National Australia Bank's first-quarter unaudited cash earnings have slipped about 1 per cent to A$1.6 billion ($1.68b) as the cost of cutting staff helped push up expenses.

Lending growth helped lift revenue about one per cent and net interest margin for the three months to December 31 was broadly stable, but NAB said expenses rose about 5 per cent compared to the corresponding period, driven by salary increases and redundancy payments.

NAB, the first of the big four Australian lenders to update the market during the current earnings season, on Monday said it shed the equivalent of 488 full-time jobs during the quarter.

"We are taking a disciplined approach to reshaping our business, balancing higher levels of investment with tight cost management, to become more efficient and to serve customers better," chief executive Andrew Thorburn said.


"Our first quarter expenses were impacted by the usual October 1 salary increases as well as elevated redundancy costs."

The charge for bad and doubtful debts declined 23 per cent to A$164 million ($172m), while the cost of maintaining its full-year dividend at 99 cents - which lifted its payout ratio above 80 per cent - meant NAB's common equity tier one capital ratio dropped from 9.8 per cent on September 30 to 9.5 per cent.

That's still above NAB's target range of 8.75 per cent to 9.25 per cent.