National Australia Bank acting chief executive Phil Chronican maintains the bank can keep growing despite "subdued" conditions, after it acted to strengthen its balance sheet by cutting its dividend to its lowest level in almost nine years and raising capital.

As NAB on Thursday conceded its 99¢-a-share dividend was no longer sustainable, it sought to reassure shareholders there may be potential to raise dividends in the "medium term".

Phil Chronican said the dividend cut was prudent. Credit:Paul Jeffers

And amid debate about whether an interest rate cut would give the economy a much-needed boost, Mr Chronican played down the impact of such a move, saying lower rates would have only a "muted" effect.

NAB's cash earnings rose 7.1 per cent to $2.95 billion in the March half, after profits in the same six months last year were bogged down by restructuring costs. The retail and wealth division suffered a sharp earnings drop of 20 per cent, with a better performance in its small business, corporate and New Zealand businesses.