By Jonathan Barrett and Paulina Duran
SYDNEY (Reuters) - National Australia Bank (NAB) flagged thousands of job cuts as it posted a record annual cash profit of A$6.64 billion ($5.1 billion) on Thursday, underpinned by surging home loan volumes and higher business lending margins.
The 2.5 percent rise in profit comes amid a broader sector push to improve margins, cut costs and hoard cash as Australian banks react to regulator-imposed changes to lift capital requirements.
Australia's largest business lender said it expected to cut about 6,000 staff over the next three years as it automates its business, while creating 2,000 new positions over the same period. A net loss of 4000 jobs represents about 12 percent of its current workforce.
It flagged restructuring charges of A$500 million to A$800 million in the first half of fiscal 2018, and a spike in expenses of between 5 percent and 8 percent over the year.
UBS described the result as "solid" while noting that the restructure costs were higher than expected and would weigh on market sentiment.
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NAB shares were down 3 percent in early trading on Thursday in a flat market.
The bank released an upbeat outlook, underpinned by an anticipated upswing in business investment and government infrastructure spending.
"Some slowing in the housing cycle and a moderation in housing credit is expected, but downside is likely to be limited by strong population growth and low unemployment," NAB said.
While net interest margin, a key gauge of profitability, fell 3 basis points from last year, it was 6 basis points higher in the second half of the 2017 results, as the lender benefited from a repricing of its mortgage book.
Interest rate levels have become a hot-button political and customer issue in Australia this year, with the corporate regulator pledging to investigate whether banks are using a push to curb a potential housing bubble as an excuse to profiteer through unnecessary mortgage rate rises.
In May, Canberra said it would charge a 6 basis-point levy on the mortgage books of the country's major lenders to raise government revenue and help smaller lenders compete.
"The banks are getting a bit of a regulatory dividend," Atlas Funds Management Chief Investment Officer Hugh Dive told Reuters, referring to the levy.
"So this sort of bank levy that pounded the stocks when it was announced, it's recovered and then some."
NAB is the second major Australian retail bank to report full-year results in the past week, with Australia and New Zealand Banking Group booking an 18 percent jump in annual cash profit on lower bad debts and cost cuts.
NAB declared a final dividend of A$0.99 per share, the same as last year. The bank said its statutory net profit rose to A$5.29 billion from A$352 million from the previous year when it took a one-off charge related to the sale of its British business.
($1 = 1.3033 Australian dollars)
(Reporting by Paulina Duran and Jonathan Barrett in SYDNEY. Additional reporting by Rushil Dutta in Bengaluru; Editing by Stephen Coates)