National Australia Bank (NAB) has announced a significant financial setback, revealing a $130 million hit due to underpayment of staff wages and entitlements. This revelation highlights deeper payroll issues than initially anticipated.
The bank has warned that its operating expenses for the financial year 2025 are now projected to increase by 4.5% compared to the previous year. This rise is attributed to the costs associated with reviewing and remediating these “payroll issues.”
This development comes more than five years after NAB first initiated a payroll review, which led to the repayment of millions to underpaid staff. According to an ASX release, NAB stated that its “payroll review and remediation is ongoing, and the total costs remain uncertain.”
Historical Context and Ongoing Challenges
The payroll problems at NAB are not new. In 2019, the bank launched a comprehensive payroll review that cost $250 million between FY2020 and FY2022. Despite these efforts, issues within the payroll system persisted, necessitating further action.
NAB’s chief executive, Andrew Irvine, expressed disappointment over the situation, emphasizing the necessity of resolving these issues. “The costs of rectifying and remediating payroll issues are disappointing, and the issue must be fixed,” he stated.
Sarah White, NAB’s people and culture executive, reinforced the bank’s commitment to addressing the problem. “Paying our colleagues correctly is an absolute priority,” she said. “We are sorry and apologize to our colleagues that this has happened and have commenced remediating those impacted.”
Industry and Union Reactions
The Finance Sector Union (FSU) has voiced strong criticism of NAB’s repeated payroll failures. FSU national president Wendy Streets described the scale of underpayment as “nothing short of systemic wage theft,” especially during a period when Australians are grappling with a severe cost-of-living crisis.
“NAB has been forced to make provisions of nearly $400 million to pay back its workforce over the last five years — money that should never have been taken from workers in the first place,” said Streets.
The union has demanded an immediate apology from NAB and a detailed explanation of how these issues were allowed to occur. In response, NAB stated it has engaged with the Fair Work Ombudsman and the FSU, keeping its employees informed and contacting those directly affected.
Financial Performance Amidst Challenges
Despite the payroll challenges, NAB reported quarterly cash earnings of $1.77 billion for the quarter ending in June, marking a 1% decrease compared to the quarterly average over the first half of 2025. CEO Irvine noted that the group’s Business and Private Banking business lending grew by 4% over the quarter, while Australian home lending increased by 2%.
In a statement, Irvine expressed optimism about NAB’s future prospects, despite the current financial setbacks. “The company remains optimistic about the outlook and is well-placed to manage NAB for the long-term and deliver sustainable growth and returns for shareholders,” he said.
NAB’s share price had risen by 2% to $39.98 per share at 2pm AEST.
Looking Ahead
The ongoing payroll issues at NAB underscore the complexities of managing large-scale financial operations and the critical importance of accurate payroll systems. As NAB continues its remediation efforts, the bank’s ability to restore trust among its workforce and stakeholders will be closely watched.
Moving forward, NAB’s engagement with regulatory bodies and its transparent communication with affected employees will be essential in navigating this challenging period. The bank’s commitment to resolving these issues and preventing future occurrences will be pivotal in maintaining its reputation and operational stability.
