NAB announces items impacting 2H20 results and change in Wealth reporting
NAB Group CEO Ross McEwan has today written to colleagues regarding items that will impact NAB’s financial results, which will be announced on 5 November 2020.
You can read his statement below:
I want to update you regarding items that will impact our financial results, which will be announced on 5 November 2020, and may have some impact for you.
Firstly, I understand it is a public holiday in Victoria and many of our colleagues may not see this note on the day of the announcement. However, NAB made an ASX announcement following a Board meeting this morning, and I wanted you to be aware of this as quickly as possible.
Today, NAB notified the market of items that will impact our second half 2020 (2H20) and therefore, our full year results. These include:
- a net increase in provisions for customer-related remediation matters of $380 million before tax ($266 million after tax), of which:
- $245 million before tax ($172 million after tax) is for Wealth-related matters (now included in Discontinued Operations); and
- $135 million before tax ($94 million after tax) is for Banking-related matters (included in Cash earnings);
- a net increase in payroll remediation provisions of $128 million before tax ($90 million after tax); and
- an impairment of property-related assets of $134 million before tax ($94 million after tax).
In relation to payroll remediation, this is based on our payroll review program for our Australian-based colleagues and international assignees as outlined to you in June 2020 and after we first advised you of issues in December 2019. The amount of the provision announced today is an estimate for the purpose of our end-of-year financial results, as the final impact cannot be determined with certainty until the remediation program is completed. The review is comprehensive and complex which means that the data required to be analysed to identify and fix issues is substantial. The issues largely stem from a lack of appropriate investment, governance and oversight over time, resulting in a payroll system not fit for purpose.
This review is to ensure we are paying our colleagues correctly at all times. The review is focussing on the period from 1 October 2012 onwards.
We are committed to pay any money owed as soon as practicable after we complete the investigation on an issue, and this will mean payments may be progressive for colleagues and former colleagues. Some colleagues may receive notification of more than one payment through the lifecycle of the review, with an aim for initial tranches of payments to be made by the end of this calendar year. NAB is aiming to finalise the investigation on a number of matters from the Review by the end of the 2020 calendar year. Some matters may likely continue into 2021.
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. This again demonstrates the importance of getting the basics right and the impact on people and our business when we don’t.
In relation to the Melbourne office space impairment, 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. 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.
We are focussed on determining how we give colleagues more flexibility on where and how they work. At the same time, we want to get the best of our working together and building a high performance culture that fits with our strategy, innovating for the future with pace of execution.
We will communicate more detail on this early next week.