NAB blames old guard for poor result
(16 November 2004 – Australia) Organisational complexity and a silo approach to doing business were two of the cultural reasons cited by National Australia Bank chief executive John Stewart for the bank’s poor full year result.
The bank pinned the blame on the previous regime under Frank Cicutto for its cash earnings for financial year 2004 dropping 15 percent to A$3.46 billion.
In announcing the result, which he described as "unacceptable", Stewart said organisational complexity had increased the underlying cost structure of the business and adversely affected the ability of management to plan accurately and focus on key business drivers.
"A silo approach to doing business also restricted our ability to meet all the financial services needs of our customers, and complex and overly tight lending policies resulted in us missing good business opportunities," Stewart said.
"The lack of a clear cultural framework, over reliance on voluntary culture change programs, and lack of visible leadership undermined employee morale and productivity which damaged customer relationships."
He said the bank’s performances in each of its businesses would improve over the next year as new practices were put in place. But he said expenditure was locked in and it would take time before these changes began to bear fruit.
"We expect our earnings decline to bottom in the first half of 2005 and return to an acceptable growth profile over the second half and into 2006. On this basis, it is currently expected that the existing dividend should be maintained in the first half of 2005," Stewart said.
NAB said it experienced drops in market share in most areas over the second half of 2004. Businesses lending volumes grew in the second half but were below the growth rate of the bank’s peers.
In announcing the result, which he described as "unacceptable", Stewart said organisational complexity had increased the underlying cost structure of the business and adversely affected the ability of management to plan accurately and focus on key business drivers.
"A silo approach to doing business also restricted our ability to meet all the financial services needs of our customers, and complex and overly tight lending policies resulted in us missing good business opportunities," Stewart said.
"The lack of a clear cultural framework, over reliance on voluntary culture change programs, and lack of visible leadership undermined employee morale and productivity which damaged customer relationships."
He said the bank’s performances in each of its businesses would improve over the next year as new practices were put in place. But he said expenditure was locked in and it would take time before these changes began to bear fruit.
"We expect our earnings decline to bottom in the first half of 2005 and return to an acceptable growth profile over the second half and into 2006. On this basis, it is currently expected that the existing dividend should be maintained in the first half of 2005," Stewart said.
NAB said it experienced drops in market share in most areas over the second half of 2004. Businesses lending volumes grew in the second half but were below the growth rate of the bank’s peers.
Subscribe