National Australia Bank (NAB) is still reeling from the effects of the Royal Commission, but has continued to see progress on its three-year "digital first" transformation strategy.
"NAB's three year transformation program announced in November 2017 is now at the halfway mark and remains on track, despite higher than expected regulatory and compliance costs," NAB said.
In the half year to 31 March 2019, investment in infrastructure initiatives increased by AU$9 million or 3.4% compared to the same period in the year prior. According to NAB, the increase was largely driven by "ongoing simplification and technology refresh activity, investment in data infrastructure and technology to enable bankers to better serve customer needs".
The bank also announced in its first half results that since September 2017, 8% of IT legacy applications have been removed and 8% of applications have been moved to the cloud as part of its AU$1.5 billion transformation strategy. The bank had recently turned to Amazon Web Services (AWS) to move its computing functions to the cloud.
During that same timeframe, NAB also reduced its over-the-counter transactions, call centre volumes, and product numbers by 23%, 14%, and 30%, respectively, while reducing its full-time staff by 2,524. When NAB announced its 2017 financial results, it said at the time it would cut a total of 4,000 jobs from its workforce, while adding 2,000 new jobs.
The bank's operating expenses during the six months to March, meanwhile, increased 2% percent year on year to AU$4.1 billion. Part of the expenses were restructuring-related costs of AU$755 million, which comprised of AU$540 million of personnel, outplacement, and project management costs, AU$146 million of software write-offs, and AU$69 million of property rationalisation costs.
It also accrued AU$120 million in costs for customer-related remediation matters in the wake of the Royal Commission.
The bank reported AU$9.17 billion in revenue for the half year, which was hit by a reduction of AU$302 million to its fees and commissions to compensate customers that were incorrectly charged fees from its wealth management arm.
NAB's post-tax cash earnings -- the bank's preferred measure for financial performance which strips out one-off gains and losses -- rose 7% year on year to AU$2.95 billion, and its net profit attributable to owners increased 4.3% year on year to AU$2.95 billion.
Employee salaries and benefits in the half year to 31 March 2019, exclusive of those related to restructuring costs, was AU$1.86 billion, while its senior executive leadership forfeited around AU$5.5 million during the half year to take accountability for the incorrectly charged fees that were uncovered during the Royal Commission.
"The Royal Commission highlighted a gap between where we are today and where we need to be to meet customer and community expectations. The Commission forced us to confront broader issues of how we treat customers, and the accountability, governance, and culture inside the bank" NAB said.
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