MLC an 'area of softness'
National Australia Bank (NAB) has identified its wealth management division, MLC, as one of its areas of “revenue softness” at the same time as reporting first quarter unaudited cash earnings of around $1.1 billion.
In an announcement released on the Australian Securities Exchange today, NAB said group revenue remained strong despite rapidly emerging weakness across the relevant economies.
However, it said areas of softness were primarily in the United Kingdom, where significantly higher funding costs could not be adequately recovered, and MLC due to the impact of declining investment markets on wealth management funds under management.
Looking specifically at wealth management, the NAB announcement said consistent with industry experience, MLC’s funds under management declined during the quarter, reflecting negative net inflows and widespread market declines.
It said given lower volumes, management had accelerated cost reduction initiatives to help offset pressure on income.
Looking at its exposures, the announcement said the group charge for bad and doubtful debts in the December quarter was $824 million, with the specific provision charge being $521 million, approximately half of which related to three individual name exposures.
It said the collective provision charge was $303 million, mainly reflecting a decline in customer credit ratings across all businesses.
AUTHOR
Mike Taylor
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