Australia’s NAB to divest wealth management arm

Sydney (AFP) – National Australia Bank announced plans to sell its wealth management arm Thursday as it continues to offload assets to simplify its business.

The lender made the move as it posted a 16 percent slump in cash profit — the financial industry’s preferred measure — in the six months to March 31.

The Aus$2.76 billion (US$2.07 billion) result was hit by restructuring costs after a raft of job cuts and the introduction of new digital products. Without the one-off costs, profit was flat at Aus$3.3 billion.

Interim net profit inched marginally higher to Aus$2.58 billion, with the dividend steady at 99 cents.

The bank has been on a mission to further automate and simplify its business, with the sale of loss-making assets a key plank of the strategy.

It has already spun off British bank Clydesdale and most of its life insurance business to Japan’s Nippon.

It also flagged plans in December to offload its life insurance arm to Swiss giant Zurich.

Now chief executive Andrew Thorburn said the axe will be taken to wealth management with an intention to sell MLC, which provides investment, pension, insurance, and financial advice.

It was part of the plan to make more than Aus$1.0 billion in cost savings and an estimated Aus$1.5 billion in additional investment by fiscal year 2020.

“Consistent with this plan and a focus on our core strengths in banking, we are moving to a simpler wealth offering through JBWere and nabtrade,” he said.

“We intend to exit our other wealth management businesses including MLC.”

The sale will be via a demerger, an initial public offering, or possibly a trade sale next year. 

All of Australia’s big banks are battling higher funding costs and lower interest margins, with rules now demanding they hold more reserves as a buffer against rising mortgage liabilities and fears over bad loans.

Earlier this week, ANZ Bank posted a 14.2 percent jump in interim net profit to Aus$3.32 billion as it continues to restructure its core operations with the sale of a spate of assets.

Among the other big banks, Westpac reports its half-year results next week. Commonwealth Bank, Australia’s largest, operates on a different reporting schedule.