Promise of better UK results

MELBOURNE - National Australia Bank says a turnaround of its banks in the United Kingdom in two to three years is achievable but the 2005 earnings will be down on the previous year.

In a presentation to analysts yesterday, UK chief executive Lynne Peacock outlined a strategy that included establishing a network of centres aimed at well-off customers in the lucrative southeast of England and consolidating back offices and cost savings of 60 million ($159 million) in operations and IT areas.

NAB runs the Clydesdale and Yorkshire banks and will open around 30 integrated financial service centres in the south that will resemble executive airport lounges.

It expects each new centre to return 4 million in profit before tax once they are up and running.

The bank is also developing products for mortgage brokers which it expects to contribute 800 million in the current year.

Peacock said there had been an increase in new customers and insurance cross sales while there was still work to do on branch realignment and increased sales effectiveness.

"This year our earnings are likely to be lower [than the previous year] and over a two-year period, by mid-2007, we should have a business here with a sensible growth trajectory," Peacock said.

"The steps in between I would rather not be drawn into at this stage because we have a way to go there, but all the signs are that we are going to get there in that time frame."

NAB's share price weakened 15 cents to A$29.98 yesterday while the other big four banks all improved.

Last December NAB sold off its two Irish banks - Northern Bank and National Irish Bank - for A$2.5 billion.

Group chief executive John Stewart said the bank was focusing on organic growth but did not completely discount further acquisitions.

"We decided to become masters of our own destiny, and that's not to say acquisitions are totally off the cards, that just says that it ceases to be the main strategy," Stewart said.

"The main strategy is 'let's fix what we've got'."

- AAP