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Business Recorder
a day ago
- Business
- Business Recorder
Australia's NAB sees $85 million cost increase to fix staff underpay issue
National Australia Bank warned its full-year expenses would be up to A$130 million ($84.7 million) higher after it discovered it had underpaid some of its staff, as it reported a slight increase in third-quarter earnings. NAB, Australia's top business lender, said a review of its payroll systems and remediation was ongoing and the final costs that could be incurred were uncertain. The A$130 million set aside would increase the bank's full-year operating expenses by about 4.5%, NAB said. NAB said the issues were discovered during a payroll review that began in 2019 and it had started a broader review into examining payroll-related benefits given to staff under current and certain historical agreements. National Australia Bank axes 6,000 jobs as annual profit jumps NAB did not say how many staff were affected or the value of the discrepancies discovered. 'Paying our colleagues correctly is an absolute priority,' said Sarah White, NAB's group executive people and culture. NAB Chief Executive Andrew Irvine said the issue was 'disappointing and must be fixed.' NAB said it was engaging with Finance Sector Union and the Fair Work Ombudsman while the issue was investigated. 'The FSU will meet with NAB again later this month to demand guarantees that workers will never again be ripped off on this scale,' said Wendy Streets, FSU national president. The increased full-year expenses are unlikely to concern investors, analysts said, as NAB's third-quarter costs of A$2.48 billion were below expectations. 'The payroll remediation disclosure will likely be treated as a one-off by the market, and in any event underlying costs looked well-managed,' said Thomas Strong, Citigroup's banking analyst. The bank reported A$1.77 billion ($1.15 billion) cash earnings for the three months ended June 30, compared with A$1.75 billion a year ago. The Reserve Bank of Australia has cut interest rates by 75 basis points so far this year and signalled further easing ahead. The lower interest rate environment has aided higher lending volumes and improved asset quality. NAB said business lending grew 4% and Australian home lending grew 2% during the quarter compared with the quarterly average of the first half. Its net interest margin - a closely watched measure of bank performance which compares interest payments received on loans minus interest paid out to deposit holders - increased by 8 basis points. NAB shares rose by as much as 2.7% to A$40.24, the highest level in three weeks, as the ASX200 was flat. The bank's growing net interest margins and lower short-term funding costs were positive for NAB. Excluding Markets and Treasury, NIM rose 4 basis points, mainly due to higher earnings on replicating portfolios and lower short-term funding costs. NAB said the ratio of default but not impaired assets to gross loans rose 2 basis points, as Australian mortgage book arrears flattened and ratio trends in the Business and Private Banking segment showed early signs of stabilising. The lender also booked a credit impairment charge of A$254 million in the quarter, mainly related to business lending in Australia and New Zealand and unsecured Australian retail portfolios.
Reuters
a day ago
- Business
- Reuters
Australia's NAB sees $85 million cost increase to fix staff underpay issue
Aug 18 (Reuters) - National Australia Bank ( opens new tab warned its full-year expenses would be up to A$130 million ($84.7 million) higher after it discovered it had underpaid some of its staff, as it reported a slight increase in third-quarter earnings. NAB, Australia's top business lender, said a review of its payroll systems and remediation was ongoing and the final costs that could be incurred were uncertain. The A$130 million set aside would increase the bank's full-year operating expenses by about 4.5%, NAB said. NAB said the issues were discovered during a payroll review that began in 2019 and it had started a broader review into examining payroll-related benefits given to staff under current and certain historical agreements. NAB did not say how many staff were affected or the value of the discrepancies discovered. "Paying our colleagues correctly is an absolute priority," said Sarah White, NAB's group executive people and culture. NAB Chief Executive Andrew Irvine said the issue was "disappointing and must be fixed." NAB said it was engaging with Finance Sector Union and the Fair Work Ombudsman while the issue was investigated. "The FSU will meet with NAB again later this month to demand guarantees that workers will never again be ripped off on this scale," said Wendy Streets, FSU national president. The increased full-year expenses are unlikely to concern investors, analysts said, as NAB's third-quarter costs of A$2.48 billion were below expectations. "The payroll remediation disclosure will likely be treated as a one-off by the market, and in any event underlying costs looked well-managed," said Thomas Strong, Citigroup's banking analyst. The bank reported A$1.77 billion ($1.15 billion) cash earnings for the three months ended June 30, compared with A$1.75 billion a year ago, opens new tab. The Reserve Bank of Australia has cut interest rates by 75 basis points so far this year and signalled further easing ahead. The lower interest rate environment has aided higher lending volumes and improved asset quality. NAB said business lending grew 4% and Australian home lending grew 2% during the quarter compared with the quarterly average of the first half. Its net interest margin - a closely watched measure of bank performance which compares interest payments received on loans minus interest paid out to deposit holders - increased by 8 basis points. NAB shares rose by as much as 2.7% to A$40.24, the highest level in three weeks, as the ASX200 (.AXJO), opens new tab was flat. The bank's growing net interest margins and lower short-term funding costs were positive for NAB. Excluding Markets and Treasury, NIM rose 4 basis points, mainly due to higher earnings on replicating portfolios and lower short‑term funding costs. NAB said the ratio of default but not impaired assets to gross loans rose 2 basis points, as Australian mortgage book arrears flattened and ratio trends in the Business and Private Banking segment showed early signs of stabilising. The lender also booked a credit impairment charge of A$254 million in the quarter, mainly related to business lending in Australia and New Zealand and unsecured Australian retail portfolios. ($1 = 1.5352 Australian dollars)
ABC News
a day ago
- Business
- ABC News
NAB flags $130 million hit after underpaying staff, as payroll problems widen
National Australia Bank (NAB) is flagging a $130 million financial hit, revealing it underpaid staff wages and entitlements, as its payroll problems run deeper than first thought. The major bank was warned its operating expenses for the financial year 2025 are now forecast to rise 4.5 per cent from the previous year, due to the cost of reviewing and remediating "payroll issues". It comes more than five years after NAB first commenced a payroll review, which saw the bank repay millions to underpaid staff. In an ASX release, NAB said its "payroll review and remediation is ongoing, and the total costs remain uncertain". NAB chief executive Andrew Irvine said the costs of rectifying and remediating payroll issues were "disappointing" and the issue "must be fixed". The bank's people and culture executive, Sarah White, said: "Paying our colleagues correctly is an absolute priority." "We are sorry and apologise to our colleagues that this has happened and have commenced remediating those impacted." In 2019, NAB launched a payroll review, which cost the bank $250 million between FY2020 and FY2022, while problems were identified with its payroll system. Finance Sector Union (FSU) said it had expressed its disbelief with NAB that "one of the nation's biggest banks has once again failed to pay its workers correctly". FSU national president Wendy Streets said the scale of underpayment was "nothing short of systemic wage theft", especially when Australians are struggling through the worst cost-of-living crisis in decades. The union has demanded that NAB immediately issue an apology and explain how this was allowed to happen. NAB said it had engaged the Fair Work Ombudsman and the FSU and was keeping its employees informed, including contacting those directly affected. The bank does not disclose how many staff have been affected but the payroll review is for its Australia-based colleagues and Australian colleagues working overseas. NAB has reported its quarterly cash earnings of $1.77 billion for the quarter ending this June, 1 per cent lower compared with the quarterly average over the first half of 2025. CEO Mr Irvine said the group's Business and Private Banking business lending grew 4 per cent over the quarter, while Australian home lending grew 2 per cent. Despite the cost blowout for the payroll issue, the CEO said his company "remains optimistic about the outlook" and is "well-placed to manage NAB for the long-term and deliver sustainable growth and returns for shareholders". NAB's share price had risen by 2 per cent to $39.98 per share at 2pm AEST.
Sky News AU
a day ago
- Business
- Sky News AU
National Australia Bank faces $130 million hit over payroll issues during the 2025 financial year, as it works to remediate underpaid staff
National Australia Bank has revealed it put aside $130 million last year to remediate staff members it underpaid, as it announced massive, increased profits for the final quarter of FY25. NAB on Monday announced a problem with its payroll systems had resulted in an undisclosed number of staffers being underpaid, forcing the bank to rectify the issue. It warned operating expenses were expected to be 4.5 per cent higher in the 2025 financial year compared to FY24 due to the issue. The problems reportedly relate to a series of staff benefits not being recognised such as overtime, penalty rates and long-service leave. The bank noted NAB's financial hit could be higher than the $130 million it flagged as total costs remain uncertain. The bank's group executive people and culture officer Sarah White apologised for the issue on Monday. 'Paying our colleagues correctly is an absolute priority,' Ms White said in a release to the ASX. 'We are sorry and apologise to our colleagues that this has happened and have commenced remediating those impacted.' The bank's chief executive Andrew Irvine similarly expressed concern about the payroll issue, labelling it 'disappointing' and saying it 'must be fixed'. NAB said it has engaged with the Fair Work Ombudsman and the Finance Sector Union over the issue. It has also begun a review of payroll benefits and is moving to a new platform for human resources and payroll issues. NAB launched a review in 2019 over payroll issues that forced it to pay $250 million to staff between the 2020 and 2022 financial years. Finance Sector Union national president Wendy Streets said the funds NAB has been forced to return to staffers over the past five years 'should never have been taken from workers in the first place'. 'At a time when Australians are struggling through the worst cost-of-living crisis in decades, this scale of underpayment is nothing short of systemic wage theft,' Ms Streets said in a statement. 'The Finance Sector Union (FSU) has met with NAB, expressing its disbelief that one of the nation's biggest banks has once again failed to pay its workers correctly.' She said NAB needed to explain how the payroll issue happened and said the union will meet with the FSU to demand workers 'will never again be ripped off on this scale'. NAB said the bank was transitioning to a new enterprise bargaining agreement in 2024. The underpayment blow comes as it revealed earning of $1.77 billion for the final three months of the 2025 financial year. NAB's share price is up almost 1.5 per cent as of 12.30pm on Monday.
New Straits Times
a day ago
- Business
- New Straits Times
Australia's NAB flags US$85mil cost increase as staff underpaid
KUALA LUMPUR: National Australia Bank warned its full-year expenses would be up to A$130 million (US$84.7 million) higher after it discovered it had underpaid some of its staff, as it reported a slight increase in third-quarter earnings. NAB, Australia's top business lender, said a review of its payroll systems and remediation was ongoing and the final costs that could be incurred were uncertain. The A$130 million set aside would increase the bank's full-year operating expenses by about 4.5 per cent, NAB said. NAB said the issues were discovered during a payroll review that began in 2019 and it had started a broader review into examining payroll-related benefits given to staff under current and certain historical agreements. NAB did not say how many staff were affected or the value of the discrepancies discovered. "Paying our colleagues correctly is an absolute priority," said Sarah White, NAB's group executive people and culture. NAB chief executive Andrew Irvine said the issue was "disappointing and must be fixed." NAB said it was engaging with unions and the Fair Work Ombudsman while the issue was investigated. The bank reported A$1.77 billion (US$1.15 billion) cash earnings for the three months ended June 30, compared with A$1.75 billion a year ago. The Reserve Bank of Australia has cut interest rates by 75 basis points so far this year and signalled further easing ahead. The lower interest rate environment has aided higher lending volumes and improved asset quality. NAB said business lending grew 4 per cent and Australian home lending grew 2 per cent during the quarter compared with the quarterly average of the first half. Its net interest margin - a closely watched measure of bank performance which compares interest payments received on loans minus interest paid out to deposit holders - increased by 8 basis points. NAB shares rose by 2 per cent to A$39.97 as the ASX200 was flat. The bank's growing net interest margins and lower short-term funding costs was positive for NAB. Excluding Markets and Treasury, NIM rose 4 basis points, mainly due to higher earnings on replicating portfolios and lower short-term funding costs. NAB said the ratio of default but not impaired assets to gross loans rose 2 basis points, as Australian mortgage book arrears flattened and ratio trends in the Business and Private Banking segment showed early signs of stabilising. The lender also booked a credit impairment charge of A$254 million in the quarter, mainly related to business lending in Australia and New Zealand and unsecured Australian retail portfolios.
