National Australia Bank 1Q earnings growth stalls; bad debt charges abate

Friday 19th February 2010

National Australia Bank, parent of Bank of New Zealand, posted first-quarter cash earnings of A$1.1 billion, unchanged from a year earlier, and said the period was characterised by subdued credit growth, increased rivalry and rising funding costs.

Australia’s fourth-largest lender said the charge for bad and doubtful debts fell by A$202 million to A$739 million in the three months ended Dec. 31 from the previous quarter. Its Tier 1 ratio strengthened to 9.3% from 9% three months earlier.

Bad debts “aren’t expected to return to the peak experienced in the third quarter of the 2009 financial year,” chief executive Cameron Clyne said. Still, “given the fragile global recovery and uncertain regulatory environment, a conservative approach to capital and liquidity management remains appropriate.”

National Australia has ambitions to expand its offerings, having made an agreed A$13.3 billion takeover for Axa Asia Pacific Holding, trumping a rival bid from AMP Ltd.

Shares of the Melbourne-based bank fell 2.3% to A$25.37 on the ASX today and have slipped 5.4% this year.

At the bank’s consumer unit, revenue was hurt by tepid home-loan activity and lending margins were squeezed by higher funding costs.

In New Zealand, where its BNZ unit is one of the big four lenders, economic conditions “remain weak.” Demand for business and consumer credit “remains low,” it said in a statement today.

Competition for deposits remains intense though the net interest margin was relatively stable, it said. Business lending fell as customers chose to trim their debt.

Businesswire.co.nz

Comments from our readers

No comments yet