National Australia Bank's net profit, cost-to-income ratio, asset quality and return on equity are all likely to improve after the bank completes the demerger of its United Kingdom subsidiary Clydesdale Bank, which is scheduled for February next year.NAB group executive finance and strategy, Craig Drummond, recast the bank's September results on a pro forma demerged basis at an investor briefing yesterday, showing that the bank's net profit would have been 8.2 per cent higher without Clydesdale.Its cost-to-income ratio would have been 9.7 percentage points lower, at 41.1 per cent compared with the 50.8 per cent it reported. Its ratio of loans overdue by 90 days or more to gross loans and acceptances would have 63 basis points, compared with the 71 bps reported.Its return on equity would have been 14.6 per cent and not 12 per cent, as reported.The post-merger outlook is not all good news. On a pro forma demerged basis the bank's net interest margin fell from 1.87 per cent to 1.82 per cent.Drummond said the bank would make a "significant accounting loss" on the sale, resulting from the strengthening of the Australian dollar against the pound since the acquisition. The extent of the loss will not be known until the proceeds of the initial public offering are compared to book value (the bank is issuing 75 per cent of Clydesdale's equity to NAB shareholders and the balance will be sold to institutional shareholders).However, the loss will be reported as discontinued operations and will not impact NAB's cash earnings. Nor will it have any impact on the level of the bank's common equity tier one capital or its capacity to pay dividends.The tier one capital ratio comes down from 10.24 per cent reported at September 30 to a pro forma level of 9.45 per cent (which also includes the adjustment for the change in mortgage risk weights that takes effect next June).The bank's target range of common equity tier one capital is 8.75 per cent to 9.25 per cent.