NAB UK conduct still a problem
Having thrown in £1.5 billion over five years to prop up its Clydesdale Bank operation in Britain, National Australia Bank looks like it will have to divert yet more capital to the UK.In its trading update for the December 2013 quarter NAB said "the risk that additional provisions will be required for UK conduct related matters has increased since the 2013 full year results," and that it would work out how much more was needed over the course of the current quarter."Conduct related matters" includes rows with customers and regulators over the terms of some types of business loans and the long-running, industry-wide UK dispute over the mis-selling of insurance over consumer loans.NAB said there had been "an increase in the level of complaints and settlements relating to some tailored business loans," over the last quarter while UK regulators "continue to take an active stance in our management of customer claims". Like all major banks NAB has more than doubled the level of contributed capital over recent years; in its case to more than A$28 billion. On present day exchange rates, more than a tenth of this has been taken up by Clydesdale Bank.The UK represents less than nine per cent of NAB group assets.NAB otherwise reported little improvement in profit over the quarter. Net profit was approximately $1.4 billion, in line with the quarterly average for the last financial year.The bank said cash earnings increased seven per cent on the prior corresponding period.Australian banking cash earnings were "broadly stable" while in New Zealand banking "local currency cash earnings were broadly flat."Asset quality improved over the quarter, with the ratio of loans 90 days or more past due combined with impaired loans fell to 1.58 per cent from 1.69 per cent three months earlier.