National Australia Bank (NAB) has disclosed that its full-year expenses could rise by as much as A$130 million ($84.7 million) after identifying underpayments to some staff, even as it reported a modest increase in third-quarter earnings.
Payroll Review and Remediation
The issue was uncovered during a payroll review that began in 2019 and has since expanded to include payroll-related benefits under both current and historic employee agreements. NAB has not specified how many employees are affected or the size of the discrepancies.
Sarah White, NAB’s Group Executive for People and Culture, said: “Paying our colleagues correctly is an absolute priority.” Chief Executive Andrew Irvine described the situation as “disappointing” and emphasized it must be resolved.
The bank is working with the Finance Sector Union (FSU) and the Fair Work Ombudsman during the investigation. FSU national president Wendy Streets said the union would press NAB for assurances that such large-scale underpayments would not happen again.
The A$130 million provision would lift NAB’s full-year operating costs by about 4.5%. Analysts, however, expect markets to treat the expense as a one-off, noting that NAB’s quarterly costs of A$2.48 billion came in below expectations.
Quarterly Performance
For the three months ending June 30, NAB reported cash earnings of A$1.77 billion ($1.15 billion), slightly above the A$1.75 billion recorded in the same period last year.
Key highlights included:
- Business lending up 4% in the quarter
- Australian home lending up 2%
- Net interest margin (NIM) increased by 8 basis points, supported by higher earnings on replicating portfolios and lower short-term funding costs
- Excluding Markets and Treasury, NIM rose 4 basis points
The Reserve Bank of Australia’s interest rate cuts — 75 basis points so far this year — have boosted lending volumes and asset quality across the sector, supporting NAB’s growth.
Market Reaction
NAB shares rose by as much as 2.7% to A$40.24, their highest level in three weeks, outperforming the broader ASX200 index, which was flat on the day. Investors appeared encouraged by the bank’s expanding net interest margin and its management of short-term funding costs.
Credit Impairments
The lender also booked A$254 million in credit impairment charges during the quarter, largely tied to business lending in Australia and New Zealand as well as unsecured Australian retail loans.
Outlook
While the payroll underpayment case represents a reputational challenge for NAB, the underlying results suggest a business benefiting from lending growth and margin expansion. For investors, the key question is whether remediation costs remain contained — or if further liabilities emerge as the payroll review continues.
Partner With Us
Want to feature your brand, business, or service on 365247 — Whether you’re looking to sponsor, collaborate, or build presence within our ecosystem, we’d love to explore it with you.
Submit your interest here
