National Australia Bank (NAB), which owns National Irish Bank (NIB) and Northern Bank, has warned that its profits will be below expectations mainly due to weak investment returns at its wealth management business.
Speaking to analysts in Australia yesterday, NAB chief financial officer Mr Richard McKinnon said its original forecast that earnings would grow by 12 per cent for 2003 was now being reduced to 8-11 per cent. "The full-year performance is expected to reflect market expectations at the low end of the target range," he said.
The bank said the value of its wealth management business was likely to be written down by as much as 250 million Australian dollars (€140 million) after being hit by poorly performing equity markets and declining customer numbers.
"Weak investor sentiment has impacted on fee income in the investments business. The movement in equity markets over the first half is expected to result in a revaluation loss for the half of not more than A$250 million," he said.
The bank added that trading conditions in Europe had been difficult, citing intense price competition, a slowing British economy and a complex regulatory environment for creating a tougher business environment.
Northern Bank's performance would have been affected by the weak performance of the UK wealth management division. NIB is not expected to feel any impact of its weak performance.
The bank has focused on reducing its cost base in Ireland in recent years. Mr McKinnon said NAB had achieved strong growth in its Australian and New Zealand retail operations and sound asset quality across the group. The bank's share price declined sharply on foot of the profit warning ahead of half-year results in May.
