National Australia Bank has warned its full-year cash earnings will fall as much as 14% due to almost A$1 billion in higher charges from its troubled UK business.
NAB is Australia's fourth-largest bank by market value.
It said it would post annual cash earnings of $5.1 billion to $5.2 billion, compared with an average estimate of $6.2 billion and a record cash profit of $5.9 billion a year earlier.
The hit to earnings surprised some analysts and signalled that the bank's new chief executive Andrew Thorburn, who took the reins in August, is taking a tougher line on the struggling UK operations.
The provisions related to payment protection insurance and interest rate hedging costs further cloud the prospect of an easy turnaround for the UK business.
The British unit, which includes Yorkshire and Clydesdale bank branches, has been weighing on NAB's performance, and investors are watching for the bank's potential exit of its assets there.
In July, NAB had agreed to sell a $1 billion portfolio of mostly non-performing UK commercial property loans, and said it would continue to look at accelerating the sale of non-core assets.
Alongside the writedown, NAB announced it will add about $1.6 billion in capital through a discounted equity investment option where investors' dividends are directly reinvested in new shares of the bank.
That includes underwriting $800m of shares over and above the expected take-up under the dividend reinvestment plan.
Australia's "Big Four" banks - NAB, Australia and New Zealand Banking Group, Commonwealth Bank of Australia and Westpac Banking Corp have been doling out lofty dividends as they post record results.
NAB's announcement that it would lift its final dividend to $0.99 continues that trend.
