National Australia Bank Ltd. has again delayed the sale of its wealth management unit, with the lender blaming a “challenging” business environment for pushing the likely exit date beyond 2020.
National Australia had originally planned to spin off its MLC wealth business by the end of 2019, however the timing has been repeatedly shifted as the bank grapples with a rising bill for customer remediation and lackluster earnings.
The Melbourne-based lender is still targeting an initial public offering of the unit, but is also exploring other options, it said in a statement Thursday.
The bank also said it’s considering raising new Tier 1 capital, as well as potentially converting up to A$750 million ($505 million) of existing capital notes into ordinary shares. The lender’s current Tier 1 capital ratio of 10.6% is only just above the level mandated by the regulator.
The announcements came as the bank reported flat first-quarter earnings of A$1.65 billion. In a sign the worst is over after a series of scandals that led the lender to set aside more than A$2 billion to compensate customers, there were no new provisions for misconduct.
The stock rose as much as 3.1% in early Sydney trading, extending this year’s gain to 9.4%.
While the housing market rebound helped drive a better-than-expected profit at rival Commonwealth Bank of Australia, National Australia said its lending growth was subdued.
“One of our key priorities is to grow the bank safely,” new Chief Executive Officer Ross McEwan said. “We remain focused on building confidence and trust in our bank by addressing legacy issues where customers were treated poorly.”
McEwan, who built a reputation as a turnaround specialist at Royal Bank of Scotland Group Plc., was clear that shareholders shouldn’t expect quick results.
“Work is underway to refresh our strategy and build a plan for the next five to 10 years, defining our ambition and being clear on the bank we want to be: one that gets the basics right, delivers for customers, is safe and secure and has the culture we need for NAB to be a leading bank again,” he said.