pounds ($A766.63 million) and STG250 million pounds ($A456.33 million) relating to past misconduct by its UK subsidiary Clydesdale Bank and interest rate hedging products.
Along with other UK banks, the Clydesdale Bank has faced ongoing scrutiny over the selling of its payment protection insurance and interest rate hedging products.
In a statement, NAB said the total cost of the past misconduct to the company was unknown.
“There remains a wide range of uncertain factors relevant to determining the total costs associated with conduct related matters, including any possible fines,” NAB said in a statement.
Stay informed, daily
“The increased conduct provisions are adequate and appropriate based on the information available to us today as part of our year-end review and financial-close process.”
NAB also announced a $297 million impairment linked to capitalised software, mostly within its Australian business.
The bank said the benefits linked to the software had been substantially below what had been expected.
It will also take a $US120 ($A132) million hit relating to deferred tax assets in the US, while a reduction in tax offsets linked to research and development will reduce full year cash earnings by a net $28 million, after tax.
