Expenses Bite NAB Earnings
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National Australia Bank said its first-quarter cash profit rose 3% from a year ago to $1.65 billion.
The result was after what the bank reported was a sharp rise in expenses leading to a contraction in margins.
Chief executive Andrew Thorburn said the bank was on target to meet its targets despite the rise in expenses, including an additional $1.5 billion of investment over the next three years.
Revenue rose 1% in the quarter with “good growth” from business and private banking, plus corporate and institutional divisions. Bad and doubtful debts fell 23% to $160 million in the quarter. That suggests that without such a large fall, the bank’s cash earnings would have been weaker.
Without giving a figure, the bank saids its net interest margin fell in the quarter, but was “broadly stable” excluding markets and Treasury “impacts.”
“Cost savings of more than $1 billion continue to be targeted by end of FY20” Mr Thorburn said in a statement to the ASX before trading yesterday.
Expenses at the bank rose 4% in the three months ended December 31 because of increased investment and “personnel costs including Enterprise Bargaining Agreement increases".
"Continue to expect FY18 expenses to grow 5-8 per cent in FY18 then targeted to remain broadly flat over FY19-20", the statement said.
NAB shares rose 2.36% to $28.90 yesterday.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.