NAB reports A$4.13 billion net profit

The National Australia Bank expects all its markets to slow in the coming year after today reporting a 30.1 per cent increase in net profit of A$4.13 billion ($4.5 billion).

NAB's New Zealand unit, BNZ, posted a A$314 million net profit up 25 per cent from last year's A$251 million.

Chief executive John Stewart said the results showed the bank was on its way to recovering now that it is half way along its three-year turnaround.

"The full year results show the turnaround is on track but we still have much work to do," Mr Stewart said.

He said housing and business lending would slow in both Australia and New Zealand.

The bottom line number was affected by a number of one offs, including a A$1.04 billion profit from the sale of NAB's Irish banks, a restructuring provision of A$606 million and a tax settlement cost of A$97 million.

Excluding those significant items net profit lifted by 11.1 per cent to A$4.37 billion in the year to September 30, 2005.

However, cash earnings for Australia's biggest bank fell by 4.4 per cent to A$3.31 billion.

Mr Stewart said the second half result showed a 4.6 per cent improvement in cash earnings as the bank's recovery gained momentum.

NAB's net interest margin - a key measure of profitability - was down 15 basis points to 2.20 per cent over the year, but actually lifted one basis point in the second half.

This was helped by market share gains in NAB's Australian banking, particularly in housing and business lending.

However, Mr Stewart has forecast that the credit environment won't be as strong in the current year in all the bank's regions.

"In our core market, the domestic economic environment is expected to be more subdued for the next 12 months and competition is expected to increase in all areas of business," he said.

He said the slower consumer spending and softer labour market in the United Kingdom would be challenging.

"In these circumstances, our focus will be on rebuilding the businesses to ensure sustainable earnings growth over the longer term," Mr Stewart said.

NAB has also today announced an increase in the number of redundancies expected over its three year restructuring programme.

"We are now expecting about 4,500 staff globally," Mr Stewart said.

That's up from the previous estimates of 4,200.

During 2004/05, staffing levels in Australia fell by 10 per cent with 1,674 redundancies.

NAB declared a final dividend of A83 cents, the same as the previous corresponding period, 80 per cent franked.

Total dividends for the year were A$1.66, the same as the previous year.

- AAP