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National Australia Bank Positioned for Growth   July 8 , 2002 national.com.au Richard McKinnon, Chief Financial Officer
Agenda 2. Competitive advantages in Banking 4. Targets and Summary 3.  Wealth Management in the National 1. The National t...
<ul><li>We are focused on integrated financial services in Australia, NZ, Great Britain and Ireland  </li></ul><ul><li>Pos...
We have a clear strategic intent by business and region Banking Australia NZ UK/RoI Asia / US Wholesale Wealth  Management...
We have a simplified structure with a strong and diverse leadership team <ul><li>5 EGM’s in new roles </li></ul><ul><li>3 ...
Our fist half result shows strong earnings momentum <ul><li>Record Net Profit $ 2.256 billion </li></ul><ul><li>Profit 11....
..and strong performances in core business units Growth in Business Unit Net Profit 0 250 500 750 1000 Australia Europe NZ...
Positioning for Growth provided robust organic growth plans for 2003 and beyond <ul><li>Strategic focus </li></ul><ul><li>...
2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
We have strong market positions and distinct competitive advantages in banking …. <ul><li>Leading relationship banking cap...
Financial Services Australia holds a dominant position in Business Banking Source Greenwich Associates MIDDLE  MARKET SOLE...
…  and is the leader at meeting customer needs PRIME BANK CUSTOMERS VS TOTAL MARKET PENETRATION (%) PRIME BANK CUSTOMERS -...
Financial Services Australia is also the leader at meeting personal customers’ needs Source: Roy Morgan Research Dec 2001 ...
We have long standing and superior capabilities in customer relationship management 2001 NCDM Excellence Award Presented b...
We are taking transferring capability to our European business YB heartland CB Natural Marketing area NB Natural Marketing...
WFS Composition by Equivalent S&P Rating March 2002 Investment Grade 84% B+ to B 3% BB+ to BB- 12% B- to CCC 1% Asset Comp...
2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
In Wealth Management we differentiate ourselves from our competitors by: <ul><li>Manager of Managers investment approach <...
Strong track record with Manager of Manager approach We have achieved 29% annual growth in retail net funds flow since 199...
Wealth Wealth Accumulation Wealth Consumption Retirement Asset/ Product Selection, Transactions, Reporting Tax Management,...
...across the markets in which we operate Horizon 1 Horizon 2 Horizon 3 GB/Ireland Time HK/Indonesia/ Thailand Growth Aust...
The Wealth Management business continues to  evolve to meet market needs Life Co Fund Manager Investment &  Advice Platfor...
Target Business Model - Generic  Advice Dealerships Strategic Advice Platform Internal and External Providers Investment S...
The U.K. wealth management market represents a significant expansion opportunity for the National 1 Significant banking sh...
We have commenced building our offer and  advice capability... Advice Dealerships Strategic Advice Platform Internal and E...
… with positive early results <ul><li>In process of implementing long-term vision for Wealth Management in the UK </li></u...
Target UK Business Model 2005 Advice Dealerships Strategic Advice Platform Internal and External Providers Investment Solu...
2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
Group Targets to 2004 <ul><li>Cash EPS Growth </li></ul><ul><ul><li>2001/02:  Between 7 - 10% </li></ul></ul><ul><ul><li>(...
<ul><ul><li>Clear strategic focus  </li></ul></ul><ul><ul><li>Strong earnings momentum driven by relationship banking and ...
The preceding material is a presentation of general background information about the National’s activities current at the ...
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  1. 1. National Australia Bank Positioned for Growth July 8 , 2002 national.com.au Richard McKinnon, Chief Financial Officer
  2. 2. Agenda 2. Competitive advantages in Banking 4. Targets and Summary 3. Wealth Management in the National 1. The National today
  3. 3. <ul><li>We are focused on integrated financial services in Australia, NZ, Great Britain and Ireland </li></ul><ul><li>Positioning for Growth provided room for investment while maintaining earnings momentum </li></ul><ul><ul><li>We are targeting 12% cash earnings per share growth in 2003 and 2004 </li></ul></ul><ul><ul><li>While investing in Wealth Management in Australia and UK and banking across the group to underpin future growth </li></ul></ul><ul><li>We have an active ongoing share buy-back </li></ul><ul><li>HomeSide risk reducing with MSR sale </li></ul>The National today
  4. 4. We have a clear strategic intent by business and region Banking Australia NZ UK/RoI Asia / US Wholesale Wealth Management <ul><li>Not Applicable </li></ul><ul><li>Universally recognised as the top FS provider in Australia </li></ul><ul><ul><li>No. 1 in business and agri-business banking </li></ul></ul><ul><ul><li>No. 1 in premium and private segments </li></ul></ul><ul><li>To provide market leading integrated financial services </li></ul><ul><ul><li>Targeted operating strategies across franchises </li></ul></ul><ul><ul><li>Leverage product including wealth management and wholesale </li></ul></ul><ul><li>Maintain a leading position in the NZ market </li></ul><ul><ul><li>No 1 or 2 in market share in business and in retail banking </li></ul></ul><ul><ul><li>Increased wealth management market share </li></ul></ul><ul><li>To be recognised by clients as a high quality and innovative financial services partner </li></ul><ul><ul><li>No. 1 Wholesale Bank </li></ul></ul>To grow a relationship based business to support core clients in selected markets <ul><li>To be recognised by clients as a high quality and innovative financial services partner </li></ul><ul><ul><li>No. 1 Wholesale Bank </li></ul></ul>To continue to service the needs of our core clients and pursue niche opportunities in selected markets <ul><li>Leading business partner & outsource provider: </li></ul><ul><ul><li>No. 1 in Retail FUM and in Group & Personal insurance </li></ul></ul><ul><ul><li>A leading provider of outsourced corporate super & employee benefit solutions </li></ul></ul><ul><li>A recognised investment platform with multi channel distribution capability: </li></ul><ul><ul><li>Top 10 in retail funds flow </li></ul></ul><ul><li>Best practice bancassurer </li></ul><ul><ul><li>Better than industry standard benchmark performance for WM penetration </li></ul></ul><ul><li>Best practice bancassurer: </li></ul><ul><ul><li>Better than industry standard benchmark performance for WM penetration </li></ul></ul><ul><ul><li>Top 2 Fund Manager </li></ul></ul><ul><ul><li>Top 2 in Life Insurance </li></ul></ul><ul><li>Continue emerging market strategy: </li></ul><ul><ul><li>Hong Kong - Top 10 life insurer </li></ul></ul><ul><ul><li>Thailand - Top 5 Coy by 2005 in new business </li></ul></ul><ul><ul><li>Indonesia - Grow Value </li></ul></ul>
  5. 5. We have a simplified structure with a strong and diverse leadership team <ul><li>5 EGM’s in new roles </li></ul><ul><li>3 external appointments </li></ul>Managing Director & CEO Frank Cicutto OPERATIONAL SUPPORT EGM People & Culture Peter McKinnon EGM Risk Management Chris Lewis EGM Corporate Development Mike Laing CFO Richard McKinnon CEO BNZ Peter Thodey EGM Financial Services AU Ian MacDonald EGM Financial Services GB & Ireland Steve Targett EGM Wealth Management Peter Scott EGM Corporate Development Mike Laing EGM Financial Services AU Ian MacDonald EGM Financial Services GB & Ireland Steve Targett EGM Risk Management Chris Lewis EGM Risk Management Chris Lewis EGM Wholesale Financial Services Ian Scholes EGM Wholesale Financial Services Ian Scholes EGM Wholesale Financial Services Ian Scholes EGM Financial Services AU Ian MacDonald EGM Financial Services GB & Ireland Steve Targett EGM Corporate Development Mike Laing CIO Ian Crouch CIO Ian Crouch CIO Ian Crouch CIO Ian Crouch
  6. 6. Our fist half result shows strong earnings momentum <ul><li>Record Net Profit $ 2.256 billion </li></ul><ul><li>Profit 11.4 % up on Mar 01 and 13.1% up on Sep 01 </li></ul><ul><li>ROE up 110bp to 20.1% </li></ul><ul><li>ROA up 15bp to 1.23% </li></ul><ul><li>Dividend per share up 5c to 72c </li></ul><ul><li>Additional $1 billion buy-back </li></ul>Half Years $M's Net profit excluding significant items
  7. 7. ..and strong performances in core business units Growth in Business Unit Net Profit 0 250 500 750 1000 Australia Europe NZ Wealth Management Wholesale $ M’s Financial Services Mar-01 Sep-01 Mar-02 29.6% 19.5% 17.7% 16.1% 0.3%
  8. 8. Positioning for Growth provided robust organic growth plans for 2003 and beyond <ul><li>Strategic focus </li></ul><ul><li>Leverage past investments & capabilities </li></ul><ul><li>Capture growth opportunities </li></ul><ul><li>Revitalise organisation </li></ul><ul><li>$370M p.a. cost reduction by 2004 </li></ul><ul><li>Increased revenues with 1380 new positions </li></ul><ul><li>Over $400M of investment in Wealth Management and Europe </li></ul><ul><li>Cultural change program </li></ul>Positioning For Growth
  9. 9. 2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
  10. 10. We have strong market positions and distinct competitive advantages in banking …. <ul><li>Leading relationship banking capabilities </li></ul><ul><ul><li>Leading market positions in Australia (SME and Premium), New Zealand and Northern Ireland </li></ul></ul><ul><ul><li>Multiple specialised distribution platforms aligned to customer needs and value potential </li></ul></ul><ul><ul><li>Integration of product specialists and service delivery </li></ul></ul><ul><li>Global best practice Customer Relationship Management </li></ul>
  11. 11. Financial Services Australia holds a dominant position in Business Banking Source Greenwich Associates MIDDLE MARKET SOLE PROPRIETORS CORPORATE NATIONAL BANK'S SHARE (PENETRATION) MARKET DEFINITION & SIZE 42% 61% 28% <ul><li>Turnover over $100m </li></ul><ul><li>1,200 companies </li></ul>Total Number of National Business customers: 305,000 (30%) Total Number of Business customers in Australia: 1,076,700 BFSA SMALL BUSINESS Wholesale <ul><li>Turnover over >$5m - <$100m </li></ul><ul><li>24,500 companies </li></ul><ul><li>Turnover over <$5m </li></ul><ul><li>506,000 companies </li></ul><ul><li>Turnover over <$5m </li></ul><ul><li>545,000 companies </li></ul><ul><li>No employees </li></ul>
  12. 12. … and is the leader at meeting customer needs PRIME BANK CUSTOMERS VS TOTAL MARKET PENETRATION (%) PRIME BANK CUSTOMERS - % SHARE OF WALLET SERVED BY PRIME BANK 88 92 94 96 WBC CBA ANZ NAB 26 29 29 42 ANZ WBC CBA NAB 17 19 18 30 Source: Greenwich Associates
  13. 13. Financial Services Australia is also the leader at meeting personal customers’ needs Source: Roy Morgan Research Dec 2001 2.2 2.4 2.5 2.5 CBA ANZ WBC NAB Average number of products 32% 45% 45% 47% ANZ CBA WBC NAB Premium Customers Share of Wallet <ul><li>Wealthier customer base on segmented platforms </li></ul><ul><li>Long standing CRM capabilities </li></ul><ul><li>Broadest distribution channels </li></ul>
  14. 14. We have long standing and superior capabilities in customer relationship management 2001 NCDM Excellence Award Presented by US National Centre for Direct Marketing Best CRM Strategy, Nov 2001, Presented by Institute of Financial Services UK & British Telecom <ul><li>Needs identification is cornerstone of relationship management approach </li></ul><ul><li>National Leads and CRM capabilities are key component </li></ul><ul><li>Developed over past decade </li></ul>
  15. 15. We are taking transferring capability to our European business YB heartland CB Natural Marketing area NB Natural Marketing area YB CB NB Regional market share, % of personal current accounts Regional customers, million 16% 17% 25% 2.3 1.1 0.6 <ul><li>Financial Services Europe has produced CAG of 12.5% in local currency over last 5 halves </li></ul>
  16. 16. WFS Composition by Equivalent S&P Rating March 2002 Investment Grade 84% B+ to B 3% BB+ to BB- 12% B- to CCC 1% Asset Composition - March 2002 BFS Secured 26% PFS Secured 20% BFS Partly Secured 11% PFS Partly Secured 12% BFS 5% PFS 3% WFS Sub- Investment 4% WFS 19% Investment Unsecured Unsecured Credit risk management is a core strength
  17. 17. 2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
  18. 18. In Wealth Management we differentiate ourselves from our competitors by: <ul><li>Manager of Managers investment approach </li></ul><ul><li>Advice based distribution philosophy </li></ul><ul><li>A focused strategy across - Australia, Europe and Asia </li></ul><ul><li>A diverse portfolio of businesses </li></ul><ul><li>Multiple distribution channel management </li></ul><ul><li>Customer base - bank client base potential </li></ul>
  19. 19. Strong track record with Manager of Manager approach We have achieved 29% annual growth in retail net funds flow since 1998 in Australia
  20. 20. Wealth Wealth Accumulation Wealth Consumption Retirement Asset/ Product Selection, Transactions, Reporting Tax Management, Estate Management, Risk Management Asset Allocation, Investment Strategy Debt & Cashflow Management 25+ 30+ * Source: Hypercompetition, Credit Suisse, November 2001 Our strategic intent is to lead the evolution of the model to holistic financial planning...
  21. 21. ...across the markets in which we operate Horizon 1 Horizon 2 Horizon 3 GB/Ireland Time HK/Indonesia/ Thailand Growth Australia/NZ
  22. 22. The Wealth Management business continues to evolve to meet market needs Life Co Fund Manager Investment & Advice Platforms <ul><li>Process Simplification </li></ul><ul><li>Product Simplification </li></ul><ul><li>MasterKey, FlexiPlan </li></ul><ul><li>Re-engineered distribution and advice capability </li></ul><ul><li>Sale of non-core businesses </li></ul><ul><li>Integration of WM Businesses </li></ul><ul><li>Acquired Deutsche FP and JANA </li></ul><ul><li>360 dealership infrastructure </li></ul><ul><li>Launch UK Investment and Advice Service </li></ul><ul><li>Sale of non-core businesses </li></ul>Business Partner and Outsource Provider <ul><li>Enhance Advice Platform </li></ul><ul><li>Move towards Holistic Advice Model and IFS </li></ul><ul><li>International Expansion </li></ul>1995 1998 2000/2001 2002/Future
  23. 23. Target Business Model - Generic Advice Dealerships Strategic Advice Platform Internal and External Providers Investment Solutions Insurance Solutions Debt Solutions General, health and risk providers Mortgages, margin lending Direct securities, personal and non-custodial assets Business Coaching Practice Management and Advice Support Embedded Advice Investment Choice Estate Planning Tax Management Other Securities Solutions Related Advice Solutions Consolidated Reporting for Advisers and their clients across: Aligned Self-Employed Advisers Direct Salaried Advisers External Dealerships Life Administration and Servicing - Seamless Integration
  24. 24. The U.K. wealth management market represents a significant expansion opportunity for the National 1 Significant banking share in small market 0.6 million customers Smaller market 1.1 million customers Small share of large primarily retail markets 2.3 million customers
  25. 25. We have commenced building our offer and advice capability... Advice Dealerships Strategic Advice Platform Internal and External Providers Investment Solutions Insurance Solutions Debt Solutions General, health and risk providers Mortgages, margin lending Direct securities, personal and non-custodial assets Business Coaching Practice Management and Advice Support Embedded Advice Investment Choice Estate Planning Tax Management Other Securities Solutions Related Advice Solutions Consolidated Reporting for Advisers and their clients across: Bank Based Life Administration and Servicing - Seamless Integration Internal IFA’s External IFA Relationships Launched Financial Planning and Investment Service in November 2001 Undertaken a significant re-engineering program of Insurance business Capability exists
  26. 26. … with positive early results <ul><li>In process of implementing long-term vision for Wealth Management in the UK </li></ul><ul><li>Launched Financial Planning and Investment Service in November 2001 </li></ul><ul><li>Committed further investment to expand advice proposition to the UK intermediated advice channel </li></ul>UK Funds under Management 500 520 540 560 580 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 GBPm Source: Association of Unit Trusts and Investments Funds (AUTIF) Growth since launch 11%
  27. 27. Target UK Business Model 2005 Advice Dealerships Strategic Advice Platform Internal and External Providers Investment Solutions Insurance Solutions Debt Solutions General, health and risk providers Mortgages, margin lending Direct securities, personal and non-custodial assets Business Coaching Practice Management and Advice Support Embedded Advice Investment Choice Estate Planning Tax Management Other Securities Solutions Related Advice Solutions Consolidated Reporting for Advisers and their clients across: Bank Based Life Administration and Servicing - Seamless Integration Internal IFA’s External IFA Relationships Capability
  28. 28. 2. Competitive advantages in Banking 4. Targets and Summary 3. Growth opportunity in Wealth Management 1. The National today
  29. 29. Group Targets to 2004 <ul><li>Cash EPS Growth </li></ul><ul><ul><li>2001/02: Between 7 - 10% </li></ul></ul><ul><ul><li>(includes impact from HomeSide) </li></ul></ul><ul><ul><li>03 and 04: Greater than 12% </li></ul></ul><ul><li>Return on Equity > 18% p.a. </li></ul><ul><li>EVA Growth > 5% p.a. </li></ul><ul><li>Capital Management </li></ul><ul><ul><li>Maintain capacity for active capital management </li></ul></ul>
  30. 30. <ul><ul><li>Clear strategic focus </li></ul></ul><ul><ul><li>Strong earnings momentum driven by relationship banking and wealth management capabilities </li></ul></ul><ul><ul><li>Unique growth opportunities in wealth management and Europe </li></ul></ul><ul><ul><li>Reducing risk profile with MSR sale </li></ul></ul><ul><ul><li>Capital generation strong. Ongoing buy-back. </li></ul></ul><ul><ul><li>Positioning for Growth outcomes will enhance momentum </li></ul></ul>Summary
  31. 31. The preceding material is a presentation of general background information about the National’s activities current at the date of the presentation, July 8, 2002. It is information given in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. Disclaimer
  32. 32. national.com.au

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