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NAB lifts cash earnings

Business

National Australia Bank has lifted first-half earnings 6.5 per cent to $3.31 billion, even as the sale of its unprofitable UK unit dragged it into the red.

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Cash earnings, the bank’s preferred measure of profitability, for the six months to March 31 were up from $3.11 billion, but a one-off $4.22 billion hit from the demerger and float of the Clydesdale Bank dragged it to a loss of $1.74 billion.

While rival ANZ this week cut its dividend when reporting a drop in cash earnings, NAB has kept its interim dividend unchanged at a fully franked 99 cents per share after lifting net interest margin one basis point to 1.93 per cent.

“This is our first result squarely focused on our Australian and New Zealand business,” chief executive Andrew Thorburn said in a statement today.

“It shows that delivering against our strategic priorities is producing results and laying the foundations for sustainable growth and returns. We have a clear plan and are executing it in a disciplined way.”

The charge for bad and doubtful debts dropped 6 per cent on the prior corresponding period to $375 million, although it was up 7.4 per cent on the previous half year because of what the bank said was a small number of large single name exposures.

Writing before the results, UBS analysts estimated NAB’s exposures included $220 million to at risk steelmaker Arrium, $300 million to troubled law firm Slater and Gordon and $70 million to collapsed electrical retailer Dick Smith.

NAB, which on Tuesday committed to passing on the Reserve Bank’s 25 basis point cash rate cut in full to its mortgage holders, said personal banking revenue growth was up 2 per cent despite higher wholesale funding costs and a slowing in home lending growth.

-AAP

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