National Australia Bank said it would axe 4,000 jobs — about 12 per cent of its workforce — over the next three years in an effort to automate and simplify its business using new technologies.
The Australian lender announced the job cuts on Thursday as it reported a cash profit after tax of A$6.6bn ($5.1bn) for the 2016-17 financial year — a rise of 2.5 per cent on the previous year. The performance was boosted by growth in home and business lending and stronger markets and treasury income. “As we simplify, we automate processes and things move to digital channels, we will need less people and as that happens we estimate that there will be 6,000 less people needed in three years’ time,” said Andrew Thorburn, NAB chief executive. “Having said that, we’re hiring 2,000 people with different capabilities: data scientists, AI, robotics, automation, technology people, digital people, so the net [loss] will be 4,000 and that’s just a reshaping that’s going to happen.” Shares in NAB fell as much as 3 per cent to A$31.81 in early trading on an otherwise flat ASX. NAB’s job cuts follow a global pattern as lenders introduce new technologies such as artificial intelligence to replace customer support staff and digital channels that eliminate in-branch jobs. In September Vikram Pandit, who ran Citigroup from 2007 to 2012, joined a chorus of industry leaders predicting disruption when he forecast 30 per cent of banking jobs could disappear over the next five years because of technology.
NAB said it would invest an extra A$1.5bn in new technologies and products to the end of 2020 in a bid to boost growth, particularly at its business and private banking units. Mr Thorburn said digitisation, fintech and new global banking players were entering NAB’s market and it needed to adapt, particularly in the face of an uncertain global economy. “I’d rather face into this environment from a position of strength — and we’re in that position today — rather than drift into it or someone else forces us to do it,” he said. NAB said the outlook for Australia and New Zealand economies remained supportive of solid growth. “Some slowing in the housing cycle and a moderation in housing credit is expected, but downside is likely to be limited by strong population growth and low unemployment,” said the bank. The net reduction in employee numbers will cost the bank A$500m-A$800m in the first half of 2018. NAB said it was targeting cost savings of more than A$1bn by the end of 2020. NAB’s net interest margin fell 3 basis points in the 12 months to end September, compared with the same period a year earlier. Net operating revenues grew 2.7 per cent to A$17.89bn. UBS said the result was “solid” but that the bank had flagged higher than expected costs in coming years.