National Australia Bank's (NAB) weak UK business caused the company's yearly profit to go down 22 per cent by $1.1 billion to $4.1 billion in the year to Sept 30, NAB reported on Wednesday.
NAB, Australia's fourth largest bank by market value, logged a $5.2 billion profit a year ago.
"The Group result reflects both the strength of the core Australian and New Zealand banking businesses and ongoing challenges in the UK," NAB Group Chief Executive Cameron Clyne said in a statement.
The bulk of the profit drop was on account of bad property loans held by the group's banks in Clydesdale and Yorkshire which rose 44 per cent to $2.6 billion from $793 million.
NAB full-year cash profit, which excludes one-off financial items, reached $5.43 billion, slightly lower than the previous year's $5.46 billion. Wednesday's report ended two years of consecutive profits for the bank.
Despite the contribution of the UK banks to its profit decline, Mr Clyne said that NAB would not hold a fire sale of its British banks. NAB would rather exert all efforts to simplify its business operations in the UK.
Last week, ANZ Bank registered a record profit of $5.66 billion mainly on the strength of its Asian operations. Analysts forecast that the big four would register a record combined yearly profit of over $25 billion despite the slower pace of expansion, which is the lowest in three years, and a rise in bad debts.
Due to these weak local conditions, Mr Clyne said that NAB would focus on attracting new clients and cutting costs in addition to the 1,309 positions the bank axed in the past 12 months which brought down total employees to 43,336.
He added the bank is still studying if it will extend its pricing commitment to offer the lowest standard variable home loan rate. The commitment, which NAB kept for several years, is due to end on Dec 31.
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