London, 10 November 2004: National Australia Group today released the consolidated result for its Financial Services Europe division, the retail banking arm of the Group in Great Britain and Ireland, announcing operating profits before significant items and tax for the year to 30 September 2004 of £349m, a 29% decrease on the previous year.
Mr Ross Pinney, Chief Executive National Australia Group Europe, said: "The result was as expected and reflects the challenges we face as we turn around the performance of our European businesses. Last year we commenced a programme to reinvigorate our European businesses and we can already see the first signs of turnaround and are very encouraged by the progress that has been made.
"We are moving forward on key growth initiatives such as our expansion into the south east of England, growing our SME offering and distributing our mortgages through intermediaries, and are starting to see the first signs of progress and turnaround in areas such as sales volumes and customer loyalty.
"We have made progress in re-engineering processes, simplifying management structures and improving the efficiency of business operations. We have released a variety of new products in personal and business banking, launched new advertising, and invested in new technology and compliance.
"However, we are in the early phases of an ongoing programme of change and are realistic about the time it will take before this results in improved financial performance."
Overview of Financial Performance
Summary of Operational Developments
Notes to Editors:
Below are further details of financial performance. Please note that operating profit before tax is shown in the tables as Cash Earnings Before Tax, as per Australian Generally Accepted Accounting Principles.
For further information, contact:
National Australia Group Corporate Affairs: Tim Pie 020 7710 2146
Tulchan Communications: Kate Inverarity 0207 353 4200
Financial Services Europe
Performance Summary
Half year to | Fav/ (unfav) change on Mar 04% | Year to | Fav/ (unfav) change on Sep 03% | |||
Pounds Sterling | Sep 04 £m |
Mar 04 £m |
Sep 04 £m |
Sep 03 £m |
||
---|---|---|---|---|---|---|
Net interest income | 428 | 436 | (1.8) | 864 | 887 | 2.6 |
Other operating income | 167 | 172 | (2.9) | 339 | 357 | (5.0) |
Total income | 595 | 608 | (2.1) | 1,203 | 1,244 | 3.3 |
Pension fund expense | (34) | (39) | 12.8 | (73) | (36) | large |
Other operating expenses | (356) | (335) | (6.3) | (691) | (621) | (11.3) |
Underlying profit | 205 | 234 | (12.4) | 439 | 587 | (25.2) |
Charge to provide for doubtful debts | (48) | (42) | (14.3) | (90) | (94) | 4.3 |
Cash earnings before tax | 157 | 192 | (18.2) | 349 | 493 | (29.2) |
Income tax expense | (43) | (63) | 31.7 | (106) | (153) | 30.7 |
Cash earnings before significant items | 114 | 129 | (11.6) | 243 | 340 | (28.5) |
Key Performance Measures
Sep 04 £m |
Mar 04 £m |
Sep 04 £m |
Sep 03 £m |
|||
Performance & profitability |
||||||
Return on average assets (annualised) | 0.84% | 0.97% | 0.92% | 1.36% | ||
Cost to income ratio | 65.5% | 61.5% | 63.5% | 52.8% | ||
Cost to income ratio (excl. pension fund expense) | 59.8% | 55.1% | 57.4% | 49.9% | ||
Cash earnings per average FTE (annualised) (£'000) | 19 | 22 | 21 | 29 | ||
Net interest income |
||||||
Net interest margin | 3.92% | 4.16% | 4.03% | 4.30% | ||
Net interest spread | 3.40% | 3.69% | 3.54% | 3.82% | ||
Average Balance sheet (£bn) |
||||||
Gross loans and acceptances | 19.7 | 19.1 | 3.1% | 19.4 | 18.3 | 6.0% |
Interest-earning assets | 21.5 | 21.2 | 4.4% | 21.1 | 20.3 | 3.9% |
Retail deposits | 15.3 | 14.9 | 2.7% | 15.1 | 14.6 | 3.4% |
Key Performance Measures |
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---|---|---|---|---|---|---|
Half year to | Fav/ (unfav) change on Mar 04% | Year to | Fav/ (unfav) change on Sep 03% |
As at | |||
Sep 04 | Mar 04 | Sep 03 | |
Asset quality | |||
Gross non-accrual loans (£m) | 108 | 101 | 122 |
Gross loans and acceptances (£bn) | 20.3 | 19.2 | 18.7 |
Gross non-accrual loans to gross loans and acceptances | 0.53% | 0.53% | 0.65% |
Specific provision to gross impaired assets | 45.7% | 43.7% | 39.9% |
Full-time equivalent employees (FTE) | 11,765 | 11,661 | 11,411 |
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