NAB has announced an annual profit decrease of 21.8%, but its wealth division has proven to be one of the year’s star performers.
Overall, the group announced today that, on a statutory basis, net profit attributable to the owners of the company for the 2011/12 financial year decreased by $1.1bn to $4.1bn when compared with the previous year’s result.
A large portion of the blame for the group’s demise was apportioned to its UK operations, which went through a significant restructure on the back of poor results.
According to a NAB ASX announcement, cash earnings fell by $27m (0.5%) on the September 2011 year to $5.4b.
“This reflected an increased charge for bad and doubtful debts (B&DDs) mainly in the UK, and a pre-tax $250m increase in the economic cycle adjustment on collective provisions (ECA), partially offset by cash earnings growth in the Australian and NZ banking franchises,” it said.
“The difference between statutory and cash earnings was primarily due to charges relating to the outcomes of the UK Banking strategic review, provisions for customer redress in the UK, fair value and hedge ineffectiveness and the effects of adjusting for treasury shares.”
NAB CEO Cameron Clyne noted that the group’s result reflected both the strength of the core Australian and New Zealand banking businesses and ongoing challenges in the UK.
“The Australian economy has performed well relative to other advanced economies, although business conditions across sectors remain mixed reflecting the prolonged global uncertainty and weak confidence,” he said.
Wealth performs well
The group’s wealth division, however, proved to be a strong performer, with the ASX release noting that its “cash earnings before IoRE7 and non-controlling interest of $519m increased by $15m or 3% compared to September 2011".
This, said NAB, was a reflections of higher funds under management and increased revenue from both the annuities portfolio and direct asset management. The release also noted that this was partially offset by a deterioration in lapse experience.
Planner numbers were also on the up, with adviser numbers in the aligned channel increasing by 82 during the year, as the bank’s wealth business “continued to undertake significant investment”.
“This included the relaunch of key products in both the investments and insurance businesses, the launch of NAB’s online trading platform, nabtrade, and the ongoing development of a range of innovative retirement products for Australia’s retireesand pre-retirees,” said the statement.
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