As we expected, National Australia Bank released relatively moderate results with no major surprises in their first quarter trading update. Cash earnings from continuing operations were approximately $1.7 billion up 8% up on the prior corresponding period primarily driven by improved lending volumes, a higher net interest margin and stronger wealth results. Additionally, bad and doubtful debts fell 52% for the quarter due to improved asset quality (removal on Australian mining and Agriculture over lay). The bank’s balance sheet remains strong with capital and liquidity relatively unchanged. However, competition in the business banking segment remains intense and funding costs have risen which could pose potential risks to future earnings. Given the uncertainly of the economic environment, the bank’s asset quality has been remained relatively stable. The ratio of 90+ days past due and gross impaired assets to gross loans and acceptances increased marginally (0.63% to 0.68%), collective provision to credit risk weighted assets was unchanged at 1.00% and specific provisions to impaired assets increased by 2.1%. Preferably we would like the provision levels to be slightly higher but given the marginal increase in impaired assets this is still reasonable. The update also outlined NAB’s successful completion of the demerger and Initial Public Offering (IPO) for Clydesbank Bank in the UK. The loss is expected to be $4.2 billion and will be recorded as discontinued operations in its half year results on the 5th of May 2016. As outlined by the bank, the impact of the demerger and IPO is estimated to reduce NAB’s Common Equity Tier 1 ratio by 0.49% to 9.6% which is still above the target range of 8.75% – 9.25%. The sale of 80% of the group’s life insurance business to Nippon Life (announced October 2015) marks the last major divestment of NAB’s low returning and legacy assets.