Nat.Australia Bank 40HT Economic adjustment and fourth quarter earnings

  Nat.Australia Bank (40HT) - Economic adjustment and fourth quarter earnings

RNS Number : 0560P
National Australia Bank Ld
19 October 2012

Friday, 19 October 2012

National Australia Bank announces collective provision economic cycle
adjustment and fourth quarter cash earnings

The Australian economy remains comparatively strong but lower global growth
expectations, divergence in business conditions across sectors and low levels
of consumer and business confidence have reduced the outlook for economic
growth in 2013. Furthermore, in the last three months, conditions in the UK
have deteriorated and economic recovery is likely to be slower than previously

As a prudent response to these current economic conditions, National Australia
Bank Limited (NAB) has increased the economic cycle adjustment on its
collective provisions by $250 million ($175m post tax) as at 30 September
2012. The increase in collective provisions will be reported in cash earnings
and increases the total economic cycle adjustment to $320 million, excluding
the overlay allocated to the UK commercial real estate (CRE) portfolio. This
will not adversely affect the Group's capital position as capital deductions
associated with the General Reserve for Credit Losses (GRCL) will fall by an
offsetting amount.

Excluding the increase in the economic cycle adjustment, unaudited Group cash
earnings for the September 2012 quarter were approximately $1.4 billion,
broadly in line with third quarter cash earnings. Full year 2012 cash
earnings (including the increase in the economic cycle adjustment) is broadly
in line with 2011 cash earnings.

Subject to finalisation and independent audit of the Group's September 2012
Full Year Results, NAB intends to pay a final dividend of 90 cents per share,
fully franked, consistent with the first half. This represents a 4.7%
increase in the full year dividend compared to 2011.

Executive Commentary

"Balance sheet strength remains a key priority for the Group and this increase
in the economic cycle adjustment will further strengthen our provision
coverage", National Australia Bank Group CEO, Cameron Clyne said today.

"The Australian economy has performed well relative to other advanced
economies, although business conditions across sectors and the various states
remain mixed. In October, NAB reduced its forecast for 2013 Australian GDP
growth to 2.5 percent from 3.3 percent in July. Mining and related sectors
have been performing strongly, but in the last few months, falling commodity
prices and weaker global growth prospects, specifically in China, have reduced
growth in these sectors.

"The UK economy has now posted three consecutive quarters of declining GDP and
expectations for recovery in 2013 have continued to be downgraded.

"Considering the increased level of uncertainty, we feel that increasing the
economic cycle adjustment on the collective provision is a prudent measure at
this time" he said.

For further information:


Brian Walsh            Meaghan Telford

M: +61 (0) 411 227 585 M: +61 (0) 457 551 211
Investor Relations     Craig Horlin

Ross Brown             M: +61 (0) 417 372 474
M: +61 (0) 477 302 010


This announcement contains certain forward-looking statements. The words
"anticipate", "believe", "expect", "project", "estimate", "likely", "intend",
"should", "could", "may", "target", "plan" and other similar expressions are
intended to identify forward-looking statements. Indications of, and guidance
on, future earnings and financial position and performance are also
forward-looking statements. Such forward-looking statements are not
guarantees of future performance and involve known and unknown risks,
uncertainties and other factors, many of which are beyond the control of the
Group, which may cause actual results to differ materially from those
expressed or implied in such statements. There can be no assurance that
actual outcomes will not differ materially from these statements. Further
information on important factors that could cause actual results to differ
materially from those projected in such statements is contained in the Group's
Annual Financial Report.

Note on Cash Earnings

Cash earnings is a key financial performance measure used by NAB, the
investment community and NAB's Australian peers with a similar business
portfolio. NAB also uses cash earnings for its internal management reporting
as it better reflects what NAB considers to be the underlying performance of
the Group. It is not a statutory financial measure and is not presented in
accordance with Australian accounting standards. "Cash earnings" is
calculated by excluding some items which are included within the statutory net
profit attributable to owners of the company. A definition of cash earnings,
discussion of non-cash earnings items, and a full reconciliation of the 2012
full year cash earnings to statutory net profit attributable to owners of the
company, will be included in the 2012 September Full Year Results dated 31
October 2012. The Group's audited financial statements, prepared in
accordance with Corporations Act 2001 (Cth) and Australian Accounting
Standards will also be included in the 2012 September Full Year Results dated
31 October 2012.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


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