NAB releases annual results

The National Australia Bank Group has released full year results for its UK banking and wealth management operations, announcing cash earnings before tax of 297m for the 12 months to September 30.

Lynne Peacock, chief executive officer of NAB UK, says: “We have stabilised profits, while conducting a major restructure to make the business more competitive, are managing margins down to bring them more into line with the UK market and invested in an expansion programme for future growth.

“We have taken the hard decisions that were needed for our business to be efficient, nimble and competitive and to develop an offering that differentiates us from our competitors. We are getting costs under control and have made great progress in re-engineering processes, simplifying management structures and improving our efficiency.

“We have delivered more competitive products and invested in our brands, technology and compliance. We have pressed ahead with building our integrated financial services business and third party distribution of our mortgage products, building an offering that is already showing results. We have also almost completed the reconfiguration of our retail branch network across the UK.

“We are now seeing strong results from our key areas of investment and believe we are generating the momentum we need to see sustained growth. Mortgage volumes have increased substantially, with Clydesdale Bank writing an additional 40%, which now includes the sale of Clydesdale mortgages through mortgage brokers, while Yorkshire Bank was up 15% on the previous year. Business lending volumes have also increased, with Clydesdale up 19% and Yorkshire up 40%.

“There is still a great deal to do to complete our turnaround. However, to have delivered this result in a period of such change is an impressive achievement.”

The last year has seen the sale of National Irish Bank and Northern Bank to the Danske Bank Group, and the completion of the build phase of a network of financial solutions centres offering integrated business and premium banking services to small to medium sized business customers.

By September 30, there were 32 such centres in the south of England, 28 in the North and 18 in Scotland. There has also been the expansion of the third party distribution channel that added 989m of mortgage completions by September 30. The business now has relationships with more than 300 British brokers.

A review earlier in the year of the distribution strategy and branch network resulted in a decision to close 64 Clydesdale branches and 38 Yorkshire branches over a six to12 month period.

Peacock says: “This decision reflected the changing needs of our customers and the different ways in which they are banking.

7m was invested in upgrading the internet banking platform, and 3m invested upgrading ATM software. The Group has continued expanding its ATM network, which includes the introduction of the UKs first ATMs for the hearing impaired, and upgraded telephone banking services.

There were also further advances in integration of Clydesdale and Yorkshire, including the merger of the legal entities of the two banks, a single management structure, and the consolidation of call centre services and back office processing and administration. There was also the ongoing development of a single product set supporting multiple brands and distribution channels, including a new current account and an offset mortgage.

Over the last 12 month net interest income has increased 0.9% and lending volumes have increased 21.1% on the previous year with major increases in variable and fixed rate mortgages, term lending and overdrafts.

Retail deposits have increased 7.8% and other operating income has increased 18.4%. Origination fees have seen an increase of 12.1m and the profit on property transactions has reached 21m.