The NAB Wealth division saw its net operating income fall by $61 million, or eight per cent, compared to the previous year.
NAB Wealth’s cash earnings were also down by 1.5 per cent – or $4 million – to $256 million for the year.
NAB Wealth group executive Andrew Haggar put the drop in cash earnings down to higher insurance claims, an increase in insurance lapses and lower annuities profits.
Insurance cash earnings were down $45 million compared to the March 2012 half year, “reflecting difficult industry conditions”, according to a NAB statement to the Australian Securities Exchange (ASX).
The poor insurance results also contributed to the drop in net operating income for NAB Wealth, said Mr Haggar.
Speaking at a NAB results presentation yesterday, NAB chief executive Cameron Clyne said the NAB Wealth result was more of a “sectoral disappointment” than a specific issue to NAB Wealth.
“The insurance experience is something that all of the [NAB] peers have called out as being a challenge,” said Mr Clyne.
“We see great potential in the wealth franchise. We’ve got a new leadership team in there and we’re looking forward to seeing how that business can continue to make a strong contribution to the group,” he said.
NAB Wealth had 1,868 financial advisers as at 31 March 2013 – up 24 from the previous year. Of the NAB advisers, 779 were salaried advisers and 1,089 were aligned advisers.
But compared to the September 2012 half numbers, the number of NAB advisers is down 30 from 1,898.
According to Mr Haggar, adviser numbers were up against March 2012 “as the business continued to attract advisers from competitors”.
“Against September 2012 adviser numbers decreased, as underperforming advisers left the business,” he added.
Funds under management in the NAB Wealth business increased by $13.2 billion or 10.7 per cent as a result of “strong market performance and positive net flows”, according to the NAB statement.
