New NAB chief says bank must lift its game, tells senior execs 'fear me'

National Australia Bank's new chief executive Ross McEwan says the bank must lift its game and has told senior executives to "fear me" if they have deliberately ripped off customers, as the lender tries to regain public trust after a run of scandals.

With some investors keen to see Mr McEwan ramp up cost-cutting against a soft profit backdrop, the NAB chief also signalled he would have a "very strong" look at the bank's costs, in order to deliver shareholder returns.

NAB chief executive Ross McEwan.Credit: Brendon Thorne

In his first detailed public comments since starting as CEO earlier this month, Mr McEwan on Wednesday told shareholders at an annual general meeting that NAB needed to get the "get the basics right,” which included a sharper focus on customers.

A day after the corporate cop launched legal action accusing NAB of more than 12,000 breaches over the "fees for no service" scandal, Mr McEwan said some problems it faced were "not acceptable."

Amid a wider debate about the need to hold people in banks responsible for scandals, Mr McEwan said he and the board would focus "very strongly" on ensuring there was accountability. But he said this should be done in a "fair and even-handed" way, warning that being overly punitive would deter people from working in banks.

“I’ve said this to our senior team: ‘If you’ve done your best, you’ve thought about the activity, you’ve made a decision, it won’t be me that will come after you on that decision, as long as you’ve thought about it and done your best," he said.

“But if you’ve gone out and taken money out of a customer’s pocket, by way of bonuses or any other [way] and put it in your pocket, yes you should fear me.

"So there’s quite a distinction in the way I think about it because I want our people and our colleagues in this bank to actually be moving forward with the bank and trying to make changes for the good.”

Mr McEwan made the remarks after NAB avoided a second "strike" on executive pay, after last year's record-breaking shareholder backlash against its remuneration report. There were 97 per cent of votes cast in favour of the remuneration report, compared with an 88 per cent vote against last year.

Earlier, Mr McEwan reiterated NAB would have its work cut out in rebuilding its standing, after a tumultuous period. Addressing about 200 shareholders at the meeting, Mr McEwan acknowledged there had been "unacceptable" failings at the bank.

"On the barometer of reputation, in recent years, including through the royal commission, it is clear NAB has lost a lot of trust and respect.

Mr McEwan, a former Royal Bank of Scotland CEO, outlined five focus areas for the bank. These were to get the simple things right for customers; to ensure the bank's strength; to make NAB "a good place to work"; to make it easy for customers to do business with the bank; and to grow.

With bank profit margins under pressure from falling interest rates, he acknowledged this pressure and said it meant lenders were looking at costs.

"You’re seeing the interest rates coming down, that hurts all banks, not just this bank, but it hurts all banks. And at that time if you do want to give a reasonable return to a shareholder you’ve got to have a very strong look at your costs,” he said.

NAB chairman Phil Chronican faced several questions from shareholders over the Australian Securities and Investments Commission's (ASIC) lawsuit lodged against the bank, which could theoretically attract a maximum penalty in the billions of dollars. Mr Chronican responded that while it was "possible to extrapolate and get a very large penalty" based on the law, he said "the substance of what’s been alleged is materially less."

NAB shares fell 0.7 per cent to $25.30.