SYDNEY (Reuters) - National Australia Bank (AX:NAB) on Monday posted a 9 percent rise in third-quarter unaudited cash profit, helped by higher home and business lending, although net interest margins fell due to stiff lending competition and weaker treasury income.
NAB, Australia's biggest lender by assets, also flagged that it may have to provide up to 500 million pounds ($775 million) in capital support to its troubled UK business before a planned demerger, part of the 1.7 billion pounds already provided.
In May, the bank announced a A$5.5 billion rights issue amid plans to exit the UK business and to shore up its balance sheet ahead of an expected tightening of capital requirements at home.
Under CEO Andrew Thorburn, NAB has made exiting its overseas businesses a priority and hopes to focus resources on its home markets where returns are higher.
Its strong quarterly earnings underlined the reasons for the switch in strategy, with home and business lending being its priority segments.
NAB reported unaudited cash earnings of A$1.75 billion ($1.3 billion) for the quarter ended June 30. It did not give a year-ago comparison in its trading update, which does not contain as much detail as a full earnings statement.
Cash profit excludes one-offs and non-cash accounting items and are closely watched by investors.
The charge for bad and doubtful debts for the quarter fell 15 percent to A$193 million. Cash earnings from its wealth management arm increased, benefiting from favourable investment markets, higher premiums and lower retail claims, it added.
The bank is due to report full-year results in November.
Its tier-I ratio stood at 9.94 percent as at June 30, up 107 basis points from March 2015, helped by the proceeds from its rights issue.
(This version of the story corrects second paragraph to show 500 million pounds provision is part of the 1.7 billion already provided, after company clarifies statement)