National Australian Bank has shown a profit record of around $6.34 billion, which is 19.7 percent more than the gain recorded in financial year 2014.
Advertisement
Nab confirmed the demerger and initial public offering of CYBG plc (Clydesdale Bank UK) which is expected to be complete in early February 2016.
The spin-off structure for NAB’s United Kingdom asset was revealed in Street Talk on Wednesday morning.
The bank’s shares have been halted from trade pending an announcement of a material transaction, NAB said on Tuesday. Nippon’s stake in the company, when the deal comes through, will rise to 49 % – the upper limit for a foreign player in the private sector insurance firm.
NAB said it plans to give about 75 percent of the shares in Clydesdale to existing NAB shareholders and sell the remainder to institutional investors.
The sale price is equivalent to a price-earnings (P/E) ratio of 19x. “The transaction is expected to result in an indicative loss on sale of approximately $1.1 billion inclusive of transaction and separation costs, based on expected completion life insurance net assets of $3.6 billion including $1.6 billion of allocated goodwill”, the bank said.
The lender, which a few analysts had forecast would post profits of above $7 billion, said cash earnings increased 15.5 per cent to $5.84 billion.
It said at the time it was looking to improve returns from its wealth management business, and discussions about a transaction were continuing.
Although NAB’s profit performance was below many analyst expectations, the group is powering ahead with sweeping changes to improve the bank over the long term.
NAB said on Wednesday that as part of its partnership with the Japanese unlisted mutual company it will enter a 20-year distribution agreement to provide life insurance products through its distribution networks. The charge includes a collective provision overlay of $102 million for Australian agriculture and resource sectors, and an increase in New Zealand collective provision charges of NZ$78 million predominantly relating to the dairy sector.
“We need to extract the superannuation fund business, which NAB will then retain, and it is a reasonably complex exercise given that we now have eight super funds and three administrators”, the CFO said.
Advertisement
But the capital raising, the nation’s biggest ever that was strongly supported, was also to help NAB exit its British operations.
