NAB expects its number of branches to go down as people use them less and prefer the convenience of technology.
NAB CEO Andrew Thorburn said in a radio interview last Friday that although the number will go down, the company will still be opening branches.
Thorburn said the bank has no policy to reduce its number of branches.
“There is a policy to adapt and invest where our customers need us to be and the end result all that will be that some branches get used more and some will get used less and we just deal with that as a business should,” he said.
He said that as the population has moved away from brick and mortar banks, some branches are being used less and less. As a result, transactions are falling.
“However, if you go to the growth corridors in Melbourne and Sydney where there’s more and more population – going back to your first point – we’ll be opening branches there,” he said.
As technology disrupts and transforms its business, NAB plans to invest more in technology in the next three years – earmarking $1.5bn a year, which Thorburn said is 50% more than what it usually invests.
“Our business is going through dramatic change and our customers are demanding simpler and faster services as part of their lives, whether they’re businesses or individuals, and we have to respond to that,” he said.
When asked if the bank is concerned that a rise in interest rates will see people losing their homes, Thorburn said that NAB takes its assessment of borrowers’ capacity to repay their loans seriously.
“That’s obviously a contract and a commitment, they’re taking on debt. But what we do is if it’s a mortgage customer, a home loan customer, we require them to be able to pay a minimum of 7.25%.”
He said that though NAB allows above 80% in LVR for borrowers like young people who are trying to save for their deposit, it is more restrictive now.
“So we will go up to 90%, but we are more restrictive because we don’t want people to over burden themselves,” he said.
NAB recently made a change to its home lending policy amid concerns over the rising household debt to income ratio. From 16 February, the loan to income ratio it uses in its home lending credit assessment has been changed from 8 to 7.
With the change, loan applications with an LTI ratio of more than 7 will automatically be declined or referred depending on the income structure.