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NAB tumbles, despite record profit
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest bank, National Australia Bank, has rebounded from last year's U.S. setbacks to lift full-year net profit 62 percent to a record Aust. $3.379 billion ($1.9 billion). But the record, announced Thursday morning, was greeted coolly by investors, who were expecting a better result. NAB shares tumbled to close 5.4 percent lower at A$32.02 on a day when the broader market dipped about 1.2 percent. The bank's earnings before significant items came in at A$3.85 billion, below the consensus forecast of about A$4 billion. NAB chief executive Frank Cicutto called 2002 a "pivotal year" and said Thursday the bank's plans called for cash earnings per share to grow more than 10 percent in 2003. Cicutto said that given the uncertainty in markets, a range of 8 to 11 percent was "prudent". The bank reported strong earnings growth in its key Australian and New Zealand markets, a rise of 11 percent in Europe, and falls in the United States and Asia. A year ago, the NAB saw its 2001-02 result tumble 36 percent to about $1.06 billion after the bank came to grief over its costly entry into the U.S. mortgage business. That began when it bought the Florida-based HomeSide business in February 1998. Big writeoff in U.S.
After a flurry of interest rate cuts in the United States in 2001 that created turbulence in the mortgage servicing business, the NAB wrote off $1.84 billion on its HomeSide investment and finally sold it in two stages this year to Washington Mutual. The NAB's record profit for the year to September 30 continues the banking sector's strong run. Two other big banks, Westpac and ANZ, have already reported record earnings this year. (Full story) Last month, ANZ reported a 16 percent lift in net profit before one-off items to a record A$2.17 billion ($1.19 billion). Last week, Westpac, the smallest of the big four, said its net profit rose 15 percent to a record A$2.19 billion ($1.2 billion). The fifth-largest bank, St George, on Wednesday reported net profit rose 10 percent to A$369 million ($206 million). Net profit before significant items rose 34 percent to A$505 million ($282 million). Commonwealth Bank, the No. 2 bank by market capitalization, follows a different financial year and reported in August, when it posted record net earnings of A$2.655 billion ($1.45 billion) for the year to June 30. (Full story) It worried the market on Friday with a weak profit outlook, telling its annual general meeting that first half earnings for fiscal 2003 would be flat. U.K. operationsThe NAB reported net profit from its European operations of A$912 million ($510 million), primarily from its four banks in the United Kingdom: the Clydesdale, Northern, Yorkshire and National Irish banks. Last month it confirmed it had made another unsuccessful offer for British bank Abbey National. The NAB has been keen to expand its customer base in the U.K. because Australian government policy prevents it from buying any of its big rivals at home. (Full story) Shares in all of the big banks closed lower Thursday, save for St George Bank, up about half a percent.
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