NAB scores record $1bn half-year profit

NAB is Australia's largest bank

In this story: Investors lift share price Currency rate lifts UK contribution RELATED SITES

SYDNEY, Australia -- National Australia Bank beat market forecasts on Thursday with a 29 percent rise in first half profit to just over $1 billion (A$2.025 billion).

NAB, Australia's largest bank, confirmed it was on track for full year earnings growth of more than 10 percent.

NAB's result was well above the average of major brokers' forecasts. They predicted a 21 percent rise to A$1.896 billion, boosted by the bank's acquisition last year of fund manager MLC Ltd and foreign exchange gains on its UK businesses.

NAB chief executive Frank Cicutto said the group's focus on retail banking, wealth management and wholesale finance was paying off.

This growth would offset the global economic slowdown.

Investors lift share price

Investors reacted to the stronger than expected profit by bidding NAB's shares up 2.5 percent to a high of A$30.77 after the results were released.

NAB has outperformed all three of its main rivals in the year to date,

Analysts said they were likely to increase their profit forecasts for the full year.

"We've got four buys in the (banking) sector, and we still think it's best buy in the peer group," said UBS Warburg analyst James Ellis, adding that the other buys recommended were smaller, regional banks rather than any of the other majors.

Driven by its A$4.5 billion MLC funds management purchase last year, NAB succeeded in decreasing its reliance on interest income, posting a strong 26 percent rise to A$3.6 billion in non-interest income, excluding revaluations.

Currency rate lifts UK contribution

NAB posted 10 percent growth from its banks in Britain and Ireland in local currency terms, which turned into around 18 percent growth with the help of the poor Australian dollar.

The group has been looking to expand in Britain but its options have narrowed, following the merger announced last week of its preferred target, Bank of Scotland, with Britain's biggest mortgage lender Halifax Group Plc.

Nevertheless Cicutto said the group remained focused on growing organically and through acquisitions in the UK, armed with $2.75 billion from the sale of Michigan National Bank in the United States.

Reuters contributed to this report.

National Australia Bank

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