NAB 1.34% $30.86 national australia bank limited

NAB to announce increased profit?

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    Interesting article- it says NAB "MIGHT" announce increased profit.....??

    Top Financial News

    05/06 18:04
    National Australia Bank 1H Profit May Rise 6% to A$2.14 Billion
    By Kevin Foley

    Sydney, May 7 (Bloomberg) -- National Australia Bank Ltd. will probably say first-half profit rose 6 percent, driven by higher income from lending and increased investment management earnings when the nation's biggest bank reports results Thursday.

    Net income likely rose to a record A$2.14 billion ($1.15 billion) in the six months to March 31 from A$2.03 billion a year ago, according to the average forecast in a Bloomberg News poll of 12 analysts. Estimates ranged from A$2.09 billion to A$2.22 billion.

    Investors will focus on earnings growth at National Australia's MLC funds management unit, which recently started operations in the U.K., and the potential sale of the bank's mortgage servicing rights in the U.S., analysts said.

    ``MLC is continuing to really shoot the lights out,'' said Brian Johnson, a J.P. Morgan Chase & Co. analyst who rates the bank ``market perform.'' ``MLC has an incredibly strong management team. Its biggest issue is expansion into the U.K.''

    The lender's result will follow record first-half earnings at rivals Australia & New Zealand Banking Group Ltd. and Westpac Banking Corp. in the past two weeks, even as bad debts rise amid the highest number of company failures in a decade.

    It should put the biggest Asia-Pacific bank outside Japan on track to regain profit growth after $2.2 billion of writedowns at National Australia's HomeSide Lending Inc. unit in the U.S. last year ended an eight-year run of record net income.

    Job Cuts

    Full-year net interest income will rise 10 percent to A$7.2 billion on higher banking profit and fiscal 2002 earnings from insurance and investment management will jump by a fifth to A$411 million, brokerage Burdett Buckeridge Young Ltd. said in a report.

    Last month, Chief Executive Frank Cicutto said he would cut 4.6 percent of the bank's global staff, or 2,050 jobs, to boost earnings-per-share growth to 12 percent in fiscal 2003 and 2004 from between 7 percent and 10 percent this year.

    Banned from merging with rivals at home, Melbourne-based National Australia aims to expand in the U.K. and Ireland, where it owns Clydesdale, Yorkshire, Northern and National Irish banks, and earned A$976 million in 2001 from its 4.5 million customers.

    ``We're not expecting a huge profit number,'' said Macquarie Equities Ltd. analyst Stephen Walsh. ``We're looking for clarity on strategic direction and what NAB's trying to achieve with its overseas businesses.''


    Cicutto plans to invest A$200 million in MLC in Australia and New Zealand in the next three years, and a further A$90 million to build MLC in the U.K.

    The bank accounts for more than a fifth of Australia's net retail fund inflows after paying A$4.6 billion for MLC two years ago. It had more than A$700 million of net inflows from individual investors in the quarter to December 31.

    Cicutto aims to sell HomeSide's mortgage servicing rights, which he values at $2.7 billion, as U.S. home loan interest rates rise. He sold most of the HomeSide business to Washington Mutual Inc. for $1.9 billion last year, exiting the U.S. after selling Michigan National Corp. for $2.75 billion 18 months ago.

    ``We're looking for a better understanding of how the U.K. businesses are going, an update on any sale of HomeSide's mortgage servicing rights and whether they'll boost their stock buyback,'' said Goldman Sachs Group Inc. analyst Nick Selvaratnam.

    The lender's performance in the U.K. retail banking market will be closely scrutinized.

    ``The U.K. market's becoming more competitive and NAB no longer enjoys the currency-assisted growth they got when the Aussie dollar was falling,'' said Salomon Smith Barney analyst Michael Macrow.

    In December, Standard & Poor's cut National Australia's credit rating outlook to ``negative'' from ``stable'' as unpaid loans to large companies rose. Still, it affirmed the bank's ``AA'' credit rating -- the highest among Asia-Pacific lenders.

    National Australia stock fell 13 percent on Sept. 3, its biggest decline in 14 years, after the lender booked its second HomeSide charge. It's risen 10 percent so far this year, outpacing a 7 percent gain in the 15-member ASX Banks Index, and fell 0.7 percent to A$35.25 when it last traded Monday.

    It's expected to pay a first-half dividend of 72 cents per share, up from 67 cents a share a year ago.

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