NAB has cut its dividend for the first time in ten years, citing a more difficult operating environment and describing the reduction as part of a plan to improve capital generation.The bank said the 16 per cent reduction in the dividend for the March 2019 half year would give it more flexibility to accommodate earnings volatility, as well as further regulatory changes and growth in risk-weighted assets.It cut its dividend from 99 cents a share, which had been its consistent interim and final level for the past few years, to 83 cents. The dividend payout ratio was 77.4 per cent, down from 91.5 per cent in the September 2018 half and 96.9 per cent in the March 2018 half last year.NAB set a dividend reinvestment discount of 1.5 per cent, with no participation limit. The bank has entered into an agreement to have the DRP on the interim dividend partially underwritten up to an amount of A$1 billion over and above the expected participation in the DRP.Assuming a DRP participation rate of 35 per cent, these initiatives should provide a $1.8 billion increase in share capital - equivalent to a 45 basis point increase in the common equity tier 1 ratio.Other capital initiatives included the issue of NAB Capital Notes 3 in March, which raised $1.9 billion.NAB chief executive Phil Chronican said: "We recognise the importance of the dividend but we also need to rebase to take account of any headwinds, such as more remediation costs."We want to accumulate organic capital. We will meet APRA's 10.5 per cent CET1 target by January 2020."The bank's CET1 is currently 10.4 per cent.