NAB’s staggering $3.3 billion profit

NAB’s plans to sell its wealth management arm came as it posted a 16 per cent slump in cash profit in the six months to March 31.

The $2.76 billion result was hit by restructuring costs after a raft of job cuts and the introduction of new digital products. Without the one-off costs, its first-half profit was flat at $3.3 billion.

NAB said it was considering options including a demerger and IPO for the businesses, which operate under the MLC brand and others as it continues to offload assets to simplify its business.

Chief executive Andrew Thorburn said the decision to spin off businesses had been unrelated to the royal commission, which had flagged the possibility of forced asset sales after hearing of providers charging for, and then failing to provide, advice.

“There’s a lot of buffeting at the moment and I don’t think we entirely have perspective, so we would not make a decision that’s this major based on a couple of weeks of evidence at the royal commission,” Mr Thorburn said.

NAB Group CEO Andrew Thorburn. Picture: AAP/Dean Lewins

NAB Group CEO Andrew Thorburn. Picture: AAP/Dean LewinsSource:AAP

“Respecting the royal commission’s importance, I think this is much, much bigger.” Mr Thorburn said the move, which should be completed by the end of the 2019 calendar year, was being considered prior to the airing of the “fees for no service” scandal that has rival Commonwealth Bank on the back foot and forced the resignation of AMP’s CEO and chair NAB has already spun off its loss-making Clydesdale Bank and sold 80 per cent of its life insurance unit over the past two years.

“This is a major decision for the bank and we would not make it on the basis of some noise and some shameful things that have happened,” Mr Thorburn said. Mr Thorburn said bonuses for selling products and poor character were to blame for misconduct in the financial services industry, rather than the big banks’ ownership of those services.

“It’s not about vertical integration — we’ve had poor advice from people who just do advice — but it’s often about the character and conduct of people,” Mr Thorburn said.

NAB, has owned MLC since 2000, and will continue to operate its JBWere business servicing high-earning clients.

The bank’s six-month cash profit drop to $2.76 billion after expenses jumped 25.3 per cent, largely due to the cost of the ongoing restructure announced last year.

Redundancy costs rose with about 1050 full-time employees having left as NAB chases its target of 6,000 cuts by 2020.

Cash profit was flat at $3.29 billion in what NAB called a solid underlying result. Net operating income rose 2.5 per cent to $9.09 billion and net interest margin — a key measure of profitability — slipped 0.04 percentage points over the half but was up 0.03 percentage points on the prior corresponding period.

This multibillion-dollar profit comes as Commonwealth Bank customers vented their outrage over a data breach in which the bank admitted it lost financial statements spanning 15 years.

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