National Australia Bank's (NAB's) European business, which includes National Irish Bank and Northern Bank, has reported a modest increase in profits in the first half of its financial year but the overall group results were down.
The European division posted a 2.2 per cent rise in after-tax profits to £184 million sterling (€259 million) in the six months to the end of March, describing this as satisfactory given weakening economic conditions.
NAB Europe's acting chief executive, Mr Ross Pinney, said he was particularly pleased with the reduction in bad-debt provisions in the current year.
The bank does not disclose figures for the Irish operations at the half-year stage. Mr Pinney said the group would continue its efforts to achieve growth in its share of the Irish market. "We are focused on organic growth and have been implementing our Positioning For Growth strategy and will be building on that. If acquisition opportunities present themselves, then that would help us to grow even faster," he said.
NAB reported a 17.2 per cent fall in profits to 1.86 billion Australian dollars, mainly due to losses at its wealth management arm and a relatively weak performance in Europe.
Despite the downturn, NAB's chief executive, Mr Frank Cicutto, said the bank was standing by its previous guidance, which indicated it would deliver earnings per share growth of 8-11 per cent this year. "We have seen solid growth in our core operations in the first half and remain well positioned for future challenges," he said.
Apart from its two Irish banks, NAB also owns the Clydesdale Bank in Scotland and Yorkshire Bank in the UK. Mr Pinney said it would be seeking to expand the entire European operations.
"We will be expanding our business banking network in Clydesdale and Yorkshire banks, which includes opening new regional business centres later this year in Liverpool, Bristol, Reading and Southampton," he said.
Mr John Stewart will take over as NAB's chief executive in Europe in August and will be charged with driving its expansion in this region.
In Europe, the bank's net interest income rose to £449 million sterling, reflecting a modest increase, it said. Mortgage lending grew by 8 per cent compared with the same quarter last year.
Gross loans and acceptances were at £19.7 billion while its average retail deposits grew to £13.8 billion.
The charge for bad and doubtful debts decreased by 27 per cent.
The bank said that trading conditions in Europe were tough and it had previously complained of intense price competition in the market and a complex British regulatory environment.
The group's first-half result included a A$205 million non-cash writedown on its wealth management business MLC, where net operating profit slumped 24.4 per cent to A$167 million for the half year. - (Additional reporting by Reuters)
