Peter Ryan reported this story on Thursday, May 8, 2014 12:14:00

ELEANOR HALL: The chief executive of the National Australia Bank (NAB), Cameron Clyne announced that his bank's profit result today was not a surprise, it was a bumper profit.



PETER RYAN: Yes, and Mr Clyne announced earlier this year that he'll be retiring in August to spend more time with his young family so he's probably quite relieved. He'll be replaced the chief executive of the NAB-owned Bank of New Zealand, Andrew Thorburn.



Mr Clyne, as you said, is leaving is on a good set of numbers - a half year net profit of $2.86 billion. That's up 15.8 per cent or by $390 million.



This has been driven by a 52 per cent fall in bad debts, which we heard a lot about during the global financial crisis, down to $528 million, and also the NAB's troubled business in the United Kingdom is recovering slowly because of an improving British economy.



One problem though for the NAB is that it's net interest margin is down 9 basis point to 1.94 per cent - that's because of the competitive banking environment where the NAB is the joint lowest mortgage rate provider.



So while analysts were a bit disappointed with result, investors might be little happy today because they're now going to be getting a bigger dividend.



ELEANOR HALL: And did Mr Clyne have anything to add to the speculation about Tuesday's budget?



PETER RYAN: Well, Mr Clyne is not quite free just yet to express his personal views, given that he's still running Australia's fourth biggest bank by market value so he knows that words can move markets.



However, he does appear to be concerned about what he calls a "surplus" of budget speculation and also he says he doesn't buy into the talk of a budget crisis or budget emergency that we've been hearing over the last couple of weeks. He says it's not the picture that he sees, especially when Australia's economy and its relatively low jobless rate is compared to the rest of the world.



So Mr Clyne appears to be a bit of a cynic about some of the hype that may well have been going around in a greater than usual fashion for this particular budget and we'll hear more about that shortly.



But first I asked Cameron Clyne about his final set of numbers for the NAB given that he took over the reins at the NAB in January 2009 when the worst of the global financial crisis was about to hit. Mr Clyne seems relaxed, happy and yes, probably relieved to be on the end or to be ending on another strong result.



CAMERON CLYNE: It's obviously a very pleasing one and really demonstrates the culmination of sort of five and a half years of steady de-risking of the bank and to see such a material reduction in bad debts, you know, strong improvement in capital, you know the bank is fundamentally in much better shape than it was, you know, a couple of years ago, so I think we're pleased with that.



Obviously with regard to the marginal, it's a competitive market. There's not a lot of business, you know, volume growth out there so you're seeing competition but you know, to still have a strong result like this and be able to pay out a record dividend, I think it's something we're very pleased about.



PETER RYAN: On the general economy, do you have any concerns about the budget or worries that there might be heavy spending cuts that could dampen consumer spending?



CAMERON CLYNE: Well, I think, you know, one thing that's definitely in surplus is budget speculation so I can't really add much to it except that what consumers and businesses don't like is uncertainty and so the sooner we get past these events and people can actually deal with the facts then obviously it has a, you know, much better opportunity then for people to start making investment decisions.



I think the interesting thing is, we've made this point on many occasions, the Australian economy is fundamentally a lot stronger than people give it credit for. The transition is occurring, you know.



In any one month, you know, there's 180,000 job movements in the labour market, people come in, people going out, yet for the vast majority of the last, you know, five or six years we've maintained unemployment, you know, below six.



So the transition from mining to other sectors is occurring. What we have is extraordinary noise around the sectors of the economy that are perhaps struggling and nowhere near enough coverage around the sectors of the economy that are growing and you just simply don't produce 5 per cent unemployment for six straight years without the economy actually doing well.



PETER RYAN: Are you concerned about some of the talk we've been hearing about a budget crisis or a budget emergency? Is that the picture of Australia that you're seeing?



CAMERON CLYNE: It's not the picture that I see. It's certainly not the picture that overseas people see. They look at Australia as having had a remarkable economic achievement.



Look, I think the reality is that, you know, consumers and businesses don't like uncertainty so it's quite sensible for them to sit on their hands, be it in making investment decisions or spending decisions, until they see the lay of the land.



Now, you know, I think there was probably a hope that immediately post the election there'd be a bounce and there has been a bounce in confidence but it hasn't translated into activity so, you know, I'm optimistic that once the budget is sort of actually reality rather than speculation, people can make some assessments and we might get into a period where they can start to make some longer term decisions.



PETER RYAN: Do you have any concerns or views about the debt tax or the debt levy and what impact that might have on consumer confidence or consumer spending?



CAMERON CLYNE: I absolutely have a view about it but I'm not going to speculate, the reason being that my view, and it's not going to change whether it happens so you're better off, I mean, you know, I'll wait and see what the budget, you know, produces next Tuesday and hopefully, as I said, the biggest thing for us it moves from speculation to certainty, you can start to deal with businesses at that point and talk to them about hopefully the opportunity they've got to invest.



ELEANOR HALL: That's the chief executive of the National Australia Bank, Cameron Clyne, speaking to our business editor Peter Ryan.