NAB executives won’t receive bonuses after a ‘challenging’ year. Picture: Hollie Adams/The Australian
NAB executives won’t receive bonuses after a ‘challenging’ year. Picture: Hollie Adams/The Australian

Bank executives denied $14.4 million

NAB is the latest major lender to suffer a hefty profit fall after a disastrous year for Australia's banks.

The big four bank followed Westpac's lead earlier this week in suspending short and long term bonuses for its entire executive team as falling earnings resulted in its full-year earnings plunging 10.6 per cent to $5.1 billion.

The result was weighed down by record low interests rates and a weaker operating conditions, while the $1.1 billion in customer remediation expenses following the fateful royal commission into the finance sector also put a significant dent in the books.

NAB has now set aside $2.1 billion to earning back the trust of customers after misconduct was exposed during the inquiry, including fees for no service and credit card insurance.

The major bank now has nearly 1000 employees dedicated to the task of customer remediation.

"This year has been very challenging, requiring significant actions for us to deal with past issues and make real changes aimed at earning trust with customers and the community," chief executive Philip Chronican said in a statement to the ASX.

The refusal to payout short-term bonuses to the executive team will result in a maximum rejection of $14.4 million.

When removing expenses following the royal commission and a software overhaul, the bank's profit fell 8.6 per cent to $8.2 billion as revenue for the 12 months to September 30 fell 4.2 per cent to $17.2 billion.

NAB has followed its major rivals this week in slashing its final dividend, with shareholders to receive a fully franked 83 cents, down from 99 cents last year.

Rivals Westpac and ANZ also both cited "challenging" years when revealing a loss of 15 per cent and flat profit result respectively.

 

Andrew Thorburn resigned as CEO after being singled out in the royal commission. Picture: Stuart McEvoy/The Australian.
Andrew Thorburn resigned as CEO after being singled out in the royal commission. Picture: Stuart McEvoy/The Australian.

 

NAB's interim chief executive Mr Chronican will hand over the reins to former Royal Bank of Scotland (RBS) boss Ross McEwan in the coming weeks.

The New Zealand-born banking veteran will fill the role left empty by Andrew Thorburn, who resigned in February after being singled out in Commissioner Kenneth Hayne's scathing review of the sector.

Both Mr Thorburn and chair Ken Henry were the major scalps of the banking scandal, with the inquiry's final report detailing the lack of confidence Commissioner Hayne had in the two leaders of the major bank.

He wrote NAB "stands apart" from the other three major lenders.

"More particularly, I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly," he wrote.

"Overall, my fear - that there may be a wide gap between the public face NAB seeks to show and what it does in practice - remains."

Do banking executives deserve to have their bonuses cut? Comment below or get in touch | @James_P_Hall | james.hall1@news.com.au

 

 


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