The National Australia Bank (NAB) has announced its financial results for the first half of the 2018 financial year, reporting AU$2.6 billion in statutory net profit, up 1.5 percent when compared to the same period last year.
In delivering its results, the bank revealed it had focused heavily on its technology capability during the six-month period, scooping up executive talent from major tech firms.
"In the March 2018 half year, the group assembled a new technology leadership team hired from major technology firms and international banks," NAB told shareholders Thursday.
NAB is in the process of reshaping its business, announcing during its 2017 financial results in November it would be reducing its workforce by around 4,000 people. It shortly revealed it would be immediately hiring 600 technology specialists spanning software engineering, data, architecture, and cybersecurity, of which 35 will be recruited into NAB Labs.
"We are improving the experience of our customers, reshaping our workforce, and growing our bank in an environment of rapid technological and regulatory change," NAB CEO Andrew Thorburn told shareholders on Thursday.
Around 1,050 full-time staff had left the bank by the end of April, against its target of 6,000 by the end of 2020. The bank hired 93 new full-time employees out of the target 2,000 and as of March 31, 2018, boasted 33,944 staff.
To help people "transition" out of the bank, NAB said it will be investing around AU$50 million in an initiative known as "The Bridge", with 440 former staff using its wellbeing and career services.
Attempting to further combat the skills shortage, NAB announced last month the launch of the NAB Cloud Guild, an internal program that offers up Amazon Web Services (AWS) skills training.
"Cloud computing is becoming a dominant technology platform and our people need to have the relevant skills to deliver for our customers," NAB chief technology and operations officer Patrick Wright said. "Customers are demanding seamless, digital experiences and we need to be ready to deliver."
The training program is available to more than 2,000 of NAB's staff. Graduates will have access to become certified AWS Cloud practitioners and have the ability to continue training to become an associate developer, an associate systems operator, or an associate architect.
Underlying profit for the six-month period was AU$4.3 billion, down from the AU$5 billion recorded in H1 2017. The bank paid AU$1.16 billion in income tax.
Net operating income was AU$9 billion, cash earnings totalled AU$3.3 billion, and revenue from ordinary activities was up 11.4 percent to AU$9.6 billion.
Business and private banking contributed AU$1.5 billion; consumer banking and wealth AU$804 million; corporate and institutional banking accounted for AU$778 million; and the New Zealand arm of the bank added AU$494 million in earnings for the six-month period.
Operating expenses for the half increased by AU$959 million over the same period last year. The figure excludes restructuring costs of AU$755 million which comprised a AU$146 million software write-off.
Operating expenses increased mainly due to uplift in investment in customer and technology capabilities, the bank said.
In the first half of 2018, NAB pumped AU$135 million into tech-related investments.
"The group is focused on ensuring fast, flexible, resilient, and efficient technology capabilities underpin its operations. This requires world class capabilities and skills, increased use of the cloud, microservices, and application programming interfaces, and a modern technology architecture," NAB said Thursday.
During the first six months of the year NAB migrated nine applications to the cloud, and is planning on boosting that figure to 39 in the second half.
It also built out its discovery cloud, touted as a focal point for analytics.
NAB said its investment in technology has driven lower instances of technology incidents since H1 2014, reporting an 87 percent reduction in "high priority" incidents and a 90 percent reduction in "critical" incidents. During H1 2018, less than 10 critical and high priority tech-related incidents were recorded.
For the 2017 financial year, NAB reported AU$5.285 billion in statutory net profit, up from the AU$352 million reported for the 2016 financial year.
The initiative will give more than 2,000 of the bank's employees access to cloud computing skills development.
NAB said the use of voice assistants and other third-party banking channels is a 'natural evolution' of the use of digital channels.
The bank plans to add 35 more full-time staff to its innovation lab as it looks to experiment with 'emerging' technologies such as the blockchain and machine learning.
The bank will immediately hire 600 technology specialists spanning software engineering, data, architecture, and cybersecurity as it plunges into its customer-focused digital transformation.
In announcing its AU$5.3 billion statutory net profit for the 2017 financial year, NAB has promised a AU$1.5 billion increase in investment in its 'digital-first' strategy.