The lender tabled the moves in posting a 19.7 percent lift in annual net profit to Aus$6.34 billion (US$4.56 billion) for the year to August 31 as it looks to bolster its balance sheet and provide a buffer to meet tougher regulatory requirements. The lower valuation is an indication of a correction happening in an industry where premium incomes have missed expectations and prospects aren’t looking as rosy as before.
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NAB posts full year results on Wednesday.
“This would be a great outcome given the poor profitability of life insurance and the massive regulatory capital release”, Mr Johnson said.
NAB also announced a timetable for a demerger and initial public offering for its poorly performing British business Clydesdale Bank, which it acquired in 1987.
Nippon Life Insurance is set to acquire another 23% of Reliance Life Insurance for Rs 2,500 crore to increase its stake in the joint venture with Anil Ambani’s Reliance Capital to 49 per cent, two people familiar with the matter said. NAB expects CYBG to be listed on both the London Stock Exchange and ASX.
Last year, NAB’s cash profit was a mere $5.8 billion, impacted by costs from its troubled United Kingdom operations, which it had planned to spin off by the end of this year. NAB shares were trading lower than the rest of the banks in a weaker sector on Wednesday.
Analysts said the bank was moving in the right direction.
National Australia Bank has reportedly struck a multi-billion dollar deal to sell a stake in its underperforming life insurance business.
“However, market attention will now focus increasingly on its core Australian business”.
Investors get a final dividend payout of 99 cents a share, fully franked.
NAB’s closely-watched net interest margin contracted by 4 basis points, which it said was due to competition in business lending.
Expenses were up 6 per cent, which the bank said was part to hiring of new business bankers and “higher project costs”.
Mr Thorburn also said the bank would spend an extra $300 million on its its wealth business, over the next four years, focusing on superannuation, wealth platforms, financial advice and asset management.
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“Our wealth business has delivered significantly improved results since 2013, which has enabled us to secure the long term partnership we are announcing today”, chief executive Andrew Thorburn said. Revenue rose 4% on the back of stronger markets and treasury performance combined with higher volumes of housing and business lending.
