The National Australia Bank Ltd (ASX: NAB) share price is down by more than 3% after the ASX bank share announced cost-cutting plans.
Restructuring plan to cut up to 2,500 roles
NAB said that it’s implementing changes as part of a broader review to “identify the nature of the workforce required” for NAB’s strategic ambition in an evolving operating environment.
The ASX bank share said the changes will help make NAB a stronger bank, create capacity for ongoing investment in its strategic direction for customers and support priorities to grow business banking, drive deposit growth and strengthen proprietary home lending.
As part of the plan, NAB said it expects to reduce its internal workforce by up to 2,500 roles, equating to around 6% in FY27. This will include up to 1,500 roles before the end of 2026.
The ASX bank share also said that it will materially reduce its use of consultants and external contractors.
Restructuring cost
The bank noted that it will commence consultation with colleagues and the Finance Sector Union.
It said it will provide departing colleagues with consultation and engagement, redeployment and reskilling opportunities, career transition support, and redundancy entitlements in accordance with applicable industrial instruments and employment obligations.
NAB expects to recognise a restructuring charge of approximately $300 million in FY27, which relates to redundancy, redeployment and organisational redesign costs. That compares to a charge of $80 million in FY25 and FY26.
Management comments
The NAB CEO Andrew Irvine said:
Our ambition and strategy remain unchanged. We will improve productivity, risk outcomes and execution to be a simpler and more efficient bank.
These changes are expected to improve outcomes for customers by reducing duplication and speeding up decision making.
We are particularly focused on reducing the size of corporate functions. There will be no material impact to customer-facing banking roles.
We have also deliberately made deeper changes to senior management positions which will broaden leadership responsibilities across the bank.
This will simplify work between teams and improve cross-functional processes with clearer roles, priorities and accountabilities for our colleagues.
We know this will be a difficult period for our colleagues impacted by these changes as well as the people around them. We will treat every person with dignity and respect.
Final thoughts on the NAB share price
National Australia Bank is doing what it thinks it needs to. It comes at a large cost to the ASX bank share, as well as a personal cost to the members of the NAB team.
In the long-term, this may well help NAB’s net profit, but it’s a hit in the short-term and many investors focus on the next result rather than the longer term.
I wouldn’t say the NAB share price is now at a great price, but it’s cheaper than it was and better value. But, there are other, even more appealing ASX dividend shares I’d rather buy first.
