Bank's clean up bill to surge by £245m
By Chanice HenryWithin its quarterly statistics the National Australia Bank, has indicated it expects to add £245 million to its redress bill by the end of this year
Within its quarterly statistics the National Australia Bank, has indicated it expects to add £245 million to its redress bill by the end of this year.
The parent group of Clydesdale Bank-which previously provided funds to bridging lenders Masthaven, Cheval and Tiuta- posted its figures for Q3 this week.
The firm announced that in regards to PPI redress structures, an additional £75 million will be needed at the end of 2014. Also an added £170 million will be needed in regards to interest rate hedging products redress. This reportedly boosts its redress bill up to around £ 1 billion.
Also, a loss was seen with the UK CRE run-off portfolio, which shrunk by £300 million to £3 billion. As announced on 28 July, NAB has agreed to sell a £625 million commercial real estate loans of mainly impaired facilities for a small gain above its net book value, with these loans derecognised from NAB Group’s balance sheet on that date.
On a cash earnings basis, the group’s revenue decreased by 1 per cent. The statistics state that this was partially offset by higher lending balances and a broadly stable customer margin.
Business lending balances grew at an annualised rate of 5.5 per cent over the quarter with the growth strongest in Institutional lending.
Back in 2012, National Australia Bank (NAB) Group, took control of Clydesdales’s commercial real estate portfolio when reportedly elements of “toxic assets” forced the firm to restructure its balance sheet.
For the financial year to date, the Group has raised approximately $23 billion of term wholesale funding.
The weighted average term to maturity of the funds raised by the Group for the financial year to date was 5.1 years
Despite the blips in the figures, CEO Andrew Thorburn said the figures were satisfactory despite a challenging environment: “The Group achieved a satisfactory third quarter result. Costs were well contained and asset quality continues to improve.”
He later added: “However, our UK operations still face a number of challenges. 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 (PPI).
“In addition, the Scottish Independence vote takes place on 18 September and a vote in favour of independence may give rise to significant additional costs and risks for Clydesdale Bank. We continue to closely monitor the situation and have appropriate contingency planning in place.”
“Like all large businesses there are things we can do better at NAB and we will have more to say on this at our Full Year result on 30 October.”
Keywords: National Australia Bank, NAB, Clydesdale, Quarter, trading update, August, loss, portfolio, figures, statistics, million, billion