NAB Wealth, MLC cash earnings drop 5%

National Australia Bank’s wealth arm, NAB Wealth and MLC, has recorded a 5 per cent drop in cash earnings to $493 million for the full year to September 30, 2013, as deteriorating lapse rates and claims experience continue to ravage the broader wealth industry.

NAB chief executive, Cameron Clyne, said an increase in earnings from the group’s investments and private wealth business, off the back of favourable market conditions and lower funding costs, had been “more than offset by challenging conditions in the insurance industry”.

As a result, the group’s insurance reserves were strengthened in September to reflect a change in actuarial assumptions, which affected the result by $57 million.

Net income from insurance plunged to $91 million in the six months to September 2013, compared to $231 million in the same corresponding period.

NAB Wealth’s result showed that margins in wealth management fell by 0.09 percentage points in the last year, with the average investment margin on funds under management dropping to 0.77 per cent from 0.86 per cent. Despite this, the group marginally boosted income generated from investments to $545 million.

Cash earnings on investments were $255 million at September 30, 2013, up from $183 million in 2012. Net fund flows soared to $1.29 billion compared to net outflows of $871 million in 2012.

Overall NAB posted a net profit of $5.45 billion for the full year, up 33.6 per cent on the previous corresponding period. The result was driven by higher earnings across all banking businesses.