SYDNEY: National Australia Bank shares rallied Thursday as bad debt charges eased, although it booked a hefty Aus$1.74 billion (US$1.29 billion) half-year net loss from spinning off troubled British asset Clydesdale.
Cash profit in the six months to March 31, the financial industry's preferred measure which strips out volatile items, was up 6.5 percent at Aus$3.31 billion.
Taking into account its exit this year from the struggling Scottish business, which involved a one-off Aus$4.22 billion hit from the demerger and float, the net result was in the red.
This compared to a profit of Aus$2.86 billion in the same period last year.
The underperforming Clydesdale unit was divested with 75 percent going to NAB shareholders and the rest sold through an initial public offering to institutional investors.
"This is our first result squarely focused on our Australian and New Zealand business," said chief executive Andrew Thorburn.
"It shows that delivering against our strategic priorities is producing results and laying the foundations for sustainable growth and returns. We have a clear plan and are executing it in a disciplined way."
Shares in NAB, Australia's fourth biggest lender, climbed 1.98 percent to close at Aus$27.84, as the bank maintained its six-monthly dividend at Aus$0.99.
"The contrast with ANZ's and Westpac's half-year reports is stark, and NAB investors may see sector-beating returns if the earnings trend continues," said CMC Markets' chief strategist Michael McCarthy.
Both Westpac and ANZ Bank reported hefty impairment expenses in their half-yearly results this week, in contrast to NAB where bad and doubtful debt charges decreased six percent from a year earlier, although they still came in at Aus$375 million.
Slumping commodity prices are squeezing Australia's resources companies, causing worries for banks that have lent them billions of dollars.
"The decisions we have made over the last two years have resulted in NAB being a stronger and simpler business," added Thorburn.
"We are focused on improving returns in our Australian and New Zealand businesses and, while there is still more work to do, we have made good progress against our agenda."
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