NAB lifts third quarter profits to $1.75B

By @preciousvsilva on
Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

National Australia Bank took charge of concerns after it delivered AU$1.75 billion third-quarter profit amidst increase of bad loans. Furthermore, the resulting profit has also helped boost the bank's shares.

Australia's biggest loan provider to small and medium businesses claimed that that the 9 percent annual jump in its third quarter profits was thanks to the lower bad-debt charges in the country. Latest figures from NAB proved that while ANZ sparked a mean sell-off among banks following lifted provisions and raised capital on soured loans, the problem remains limited and is not industry-wide. ANZ along with Commonwealth Bank, Westpac and NAB all saw at least 1 percent increase in their shares.

CBA equities analyst Victor German further added that based on the NAB information, there is no industry-wide problem. "NAB is the biggest SME [small-to-medium enterprise] lender in the country, and their credit-quality metrics have actually improved in the quarter," he was quoted by the Sydney Morning Herald as saying. "I think a lot of the concerns that we've seen with ANZ could be due to a deterioration within a small part of their book or could be specific to ANZ, but it does not seem to be a material sector issue at the moment."

The Australian also reported that NAB has begin biting into the AU$3.65 billion funds it has kept to walk away from its problematic British operations. The bank also revealed an added provision linked to the mis-selling of what was called the "payment protection insurance" or PPI. This amounted to £290 million of £420 million [AU$617 million to AU$895 million]. The PPI controversy has taken a toll on the British banking industry for the past few years accounting for much as £20 billion [AU$43 billion] after it was discovered that banks failed to provide enough information to customers while in the process of adding the insurance.

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