Among the bombshells in the release was the exploding scale of an underpayments problem.
Twelve months ago the bank revealed it was investigating a payroll blunder that was responsible for short-changing 730 NAB employees about $850,000. The number had grown to 1500 staff and $1.3 million by June.
Now the bank says its best estimate for the underpayments, which stretch back to October 2012, is $128 million before tax or $90 million after tax. The bank did not disclose how many employees the bank has underpaid.
The Financial Review understands the bank is analysing millions of time sheets and pay slips to ensure they accurately reflect and record nearly different 800 wage codes used by the bank.
Refunds by year’s end
Among the issues being explored by the bank are premium rates, shift loadings, rostered days off, flexible working arrangements, allowances and public holidays.
Mr McEwan apologised for the errors saying the bank was committed to paying its employees a fair salary and hoped to wrap up the lion’s share of the refunds by the end of this year.
“We are moving as quickly as possible to find and fix these issues and want to make sure we get this right. As we have said previously, these issues are not acceptable,” Mr McEwan said.
The big-ticket item on the profit hit-list, however, was rising and continued remediation to banking and wealth customers, which came in at $380 million before tax or $266 million after tax.
Among the reasons for the rising bill are more instances of customers receiving non-compliant advice and rising program costs.
NAB is now refunding more than half of every dollar paid by customers to its employed planning force.
“Until all customer payments have been completed, the final cost of customer-related remediation matters remains uncertain,” the bank said.
The bank also revealed that it was going to wear a considerable impairment to property assets of $134 million before tax or $94 million after tax following the decision to mothball two purpose built buildings in Docklands leased to it by GPT and AMP Capital.
“This primarily relates to plans to consolidate NAB’s Melbourne office space, with more colleagues expected to adopt a flexible and hybrid approach to working over the longer term,” the bank said in its announcement.
Mr McEwan said the bank expected the need for more flexible working arrangements would continue, but he was looking forward to a return to the office.
“I do want us to return to work in our commercial buildings when it is deemed safe to do so and in a way that gives colleagues more flexibility than pre-COVID working,” he said.
The bank’s office staff are now entirely concentrated in its 500 Bourke Street offices, which are leased by ISPT.
Earlier this week, UBS analyst Jon Mott forecast a full-year profit of $3.66 billion for the full year and $2.22 billion for the second half.
The result will be watched closely for signs of deterioration in the bank’s loan book because of its exposure to Victoria and what analysts perceive to be a slightly lower provision for losses from COVID-19.
NAB shares were unaffected by the announcement and rose in line with its peers, up 0.4 per cent as of 1.30pm.