NAB profits fall short of forecasts

NAB Image copyright Getty Images
Image caption National Australia Bank is the country's largest lender by assets

One of Australia's biggest lenders, National Australia Bank (NAB), has reported a 15.5% rise in full year cash profit - but still missed expectations.

Cash earnings rose to 5.84bn Australian dollars ($4.15bn; £2.71bn), but that was below forecasts of about A$6.3bn.

The bank also announced it would sell most of its life insurance business and that its demerger from its UK business should be finalised by early next year.

NAB is one of the country's big four banks, and the largest by assets.

The lender's Sydney-listed shares closed down 2.2% following the results.

The cash earnings number strips out some one-off accounting items and is the bank's preferred reporting measure.

NAB's net profit came to 6.34bn Australian dollars ($4.5bn; £2.97bn) for the period - a rise of 19.7% for the year to September compared with a year earlier.

Australia's big banks are regarded as highly profitable and include the Commonwealth Bank of Australia, ANZ and Westpac.

The big four lenders came out of the global financial crisis relatively unscathed, but are now facing tighter regulatory controls.

The Australian Prudential Regulation Authority has told the country's lenders to increase the amount of capital they put aside in order to protect their mortgage businesses.

Changes ahead

Image copyright Clydesdale Bank
Image caption National Australia Bank has been trying to offload Clydesdale for years

In its annual results announcement on Wednesday, the NAB said that it would sell 80% of its life insurance business to Japan's Nippon Life Insurance Company - one of the world's leading life insurers.

The lender's shares were halted from trade on Tuesday ahead of pending news of the "material transaction".

The insurance arm sale was worth $2.4bn, the bank said, and represented "an attractive long term partnership with a high quality partner".

The banking giant also said it was "pleased to confirm" the demerger and initial public offering of its UK Clydesdale Banking Group - which chief executive Andrew Thorburn said was expected to be completed in early February next year.

"This follows the completion of the Great Western Bank (GWB) sell-down, the finalisation of the life reinsurance transaction, and the sale of most of our UK commercial real estate portfolio," Mr Thornburn added.

The sale of the UK business, which had been underperforming, was in line with the lender's strategy to focus on its Australian and New Zealand operations, it said.

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