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NATIONAL AUSTRALIA BANK LIMITED

NAB inks 9.4% fall in earnings, dividend cut by 25%

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National Australia Bank (ASX:NAB) has seen cash earnings fall by 9.4% to $2.0 billion reflecting tough market conditions, which further deteriorated during the half year to March 2009. The fall in cash earnings was largely due to increased charges for bad and doubtful debts and higher funding costs. Statutory profit decreased marginally to $2.7 billion.

Group revenue increased by 11.5% to $8.5 billion, primarily because of the strong performance of Australia Banking and the Global Markets division of nabCapital. Australia Banking revenue benefited from increased market share in business banking and effective margin management. Revenue was weaker in the United Kingdom, due to significantly higher unrecovered funding costs, and in MLC due to weak investment markets. New Zealand Region revenue improved by 5.2%.

Group cost growth was 2.7% on a like-for-like basis2, excluding foreign exchange movements. (Unadjusted up 4.8% on the previous March half year.)

Consistent with the challenging operating conditions, asset quality continued to decline with the six monthly charge for bad and doubtful debts increasing from $0.7 billion to $1.8 billion.

Conservative funding and liquidity positions were retained. The group funding task for the full year is more than 86% complete and liquid asset holdings remain well above regulatory requirements.

- Interim dividend has been reduced by 24.7% or 24 cents to 73 cents, fully franked.

Quick facts: NATIONAL AUSTRALIA BANK LIMITED

Price: $29.16

Market: ASX
Market Cap: $84.07 billion
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