National Australia Bank (NAB) has reported it will see a 4.5 per cent increase to operating expenses for FY2024–25 as it continues to address payroll errors.
The major bank disclosed via the ASX that around $130 million in costs are expected to be incurred this financial year as part of a review and remediation of payroll issues, including $43 million already recognised in the first half. According to NAB, the total cost of the program remains uncertain.
The payroll review first began in 2019, with $250 million in costs incurred between 2020 and 2022.
NAB group executive people and culture, Sarah White, commented: “Paying our colleagues correctly is an absolute priority. We are sorry and apologise to our colleagues that this has happened and have commenced remediating those impacted.”
Additionally, NAB has moved to invest in new human resources and payroll platforms while initiating a broader review into benefits under current and historical agreements.
The major bank confirmed a dedicated team is working to further investigate and resolve issues, with oversight from the Fair Work Ombudsman and the Finance Sector Union.
The disclosure accompanied NAB’s third quarter trading update, which showed steady performance despite higher costs.
Cash earnings fell 1 per cent compared with the first-half average, but underlying profit rose 2 per cent on the back of revenue growth and stronger net interest margins.
NAB reported a revenue increase of 3 per cent during the quarter, with NIM rising by eight basis points. While expenses rose 3 per cent largely linked to the aforementioned remediation costs and additional tech spending, this was partially offset by productivity benefits and lower customer remediation costs.
CEO Andrew Irvine said the execution of NAB’s key strategy and focus on its key priorities supported a 2 per cent increase in underlying profit over the quarter.
Irvine further commented that the costs associated with the payroll program “to identify, rectify and remediate payroll issues” was “disappointing and must be fixed”.
The update revealed that business and private banking lending rose 4 per cent over the three months to 30 June, including a record monthly business lending balance growth of $4.6 billion in June.
Australian home lending increased 2 per cent, while deposits were broadly stable for the quarter but up 6 per cent over the nine months to June.
NAB reported an unaudited statutory net profit of $1.66 billion and cash earnings of $1.77 billion for the quarter, with its common equity tier 1 capital ratio standing at 12.14 per cent at the end of June, reflecting prudent balance sheet management.
NAB also confirmed AUSTRAC had cancelled its enforceable undertaking, following improvements in compliance with anti-money laundering and counter-terrorism financing laws.
Beyond financials, NAB highlighted its community initiatives, including refurbishing 100 branches since October 2024 – 82 of them in regional locations – to improve accessibility and customer service.
The major bank has also rolled out PayID Receivables to streamline payments for businesses and provided close to $6 million in disaster relief grants and additional financial assistance to more than 5,000 customers and 400 colleagues over the past year.
