CEO Ross McEwan pledges to go further than the transformation strategy begun by his predecessor Andrew Thorburn.

The “consumer banking” division will be relabelled “personal banking” and a single mortgage operation will be created to streamline processes as the bank uses productivity savings to lift investment in data analytics to help deliver better insights to bankers.
The divestment of the troubled MLC Wealth business, which accounted for 69 per cent of the bank’s customer remediation bill, was listed as an “immediate priority”. Mr McEwan hailed the “good progress” on the exit project but provided no update on the timing of a trade sale or public float.
This bank needs to execute much better than it has in the past.
Ross McEwan, NAB chief executive
Theres not a lot of things on the page here and that is the point, he said of a presentation slide outlining the bank’s simplified structure and priorities.
He said NAB would become a “very cost-conscious organisation” and spending on customer service projects such as the NAB Assist financial hardship hotline would minimise bad debts in the long-term.
As NAB investors prepare to tip $3 billion into its institutional placement, he said there are compelling opportunities to create long term value at the bank while promising more discipline on how shareholder funds are spent.
We need to execute better. Customers and colleagues have been direct in saying we have been too slow and are far too complex,” Mr McEwan said.
“We have been doing far too much in the business, accountabilities have not always been clear, decisions have not been made fast enough and we have not invested enough in bankers and tools they use. The result has been negative net promoter scores, and engagement and enablement that is nowhere near where it should be, while organic capital generation lags our peers.”
In the past six weeks, 30,000 NAB staff have made the transition to working from home while also facing an unprecedented number of inquiries from stressed customers, approving 70,000 deferrals of home loans worth $26.5 billion and 34,000 business loans worth $17.4 billion.
Mr McEwan encouraged staff to maintain this innovation mindset and “not lose this urgency” created by the coronavirus response.
“This bank needs to execute much better than it has in the past. We have been too complex, [there is] too much bureaucracy. It takes too long to make decisions … we need to focus [investment] on fewer things and do less … NAB has a very clear plan and we just need to get on with it.”
Mr McEwan, a former CBA executive who joined NAB after running Royal Bank of Scotland since early 2014, said the bank was cutting its products by 200, had 9 per cent fewer legacy applications and had shifted one-third of IT apps to a lower-cost, cloud platform.
Almost two-thirds of sales are through digital channels and this could increase as NAB makes more use of its UBank division to drive digital customer acquisition.
NAB said it was on track to meet its full-year 2020 goal of making more than $1 billion in productivity savings, and that operating costs, which were stable over the half at $4.1 billion, would remain flat, with no change to the previously announced annual investment budget of $1.2 billion to $1.4 billion.
However, the bank said its plan to reduce staff by 4000 by the end of the year would be difficult as it had to add new employees in risk and compliance.
NAB’s half-year revenue was down 4.3 per cent to $8.8 billion because of market volatility that reduced the contribution from treasury operations. But when this was removed, the key revenue driver, the net interest margin, was flat at 1.78 per cent.
Banking analysts said that while this half was ugly, NAB which has the largest business bank in the country would be well placed to fund companies re-establishing themselves after the shutdown.
“Looking forward, we expect capital headwinds will partially reverse and stronger credit growth will contribute to earnings,” said Citi analyst Brendan Sproules.
NAB said competitive pressures in the market would be a headwind for its net interest margin in the second half, and UBS said the impact from low official rates would also be a drag on this margin.
UBS analyst Jonathan Mott said he “expects strong full-year 2020 Australian business lending growth” but added that NAB may have to top up its COVID-19 provisioning if the economy took longer to get out of the hole.
NAB also announced senior executive changes on Monday Rachel Slade was appointed group executive of personal banking, replacing the outgoing Mike Baird. Meanwhile, Nathan Goonan will become group executive of strategy and innovation.
NAB is still looking for a new head of business banking after the announcement in March of the departure of Anthony Healy, who led the bank’s coronavirus response.
Mr McEwan said the management would “share the pain” with shareholders and customers he and the directors would take a 20 per cent pay cut and senior executives would receive no short-term bonuses.