‘Conditions are favourable’: NAB chief sees economy in good shape ahead of rate cuts

National Australia Bank chief executive Andrew Irvine says the nation’s economy is in “reasonable shape” and he’s confident of favourable trading conditions in 2025 as interest rates decline.

Addressing shareholders at the bank’s annual general meeting in Melbourne on Wednesday, Irvine – who took up his post in April – said NAB was “optimistic about the longer-term outlook” for the Australian economy, citing its forecast for the Reserve Bank to commence interest rate cuts from the first half of next year and the nation’s strong jobs market.

“Businesses I talk to remain ambitious,” Irvine said. “Conditions are favourable, and the job market is resilient, positioning us well compared with global peer economies.”

Andrew Irvine faced his first AGM as NAB chief executive on Wednesday.Credit: AAP

Financial markets put the chance of an interest rate cut at the RBA’s February meeting at 60 per cent as inflation is easing. The RBA has said key inflation figures due in January, as well as future jobs reports, will be key to when it starts loosening monetary policy.

In his speech, Irvine also reassured mum and dad investors at the meeting that the bank wouldn’t shut busy retail branches. More than 93 per cent of NAB customers conduct their banking online, but he said a strong physical presence remained critical for customers needing in-person assistance.

“While the number of people visiting our branches has decreased, there are times when our customers seek expert advice from our bankers,” Irvine said. “We’re constantly assessing our branch network, our phone and online channels to ensure we are where our customers need us to be.”

One month after the corporate regulator commenced legal proceedings against NAB over claims it failed customers in financial distress and ignored more than 300 vulnerable customers during their time of need, NAB chair Phil Chronican said: “We don’t always get it right, [but] we do take action to resolve issues quickly”.

He used his speech to say the bank had enjoyed “renewed strength, stability and momentum” in the five years since accepting 72 recommendations referred from the banking royal commission, and the two years since implementing stronger anti-money laundering and counter-terrorism financing measures under an enforceable undertaking from AUSTRAC.

Confronting claims from a shareholder that the latest legal action renewed concerns that NAB put “profits over people”, with some of the affected financial hardship customers victims of domestic violence and critical health conditions, he said the bank and its management “really regret that this happened,” calling the issue an “operational mistake”.

“The only consolation I can offer is that I think over that time, there were over 100,000 applications that we dealt with, and there were 345 that we failed to deal with.”

NAB chair Phil Chronican was grilled about NAB’s role in financing fossil fuel companies at the bank’s AGM.Credit: Louise Kennerley

While ratifying changes to the NAB board and remuneration reports for its top executives, shareholders knocked back a resolution that would have given investors power to advise on and monitor the board’s dealings with fossil fuel companies, as an accountability tool to support NAB’s environmental goals.

The resolution was filed on behalf of more than 100 shareholders by environmental non-profit organisation Market Forces. Addressing the board at the AGM, Market Forces senior banking analyst Kyle Robertson said shareholders had been left in the dark on NAB’s plans to finance fossil fuel companies now and in the future.

“Unless NAB requires its clients to demonstrate Paris [agreement] alignment, banks’ historical financing activity indicates that it will continue providing finance to companies misaligned with the Paris climate goals,” Robertson said.

“There is a clear recognition from the bank that fossil fuel expansion is incompatible with local climate goals … however continuing to arrange corporate finance or bonds for the same companies developing those projects is a substantive loophole.”

Ninety-five per cent of voters opposed the motion, after the board warned that the proposal was “likely to disproportionately favour activist shareholders who have a practice of requisitioning special interest resolutions”, and recommended voting against it.

Among the handful of attendees supporting the resolution was NAB customer Peter Lake, a farmer from northern NSW whose insurance has become unaffordable after a series of flooding events on his property.

“Record floods and droughts have impacted my business, and I’m deeply concerned that it will continue to get worse and become harder to adapt to. Your financial support for companies developing new coal, oil and gas projects is completely at odds with your support for Australian farmers,” Lake told Chronican.

Chronican said shareholders held “several” avenues to raise concerns about the company’s practices, other than the knocked-back resolution.

“The bank can’t change the climate,” he said. “But what we can do is adjust our lending so that it’s commensurate with what the economy needs to look like as we move to net zero.”

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