NAB adds to bank sector's record run


The NAB's result is the biggest half-year profit for an Australian company

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australia's biggest bank, National Australia Bank, has beaten expectations with a record first-half net profit of $1.22 billion (Aust. $2.256 billion).

The NAB result, released Thursday, is up 11 percent on the previous year's comparable half.

It is the biggest half-year profit reported by an Australian company and continues the strong profit run seen in the Australian banking sector recently.

In the past two weeks, two other banks among Australia's "big four" lenders, the ANZ Bank and Westpac Banking Corp, have also unveiled record interim profits for the six months to March 2002.

Commonwealth Bank of Australia, the No. 2 bank by market capitalization, follows a different financial year and will report its full-year result in August.

NAB chief executive Frank Cicutto said Thursday the bank generated double-digit growth in its major markets of Australia, Europe and New Zealand.

"We are on track to delivering more than 10 percent cash earnings growth and group cash earnings per share growth of 7-10 percent for the full year," he said in a statement to the Australian Stock Exchange.

EPS growth target of 12 percent


Cicutto says the bank is targeting EPS growth of 12% in 2003 and 2004

Cicutto reaffirmed the NAB's announcement last month that the bank was targeting cash earnings per share growth of more than 12 percent in 2003 and 2004 -- subject to "the usual caveats around exchange rates and credit environment".

The NAB's performance had been under a cloud since announcing it lost almost $2.3 billion at its U.S.-based HomeSide Lending unit last year.

It sold HomeSide's operating platform to Washington Mutual Bank for $1.9 billion in December, after reporting a 36 percent fall in net profit to $1.06 billion (A$2.08 billion) for the year to September 2001.

Cicutto said Thursday the bank had "sharpened its focus" after a period of significant repositioning and was committed to delivering cost savings of more than $200 million (A$370 million) by September 2004.

Extending share buyback

He said the NAB was the only Australian bank with significant offshore growth options, via its investments in the U.K. and Ireland.

The NAB also announced Thursday it was extending its share buyback program by an additional $540 million (A$1 billion) as part of its capital management policy.

NAB shares were down 27 cents or 0.74 percent to A$34.78 by midday. The stock touched a record high of $35.85 in late February and has been near that price for most of the time since.

ANZ, Westpac and CBA were also down in morning trade, with CBA taking the biggest hit, off 1.66 percent. The benchmark S&P/ASX200 was flat, up 1.1 points to 3341.0.

Earlier this week, fifth-ranked St George Bank, which is much smaller than the big four, reported a drop of 11 percent in interim earnings to $101 million (A$187 million). Its shares were down 0.25 percent to A$19.65.

The NAB holds a 9.6 percent stake in St George.