Australia's big banks - once among the most profitable in the world - are being forced to amass war chests worth billions of dollars to reimburse customers for years of dodgy fees.

Industry heavyweight the National Australia Bank on Thursday became the latest bank to outline the mounting cost of refunding ripped-off customers following a government probe into the sector.

The company announced it had set aside Aus$1.1 billion in the last financial year to remediate customers.

A year-long Royal Commission exposed rampant bank malpractice that included charging fees to dead people, charging fees for no services at all, aggressive selling tactics and poor advice that led to significant financial upheaval for clients.

The year-long investigation singled out NAB for especially harsh criticism, forcing the departure of the firm's CEO and chairman.

It "forced us to confront broader issues of how we treat customers", the bank said in a statement Thursday.

Earlier this week NAB's competitor ANZ said it had set aside Aus$928 in remediation costs since the first half of the 2017 financial year and contacted more than 276,000 customers.

Commonwealth Bank and Westpac have taken similar steps.

The total cost for the sector could be as much as Aus$6 billion, according to a Macquarie Research estimate.

The costs - although a fraction of revenues - are beginning to be felt on the banks' bottom lines, at a time when the housing market is slowing, and they are being asked to increase capital holdings.

Announcing half-yearly earnings, NAB said it would defer the "majority" of management bonuses and cut shareholder dividends by 16% to protect the firm's balance sheet during a "challenging" period.

NAB said that in the past six months it had put aside Aus$525 million for "customer-related remediation costs", bringing the total provisions to Aus$1.1 billion.

The bank said there was "potential for additional costs, although the amounts and timing remain uncertain".