CANBERRA: National Australia Bank Ltd. posted a 9.4 percent increase in third-quarter profit as lower bad-debt charges helped offset a drop in interest margins. The lender flagged more provisions for its U.K. unit.
Unaudited cash profit, which excludes one-time items, climbed to about A$1.75 billion ($1.3 billion) in the three months ended June 30 from A$1.6 billion reported a year earlier, the Melbourne-based lender said Monday. The bank may need to provide as much as 500 million pounds ($775 million) for compensation for mis-selling payment protection insurance and hedging products to U.K. customers, it said.
National Australia, which raised A$5.5 billion in May to bolster capital in the nation’s largest rights offering, is targeting the sale of its U.K. unit by year-end. The lender is shifting focus to its Australia and New Zealand businesses and is the fastest-growing mortgage lender among the so-called Big Four banks.
“The additional U.K. charges reduce full-year earnings and in our view lower the probability of NAB’s shareholders ultimately getting a material part of this provision back once it completes compensation,” said Victor German, a Sydney-based analyst at CBA Institutional Equities. “Credit quality metrics remained favorable, which is positive.”
National Australia shares gained 0.3 percent at 10:57 a.m. in Sydney, compared with a 0.2 percent advance for the benchmark S&P/ASX 200 Index. The lender slumped 5.6 percent last week, the biggest weekly slide in two months.
