NAB takes compliance hit with AU$1.65b Q3 profit
The National Australia Bank (NAB) has emerged from the Banking Royal Commission with a higher regulatory spend, with the bank's third-quarter expenses rising 2 percent year on year.
The AU$1.65 billion in cash earnings for the three months to June 30, 2018, was down 3 percent over the corresponding period last year, with the bank telling shareholders on Tuesday that this reflected "higher investment spend and credit impairment charges".
Expenses rose by 2 percent due to higher compliance costs, investment spend consistent with the accelerated strategy, and increased depreciation and amortisation, the bank said.
"As we make progress towards resolving several previously disclosed regulatory compliance investigations, we expect to recognise additional provisions in the 2H18 result, noting there are significant uncertainties in determining a provisioning outcome at this time," CEO Andrew Thorburn said in a statement.
"The Royal Commission is challenging us with its focus on where we have let customers down. We are determined to respond and become a better bank through living our purpose and values every day."
The "accelerated strategy" includes the reshaping of the bank's business.
The bank announced during its 2017 financial results in November that it would be reducing its workforce by around 4,000 people. It shortly afterward 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," Thorburn said earlier this year.
Around 1,050 full-time staffers 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.
For the first half of the financial year, NAB reported 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 that it had focused heavily on its technology capability during the six-month period, scooping up executive talent from major tech firms.
Meanwhile, throughout Australia's Banking Royal Commission, it was revealed that NAB, alongside the Commonwealth Bank, Westpac, ANZ, and AMP, had taken more than AU$220 million from clients for services they never intended to provide.
The Australian Securities and Investments Commission (ASIC), the country's corporate regulator, also came under fire during the Royal Commission for not appropriately punishing the banks.
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