National Australia Bank chairman Michael Chaney has backed the financial system inquiry's move to create a stronger financial system by having banks hold more capital to provide a bigger buffer against a crisis.
In comments to the bank's annual general meeting in Brisbane on Thursday morning, Mr Chaney said David Murray's inquiry "has been a necessary and important process and we fully support initiatives that create a more efficient and stronger financial system".
He told shareholders the inquiry process was not over and NAB continues to be actively involved in the debate.
"We believe our balance sheet strength positions us well to meet regulatory changes and we look forward to continuing to work with government and regulators to ensure Australia continues to enjoy the benefits of a world class financial system while avoiding impediments to economic growth," he said in his prepared remarks.
In response to a question from the floor about the impact the report will have on the bank, Mr Chaney said: "We will all be effected by the outcome of the Murray report, but we don't see it as something of concern to us, because we are very well capitalised, and our insurance and super businesses are running in an ethical and straightforward way. We are in good shape."
"I think it is a very good report," Mr Chaney said.
The comments suggest NAB may be less aggressive than some of its competitors in opposing the Murray report. Last Friday, Westpac chairman Lindsay Maxsted criticised the inquiry for not devoting enough attention to how Australia funded itself over the economic cycle.
Mr Chaney described 2014 as a year of "mixed fortunes" for NAB shareholders. Australian and New Zealand operations "performed well" but additional provisions for conduct-related charges in the UK reduced full-year profit.
"All UK banks have experienced these conduct issues but it is disappointing nevertheless," he said.
"Dealing with the bank's legacy issues remains a priority for the board and management. We continue to look for opportunities to exit the UK banks and are now looking at a broader range of options."
With speculation swirling for much of the year that NAB will seek to sell its wealth division or part of the MLC life insurance business, Mr Chaney said it was pleasing NAB Wealth had increased its profits during 2014. However, "returns in this business are still below acceptable levels and we are considering options to improve them."
With NAB having disposed in late October of a 32 per cent interest in Great Western Bank in the US via an initial public offering, Mr Chaney said NAB expected to be able to sell the remaining 68 per cent over the next 12 to 18 months, subject to market conditions.
One shareholder complained that over the nine years of Mr Chaney's tenure, the bank's shares were trading at the same level while Commonwealth Bank of Australia's market value doubled, describing the directors as "flock of docile sheep".
Mr Chaney said the orientation of the bank towards business banking had hurt it in terms of relative returns, but "in my view, the board and management have done what they have needed to do to help this bank be profitable...and in Australia our ROE [return on equity] is right up there with the other banks."
He also defended the directors, saying they possessed "a steely determination to do well in the future".
Thursday's AGM is the first with Andrew Thorburn as CEO. Mr Thorburn told the meeting the bank's performance had not met expectations.
"I acknowledge that our financial performance has not been at the level you – or we – desire, and our leadership team and our people are focused on driving better results," he said.
Mr Thorburn said while the Australian economy is growing, "we recognise that confidence remains an issue for consumers and – increasingly – the business community."
Directors John Thorn and Geoff Tomlinson retire from the board after the meeting.
Mr Chaney thanked former CEO Cameron Clyne, who retired in August, for his "exceptional" leadership over 5 ½ years.
Mr Clyne "took on the role during the global financial crisis and steered the bank through what was a very challenging period. It was also a time during which the bank underwent significant cultural and structural changes," Mr Chaney said.