National Australia Bank has slashed its dividend to its lowest in almost nine years after posting a first-half cash profit of $2.95 billion.

Profit for the six months to March 31 was up 7.1 per cent on a year earlier, but the increase was largely because the $325 million hit to cash earnings from customer remediation was smaller than the $530 million from restructuring costs in the prior corresponding period.

The lender cut its interim dividend 16 per cent to 83 cents after deciding the 99 cents paid in each of the previous 10 reporting periods had become unsustainable.

"Given the number of new shares that we've been issuing cumulatively over the last two to three years, it was harder and harder to sustain a 99 cent dividend," interim chief executive Philip Chronican said.

"We felt it was better for the company to be in a situation where on the balance of probabilities we're more likely to be generating surplus capital rather than continually having to raise new capital."

NAB had paid shareholders a 99 cent dividend every half year since May 2014, and hadn't paid as little since the 78 cents that came with the 2010 full-year results.

Chronican said the cut would partially underwrite a dividend reinvestment plan designed to raise $1.8 billion.

Ratings agency Moody's said the move will likely strengthen the bank's common equity tier 1 capital ratio by approximately 45 basis points - from its current 10.4 per cent.

Chronican acknowledged the protest, which followed the bank's mauling at the financial services royal commission and preceded the resignations of CEO Andrew Thorburn and chairman Ken Henry, and said executives would forfeit deferred bonuses worth a total $5.5 million.

Directors fees will also be cut by 20 per cent as NAB aims to avoid a second strike and a possible board spill.

NAB has now made a total $1.1 billion in provisions for customer remediation after putting aside another $525 million, and still has aligned adviser fee remediation to come, which Chronican said he hoped could be provisioned in the second half.

Stripping out large one-off items such as last year's restructuring and this year's remediation, first-half profit was down just 0.3 per cent.

Cash profit from retail and wealth was down 20.6 per cent to $638 million, with above system housing lending growth offset by margin pressure and higher impairment charges, combined with lower wealth revenue.

At 10:38am, NAB shares were 1.1 per cent lower at $25.50, although rivals ANZ and Westpac both fell by more.

NAB's first-half performance

  • Cash profit up 7.1pct to $2.95b
  • Statutory profit up 4.3pct to $2.69b
  • Net operating income down 2.4pct to $8.87b
  • Interim dividend down 16 cents to 83 cents, fully franked