Thanks Mr Coleman and members of the Committee for having us here today.
As I was last time, I’m joined by Antony Cahill our Chief Operating Officer.
A lot indeed has happened since we were here last time. In our industry, in our economy and importantly, around the world.
In my opening comments I’d like to cover three points.
Firstly, to demonstrate that we’ve been listening to our customers and we’ve been taking action.
Secondly, that accountability and consequences are being taken seriously; and thirdly, that given the uncertain global environment, the changing economic and political risks, what do we need to focus on together to create a better Australia.
I often say to our people that CEO stands for customer, employees, owners, in that order.
Customers are our lifeblood; without customers, we have no bank. More than this, we strive for our customers to trust and respect us.
When I started in banking 1986 this was the ethos. We listened to customers, we cared about customers, we did the right thing. And now, 2017, 30 years on, we still have the same ideals.
As a profession we’re working hard to demonstrate we’re acting for customers.
Since I was here last, at NAB we have continued to implement positive changes and I’d like to cover some of those.
We’ve added our Independent Customer Advocate for banking to complement the Independent Customer Advocate we have in wealth.
We’ve fixed a further 50, what we call customer pain points, to make it easier and simpler for our customers and this adds to the 120 we’ve made in the last two years.
We’ve strengthened further our whistleblower program, including having it managed independently of the bank.
We’ve rewritten 289 letters in plain English that go to 3.1 million customers.
Further product enhancements have occurred including our new mobile app and QuickBiz which is an unsecured business loan for our business customers.
We’ve enabled customers to be able to close their credit card online and we’ve continued to implement our wealth initiatives including reporting planners who breach our code of conduct immediately to ASIC, resolving customer complaints within 45 days and increasing significantly our compliance monitoring.
Also we’re part of a broader profession and banking industry that is also doing more. We have six initiatives as an industry, they’re in major areas; product commissions, dispute resolution, whistleblowing, removing individuals from the industry for poor conduct, revising the code of banking practice and supporting ASIC.
There’s a significant degree of independence and rigour in all those reviews, including Ian McPhee’s report, Stephen Sedgwick’s report and Phil Khoury’s work on the code of banking practice.
We have said, at NAB, we will implement the Sedgwick recommendations on remuneration when the final report is released. And also Mr Chairman, yesterday we provided a response to the Coleman Report and to the Carnell Report for the Committee.
Accountability; accountability is a fundamental principle in our bank. It’s my role to make sure that executives know what they’re accountable for and what behaviour is expected of them. This is then cascaded all the way down through the bank.
We have four key accountability areas. These are consistent through our company. The four are: customers, risk management, financial performance and team or people.
In addition to that, wrapping around it is our company values and our code of conduct. Feedback is then provided to people on a monthly basis and then at the half way point and at the full year we wrap that all up in a rigorous, disciplined and serious way.
But there are consequences for people if our behavioural standards are not met.
Since I was here last, we’ve completed our financial year 2016 year and over that year there were 1138 people in our bank who were deemed to have not met our code of conduct.
This follows a discipline review in every case by a specialist team that we have. The consequences for those people ranged from a formal warning, through to dismissal. It also involves a reduction or elimination of any bonus.
Of the 1138 there were five senior managers – two were dismissed, and three faced other disciplinary action.
We also went back and looked at issues over the past two years, applied this standard and we’ve taken similar action against 48 additional people.
Also, since we were here last we’ve made it a formal policy in the bank, that any prudential breach must be investigated by a dedicated and specialist team.
The message here to all our people is that we are in a position of trust. We have high standards, they are expected to be met and if they are not there are consequences.
Also since we were here last, the world has continued to change. We must be prepared for what lies ahead because it will be increasingly uncertain.
There are numerous elections in Europe this year. The Trump administration impacts are still to play out, particularly in relation to China, our largest trading partner, and the IMF said in January that there is a wider than usual range of upside and downside risks at play. And these risks are in addition to new and emerging risks, such as cybercrime.
I believe we must work together to present a clearer and more inspiring future for Australians.
Recent research that we did with our customers revealed some interesting statistics.
For example, 90 per cent of them think Australia is a great place to live today, but only 50 per cent think it will be in ten or so years. Eight-two per cent of businesses think that Australia is a great place to run a business today, but only 60 per cent think it will be in a decade.
So working together means business, government, politicians, government departments, the private sector, the public sector. Because if there was ever a time for us to work together, it is now, because there is a lot at stake here.
Our sector, the Australian banking sector, helps to safeguard Australia from this uncertainty. It helps make the economy stronger and it helps it grow.
Since I was here last, at NAB we have borrowed $10.6 billion from offshore markets and we are now lending this directly to Australian households and businesses. We have also lent, since we were here last, over $13 billion to the household sector and a further $10 billion to business.
Together, I believe we should be speaking for our banking sector, because the supply of overseas funds depends on their confidence in our strengths. So our balance sheet, our capital, our profitability and yes, our reputation, depends on that.
And we need to take action together to make it easier for Australia to grow.
Each of these are difficult issues, but this is our collective challenge – to restore the federal budget in a sustainable way, to build infrastructure together so that we can support our growing population, to reform the tax system to make it more competitive and much simpler, and to simplify regulation so that businesses can actually do what they need to do much more easily.
So in closing, committee members, thank you for listening. I’m committed to our bank being a better bank for customers, and for Australia.
We have a good base, we are not complacent, but we are continually implementing improvements.
Australia does have a strong banking system and this is vital, given the rising economic and political uncertainty around the world. Because strong banks enable a strong economy.
I really hope we can work together, to face into the real issues that exist in our economy, and implement the right change to create a stronger Australia.
We now look forward to your questions and our conversation. Thank you.