Costs cause NAB slip

National Australia Bank’s first-quarter cash earnings have slipped 1 per cent amid a rise in expenses, partly due to the lender’s job cuts and increased spending on infrastructure.

NATIONAL Australia Bank’s first-quarter cash earnings have slipped 1 per cent amid a rise in expenses, partly due to the lender’s job cuts and increased spending on infrastructure.

Cash earnings, a measure of underlying profit, clocked in at $1.65 billion for the three months to December, the bank said yesterday.

In line with convention for quarterly banking updates, the result has not been audited.

The tally was down 1 per cent from the previous quarter as NAB’s net interest margin – a key measure of profitability – fell, but it was up 3 per cent from the same quarter a year earlier.

In a trading update, NAB said expenses had risen 4 per cent in the quarter due to previously announced investments and job cuts, as well as the seasonal impact of its staff enterprise bargaining agreement.

NAB in November said it would spend $1.5 billion on new technology and cut more than $1 billion in costs by the end of the 2020 financial year, partly through the elimination of 6000 jobs.

“The acceleration of our strategy is well under way and we are pleased with the early progress,” chief executive Andrew Thorburn said yesterday.

NAB said expenses were likely to grow between 5 and 8 per cent over the full year, then remain broadly flat until 2020.

Revenue rose 1 per cent thanks to growth in business and private banking.