Britain saves day for National Australia: Interim dividend up as profits jump 25% despite flat markets

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The Independent Online
NATIONAL Australia Bank - whose northern hemisphere portfolio includes Yorkshire, Northern and Clydesdale Banks - relied on a strong recovery in its British and Irish operation to report a 25 per cent surge in its half-year net profits to Adollars 507m (pounds 228m).

NAB raised its dividend to 24 cents from 22 after the UK and Ireland operations increased their contribution by Adollars 83.9m to Adollars 152.5m.

It also announced plans yesterday to expand lending in Australia. 'We might give the market a bit of a shake very shortly . . . in an environment with very little growth, we are trying to attack the market as much as we can,' Don Argus, managing director, said in Melbourne.

NAB's half-year result was achieved despite the group's main markets in Australia, the UK and New Zealand showing no signs of upturn, Mr Argus said.

He attributed the gains to increased productivity, cost-cutting, improved credit management and new, targeted banking products.

Total bad debt provisions were Adollars 392m in the latest half-year compared with Adollars 413m. While non-accrual loans as a proportion of total lending continued to fall in Australia, they rose in Britain and Ireland. But in the half-year, bad and doubtful debts in the UK and Irish banks fell by 40.5 per cent or Adollars 103.9m.

Mr Argus said: 'This improvement primarily reflected measures taken in Yorkshire Bank during the second half of last year to ensure that the bank's credit procedures aligned with group policy.'

Australian banking performed strongly, with an after-tax profit of Adollars 308.7m, compared with dollars 286m in the same year-ago period, he said.

'In Australia, we have sustained the market momentum we built up over 1991/92,' Mr Argus said.

However, results were not so good in New Zealand. Bank of New Zealand, bought by NAB last November for NZdollars 1.09bn, reduced its profits for the full year to 31 March to NZdollars 135m (pounds 47m) from dollars 172m, largely due to treasury trading activities that it has since cut back.

NAB, which five years ago tagged along behind its rivals, is now larger in terms of assets than its main rivals, Australia and New Zealand Bank and Westpac, which also reported yesterday.

Westpac, Australia's oldest and most financially troubled bank, showed it was still digging its way out of its severe problems with the announcement of a Adollars 240m net loss for the half-year to 31 March.

It halved its interim dividend to 6 cents.

The bank, which made a much larger loss of Adollars 1.7bn in the same period a year ago, also announced a Adollars 500m preference share issue to raise new capital.

Westpac said it had agreed to up to 15 per cent of its shares being purchased by a large financial group, Lend Lease Corporation, which owns nearly 10 per cent already.

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