NAB to take $130 million hit as yet more staff underpayments uncovered

National Australia Bank will put aside another $135 million to cover yet more staff underpayments uncovered by a widening payroll review that is already six years old.

Announcing quarterly results on Monday, NAB flagged a 4.5 per cent increase in this financial year’s operating expenses to meet “further payroll issues” identified by the review.

The probe was launched in 2019 to initially look into how 730 NAB employees were short-changed about $850,000, but it has since exposed widespread underpayments across the bank that have already cost it hundreds of millions of dollars.

NAB, which has invested in a new payroll platform, on Monday said it now expected to spend $130m for the 2025 financial year on the review and “remediation of payroll issues”, including $45m booked in the first half, but warned the bill could go even higher.

The latest hit is on top of the $250m of repayments and other costs incurred between 2020 and 2022 alone.

“This ongoing review and investment and the work undertaken to transition to a new (staff) enterprise agreement has helped identify further payroll issues,” NAB said.

“As a result, NAB has initiated a broader review into payroll-related benefits under current and certain historical agreements.”

NAB said the “review and remediation is ongoing and total costs remain uncertain”.

The bank’s group executive of people and culture, Sarah White, insisted “paying our colleagues correctly is an absolute priority”.

“We are sorry and apologise to our colleagues that this has happened and have commenced remediating those impacted.”

NAB’s results for the three months to June 30 showed the still growing underpayments problem contributed to a flat cash profit of $1.8 billion for the period, lower than its first-half average.

Revenue was 3 per cent higher, with business and private banking growing 4 per cent. including record June monthly business lending balance growth of $4.6b. However, that was offset by increased impairments of $254m and a 3 per cent increase in expenses.

Home lending improved 2 per cent over the quarter, while deposits growth was flat but stood at 6 per cent for the first nine months of the 2025 year.

Operating expenses are tipped to grow 4.5 per cent for the year. “This includes costs associated with a program to identify, rectify and remediate payroll issues ... which is disappointing and must be fixed”, NAB chief executive Andrew Irvine said.

Citi analyst said the update on the underpayments would likely treated as a one-off by investors, adding that the lender’s underlying costs looked well managed.

“With regards to asset quality, given the volatility in bad and doubtful debt prints between the first and second quarters, we expect the market will reserve judgement until the end of the second half of this year when management update provisioning,” Citi said.

NAB shares were 2 per cent higher near their day’s high at $40.01 as at 1.20pm.