CANBERRA: National Australia Bank says more income from lending and investments, stronger markets, and fewer bad debts helped it post a rise in annual earnings.
After-tax profit for the 2015 financial year came in at $6.3 billion, up by nearly 20 per cent from a year ago. The bank’s preferred measure, cash earnings, increased nearly 16 per cent to $5.8 billion, worse than the $6.3 billion predicted by analysts.
The figure was lower than expected because of provisions made to cover compensation it had to pay for mis-selling payment protection insurance and interest rate products in the UK.
But Group net interest margin, the difference between the interest rates the bank pays to borrow money compared to the lending rates it charges, fell four basis points, mainly because of the competitive business loans market.
As part of an effort to boost its capital reserves, NAB will sell 80 per cent of its life insurance business to Japanese insurer Nippon Life Insurance Company for $2.4 billion. It will also hive off its loss-making Clydesdale and Yorkshire Bank operations in the United Kingdom in February next year and float the demerged business.
Australia’s banking regulator, the Australian Prudential Regulation Authority, has told banks to raise the amount of capital they put aside to cover potential losses on their mortgage books. NAB chief executive Andrew Thorburn told analysts at a briefing on the results this morning it had been a difficult year.
