National Australia Bank (NAB) made a $1.2 billion profit in the three months to June, while its revenue dropped because of higher funding costs and weak financial markets.
In a trading update on Tuesday, NAB said its unaudited cash profit for the three months to June 30 was higher than net profit, standing at approximately $1.4 billion.
Charges for the restructure of NAB's UK banks were the main reason for the lower net profit, it said.
Revenue in the three months to June was down one per cent from the three months to March, because of higher funding costs in the UK and lower revenue from NAB's markets business, the bank said.
"This quarter's result is set against a backdrop of ongoing challenges in the global economy with continued uncertainty in the euro zone and the United States, volatility in global financial markets, and slowing growth in the big emerging economies," chief executive Cameron Clyne said in a statement.
"Although subdued business and consumer confidence continue to affect the Australian economy, we remain positive about the outlook."
NAB also posted a $1.4 billion cash profit in the previous corresponding period.
Tuesday's result takes NAB's cash profit for the first nine months of its fiscal year, which ends in September, to $4.23 billion.
That puts the bank on target to improve on its 2011 record full year cash profit of $5.5 billion.
Mr Clyne said NAB's strategy to improve its reputation again delivered growth in customer numbers, and revenue and earnings growth in its personal bank division during the quarter.
Business banking posted a weaker performance, due to higher funding costs and increased bad debt charges, he said.
NAB's total charge for bad debts in the June quarter was $524 million, down $42 million, or seven per cent, from the March quarter.
The UK operations continued to lose revenue, as the weaker economy there resulted in elevated bad debt charges and funding costs, Mr Clyne said.
The head of NAB in the UK, David Thorburn, had agreed to step down from NAB's group executive committee in order to focus on the current restructure of NAB's UK business, the bank announced.