AAP
National Australia Bank Ltd (NAB) shareholders can look forward to higher dividends if the bank's $13.29 billion all cash offer for AXA Asia Pacific Holdings is approved.
NAB's Chief executive Cameron Clyne declined to comment on specifics surrounding NAB's $13.3 billion all cash offer for AXA Asia Pacific Holdings (AXA APH), but said the deal is "strategically and financially attractive" and "work is ongoing".
Mr Clyne was speaking to analysts and media after NAB unveiled flat December quarter earnings.
NAB's unaudited cash earnings were $1.1 billion for the three months to December 31, flat on the previous corresponding period, but 20 per cent higher than the September 2009 quarter.
Both revenue from wealth management and funds under management increased during the quarter in line with stronger investment markets.
Asked about the rationale for the deal outlined to key NAB shareholders in January, Mr Clyne listed greater consumer demand, along with revenue and funding benefits to the bank.
NAB shareholders would enjoy a higher dividend, he said.
"We have the ability in a wealth franchise...to pay out the vast majority of earnings if not all the earnings in terms of dividends rather than retain a third of them in the banking franchise, he said.
"So it has the capacity for dividend growth."
NAB has been in a two-month takeover tussle with AMP Ltd over AXA APH, and is in discussions with AXA APH's French parent, AXA SA, as Australia's competition watchdog reviews both bids.
Under both bids, AXA SA will acquire AXA APH's Asian assets, leaving either AMP or NAB with its Australian and New Zealand operations.
AXA SA on Thursday reported a euro 100 million ($A150.93 million) decline in annual 2009 underlying earnings to euro 3.9 billion ($A5.89 billion) on a quadrupling in net income to euro 3.6 billion ($A5.43 billion).
AXA SA management board chairman Henri de Castries said discussions with NAB were ongoing, and the terms for acquiring the Asian units had not changed although the timing was uncertain.
The Australian Competition and Consumer Commission (ACCC) will make a final decision on both bids by March 17, and on February 10 said NAB's bid presented deeper competition concerns.
"It appears to the ACCC that NAB's proposed acquisition of AXA raises a higher level of concern then AMP's proposed acquisition of AXA," the ACCC said in a statement of issues. Mr Clyne said on Friday wealth management was attractive to NAB as more Australians seek financial advice and increase their retirement savings.
If NAB's bid is successful, it will have Australia's biggest retail investment platform by funds under administration, and a greater ability to generate earnings that don't rely on wholesale funding.
"The requirement of wholesale funding does remain an Achilles heel and we do like having a wholesale funding ask that is somewhat below some of our peers," Mr Clyne said.
As well, the ability to cross sell from business banking into wealth management is "vital", he said.
"We think 40 per cent of the cross-sell we see out of our business bank is into wealth.
"The industry needs scale to deliver into the market....as the government (seeks) to get low-cost superannuation and portability into that sector."
His comments came one day after AMP Ltd said it has not given up on its revised $12.85 billion bid which was rejected by AXA APH's board in favour of NAB's bid last December.
