AAP
National Australia Bank Ltd (NAB) increased cash earnings by 20 per cent in the first quarter of fiscal 2010, from the final quarter of the previous year, after bad and doubtful debt charges fell.
Its cash earnings for the three months ended December 31 totalled $1.1 billion and included a contribution of $33 million from recent acquisitions.
"The earnings improvement reflected a decline in the charge for bad and doubtful debts and sound business performance," NAB said in a statement on Friday.
The charge for bad and doubtful debts (B&DD) in the December quarter was $739 million, which was $202 million lower from the end of the September quarter.
NAB said the ratio of loans 90-plus days past due and gross impaired assets to gross loans and acceptances had been broadly flat since June and was 1.84 per cent at the end of December 2009, compared to 1.75 per cent at the end of September.
Chief executive Cameron Clyne said NAB delivered a sound first quarter result, despite subdued credit growth, greater competitive pressures and rising average funding costs.
"Bad and doubtful debt charges have fallen and are not expected to return to the peak experienced in the third quarter of the 2009 financial year," he said.
"However, given the fragile global recovery and uncertain regulatory environment, a conservative approach to capital and liquidity management remains appropriate."
NAB's collective provision balances increased marginally to $3.57 billion, while specific provisioning had increased by $291 million since the end of September.
Total provisioning at the end of first quarter totalled $5.425 billion, down from $5.10 billion.
NAB said it continued to maintain strong liquidity with its Tier 1 capital ratio increasing to 9.3 per cent, from nine per cent.
Mr Clyne said NAB was continuing to work to finalise its proposal to acquire the Australian and New Zealand businesses of AXA Asia Pacific Holdings Ltd (AXA APH), which is also the target of a competing proposal from AMP Ltd.
NAB's proposal comprises a $13.3 billion all cash offer but it needs to negotiate with AXA APH's French parent AXA SA to come to an agreeable arrangement.
NAB said any capital impact of the proposed AXA APH deal will only occur after a successful transaction has received final court approval.
