National Australia Bank's business banking strategy came in for plenty of scrutiny when the bank presented its 2013/14 financial report at an investor briefing yesterday.Business banking accounts for more than 40 per cent of the bank's earnings and has been its powerhouse for many years. But, in the year to September, the division's net interest income fell, its net operating income was flat, its net interest margin fell, its expenses were up and its cash profit rose by just 3.3 per cent.Business lending volumes also fell and the division lost market share in both lending and deposits.The business division contributed A$2.5 billion to the group's cash profit of $5.9 billion for the year to September.NAB's executive director of finance, Mark Joiner, said: "The business bank contribution was modest. The key issue is weak volumes resulting from subdued demand."Joiner said the bank had chosen not to participate in increased price competition in the business lending market. Instead, it had concentrated on improving the asset quality in the division, which led to a significant reduction in the bad debt charge. The proportion of the business loan portfolio rated "investment grade equivalent" rose from 47 per cent to 49 per cent.It also made structural changes to the business, centralising administration, with the aim of allowing business bankers to spend more time with their customers.NAB's chief executive, Cameron Clyne, said: "There is not a lot of revenue growth in any business bank at the moment. Some have dropped standards. "We will continue to protect the franchise and look to grow, but we will be very disciplined. There has been a softening in credit risk appetite. We have chosen not to get into that."The critical thing in business banking is that it is a relationship franchise. We have more points of presence. We have more insight than others. What will drive growth is a pick-up in credit growth. If it comes back in 2014 we are exceptionally well positioned."According to Roy Morgan Research, NAB makes the greatest use of business relationship managers among the big banks. Over half of its business customers (52.9 per cent) have a relationship manager, compared with 36.1 per cent for Westpac, 34.2 per cent for ANZ and 28.7 per cent for Commonwealth Bank.Clyne said: "We are confident that the lift in business confidence, which is at a three-and-a-half year high, will lead to higher activity next year."We have made changes to our operating model and we are well placed for an environment that picks up."