National Australia Bank (ASX:NAB) released several reports to the ASX on Thursday, including its half-year results. The banking giant reported $3.32bn in cash earnings for the half year to 31 March 2015, an increase of $170m or 5.4 per cent. Profit after tax and profit attributable to the owners of the company rose by 20.4 per cent to $3.44bn. Revenue rose to $10.55bn, an increase of 14.6 per cent. The interim dividend remained unchanged at 99c per share fully franked. The report said expenses for the company remained mostly flat, with the exception of a fine paid in the UK. NAB attributed the increased earnings to its customer-focused strategy, with a particular renewed interest in its Australian and New Zealand businesses.
NAB also said it planned to raise around $5.5bn in a rights issue that will offer 194m new shares at a significantly discounted share price of $28.50. The company also said it planned to split off and float its Glasgow-based lending company Clydesdale Bank. Its report detailed a plan to demerge 70 to 80 per cent of the UK company through public market options, while the remaining 20 to 30 per cent will be sold through an initial public offering to institutional investors. Chief Executive Officer Andrew Thorburn discussed the reasons for the demerger and cited the consistent lagging rate of return for its UK business. "In relation to exiting our UK banking business, we have been examining a broad range of options including those provided by public markets," he said. "It is a priority to exit this business, and we are today announcing our intention to pursue a demerger and IPO of the UK banking business."
Shares of NAB were suspended from trading on Thursday. Its last trading price was $35.20. NAB has advanced 4 per cent in the last 12 months and 4.76 per cent so far this year.