2009 Half Year Results Investor presentation 28 April 2009 - PDF document

2009 Half Year Results Investor presentation 28 April 2009 Cameron Clyne, Group Chief Executive Officer Mark Joiner, Executive Director Finance National Australia Bank Limited ABN 12 004 044 937 Contents � Overview � 1H09 results � Asset quality � Capital and funding � Additional information 2 1

Overview Solid performance in challenging environment Change Mar 09 Mar 09 vs Sep 08 Mar 09 vs Mar 08 Revenue ($m) 8,514 9.5% 11.5% Costs ($m) (3,770) (2.5%) (4.8%) Underlying Profit ($m) 4,744 15.8% 17.4% B&DD ($m) (1,811) (2.7 %) Large Cash Earnings ($m) 2,027 20.7% (9.4%) Diluted Cash EPS (cents) 107.4 6.7 cents (29.8 cents) Cash ROE (%) 12.7 80bps (410bps) Dividend per share (cents) 73 (24 cents) (24 cents) 4 2

Economic conditions will continue to be difficult Annual growth in global trade, global GDP and System credit growth % change year on year OECD economies - 1970 - 2010 18 Forecast Forecast World economic 16 Australia OECD growth (RHS ) Australia growth (RHS) 14 12 10 8 6 New Zealand New Zealand 4 2 United Kingdom United Kingdom 0 -2 World trade (LHS axis) -4 Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 IMF, OECD, Datastream, NAB Forecasts RBA, RBNZ, Bank of England, NAB Forecasts Real GDP % change year on year 3 month interbank rates in key markets 12 Australia 10 Forecast Forecast New Zealand 8 New Zealand 6 4 New Zealand 2 0 -2 Australia Australia United Kingdom -4 United Kingdom United Kingdom -6 Mar-79 Mar-84 Mar-89 Mar-94 Mar-99 Mar-04 Mar-09 ONS, ABS, SNZ, Datastream, NAB Forecasts Datastream 5 Delivering on strategic focus Priority Underlying 1. Keep the bank safe � Tier 1 capital ratio comfortably above 8% and plans to strengthen � Liquidity and funding positions strong � Strong provision coverage - further economic overlay $86 million 2. Tight cost management � Strong cost performance continues � Pipeline of future efficiency gains � Strong employee engagement 3. Leadership, reputation and culture � Move towards leadership on customer front � Continue to balance the needs of all stakeholders 6 3

We will responsibly balance all stakeholder interests Support employees Manage funding mix Enhance community especially offshore partnerships component Support financing Managing in a Provide returns needs of our to shareholders recession customers Meet growing Support customers regulatory in financial difficulty obligations Maintain AA rating 7 1H09 Results 4

Group result Half year to Change $m Mar 09 Sep 08 Mar 08 Mar 09 v Mar 08 Mar 09 v Sep 08 Net operating income 8,514 7,775 7,639 9.5% 11.5% Operating expenses (3,678) (3,598) (3,770) (2.5%) (4.8%) Underlying profit 4,744 4,097 4,041 15.8% 17.4% Charge to provide for bad (1,811) (1,763) (726) (2.7%) Large and doubtful debts Cash earnings (incl IoRE) 2,027 1,679 2,237 20.7% (9.4%) ROE 12.7% 11.9% 16.8% 80bps (410bps) 3bps (18bps) ROA 0.54% 0.75% 0.57% 6.90%* 96bps 141bps Tier 1 ratio 8.31% 7.35% RWA ($bn) 352.4 343.5 336.4 2.6% 4.8% 97 (24) (24) Dividend per share (cents) 73 97 * Basel ll proforma 9 Individual business performance Half year to Half year to Home currency m Mar 09 Sep 08 Change% Mar 08 Change% Underlying Profit Business & Private Banking 1,808 1,699 6.4 1,506 20.1 Retail Banking 896 800 12.0 729 22.9 MLC 209 267 (21.7) 309 (32.4) UK Region £238 £264 (9.8) £254 (6.3) NZ Region NZ$417 NZ$388 7.5 NZ$375 11.2 nabCapital 1,035 578 79.1 731 41.6 1 Other (83) (120) 30.8 (127) 34.6 Group underlying profit 4,744 4,097 15.8 4,041 17.4 Cash Earnings Business & Private Banking 1,015 1,080 (6.0) 948 7.1 Retail Banking 481 (5.4) 419 8.6 455 MLC (pre IoRE) 158 188 (16.0) 220 (28.2) UK Region £50 £110 (54.5) £139 (64.0) NZ Region NZ$228 NZ$243 (6.2) NZ$239 (4.6) nabCapital 345 (417) Large 373 (7.5) 2 Other (247) (81) Large (241) (2.5) Group cash earnings 2,027 1,679 20.7 2,237 (9.4) 1 Other represents Central Functions, GWB and Asia 10 2 Other represents Central Functions, GWB, Asia, IoRE and distributions 5

Jaws and CTI momentum CTI H107 CTI H108 CTI H109 51.8% 47.0% 43.4% 11.5% Revenue growth 8.0% 7.1% 6.7% 6.7% 4.8% 10.1% H109 v H108 1.3% H107 v H106 Expense growth H108 H109 Growth -3.0% Expenses 3,598 3,770 4.8% H108 v H107 FX (29) GWB (46) Total (75) Net expenses 3,598 3,695 2.7% CTI – Banking Cost to Income Ratio 11 Investment spend Investment spend ($m) 445 343 331 7% 8% 9% 25% 28% 27% 38% 43% 47% 29% 22% 17% Mar 08 Sep 08 Mar 09 Compliance projects Efficiency/revenue generating projects Infrastructure projects Other 12 6

Australia Banking Business lending Retail deposits Retail lending ($bn) 11.8% ($bn) ($bn) 8.1% 4.8% 123 110 7.6% 105 7.4 7.4 7.1 48 43 42 2.0% 4.2% 107 99 151 75 148 92 67 63 142 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 BPA Retail Bank Housing Unsecured Personal Net interest margin Costs ($m) (%) 2.53 1,732 2.49 1,707 1,659 2.36 42.6% 40.6% 39.0% Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Cost to Income Ratio X% 13 Australia Banking: Net interest margin March 2009 up 4bps on September 2008 Lending Deposits 2.9% 2.8% 0.19% (0.01%) (0.11%) 2.7% (0.04%) 2.6% 0.04% (0.01%) (0.02%) 2.5% 2.4% 2.3% 2.53% 2.49% 2.2% 2.1% 2.0% Sep 08 NIM Margin Mix Margin Mix Portfolio Treasury Capital Mar 09 NIM Change Change Change Change Mix Benefit 14 7

MLC Expenses FUM Funds under management Investment earnings $bn $m CAGR (1.4%) Net Flows Other 102.9 C.Mgmt & Trustee 400 (22.3%) 90.2 350 83.6 (12.7) (0.5) 300 (5.4) 6.7 76.8 (0.7) (0.6) 250 70.1 200 (12.8) (0.1) 150 Mar 08 Mar 09 Mar 08 Sep 08 Mar 09 Incl Incl Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 C.Mgmt C.Mgmt & & Trustee Trustee Premiums in force Cash earnings (before IoRE) Investment cash earnings Insurance cash earnings 1000 (29.6%) CAGR 11.1% 5.3% (10.0%) 900 (22.7%) 800 $m 700 125 100 88 95 90 600 68 500 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 15 UK Region Business lending Retail deposits Retail lending (£bn) (£bn) 6.3% (£bn) 6.7% 7.1% 8.0% 20.1 18.9 17.5 2.4 2.5 2.4 9.5 8.6 1.7% 8.3 2.6% 19.2 18.0 16.8 10.6 11.4 11.7 11.9 10.3 9.2 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 iFS Retail Housing Unsecured Personal Net interest margin Costs (£m) (%) 359 358 2.66 325 2.59 2.14 58.3% 57.6% 57.7% Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 X% Cost to Income Ratio 16 8

UK Region: Net interest margin March 2009 down 45bps on September 2008 Lending Deposits 3.2% 0.42% (0.01%) (0.32%) 3.0% 2.8% (0.06%) (0.07%) (0.41%) 2.6% 2.4% 2.59% 2.55% 2.2% 2.0% 2.14% 1.8% Sep 08 Margin Mix Margin Mix Other Mar 09 Unrecovered Mar 09 NIM Change Change Change Change Underlying Funding NIM NIM Costs 17 17 New Zealand Region Business lending Deposits Retail lending ($NZbn) ($NZbn) 1.3% ($NZbn) 5.0% 12.1% 13.8% 23.3 23.6 22.2 1.4 1.4 1.4 12.1 12.7 11.6 2.1% 3.0% 19.8 22.2 17.4 23.3 24.5 24.0 10.6 11.2 10.9 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 BNZ Partners BNZ Retail Housing Unsecured personal Costs Net interest margin (%) ($NZm) 2.49 2.35 2.23 343 348 338 47.8% 47.3% 44.7% Mar 08 Sep 08 Mar 09 Mar 08 Sep 08 Mar 09 Cost to Income Ratio X% 18 9

New Zealand: Net interest margin March 2009 down 12bps on September 2008 Lending Deposits 2.55% 0.01% (0.28%) 0.14% 2.50% 2.45% 2.40% 2.35% 0.10% (0.06%) 2.30% 0.04% (0.07%) 2.35% 2.25% 2.20% 2.23% 2.15% Sep 08 Margin Mix Margin Mix Portfolio *ERC Benefit Gov Guarantee Mar 09 NIM Change Change Change Change Mix (Timing) & Additional NIM Liquidity * Early repayment costs 19 nabCapital Revenue by line of business Underlying profit ($m) 98% Markets CGR 22.6% 1,035 large% Structuring & Investments 731 Corporate 26% 578 502 Finance 458 Institutional 28% Lending (300) 50 400 750 1,100 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 March 08 HY Growth on Mar 08 HY Decline on Mar 08 HY Markets – Sales by Product Currency volatility and credit spreads Money markets AUD/USD 1 iTraxx Australia Credit Other -month implied volatility, % default swap spread, bps 3% 3% 50 500 Credit trading 45 450 Currency volatility (lhs) 40 400 4% Credit spreads (rhs) 35 350 30 300 Foreign exchange 25 250 50% 20 200 Interest rate 15 150 derivatives 10 100 40% 5 50 0 0 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Source: Bloomberg, iTraxx, National Australia Bank 20 10