NAB looks set to stick to its MLC split timeline of 2020 despite a torrid FY19 results announcement that included a 10.6 per cent drop in yearly earnings to $5.1 billion, due largely to a $1.1 billion client remediation bill.
“The reshaping of MLC Wealth continues to gain momentum,” the bank advised in a results statement. “NAB continues to make progress towards a separation of MLC Wealth, targeting a public markets exit in FY20, together with exploration of alternative transaction structures and options.”
NAB maintained it will take a “disciplined approach” to the split, but chief financial officer Gary Lennon refrained from indicated whether a trade sale or other option is likely.
Consumer banking and wealth revenue fell 11.2 per cent to $1.36 billion during FY19, which NAB attributed to “customer preferences and repricing on margins” as well as lower average funds under management and administration.
The second dividend was again held at 83c, reduced from last year’s 99c per share return. The full year dividend fell from $1.99 to $1.66, a drop of 16 per cent.
Chronican refused to say whether the impending MLC split would further impact the dividend on a media call, responding that it would “depend on the form of the sale”.
The bank’s disastrous year in wealth management – which led to the resignations of former Group CEO Andrew Thorburn and chair Ken Henry – continues to drag on performance. A statement announced with the results confirmed that no NAB executives would receive short-term bonuses or fixed remuneration increase for FY19.
The result brings NAB – Australia’s fourth largest bank – in line with Westpac and ANZ, which faced similar losses due to huge customer remediation bills stemming from wealth management issues and banking issues.
In the its strategic overview, NAB followed the other banks’ lead and pledged “sustainable change” to avoid mistakes of the past and prioritise customers.
“Addressing the recommendations contained in the final report of the Royal Commission… is a key part of this,” the note continued.
Of the 76 recommendations in Hayne’s final report, NAB stated that 39 are currently capable of being addressed by NAB. “We have completed five of these, and 34 are in progress,” the bank advised.
The bank – now two years into its three-year ‘transformation’ – touted efficiencies in its processes that have led to 30% fewer products, 30% less over the- counter transactions and a 17% decrease in calls to its call centres, as well as cost savings of $480 million in FY19.
Former Royal Bank of Scotland head and CBA executive Ross McEwan is scheduled to take over as NAB CEO in early December, with Chronican shifting to the chair role.