NAB flags $130m hit from ‘payroll issues’, including wage underpayments
By Clancy Yeates
National Australia Bank has revealed a fresh wave of underpayments of wages and staff entitlements, saying it would cost about $130 million to deal with the payroll problems and vowing to investigate further and fix the issue.
The bank on Monday apologised to staff and raised its expense guidance, adding it had launched a broader review into “payroll-related benefits” under current and some historical enterprise agreements. It was too early to say how many staff had been affected by the latest underpayments, the bank said.
NAB revealed the latest underpayment problems as it announced it made almost $1.8 billion in the June quarter.Credit: Bloomberg
News of the latest $130 million in costs – which include the review and paying back staff – comes after an earlier NAB payroll review that incurred costs of $250 million between the 2020 and 2022 financial years.
NAB said it had been investing in new human resources systems and processes. As part of this work, it had identified the latest problems with its payroll arrangements.
NAB’s group executive for people and culture, 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.”
Finance Sector Union national president Wendy Streets slammed the bank, urging it to explain how the underpayments had occurred.
“NAB has been forced to make provisions of nearly $400 million to pay back its workforce over the last five years – money that should never have been taken from workers in the first place,” Streets said.
“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.”
The increase in cost guidance was announced in NAB’s third-quarter trading update on Monday, which said the bank made almost $1.8 billion in the three months to June, a flat performance compared to a year earlier.
The update follows a period of public scrutiny of CEO Andrew Irvine, after a report in The Australian Financial Review last month that major investors had raised concerns about his management style and drinking at customer meetings and events with bank directors.
Irvine said at the time that it had been a difficult period for him and his family, and he would not change the amount of time he spent with customers, as this was a key part of the job.
Monday’s update said NAB’s flagship business banking arm grew its loans by 4 per cent in the quarter and posted its highest-ever monthly lending balance growth of $4.6 billion in June. NAB’s home lending grew by 2 per cent, in line with the market average.
Citi analyst Thomas Strong said the market would probably view the payroll problems as a “one-off”, and the bank’s underlying costs appeared to be well managed.
NAB shares were 1.5 per cent higher in afternoon trade.
Irvine said the bank still expected to deliver “productivity savings” of more than $400 million over the 2025 financial year, which ends in September for the bank.
“We remain optimistic about the outlook and are well-placed to manage NAB for the long term and deliver sustainable growth and returns for shareholders,” Irvine said.
While NAB’s profits were flat compared with a year ago, they fell by 1 per cent compared with the quarterly average for its first half, as bad debt charges rose. Strong said the bad debt charge was slightly higher than markets had expected, but cautioned that quarterly movements in bad debts could be volatile.
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