The wealth unit of National Australia Bank (NAB) has reported cash earnings of A$356m for the year ended 30 September 2016, up 12.7% compared to A$316m a year ago.
The bank attributed the rise in cash earnings to growth in funds under management and administration (FUM/A) due to investment markets, positive net funds flow and efficiencies in operating expenses.
The wealth division’s net income increased 2.1% to A$1.23bn from A$1.21bn in the prior year, while net investments income rose 1.7% year-on-year to A$1.15bn from A$1.13bn due to revenue growth from higher FUM/A as a result of investment market growth for the year.
The unit’s operating expenses fell 3.6% to A$758m from A$786 in the prior year, driven by lower regulatory and compliance project costs, efficiency savings and lower discretionary spend.
Net funds flow were positive A$252m, a rise of A$994m from the prior year, mainly owing to the contractual end of one institutional fund mandate (A$1.4bn) in the September 2015 full year.
The wealth arm’s average FUM/A rose by A$19.2bn or 11.5% to A$186.2bn from A$167bn a year ago. The rise was driven by the inclusion of JBWere FUM/A following the acquisition of the remaining 20% of JBWere in January 2016, growth in investment markets as well as positive net funds flow, the bank said.
Overall the banking group posted cash earnings of $6.48bn for the year ended September 2016, up 4.2% compared to last year. However, the bank’s annual statutory net profit plummeted 94.4% to $352m, reflecting the loss on sale for CYBG and 80% of NAB Wealth’s life insurance business.
NAB Group CEO Andrew Thorburn said: “This has been a milestone year for the Group with the completion of major divestments including our exit from CYBG and the sale of 80% of our life insurance business to Nippon Life.
“NAB moves into 2017 a reshaped business – stronger, simpler and focused on helping our customers in Australia and New Zealand.
“These changes have been achieved while delivering an improved operating performance and maintaining a strong balance sheet, sound asset quality and tight control of costs. This is against a backdrop of favourable Australian and New Zealand economic conditions, but also rising funding costs and global uncertainty.”