Just minutes after announcing the departures of its chief executive, Andrew Thorburn and its chairman, Ken Henry the National Australia Bank (NAB) released a first quarter trading update revealing a three per cent decline in cash earnings to $1.70 billion.
While the bank’s most senior personnel were confirmed as heading for the exit, the quarterly report made clear that the costs to NAB flowing from fee for no service and other issues were ongoing with final remediation yet to be determined.
As well, NAB pointed to the likelihood of having to delay its sale of MLC wealth.
The commentary within the trading update was provided by NAB chief financial officer, Gary Lennon who noted, “the Royal Commission’s Final Report is comprehensive and will bring the necessary change for our bank and industry to be better”.
Lennon’s commentary also pointed to customer remediation programs and regulatory compliance investigations continuing “with potential for additional costs, although amounts and timing remain uncertain”.
On the question of exiting the MLC business, the quarterly update said that the MLC wealth management business had achieved good momentum under new leadership with recent fee reductions being one of many underway to reposition the business.
However, it noted that the Royal Commission recommendations had impacted the sale of the MLC business and that “the current regulatory and operating environment for wealth businesses remains challenging and a delay of the intended public markets exit of MLC to FY20 is now likely”.
It said NAB retained the flexibility to consider trade sale options and would take a disciplined approach to the exit of MLC executing a transaction at the appropriate time.