News: NAB UPDATE 1-National Australia Bank H1 profit tanks 51%, cuts dividend amid pandemic

(Recasts and updates throughout with more detail on results, capital raising, background)

April 27 (Reuters) - National Australia Bank Ltd (NAB) on Monday announced plans to raise up to A$3.5 billion as it reported a 51% slump in first half earnings and booked A$1.04 billion in provisions,due to the coronavirus pandemic and customer compensation.

Australia's third-largest lender slashed its interim dividend as it also said it would increase forward-looking provisions to more than A$2 billion to bolster its cash position and guard against a hit to business from the outbreak.

NAB surprised the market with the announcement, giving just a few minutes notice that it was bringing its earnings report forward from its scheduled May 7 date.

NAB said provisions made to offset a hit to business from the coronavirus, as well as to compensate customers after a series of missteps last year, led cash earnings to slump 51.4% to A$1.44 billion ($919.73 million).

The lender cut its dividend by 64% to 30 cents per share, following a nudge from the Australian Prudential Regulation Authority for banks to reduce or defer dividends and conserve cash amid virus-generated uncertainty.

"We are taking decisive action to manage the rapid and unprecedented upheaval caused by COVID-19 while at the same time being clear about our long term strategy for NAB," Chief Executive Ross McEwan said.

The bank planned to raise A$3 billion in a discounted share placement and about A$500 million through a share purchase plan.

Australia's financial industry was the subject of an inquiry and damning report in 2018 that found widespread misconduct. NAB was singled out for its apparent unwillingness to accept responsibility for the failings, which cost its former CEO and chairman their jobs.

The bank said on Monday that McEwan, chairman Philip Chronican and other directors would forgo 20% of their pay.

($1 = 1.5657 Australian dollars)