NAB rethinks pricing options

National Australia Bank may be looking to lift margins on many core products as its searches for a story that will convince investors to reconsider their analysis of the bank.

In an interview with the Sydney Morning Herald, published on Saturday, NAB CEO Andrew Thorburn said: "We need to get the capital out (of the underperforming assets, such as in the UK) and deploy it in the business bank.

"It's driving us to get sustainability of returns so investors have confidence that investing in our company is going to produce long-term good quality returns in a business that's really differentiated, such that we can't be beaten just on simple things like price."

Thorburn told the newspaper that NAB's strategy was to focus on five key customer segments.

"They are growing segments and we are good at them," he said.

"The five segments we have chosen are mortgage customers, because that is the critical product that enables you to build loyalty and relationship with the client.

"The second is debt-free customers that are accumulating savings for retirement; then there are three business segments, micro, small and then medium (which is up to A$50 million turnover).

"This is the heartland of Australian and New Zealand business."

Thorburn acknowledged NAB's weak points in an interview aimed to shape thinking ahead of the release of the bank's half-year profit on Thursday.

"Our wealth business - particularly insurance - has a low returning component (and) we need to address that. My job is to assess that full-on thoroughly, properly and (based on) sustainability because we can't have capital invested in single-digit returns when the cost of capital is higher."

Of the controversies around financial planning, Thorburn said: "We have had some planners that have not delivered the service that meets our standards … we don't believe we have a systemic issue in that business and where the planners haven't met our standards of professional conduct, we got rid of them. We will keep doing that.

"We had some small limited elements of incompetency and some elements of deceit. That's not the norm, it's an exception, and we will keep finding them and dealing with them if we have to."