Dr Henry, a former treasury secretary, also explained the bank's backflip on the case for a royal commission, saying the fierce scrutiny of banks was undermining confidence in the financial sector.

As Commonwealth Bank is embroiled in fresh allegations of serious breaches, NAB's annual report last month included a contingent liability for potential costs from a project that has been in train since July last year to "strengthen" its program for complying with anti-money laundering and counter-terrorist financing laws.

NAB has been unable to put a potential figure on what the "issues" may cost the bank. The annual report pointed to shortcomings in its systems for checking customers' identities, and monitoring of transactions, and chief executive Andrew Thorburn declined to provide further details at the bank's annual general meeting on Friday. But Dr Henry said the disclosure was part of its "conservative approach".

"We did this because of heightened market and public interest in this topic," Dr Henry told shareholders in Sydney.

"We continue to invest to strengthen our compliance frameworks, systems and controls, which arealso subject to regular independent assurance reviews."

A key part of CBA's Austrac woes are its intelligent deposit machines - which were capable of taking cash deposits of up to $20,000. Dr Henry said NAB had been advised by Austrac that it had "no issues" with the bank's approach.

"On the basis of the information available to us, we have no reason to expect wehave any material issues with AUSTRAC or in meeting our obligations under the relevantlegislation," Dr Henry said.

Dr Henry also touched on the decision by him, Mr Thorburn, and their counterparts at other banks to support a judicial inquiry into banks, which was followed by the government calling a royal commission. Dr Henry said they made the decision "to put an end to the political jostling that has plagued our sector, so that we might begin to restore trust, respect and confidence in our industry".

"We had reached a critical juncture - there was too much at stake, and the political turmoil and the uncertainty generated by it was impacting too heavily on our customers, our suppliers, our people and our shareholders. It was undermining confidence in Australia's financial system."

Mr Thorburn also said the royal commission could allow the bank to "get some closure and some certainty".

All of the resolutions before the meeting passed with minimal opposition from shareholders.

Meanwhile, the government has launched a recruitment drive for the financial services royal commission, with an ad posted this week seeking people with skills in a long list of fields including accounting and finance, "community engagement" and communications.

The ad appears to confirm the royal commission will be based in Melbourne, with most opportunities located in Melbourne's central business district and some potentially in Canberra.

With banks also facing pressure from environmental groups and some investors over their fossil fuel lending, Dr Henry outlined a toughening in its lending to coal miners.

The bank would no longer lend to new thermal coal mining, Dr Henry said, though it would continue to support its existing customers in the resources sector.

"The world's transition to a low carbon future will necessarily feature less reliance on thermalcoal, and we accept responsibility for the role we will play in this transition," he said.

On the economy, Dr Henry said Australia's long run of strong growth could not be taken for granted, highlighting concerns about the high cost of housing, and weak wage growth.

"While a generation of Australians may have grown up having never lived through a recession, they are acutely aware of the challenges posed by stagnant real wage growth and high house prices," he said.

with Ruth Williams