National Australia Bank (NAB), which owns National Irish Bank (NIB) and Northern Bank, has posted lower earnings after tumbling equity markets and a weak UK economy hurt its funds management and European banking businesses.
Its Financial Services Europe division, which runs NIB and its British banking arms, today reported half-year profits after tax of £184 million sterling, an increase of 8.2 per cent on the year.
Net interest income increased to £449 million, reflecting modest growth in business volumes. Mortgage lending grew by 8 per cent in the region from March 2002. "This is another satisfactory performance, achieved despite an increasingly challenging environment, particularly in Great Britain", said Mr Ross Pinney, acting chief executive for Europe.
Overall, NAB reported a first-half net profit fell 17 per cent, at the better end of expectations, despite a robust Australian banking result, as a previously flagged writedown on the value of its MLC funds unit dragged down headline profits.
However, the bank partly soothed investors with a higher-than-expected dividend and maintained guidance for full year earnings growth above eight per cent, in line with its three big Australian rivals.
National shares, which have underperformed Australia's other banks so far this year, climbed 1.7 per cent to AU$31.86 on the result in a slightly firmer morning market.
National said net profit for the six months to March was AU$1.867 billion ($1.2 billion), compared with AU$2.26 billion a year earlier, and raised its interim dividend 11 per cent to 80 cents.
Its European cash net profit fell 6.1 per cent to AU$565 million during the period due to a weak British economy and strong competition, but the bank said it remained determined to build its presence in the region.