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NAB slashes dividend as profits slump

Business

NAB will pay a reduced final dividend after its full-year profit dropped 10.6 per cent to $5.1 billion, dragged down by its retail and wealth unit plus $1.1 billion in customer remediation provisions.

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The lender said Thursday it will pay a fully franked final dividend of 83 cents – down from 99 cents a year ago – mirroring the cut to its interim payout in May for a 16 per cent fall in its full-year payout.

Stripping out the cost of customer remediation and a software overhaul, the bank’s profit fell by 8.6 per cent to $8.2 billion as revenue for the 12 months to September 30 fell by 4.2 per cent to $17.2 billion.

In line with its major rivals, NAB cited record low interest rates and a weak operating environment for the “disappointing” result, with its consumer banking and wealth division copping the biggest hit on impairments.

NAB have now provisioned a total $2.1 billion to right past misdeeds including fees for no service and credit card insurance, and say they now have more than 950 people dedicated to remediating customers.

Interim chief executive Phil Chronican said NAB’s executive management will receive no short-term bonuses and no raise after what was his last result before handing over to former Royal Bank of Scotland boss Ross McEwan.

“This year has been very challenging, requiring significant actions for us to deal with past issues and make real changes aimed at earning trust with customers and the community,” Chronican said on Thursday.

NAB’s net interest margin – the difference between the interest it earns from loans and what it pays to fund them – declined seven basis points to 1.78 per cent.

NAB shares were worth $27.80 before trade on Thursday, up 15.5 per cent for 2019.

-AAP

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