NAB chief: 6000 job cuts a necessity
NATIONAL Australia Bank will cut about 18 per cent of its workforce as chief executive Andrew Thorburn moves to fortify the group in the face of technological changes.
Mr Thorburn has revealed 6000 jobs will be cut over three years as the bank invests $1.5 billion – on top of $3 billion already being spent – to improve its digital banking, products and services.
The 6000 workers amount to more than one in every six of its 33,400 full-time staff.
It comes after ANZ cut 5000 jobs over the past two years, meaning about 11,000 will have been taken from the finance industry nationally over five years as digital banking reshapes the sector.
Analysts say all banks must focus more aggressively on costs amid growing competition from leaner onlinebased lenders.
“We’ve got to flatten to get (our) people closer to the customer,” Mr Thorburn said.
“You are going to see activities through the whole value chain that are not required – less transactions going through branches, right through (to) marketing and product development.”
Many business models were being up-ended by technological change, Mr Thorburn said, and “you have to adapt ... do it confidently and clearly”.
“I think our business and our industry are going to go through more and more changes and we have to adapt to that,” he said. “Rather than react and do it piecemeal or incrementally, we felt we should face into it strongly.”
Mr Thorburn was speaking after NAB posted a net profit of $5.28 billion for the year to September – in line with market expectations and up from $352 million the previous year, when writedowns took a toll.
Its cash profit, which is an underlying earnings measurement, climbed 2.5 per cent to $6.6 billion, fuelled by lending growth.
Despite the result, shares in NAB tumbled 2.8 per cent, or 93c, closing at $31.95.
While 6000 jobs are earmarked to go, the bank expects to create 2000 new jobs by 2020 – including “data scientists, cyber professionals and technology architects”.
Mr Thorburn said when NAB launched its internet banking services in the late 1990s, it had just two cyber security employees.
Now it had a team of more than 200. About 3000 people left the bank of their own accord every year, he said, and many of the job losses would come from such attrition and voluntary redundancies.
NAB has held its final dividend flat at 99c, fully franked, taking its total payout for the year to $1.98.
UBS analyst Jonathan Mott noted NAB’s net interest margin – broadly its profit on lending – shrunk by 0.03 percentage points to a “stronger than expected” 1.88 per cent.
“Management expects this to be offset by stronger revenue, but the market may not incorporate revenue upside until there are signs of delivery,” Mr Mott said.