National Australia Bank is a large financial services group providing a comprehensive and integrated range of financial products and services throughout Australia, New Zealand and parts of the United Kingdom. NAB is Australia's largest bank. Australian banking operations dominate and represent 60% of group assets.

NAB has altered its previous global expansion strategy following the HomeSide debacle in the US and the divestment of the Irish banks. Management is focused on restoring market share and earnings in the Australian, New Zealand and UK banking operations while expanding domestic wealth management operations. The change in top management in the three geographic regions has had a beneficial impact on culture and this is having a tangible impact on operating efficiency and associated ratios. Restructuring is focused on driving organic growth from existing franchises and acquisition growth is of secondary importance at present.NAB reported an 8% increase in cash NPAT from $2.071bn to $2.237bn for ongoing operations for the six months to March 31, 2008. Headline NPAT, which includes cash and non-cash items, jumped 25.8% to $2.687bn and included a $225m gain on the Visa IPO and $230m from Treasury shares offset by provisions - non-cash - of $150m for bad and doubtful debts - economic cycle adjustment and $74m for new business initiatives. The result was driven by solid lending growth and excellent cost control emanating from productivity, outsourcing and offshoring programs and despite margin pressure. Cash EPS rose 8.7% from 126.2¢ to 137.2¢ but was 3.4% below 2H07. Interim dividend increased by 11.5% from 87¢ to 97¢ fully franked. The payout ratio based on cash NPAT was 70.5% up from 68.2% in 1H07. Cash return on equity improved 30 points to 16.8% but fell 90 points from 2H07 of 17.7% Australia Region - Cash NPAT $1.585bn - Banking $1.367bn, MLC $220m and Other ($2m). Australia Banking cash earnings rose 16.8% driven by revenue growth of 11.4% comprising an 8.4% increase in net interest income and a 21.2% jump in non-interest income. Business & Private Banking cash earnings increased 18.2% to $948m while Retail Banking rose 13.9% to $419m. UK Region - Cash NPAT rose 17.8% to £139m but up just 5.8% to A$311m. New Zealand Region - Cash earnings increased 14.9% to NZ$239m and by 13.1% to A$207m. nabCapital - Cash earnings increased 10.4% from $338m to $373m driven by a 34.7% jump in net operating income to $1.142bn. Operating expanses rose just 5.4% resulting in a 60% jump in underlying profit from $458m to $731m.

30/09/07

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ASX 20

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Financial-x-Property Trusts

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Banks