National posts strong first quarter result National Australia Bank began its financial year with a strong first quarter profit of $724 million for the three months to 31 December, 1998 - up 35.8 per cent on the previous corresponding period.
The latest result compares with $533 million (before abnormals) for the December 1997 quarter and $783 million (before abnormals) for the three months to September 1998. Underlying profit (before tax and doubtful debts charge) was up 27.8 per cent to $1,213 million compared with $949 million in December 1997. The significant improvement reflected the Group's continued progress with income diversification and tight control of costs. Total operating income was $2,559 million - a 22.1 per cent increase on the $2,095 million recorded for the December 1997 quarter. The ratio of non interest to net interest and other operating income was 43.4 per cent in the December 1998 quarter compared with 42.3 per cent for the September 1998 quarter and 36.3 per cent for the December 1997 quarter. The Group's cost to income ratio improved from 54.1 per cent in the September 1998 quarter and 55.5 per cent in the December 1997 quarter to 53.0 per cent for the December 1998 quarter. The National's Managing Director, Mr Don Argus said the latest result reflected the inherent strength of the Group's earnings capacity. It also demonstrated how the benefits of diversification strategy, the focus on costs and risk management enabled it to consistently deliver quality results in varying economic conditions. "Consistency in performance and shareholder returns are particularly relevant during periods of uncertainty and mixed assessments of global economic prospects," Mr Argus said. "Our objective has been to build into our Group the ability to successfully manage a variety of economic and market conditions. "This has enabled us to achieve a consistent quarter by quarter profit growth. The compound average growth in quarterly profit (before abnormals) has been around 8 per cent for the past year", Mr Argus said. Net interest income for the December quarter was $1,520 million - a 7.6 per cent increase over the previous corresponding period. Reflecting the highly competitive conditions in all Group markets, net interest income for the latest period was down 2.9 per cent over the September 1998 quarter. Loans and advances for the December quarter rose 2.0 per cent compared with September. Non interest income was $1,167 million. This compares with $1,148 million for the September quarter and $803 million in the December 1997 quarter. The main contributors to the non interest income growth included higher mortgage origination revenue from HomeSide, increased income from non-traditional financial services activities, a rise in income from treasury operations and fees from the general growth in banking business. The Group's cost reduction effort was reflected in a 3.0 per cent fall in total other operating expenses for the December 1998 quarter compared with the previous September quarter. The Group's charge for doubtful debts of $128 million was up from $102 million in September and $120 million in December 1997. Total provisioning coverage (reflecting current period write-offs and the level of provisioning) increased from 148.6 per cent in September to 163.8 per cent in December. Asset quality improved over the period with gross non-accrual loans declining by $11 million from September 1998 to $1,459 million. The Group's impaired assets portfolio is modest with the ratio of non-accrual loans to risk weighted assets at December end remaining at 0.7 per cent. Looking ahead, Mr Argus said the Group was confident about its prospects for the year. "We have made pleasing progress with the implementation of our global business model. We have also made significant gains in cost reduction and continue to derive operating efficiencies from rationalising our technology and marketing processes. "All of the signs point to another successful year," Mr Argus said. Melbourne, 27 January 1999 For further information: Ron Burke
General Manager
Group Corporate
Relations
Tel: (03) 9641 3876 | Haydn Park
Manager
Group Media
Relations
Tel: (03) 9641 3857 | | 
