National Australia Bank has announced a full-year net profit of $5.1bn, down 11% from 2018 and slightly below already low market expectations, with the Private Bank arm also reporting a fall in earnings.
The result was weighed down by record low interests rates and a weaker operating conditions, while the A$1.1bn 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 A$2.1bn to earning back the trust of customers after misconduct was exposed during the inquiry, including fees for no service and credit card insurance.
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"
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.
Chronican said the bank was two years into a three-year transformation plan aimed at improving service and compliance. But he said the executive management would not receive any short-term bonuses or pay rises.
"While we have made progress, it is not enough to be recognised in executive short-term variable reward in 2019," he added.
Stripping out the cost of customer remediation and a software overhaul, the bank's profit fell by 8.6% to $8.2bn as revenue fell by 4.2% to $17.2bn for the 12 months to 30 September.
Its Business and Private Banking arm, which caters to HNW clients through Private Bank and JBWere, has reported cash earnings of A$2.84bn for the year ended 30 September 2019.
This is a fall of 2% from the prior-year figure of A$2.91bn. The decrease was said to be due to higher credit impairment charges and technology investments.
The unit's net operating income and underlying profit both rose 1% year-on-year to A$6.67bn and A$4.4bn, respectively.