NAB LIFTS PROFIT BUT SWINGS THE AXE
Written on the 2 November 2017 by Ben Hall
NATIONAL Australia Bank (ASX: NAB) has lifted its cash profit by 2.5 per cent to $6.64 billion and announced it will cut 6,000 jobs over the next three years.
NAB revealed its results for the 12 months to September 30 were delivered thanks to a solid 2.7 per cent growth in both housing and business lending as it revealed a major strategy overhaul which includes cutting 18 per cent of the bank's 33,400 workforce.
CEO Andrew Thorburn says the move is essential as customers continue to move to do business online and "a desire to build on NAB's market-leading position in business banking".
"The world is changing fast and we must change and adapt too, to deliver for customers and become Australia and New Zealand's most respected bank. While new roles and opportunities are opening up, regrettably, some roles will go," Thorburn says.
"We're going to simplify the bank dramatically and as we do that we're going to need less people to do the business the bank does," he says.
The restructure will eliminate 6,000 jobs, although 2,000 new jobs will be created as it tries to reduce regulatory risks and improve customer experience through new technology.
"Throughout this process we will treat our people with care and respect and equip them for the future," NAB says in a statement.
The strategy overhaul will be implemented as the banking sector as a whole undergoes a dramatic shift away from wealth management and insurance to refocus on mortgage lending and deposits.
Thorburn says the aim is to direct investment towards the business arm of the bank, which NAB says holds a 21.5 per cent market share in business banking, and that no targets had been set for where the job losses will fall.
"Now it's about playing to our strengths," says Thorburn.
"We think an environment where housing credit is slowing, business credit starts to pick up."
NAB will spend $1.5 billion on its revamp of its business lending operations, and Thorburn says the bank will ultimately halve the number of products it sells and retire between 15 and 20 per cent of its IT applications.
The bank says it expects to make a one-off provision as a result of the restructure of between $500 million and $800 million in the first half of the 2018 financial year.
NAB will pay a final dividend of 99 cents with a full-year payout of $1.98, which means it will pay out $5.3 billion in profits through dividends this year.
At around midday (AEDST), NAB shares were down just under 3 per cent to $31.97.
Business News Australia
Author: Ben Hall