National Australia Bank today announced the sale of an 80 percent stake in its insurance business to Japan's Nippon Life for USD 1.7 billion and outlined plans to divest troubled British asset Clydesdale Bank.
The lender tabled the moves in posting a 19.7 per cent lift in annual net profit to 6.34 billion dollar (USD 4.56 billion) for the year to August 31 as it looks to bolster its balance sheet and provide a buffer to meet tougher regulatory requirements.
Cash profit, the industry's preferred measure which strips out volatile items, rose 15.5 per cent to 5.84 dollar billion, below expectations, with six-monthly dividends remaining at 99 cents. NAB shares were trading 1.60 per cent lower at 31.90 dollar in morning trade.
The bank -- in a trading halt since Tuesday with speculation rife that Nippon was taking a large stake in the life insurance business -- confirmed the transaction for 2.4 billion dollar.
"Our wealth business has delivered significantly improved results since 2013, which has enabled us to secure the long term partnership we are announcing today," chief executive Andrew Thorburn said.
"This partnership will enable us to continue to deliver insurance solutions to our customers while improving wealth returns for shareholders."
OptionsXpress analyst Ben Le Brun said shareholders should be happy with the outcome.
"In terms of the price tag, I think the market will be quite comfortable with that, even quite pleased," he said.
NAB also announced a timetable for a demerger and initial public offering for its poorly-performing British business Clydesdale Bank, which was acquired in 1987, as it looks to focus on core Australian and New Zealand arms.
Thorburn said NAB planned to spin off 75 per cent of the asset to NAB shareholders while the remaining 25 per cent would be sold through an IPO to institutional investors in February next year.
"Significant progress has been made on the proposed transaction, including advanced engagement with key regulators and listing authorities in both jurisdictions," he said.
"(Once completed) we will have exited all our low returning offshore businesses, allowing us to fully focus on serving our priority customer segments and leveraging the investments we have made in Australia and New Zealand.
