Thursday 12th March 2009 |
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"We face a challenging world, where flexibility is vital," chief executive Cameron Clyne said in a statement. "The world is moving into a recessionary cycle at a speed that was not anticipated six months ago."
Impairment charges wiped out profit growth in the quarter ended December 31 and today the company said maintaining the strength of is balance sheet was a key "imperative." Shares of the bank climbed 4.6% to A$17.05 on the ASX and have declined 39% in the past 12 months.
The Australian economy unexpectedly shrank 0.5% in the three months through December, prompting some economists to speculate that the nation could sink into recession this year.
"We are potentially in for a long period of deleveraging by households and companies," Clyne said.
NAB's businesses in New Zealand, where it owns Bank of New Zealand, Asia and the U.S. "are proving to be resilient under difficult market conditions," he said.
The company said it doesn't plan to exit the U.K. market. In Australia, NAB's personal banking business is "well positioned to ride out deteriorating market conditions," while changes to the business banking sector are "providing opportunities to acquire new customers and lift market share on the profitable basis," Clyne said.
The announcement of the dividend cut earned the lender rare praise from Finsec, the bank workers' union in New Zealand, which said the move was a socially responsible reaction to the recession.
"We have already lost too many jobs in the banking sector to restructuring and offshoring," said Finsec General Secretary Andrew Casidy. "We hope that NAB's announcement today represents a shift to shareholders sharing the pain of the recession, rather than forcing it all on to workers."
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