(Adds details on UK business, outlook, capital ratio)
SYDNEY Aug 18 National Australia Bank
posted a 7 percent rise in third-quarter unaudited cash profit
on Monday, led by higher mortgage growth and lower bad debt
charges, while flagging higher provisions for its troubled UK
NAB, the nation's fourth biggest bank by market value, said
it will need to make an additional provision of at least 245
million pounds ($410 million) for its UK operations for both
interest rate hedging products and payment protection insurance.
NAB's British business, which includes Yorkshire and
Clydesdale bank branches, has been weighing on its performance
and investors are watching for the bank's potential exit from
the UK assets.
CEO Andrew Thorburn also cautioned that a Scottish vote in
favour of independence next month may lead to "significant
additional costs and risks for Clydesdale Bank."
Scotland votes on Sept. 18 on whether to end 307 years of
union with England and leave the United Kingdom. Polls suggest
that the campaign to reject independence has a substantial lead,
although as many as a quarter of the electorate are undecided.
NAB reported unaudited cash earnings, which exclude one-offs
and non-cash accounting items, of A$1.6 billion ($1.49 billion)
for the quarter to end of June. It did not give a year-ago
comparison in its trading update, which does not provide as much
detail as a full earnings statement.
NAB is due to report full-year results in November.
Its UK banking cash earnings were lower in the quarter,
while the commercial real estate portfolio reported a "modest
loss", NAB said.
The bank's Basel III capital ratio fell to 8.46 percent at
June 30 due to the impact of the interim dividend, it said. At
the end of March, that ratio was 8.64 percent.
Australia's "Big Four" banks - NAB, Australia and New
Zealand Banking Group Ltd, Commonwealth Bank of
Australia and Westpac Banking Corp - are
investor favourites for their lofty dividends and record
But NAB shares have underperformed its rivals, partly due to
problems at its UK businesses.
Its Clydesdale Bank has been compensating customers after
discovering in April 2009 it had miscalculated repayments on
Last month, NAB agreed to sell a $1 billion portfolio of
mostly non-performing UK commercial property loans, and said it
would continue to look at accelerating the sale of non-core
($1 = 0.5982 British pound)
($1 = 1.0730 Australian dollar)
(Reporting by Swati Pandey; Editing by Richard Pullin)