Not an easy needle to thread: NAB CEO on interest rates and the economy

Feature image above: NAB Group CEO Andrew Irvine

10 May 2024
Economy and Markets  Interest Rates

Following reporting of NAB’s 2024 Half Year results last week, NAB Group CEO Andrew Irvine reflected on the economy and NAB’s strategy.

Large sectors of the economy are doing well

“Right now, the Australian economy, and to some extent the global economy, are actually proving to be pretty resilient and are, if anything, performing better than our expectations,” Mr Irvine said.

“Minerals, agriculture, defence, healthcare, components of manufacturing being brought back onshore – these are large portions of the Australian economy doing really well, and they don’t get celebrated enough.”

This week the RBA held the cash rate at 4.35%. When asked about the cash rate, Mr Irvine said the recent performance of Australia’s economy could mean rates take longer to go down.

“The resilience of the Australian economy is why inflation is proving to be a bit stickier,” he said.

“The problem with a more resilient economy is that central banks, not just in Australia but globally, need to make sure inflation is under control before they can reduce rates.

“That is not an easy needle to thread.

“Our current view is we won’t see rates go up, hopefully that gives some comfort to people. But it will still be a while until we see them come down.”

Connecting with customers and colleagues

In his first month as CEO, Mr Irvine said he had spent the majority of his time meeting with customers and colleagues.

“My priority has been listening to customers and colleagues to get a sense as to how we are going, what’s working and where we can do better,” he said.

“I’ve visited just about every floor in our offices in Melbourne, Sydney, Brisbane and Auckland.”

Mr Irvine shared that during the coming months, he would consider where NAB needed to evolve based on what he had seen and what was happening in the external environment.

“I do not expect there to be any major pivots, but two areas of focus will be greater customer centricity and ongoing simplification in our business,” he said.

“We’re focused on being really good for customers every single day, and being a great bank for relationship bankers who want to build a career.”

Mr Irvine said simplification was a win-win for customers and the bank.

“The simpler we are, the better we will be for customers,” he said.

“Getting rid of practices, processes, policies that get in the way of our bankers doing their best for customers and where possible, automating and digitizing as well. That’s what this is about.

“I think often there’s been a paradigm that reducing cost comes at the expense of customer experience and I don’t buy that. I think if you do things faster and safer, you can delight customers and it will be more cost effective to deliver the service as well.”