National Australia Bank Ltd says its first half 2009 cash earnings will be around $1.1 billion after a deterioration in December quarter economic conditions saw bad and doubtful debts reach $824 million. Revenue was soft in the UK where high funding costs for NAB's Clydesdale and Yorkshire Bank subsidiaries could not be adequately recovered. NAB said overall revenue remained strong, with its Australian retail arm and the institutional banking business emerging as bright spots. But deteriorating economic conditions had led to a decline in asset quality across all businesses, with gross impaired assets to gross loans and acceptances deteriorating from 83 basis points to 108 basis points at December 31, 2008. Weakening customer credit ratings drove NAB's collective provision charge to $303 million, and another $521 million charge was made owing to exposures to struggling corporates.