National Australia Bank is facing another STG245 million hit to its books in relation to its troubled UK business.
The bank says it needs to make additional provisions of at least $A310.30 million and $A136.90 million relating to interest rate hedging products and payment protection insurance in the UK.
“Conduct charges are difficult to predict, but we now expect that we will need to take further provisions at the full year result for both interest rate hedging products and payment protection insurance,” new chief executive Andrew Thorburn said in a statement on Monday.
Along with other UK banks, the NAB-owned Clydesdale Bank has faced ongoing scrutiny over the selling of its PPI and hedging products.
News of the fresh charges came as NAB reported it had lifted its cash profit 7 per cent during the June quarter as lower costs offset a slide in revenue.
The bank’s cash profit rose to $1.6 billion for the three months to June 30, up from $1.5 billion a year ago.
Net profit, which includes one-off items, was steady at $1.7 billion.
Shares in NAB were 33 cents or 0.96 per cent lower at $34.36 at 1059 AEST.
Mr Thorburn said the result was “satisfactory”.
“While revenue growth remains challenging, Australian home lending continues to achieve market share gains and Australian business loan growth improved in what is traditionally a stronger quarter,” he said.
NAB’s revenue slid one per cent after a lack of volatility in share markets hurt the bank’s markets business.
Expenses fell six per cent, but were flat once costs linked to the troubled UK business were excluded.
The charge for bad and doubtful debts fell 9 per cent to $241 million.
Earnings from the bank’s Australian business were flat after the lower markets income offset the growth in home lending and lower bad debts charges.
NAB Wealth lifted earnings due to improved results from its insurance claims business while the bank’s New Zealand division also lifted earnings thanks to increasing loans volumes and lower funding costs.
But earnings from the UK business fell as a slide in the division’s net interest margin offset an increase in home lending and lower bad debts.