National Australia Bank posted a better-than-expected 2.6 per cent rise in second-half earnings on buoyant lending, but higher costs and a tough outlook sent its shares lower.
Annual net profit jumped 30 per cent to A$4.13 billion after restructuring charges and the sale of its Irish banks. The final dividendwas unchanged at 83Ac a share.
The country's biggest bank said the economies in which it operated - Australia, New Zealand and Britain - were slowing moderately, and it would cut about 250 more jobs on top of the 4200 already announced this year.
Housing and business lending were expected to slow in Australia and New Zealand. Consumer spending had slowed in Britain, where the labour market had also softened, the bank said.
"This will increase the challenge of growing our business in each region," said chief executive John Stewart, who took over the top job in February last year after a currency trading debacle.
NAB shares fell 47Ac to A$33.18. The stock is still up 15 per cent this calendar year and has outperformed the benchmark S&P/ASX 200 Index by 2 percentage points.
Analysts said a near-10 per cent rise in second-half banking expenses, excluding the sale of its Irish banks, and Stewart's comments on challenges might have caused the shares to fall.
Part of Stewart's strategy to lift loan volumes has been to cut bureaucracy and speed up the approval time by allowing more business bankers and branch managers to make decisions on loans.
"If you look at the momentum of all our businesses going into 2006, it's looking really good," he said, adding that the bank had made gains in market share in each region.
The National is cutting about 10 per cent of its workforce over two years as part of a plan designed to improve competitiveness, lift earnings, and lower costs after several profit warnings and a currency trading scandal last year.
"I said last year it would take about three years to turn NAB around and we're about halfway through that turnaround," Stewart said.
