National Australia Bank boss says 'worst is over'

MELBOURNE - National Australia Bank Ltd (NAB) chief executive John Stewart says the bank has got over the worst of its woes and expects financial performance to gradually improve.

NAB last week posted a 17 per cent increase in net profit to A$2.54 billion ($2.73 billion) for the first half of fiscal 2005, but the result was pumped up by a A$1.1 billion profit from the sale of NAB's Irish banks last year.

When that profit and other one-off items were stripped out, the net profit fell to A$1.87 billion -- down 11.1 per cent on the previous corresponding period.

Mr Stewart said today that many of the uncertainties surrounding the bank in November last year had been removed.

"I think we've bottomed, Mr Stewart said on the Nine Network's Business Sunday programme.

"But with all the surprises we've had to deal with over the last year, you'd never say never, but I'm pretty confident that the figures will get slowly better from now."

Mr Stewart said the bank was searching for any issues that it may still need to deal with.

Last week, it was discovered that NAB bank had been overcharging fees and taxes in some customers' accounts for the past five years.

The bank has made a A$10 million provision to reimburse customers affected by overcharging.

"We will put every customer back in the right position," Mr Stewart said today.

"And we are actively trawling through all of our customer complaints over the years, or any reports from ombudsmen -- anything that may give us a clue if there is an issue we have to deal with."

Mr Stewart said he was "not terribly uncomfortable" with market analysts' forecasts of six per cent earnings growth for the full year.

"I think as long as its a middle single-digit number, I'm not terribly uncomfortable," he said.

"What we've stressed to the analysts during the week is that this is a two- to three-year turnaround ... we're only one year into it."

Mr Stewart said he expected that NAB's disappointing cost-to-income ratio and net interest margins would be as good as any other bank in Australia or elsewhere over the next to three years.

NAB had a traumatic 2004 that included losing A$360 million in the unauthorised foreign exchange options trading scandal and a shake-out of top management including ex-chairman Charles Allen and former chief executive Frank Cicutto.

- AAP