BFF5280_NAB Risk Assessment Report_S2,2015

2015
NATIONAL AUSTRALIA BANK
Risk Assessment and Evaluation Report
Jasveen Kaur Dhanoa (25456539)
Shamila Niromi Maligaspe (25485253)
October 2015
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! 2!
NAB Risk Assessment and Evaluation Report 2015
Letter of Transmittal
Date:!October!15,!2015!
!
Attention:(Dr(Shrimal(Perera(
Chief!Examiner,!Institutional!Asset!and!Liability!Management!!
Faculty!of!Business!and!Economics(
Monash!University,!900!Dandenong!Road!
Caulfield!East,!Victoria!3145!
(
Subject:(BFF5280(Report(Submission((
!
Dear!Dr!Perera,!
At! your! request,! we! are! privileged! to! present! you! with! our! Institutional! Asset! and!
Liability!Management!report.!Our!report!focuses!on!the!assessment!and!evaluation!of!
National!Australia!Bank!Group’s!performance!and!key!risk!components.!!
!
The! analysis! we! conducted,! combined! with! your! continuous! guidance,! enabled! us! to!
cultivate!this!executive!report.!We!thank!you!for!your!endless!support!and!for!providing!
us!with!the!opportunity!to!present!this!report.!We!hope!we!have!done!you!proud!by!
submitting!an!informative!and!accurate!report.!!!
!
Furthermore,!we!stand!by!to!answer!all!queries!that!you!may!have!on!this!report.!!
!
We! affirm! that! we! have! neither! provided! nor! received! any! assistance! during! the!
completion!of!this!assessment!other!than!that!approved!by!you.!!
!
Sincerely,!!
Jasveen!Kaur!Dhanoa!(25456539)!
Shamila!Niromi!Maligaspe!(25485253)!
! !

!
! 3!
Table of Content
Contents( Page(
Executive!Summary! 4!
Introduction! 5!
Corporate!Governance! 6!
Corporate!Social!Responsibility! 8!
Strategic!Risk! 9!
Reputational!Risk!! 14!
Liquidity!Risk! 16!
Credit!Risk! 22!
Business!Concentration!by!Location! 25!
Off!Balance!Sheet!Exposure! 27!
Capital!and!Regulatory!Risk! 28!
Market!Risk! 31!
Interest!Rate!Risk! 32!
Operational!Risk! 34!
Foreign!Exchange!Risk! 37!
Stability!Ratios! 38!
! Management!by!Exception!(MBE)!Analysis! 38!
Concluding!Remarks! 40!
Bibliography! 41!
Appendices! !
! Appendix!1:!NABG!Background! 50!
! Appendix!2:!NABG!Industry!Review! 52!
! Appendix!3! 62!
!
! (

!
! 4!
Executive Summary
!
This! report! provides! a! qualitative! and! quantitative! assessment! and! evaluation! of!
National! Australia! Bank! Group! (NABG,! ‘the! Bank’,! ‘the! Group’)! key! business! and!
financial!risk!with!significant!recommendations!for!management!consideration!for!the!
next!strategic!planning!horizon.!!
!
Key!recommendations!for!management!consideration!include:!!
!
Key(Recommendations( Priority(
Update!and!refine!the!roles!and!responsibilities!of!the!Board!and!
various!committees,!particularly!the!Audit!Committee,!in!assessing!
ICAAP!requirements!in!the!Bank’s!Corporate!Governance!Statement.!
Low!
Expand!through!acquisitions!to!accelerate!growth.!! Moderate!
Reduce!wholesale!funding!(deposits)!to!approximately!33!per!cent!
from!42!per!cent!(2014)!to!increase!future!profitability!and!liquidity!
and!reduce!borrowing!costs.!
High!
Weak!liquidity!profile!compared!to!competitors!calls!for!immediate!
management!attention.!!
!
Reduce!the!regularity!of!executive!changes!that!signals!weak!
management.!
Moderate!
Improve!the!Bank’s!disaster!recovery!system!to!better!address!
future!systems!malfunctions.!!
Moderate!
Accelerate!the!completion!of!NextGen.! Low!
Increase!growth!in!liquid!assets!(cash!and!cash!equivalent)!by!30!
per!cent!in!2016!to!avoid!liquidity!concerns.!
High!
Increase!deposits!to!total!assets!ratio!from!44.3!per!cent!to!50!per!
cent!in!2016!to!strengthen!the!Bank’s!future!liquidity!position.!!!
High!
Enhance!internal!credit!analysis!on!underlying!individual!securities.!!! Moderate!
Respond!to!APRA’s!recommendation!of!increasing!CET1!by!at!least!2!
per!cent!to!be!in!accordance!with!capital!charges!on!global!
‘systematically!important’!banks.!
High!
!
(
(
( (

!
! 5!
Introduction
!
This!report!examines!NABG’s!corporate!
governance,! corporate! social!
responsibility,! strategic! risk,!
reputational! risk,! liquidity! risk,! credit!
risk,! business! concentration! risk,! off!
balance! sheet! exposure,! capital! and!
regulatory! risk,! market! risk,! interest!
rate! risk,! operational! risk! and! foreign!
exchange! risk! factors.! As! part! of! the!
review,! key! observations! and! practices!
are! highlighted! with! the! appropriate!
recommendations! and! implementation!
roadmap.! Methods! of! our! analysis!
include! qualitative! (expert! judgement)!
and! quantitative! assessment! (ratio!
analysis),! cross! sectional! (peer!
analysis),! and! time! horizon.! We! have!
selected! Commonwealth! Bank! of!
Australia! (CBA),! Australia! and! New!
Zealand!Banking!Group!(ANZ),!Westpac!
Bank!and!Bendigo!and!Adelaide!Bank!as!
NABG’s! major! competitors.! Our!
selection! of! competitors! is! based! on!
market!capitalisation!and!asset!size.!The!
time!horizon!of!our!review!covers!years!
from! 2006! to! 2014.! All! financial! and!
nondfinancial!data!used!in!this!review!is!
limited! to! publically! available! data!
(secondary! data).! All! relevant!
assumptions! are! included! in! the!
footnotes! of! this! report.! A! detailed!
review! on! the! Bank’s! background,! and!
industry! analysis! is! included! in!
Appendix!1!and!2!of!this!report.!!!
! !

!
! 6!
Corporate Governance
NABG(Corporate(Governance(Analysis(
Summary(of(Key(Practices((
Corporate(Governance(
( ( (
Practices(to(be(Retained(( ( Practices(to(be(Enhanced((
1. The!Bank!has!complied!with!ASX!
Corporate!Governance!Principles!
and!Recommendations!Checklist!for!
2014!(See!Appendix!3).!!
2. The!Bank!maintains!a!clear!and!
detailed!Corporate!Governance!
Statement!(See!Appendix!3).!!
3. The!Bank’s!Corporate!Governance!
Statement!is!reviewed!and!updated!
at!least!annually.!!
( 1. Update!and!refine!roles!and!
responsibilities!of!the!Board!and!
various!committees,!particularly!the!
Audit!Committee,!in!assessing!
ICAAP!requirements!in!the!Bank’s!
Corporate!Governance!Statement.!!
2. Consider!developing!a!new!unit!or!
committee!to!oversee!ICAAP!
activities!of!the!Bank.!!
!
(
Corporate(Governance(Observations(
NABG’s!corporate!governance!framework!is!crucial!to!provide!a!clear!guidance!on!how!
authority!is!exercised!within!the!group.!!
!
Every! year! the! Bank! is! required! to! comply! with! a! checklist1!developed! by! the! ASX!
Corporate! Governance! Council! designed! to! ensure! financial! institutions! in! Australia!
comply! with! recommended! governance! practices.! ! NABG! has! complied! with! the! ASX!
recommendations!in!2014.!!
!
NABG!maintains!a!clear!well!defined!Corporate!Governance!Statement2!that!spells!out!
the! roles! and! responsibilities! of! the! Board! in! managing! stakeholder! interests! and!
reviewing!and!approving!the!Bank’s!strategy!and!risk!management!activities.!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1!NABG’s!2014!ASX!Corporate!Governance!Council!Principles!and!Recommendations!Checklist!is!attached!
in!Appendix!3!of!this!report!
2!NABG’s!2014!Corporate!Governance!Statement!is!attached!in!Appendix!3!of!this!report!

!
! 7!
Corporate Governance
Additionally,! the! Statement! also! includes! key! responsibilities! of! the! Audit,! Risk,!
Remuneration,!Nomination,!and!Information!Technology!Committee.!
!
The!Board!is!responsible!for!monitoring!and!reviewing!the!Group’s!risk!management!
processes,! maintenance! of! adequate! credit! quality! and! compliance! with! regulatory!
requirements.!!
(
Recommendations(for(Management(Consideration((
Based!on!our!review!of!the!Bank’s!Corporate!Governance!Statement,!we!noted!that!the!
Bank!has!not!refined!roles!and!responsibilities!of!the!Board!and!various!committees!in!
its! existing! statement! to! reflect! specific! functions! of! the! Board! and! the! various!
committees,!particularly!the!Audit!Committee,!in!assessing!ICAAP3!requirements.!!We!
recommend! that! the! Bank! update! its! 2016! Corporate! Governance! Statement! to!
incorporate!this.!!
Given!ICAAP’s!increasing!importance,!the!Bank!should!also!consider!developing!a!new!
dedicated!unit/committee!to!oversee!and!coordinate!ICAAP!related!activities.!!
(
(
Implementation(Roadmap(
(
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3!Internal!Capital!Adequacy!Assessment!(ICAAP)!is!a!measure!of!the!Bank’s!capital!and!is!expressed!as!a!
percentage!of!NABG’s!Risk!Weighted!Assets!(RWA)!
FUTUREPRESENT
2014 2015 2016 2017 2018
Update/reﬁne+Corporate+
Governance+Statement+
3 years
Consider+se5ng+up+a+
new+unit+to+oversee+
ICAAP+ac<vi<es+

!
! 8!
Corporate Social Responsibility
NABG(Corporate(Social(Responsibility(and(Diversity(Inclusion(
Corporate(Social(Responsibility(and(Diversity(Inclusion(
( ( (
1. !Annual!disclosure!of!the!Bank’s!
Corporate!Responsibility!(CR)!
efforts!through!the!Group’s!
Corporate!Responsibility!Policy.!!
2. Continuous!efforts!to!increase!
women!workforce!and!senior!
management!positions!within!the!
Bank.!!
( 1. Continue!current!CR!practices.!No!
major!recommendations!for!
management!consideration!were!
noted.!!
(
NABG’s(Corporate(Social(Responsibility(and(Diversity(Inclusion(Observation(
NABG! ranked! equal! first! among! financial! service! companies! in! the! Global! 500!
companies!in!the!2010!Carbon!Disclosure!Leadership!Index.!!
!
As!at!September!2014,!57!per!cent!of!the!Group’s!employees!were!women.!Women!held!
30!per!cent!of!the!Group’s!executive!management!positions.!!
!
NABG! has! a! specific! internal! council! to! manage! the! Bank’s! Corporate! Responsibility!
(CR)! efforts.! ! The! Group! publishes! a! detailed! ‘Group! Corporate! Responsibility! Policy’!
annually!outlining!policy!requirements!the!Bank’s!management!of!CR4.!!
(
(
(
( (
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4!NABG’s!CR!policy!is!attached!in!Appendix!4!of!this!report!

!
! 9!
Strategic Risk
NABG(Strategic(Risk(
Strategic(Risk(
( ( (
1. NABG’s!focus!on!expense!
management!is!likely!to!improve!
the!Bank’s!future!profitability.!!
2. In!2014,!the!Bank!recorded!the!
second!highest!total!assets!per!
employee!ratio!compared!to!its!
competitors.!!
3. The!Bank!should!continue!balance!
in!revenue!mix!with!NII!accounting!
for!73!per!cent.!!
( 1. Expand!through!acquisitions!to!
accelerate!growth.!!
2. The!expansion!of!NABG’s!
branchless!direct!banking,!UBank,!
may!reduce!personalised!services!
offered!to!customers.!The!Bank!
should!focus!on!being!more!
personalised!in!its!services!to!
customers.!!
3. Reduce!wholesale!funding!
(deposits)!to!approximately!33!per!
cent!from!42!per!cent!in!2014!to!
reduce!the!Bank’s!borrowing!cost!
and!increase!future!income.!!
(
NABG’s(Strategic(Risk(Observation(
NAB!is!organised!into!nine!divisions,!spread!across!four!geographical!regions:!Australia,!
United! Kingdom,! New! Zealand! and! Unites! State! of! America! (See! NABG! Business!
Overview,!Appendix!1).(The!Bank’s!revenue!mix!in!2014!consists!of!interest!income!of!
73!per!cent!and!nondinterest!income!of!27!per!cent!(NABG!Annual!Report,!2014).!In!
2014,! approximately! 27! per! cent! of! NABG’s! total! revenue! was! earned! from! sources!
outside! Australia! (NABG! Annual! Report! 2014).! ! The! Bank! has! a! strong! focus! on!
wholesale!funding!(deposits).!!In!2014,!the!Group’s!funding!mix!consists!of!57.8!per!cent!
retail!funds!and!42.2!per!cent!of!shortdterm!and!longd!term!wholesale!deposits.!!

!
! 10!
Strategic Risk
!
Figure(1:(NABG(Revenue(Mix(2014((NABG(Annual(Report,(2014)(
(
Figure(2:(NABG(Revenue(Source(2014((NABG(Annual(Report,(2014)!
73%!
27%!
NABG(Revenue(Mix([2014](
NII!
NondInterest!Income!
NonUAustralian(
Revenue(
(Foreign),(26.8%(
Australian(
Revenue(
(Domestic),(
73.2%(
NABG(Revenue(Source(2014(

!
! 11!
Strategic Risk
(
Figure(3:(NABG(Funding(Mix(2014((NABG(Annual(Report(2014)!
!
Expansion!Through!Direct!Banking!Services!!
In!2008,!NABG!launched!UBank,!a!branchless!direct!banking!service,!acknowledged!by!
the!Australian!Financial!Review!in!2009!as!one!of!the!key!drivers!of!NABG’s!fast!growth!
in! the! deposit! market! compared! to! its! competitors.! ! UBank! subsequently! launched!
USaver! in! 2009,! a! new! online! savings! account! made! to! differentiate! through! its! easy!
online!application!process.!In!2012,!Ubank!launched!its!first!home!loan!product!called!
UHomeloan.! UBank! was! subsequently! named! ‘Best! Online! Operator’! in! the! 2012!
Australian!Lending!Awards.!
!
Expansion!Through!Acquisitions!
In! 2009,! NABG! acquired! Challenger! Financial! Services.! ! In! December! 2009,! NABG!
attempted!to!purchase!AXA!but!was!blocked!twice!by!the!Australian!Competition!and!
Consumer!Commission.!!
!
!
Retail,(57.80%(
Wholesale,(
42.20%(
NABG(Funding([Deposit](Mix(2014(

!
! 12!
Strategic Risk
Tight!Expense!Management!
In!2014,!the!Group!has!demonstrated!its!ability!to!manage!expenses.!NABG’s!interest!
expense!to!gross!revenue5!declined!from!55.27!per!cent!in!2013!to!46.22!per!cent!in!
2014.!In!2014,!NAB!had!a!total!of!20.64!assets!per!employee!compared!to!13.09!for!ANZ!
and!18.74!for!CBA.!A!higher!asset!per!employee!translates!to!higher!productivity.!!
!
!
Figure(4:(NABG's(Assets(per(Employee(2014((NABG,(Annual(Report(2014)!
(
Acquisition!to!Accelerate!Growth!!(
Based!on!our!observation!on!NABG’s!strategic!risk!profile,!we!recommend!acquisitions!
to!accelerate!the!Bank’s!route!to!growth.!!To!date,!NABG’s!acquisitions!have!not!been!
sufficient!and!large!enough!to!increase!the!Bank’s!income.!!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
5!Net!Interest!Expense!divided!by!Gross!Revenue!
0.00!
5.00!
10.00!
15.00!
20.00!
25.00!
Assets(per(Employee([2014](
NAB!
Westpac!
CBA!
ANZ!

!
! 13!
Strategic Risk
Reduce!Reliance!on!Wholesale!Funding!
NABG’s!high!reliance!on!wholesale!funding!may!impact!the!Group’s!future!profitability!
and!liquidity.!Increased!wholesale!funding!in!deposits!translates!to!a!margin!crunch!and!!
higher!borrowing!costs.!!As!the!market!values!upside!potential,!we!highly!recommend!
that!the!Bank!maintain!a!funding!mix!based!on!historical!averages!of!67!per!cent!retail!
and!33!per!cent!wholesale.!(
!
!
!
! !

!
! 14!
Reputational Risk
NABG(Reputational(Risk(
Reputational(Risk(
( ( (
1. Strong!brand!name!and!customer!
loyalty.!!
2. AAd!longdterm!issuer!rating!by!
Standard!&!Poor.!!
3. 18th!safest!bank!in!the!world!(the!
safest!in!Australia).!!
!
( 1. Reduce!the!regularity!of!executive!
changes!that!signals!weak!
management.!!
2. Improve!the!Bank’s!disaster!
recovery!system!to!better!address!
systems!malfunctions!in!the!future.!!
3. Accelerate!the!completion!of!
NextGen.!!
(
NABG’s(Reputational(Risk(Observation(
NABG!has!a!strong!brand!name!and!customer!loyalty.!!The!bank!has!an!"AAd"!longdterm!
issuer!rating!by!Standard!&!Poor's!as!of!2014.!In!2015,!NABG!ranked!18th!safest!bank!in!
the! world! (the! safest! in! Australia)! in! Global! Finance! Magazine's! Safest! Bank! Rating!
(Business!Insider,!2015).!!
!
Since!2006,!NABG!has!undergone!several!executive!changes!(See!Table!2,!Appendix!1),!
which!signals!weak!management.!
!
Technological!Problems!
In!November!2010,!NABG!suffered!a!systems!malfunction,!due!to!a!failure!in!accounts!
processing,!resulting!in!the!loss!of!approximately!60,!000!baking!transactions.!!These!
transactions! had! to! be! subsequently! manually! recovered.! This! issue! was! claimed! by!
some!to!be!biggest!failure!in!the!Australian!banking!system!(The!Australian,!2010).!!
!
!

!
! 15!
Reputational Risk
The!Bank’s!new!core!banking!platform!upgrade!called!NextGen!was!set!out!to!replace!
the! bank’s! old! Oracle! based! system! and! was! expected! to! be! completed! in! 2014.! The!
NextGen!program!was!however!reported!to!encounter!growing!difficulties!and!delay!in!
its!implementation!(Financial!Review,!2014).!
!
We! recommend! that! NABG! improve! its! disaster! recovery! system! to! better! address!
systems!malfunctions!in!the!future!to!recoup!the!Bank’s!reputational!loss!suffered!in!
November! 2010.! ! Additionally,! the! Bank! should! resolve! all! delays! and! accelerate! the!
completion!of!NextGen!as!soon!as!possible.!!
!
Moreover,!the!Bank!should!reduce!the!regularity!of!management!change!as!it!signals!
weak!management.!!
!
!

!
! 16!
Liquidity Risk
NABG(Liquidity(Risk(Analysis(
Liquidity(Risk(
( ( (
1. Strong!current!ratio!above!peer!
average!since!2006.!!!
( 1. Weak!liquidity!profile!compared!to!
peers!calls!for!immediate!
management!attention.!!
2. Increase!growth!in!liquid!assets!by!
30!per!cent!in!2016!to!avoid!
liquidity!problems.!!
3. Increase!deposits!to!total!assets!
ratio!from!44.3!per!cent!to!50!per!
cent!based!on!peer!average!to!
strengthen!the!Bank’s!balance!
sheet.!!!!
!
NABG(Current(Ratio((
(
Figure(5:(NABG(Current(Ratio(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
0.00(
5.00(
10.00(
15.00(
20.00(
25.00(
30.00(
2006( 2007( 2008( 2009( 2010( 2011( 2012( 2013( 2014(
Current(Ratio(Analysis(
NAB! Westpac! CBA! ANZ! Bendigo!and!Adelaide!Bank! Average!

!
! 17!
Liquidity Risk
NABG!current!ratio6!measures!the!Bank’s!ability!to!pay!shortdterm!obligations.!NABG’s!
current!ratio!for!2014!was!22.72!compared!to!its!peer!average!of!15.54.!!NABG’s!current!
ratio!prior!to!the!GFC!was!18.82!compared!to!its!peer!average!of!12.40!(2006).!!NABG!
has!maintained!a!strong!current!ratio!well!above!the!average!since!2006.!!
!
NABG(Liquid(Assets(Growth((
( (
Figure(6:(NABG(Liquid(Assets(Growth(Peer(Analysis,(2007(U(2014((Bankscope,(2015)(
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6!NABG’s!current!ratio!is!computed!by!dividing!the!Bank’s!liquid!assets!with!deposits!and!shortdterm!
funding!
d100%!
d50%!
0%!
50%!
100%!
150%!
200%!
250%!
300%!
350%!
400%!
2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Cash(and(Cash(Equivalent(Growth([%]((
NAB! Westpac! CBA! ANZ! Bendigo!and!Adelaide!Bank! Average!!

!
! 18!
Liquidity Risk
(
Figure(7:(NABG(Liquid(Assets(to(Total(Assets(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
NABG’s!cash!and!cash!equivalent!growth!had!declined!from!83!per!cent!in!2013!to!15!
per!cent!in!2014.!NABG’s!cash!and!cash!equivalent!growth!in!2014!of!15!per!cent!was!
considerably!below!its!peer!average!of!56!per!cent.!Moreover,!NABG’s!liquid!assets!to!
total!assets!ratio!has!been!below!its!peer!average!since!2006.!In!2014,!NABG’s!liquid!
assets!to!total!assets!was!4.6!per!cent!compared!to!its!the!average!of!6.9!per!cent.!!
!
!
!
!
(
(
(
(
(
(
(
0.0%!
2.0%!
4.0%!
6.0%!
8.0%!
10.0%!
12.0%!
14.0%!
16.0%!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Liquid(Assets(to(Total(Assets([%]((

!
! 19!
Liquidity Risk
NABG(Deposits(Growth(Rate(
!
Figure(8:(NABG(Deposits(Growth(Peer(Analysis,(2007(U(2014((Bankscope,(2015)(
NABG(Loan(Growth(Rate(
!
Figure(9:(NABG(Loan(Growth(Peer(Analysis,(2007(U(2014((Bankscope,(2015)(
d60!
d40!
d20!
0!
20!
40!
60!
80!
100!
2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Deposits(Growth(Rate([%](
d20.00!
0.00!
20.00!
40.00!
60.00!
80.00!
100.00!
120.00!
140.00!
160.00!
2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Loan(Growth(Rate([%](

!
! 20!
Liquidity Risk
NABG(Deposits(to(Total(Assets(
(
Figure(10:(NABG(Deposits(to(Total(Assets(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
NABG’s!deposits!have!gradually!declined!since!2009.!In!2014,!the!Bank’s!deposit!growth!
rate!was!6.84!per!cent!compared!to!its!peer!average!of!9.11!per!cent.!The!Bank’s!deposit!
growth!rate!declined!from!7.89!per!cent!in!2013!to!6.84!per!cent!in!2014.!Similarly,!the!
Bank’s!loan!growth!rate!has!been!below!its!peer!average!since!2012.!In!2014,!NABG’s!
loan!growth!ratio!was!4.74!per!cent!compared!to!its!peer!average!of!6.58!per!cent.!The!
Bank’s!slow!down!in!core!earnings!is!mainly!attributable!to!slower!economic!conditions!
and!lower!operating!margins!(NABG!Annual!Report,!2014).!!
!
Although!NABG’s!deposits!to!total!assets!ratio!has!increased!from!37.8!per!cent!prior!to!
the!GFC!to!44.3!per!cent!in!2014,!the!Bank’s!deposits!to!total!assets!ratio!has!been!the!
weakest!amongst!its!peers!since!2006.!!In!2014,!the!Bank’s!deposits!to!total!assets!were!
44.3! per! cent! compared! to! its! peer! average! of! 50.1! per! cent.! Weak! deposits! to! total!
assets!translate!to!higher!liquidity!risk!for!the!Group.!!
(
0.0%!
10.0%!
20.0%!
30.0%!
40.0%!
50.0%!
60.0%!
70.0%!
80.0%!
90.0%!
100.0%!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Deposits(to(Total(Assets([%]((

!
! 21!
Liquidity Risk
Our!review!on!the!Bank’s!liquidity!position!reveals!significant!weaknesses!that!call!for!
immediate! management! attention.! We! strongly! recommend! that! the! Bank! consider!
increasing! its! growth! in! liquid! assets! by! at! least! 30! per! cent.! Additionally,! the! Bank!
should!increase!its!deposits!to!total!assets!ratio!from!44!per!cent!in!2014!to!50!per!cent!
in!2016!to!strengthen!the!Bank’s!balance!sheet!position.!!
!
(

!
! 22!
Credit Risk
NABG(Credit(Risk(Analysis(
Credit(Risk(
( ( (
1. In! 2014,! NABG! freed! up! capital!
through!the!sale!of!nondperforming!
loans!(NPLs)!in!the!UK!commercial!
real!estate!loans.!!
2. Gradual! decline! in! provision! for!
doubtful!debts!over!the!years.!!
( 1. The! Bank! should! enhance! its!
internal! credit! analysis! on! the!
Bank’s!investment!securities.!!!!
2. NABG! should! be! less! reliant! on!
external! credit! ratings! on! its!
investment!securities.!!
(
NABG(Non(Performing(Loan((NPLs)(to(Gross(Loans(
(
Figure(11:(NABG(NPL’s(to(Gross(Loans(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
(
(
(
(
0.00(
0.50(
1.00(
1.50(
2.00(
2.50(
2005( 2006( 2007( 2008( 2009( 2010( 2011( 2012( 2013( 2014(
NPLs(to(Gross(Loans([%](

!
! 23!
Credit Risk
Growth(of(Provision(for(Doubtful(Debts((
(
Figure(12:(NABG(Provision(of(Doubtful(Debt(Growth(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
(
NABG(Provision(for(Impaired(Loans(to(Gross(Loans((
! Figure(13:(NABG(Provision(for(Impaired(Loans(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
(
d50%!
0%!
50%!
100%!
150%!
200%!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Provision(for(Doubtful(Debt(Growth([%](
NAB! Westpac! CBA! ANZ! Average!!
0.00!
0.50!
1.00!
1.50!
2.00!
2.50!
2005! 2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Provisions(for(Impaired(Loans(to(Gross(
Loans([%](

!
! 24!
Credit Risk
NABG(Credit(Risk(Observation((
NondPerforming!Loans!to!Gross!Loans!
The!Bank’s!nondperforming!loans!(NPL)!to!gross!loan!ratio!declined!from!1.11!per!cent!
in! 2013! to! 0.72! per! cent! in! 2014.! This! is! partly! due! to! the! fact! that! the! Bank! sold7!
approximately!AUD$2.19!billion!of!nondperforming!UK!commercial!real!estate!loans!in!
July!2014!(NABG!Annual!Review,!2014).!!The!sale!came!about!as!the!Bank!announced!to!
replace!Cameron!Clyne!as!chief!executive!with!Andrew!Thorburn.!However,!since!2006,!
NABG’s!NPL!to!gross!loans!have!been!noticeably!above!its!peer!average.!
!
Provision!for!Doubtful!Debts!
Although!NABG’s!provision!for!doubtful!debts!has!been!steadily!declining!since!2006,!
the!Bank’!provisions!for!impaired!loans!to!gross!loans!ratio!was!higher!than!most!of!its!
competitors.!In!2014,!the!Bank’s!provisions!for!impaired!loans!to!gross!loans!ratio!was!
0.57!per!cent!(2013:!0.77!per!cent)!compared!to!its!peer!average!of!0.51!per!cent.!!
!
In!July!2008,!NABG!announced!a!total!of!AUD$1.1!billion!provisions!for!losses,!far!more!
than!its!previous!provisions.!This!triggered!a!dramatic!slide!in!the!Bank’s!share!price.!As!
a!result,!the!Bank’s!investors!claim!NABG!did!not!properly!disclose!its!exposure!to!debt!
in!the!past.!In!the!same!year,!APRA!expressed!concerns!that!the!Bank!failed!its!credit!
analysis!and!was!too!reliant!on!external!ratings.!!
!
Based!on!lessons!learnt!from!the!GFC!and!the!subprime!crisis,!we!recommend!that!the!
Bank! reduce! its! reliance! on! external! credit! ratings! and! enhance! its! internal! credit!
analysis!on!the!Bank’s!investment!securities.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7!NABG!sold!AUD$2.19!b!!of!nondperforming!loans!from!its!UK!commercial!real!estate!portfolio!to!Cerebus!
Global!Investors!

!
! 25!
Business Concentration Risk by Location
NABG(Business(Concentration(Risk(Analysis(
Business(Concentration(Risk(
( ( (
1. Large! concentration! in! the!
Australian! market! favourable! as!
NABG!enjoys!competitive!advantage!
due! to! the! Australian! government!
backing!system.!As!a!result,!NABG!is!
able! to! raise! cheaper! funds! in!
Australia!compared!to!overseas.!!!
( 1. No! major! recommendations! for!
management! consideration! were!
noted.!
(
NABG(Net(Operating(Income(by(Location(
(
Figure(14:(NABG(Net(Operating(Income(by(Location(2014((Bankscope,(2015)(
!
!
Australia(
NAB(Wealth(
New(Zealand(
UK(Banking(
NAB(UK(
Commercial(
Real(Estate(
Others(
NABG(Net(Operating(Income(2014(

!
! 26!
Business Concentration Risk by Location
NABG!is!well!diversified!in!terms!of!business!geographical!location.!In!2014,!68!per!cent!
of! the! Group’s! income! was! derived! in! Australia.! This! large! concentration! in! the!
Australian!market!is!favourable!as!the!Bank!enjoys!a!huge!competitive!advantage!due!to!
the!Australian!government!backing!system8.!!This!backing!allows!NABG!to!raise!cheaper!
funds9!in!Australia!compared!to!overseas.!!!
! !
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8!During!the!GFC,!the!government!introduced!a!guarantee/backing!system!that!left!the!big!four!with!a!
competitive!advantage.!As!a!result!of!this!support,!the!big!four!are!now!regarded!by!rating!agencies!and!
investors!as!‘toodbigdtodfail!
9!The!credit!ratings!of!the!big!four!banks!have!been!lifted!two!notches!ever!since!the!government!support!
system!was!first!introduced,!hence!allowing!the!big!four!to!raise!cheaper!funds!

!
! 27!
Off Balance Sheet Exposure
NABG(Off(Balance(Sheet(Exposure(Analysis(
Off(Balance(Sheet(Exposure(
( ( (
1. Considerably! low! off! balance! sheet!
growth!compared!to!peers.!!
noted.!
(
Off(Balance(Sheet(Exposure(Growth((
!!
Figure(15:(NABG(Off(Balance(Sheet(Peer(Analysis,(2006(U(2014((Bankscope,(2015)!
!
The!average!off!balance!sheet!exposure!of!the!top!five!Australian!banks!declined!from!
66.53!per!cent!during!the!GFC!(2008)!to!4.36!per!cent!in!2014.!!!
NABG’s!off!balance!sheet!exposure!has!declined!since!its!pre!GFC!levels!and!has!been!
considerably!below!its!peer!average!since!2007.!! !
d100.00%!
d50.00%!
0.00%!
50.00%!
100.00%!
150.00%!
200.00%!
2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Off(Balance(Sheet(Growth([%](

!
! 28!
Capital and Regulatory Risk
NABG(Capital(and(Regulatory(Analysis(
Capital(and(Regulatory(Risk(
( ( (
1. Strong!balance!sheet!as!
demonstrated!by!strong!Tier!1!
Capital!Ratio!(CET1).!!The!Bank!
increased!its!CET1!from!7.35!per!
cent!in!2008!to!10.81!in!2014.!!
2. Ranked!18th!safest!bank!in!the!
world!(the!safest!in!Australia).!!
( 1. Respond!to!APRA’s!
recommendation!of!increasing!
CET1!by!at!least!2!per!cent!by!2016!
to!be!in!accordance!with!capital!
charges!imposed!on!global!
‘systematically!important’!banks.!!
(
Tier(1(Capital(Ratio((
(
Figure(16:(NABG(T1(Capital(Ratio(Peer(Analysis,(2008(U(2014((Bankscope,(2015)!
(
!
!
!
7.00(
7.50(
8.00(
8.50(
9.00(
9.50(
10.00(
10.50(
11.00(
11.50(
2008( 2009( 2010( 2011( 2012( 2013( 2014(
T1(Capital(Ratio((%)(
NAB( Westpac( CBA( ANZ( Bendigo(and(Adelaide(Bank( Average(

!
! 29!
In!2009,!NABG!issued!$600!million!Tier!1!Hybrid!Capital!Notes.!As!a!result!of!this,!the!
Bank’s!Tier!1!capital!ratio!rose!from!7.35!per!cent!in!2008!to!8.96!per!cent!in!2009.!!In!!
2014,!the!Bank’s!Tier!I!capital!ratio!was!10.81!per!cent!compared!to!its!peer!average!of!
10.64!per!cent.!!
(
Capital(Adequacy(Ratio((CAR)((
(
Figure(17:(NABG(CAR(Ratio(Peer(Analysis,(2008(U(2014((Bankscope,(2015)!
!
In!2015,!NABG!Ranked!18th!safest!bank!in!the!world!(safest!bank!in!Australia)!in!Global!
Finance! Magazine's! Safest! Bank! Rating! (Business! Insider,! 2015).! The! Bank’s! Capital!
Adequacy! Ratio,! CAR10!rose! from! 11.8! per! cent! in! 2013! to! 12.16! per! cent! in! 2014.! A!
higher!CAR!means!NABG!is!able!to!better!protect!its!depositors!from!crunches!similar!to!
those!of!the!GFC.!!
!
(
(
(
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10!NABG’s!CAR!is!computed!by!dividing!the!Bank’s!Tier!1!and!Tier!2!Capitals!with!the!Bank’s!total!Risk!
Weighted!Assets!(RWAs)!
9.00(
9.50(
10.00(
10.50(
11.00(
11.50(
12.00(
12.50(
13.00(
13.50(
14.00(
2008( 2009( 2010( 2011( 2012( 2013( 2014(
Capital(Adequacy(Ratio((CAR,(%)(
NAB( Westpac( CBA( ANZ( Bendigo(and(Adelaide(Bank( Average(

!
! 30!
Although!the!Bank!is!ranked!amongst!the!top!30!largest!banks!in!the!world,!NABG!has!
had!the!privilege!of!excluding!itself!from!extra!capital!charges!imposed!on!most!global!
‘systematically!important’!banks.!!In!July!of!2015,!the!Australian!Prudential!Regulatory!
Authority!(APRA),!found!that!the!big!four!banks!will!have!to!raise!their!Tier!1!capital!
levels!by!at!least!2!per!cent!to!be!positioned!within!the!top!25!per!cent!of!global!banks11.!
Hence,!we!recommend!that!NABG!respond!to!APRA’s!recommendation!of!increasing!the!
Bank’s!Tier!1!capital!ratio!by!at!least!2!per!cent!by!2016!as!to!ensure!the!Bank!is!in!
accordance! with! capital! charges! imposed! on! most! global! ‘systematically! important’!
banks.!!
!
(
! !
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
11!The!APRA!study!found!Australian!banks'!topdtier!1!capital!reserves!—!or!CET1!ratio!—!fell!well!short!of!
that!held!by!global!peers!

!
! 31!
Market Risk
NABG(Market(Risk(Analysis(
Market(Risk(
( ( (
1. Relatively!low!exposure!to!market!
risk!compared!to!peer!banks.!!!!
( 1. No!major!recommendations!for!
management!consideration!were!
noted.!
(
NABG(Trading(Securities(to(Total(Assets((
(
Figure(18:(NABG(Trading(Securities(to(Total(Assets(Peer(Analysis,(2007(U(2014((Bankscope,(2015)(
(
! !
0.0%!
1.0%!
2.0%!
3.0%!
4.0%!
5.0%!
6.0%!
7.0%!
8.0%!
9.0%!
10.0%!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Trading(Securities(to(Total(Assets([%](
NAB! Westpac! CBA! ANZ! Average!!

!
! 32!
Interest Rate Risk
NABG(Interest(Rate(Risk(Analysis(
Interest(Rate(Risk(
( ( (
1. The! ability! to! optimise! exogenous!
changes! in! interest! rates! as!
demonstrated! by! the! Bank’s! share!
price.!NABG’s!share!price!has!been!
the! second! highest! amongst! its!
competitors!since!2006.!!
noted! as! we! anticipate! that! RBA! is!
unlikely! to! increase! interest! rates!
up!to!2018.!!
(
NABG’s(Ability(to(Optimise(Exogenous(Changes(in(Interest(Rates((Cash(Rates)(
(
Figure(19:(Average(Share(Price(to(Changes(in(Interest(Rates(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
!
!
5.84%(
6.41%(
6.64%(
3.18%( 4.68%(
3.64%(4.41%(
2.50%(
2.70%(
0.0!
10.0!
20.0!
30.0!
40.0!
50.0!
60.0!
70.0!
80.0!
90.0!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Average(Share(Price([$](and(Average(
Yearly(Australian(Interest(Rate(
NAB! Westpac! CBA! ANZ! Bendigo!and!Adelaide!Bank!

!
! 33!
!
Interest Rate Risk
The!Bank!appears!to!be!able!to!optimise!exogenous!changes!in!interest!rates!relatively!
well!as!demonstrated!by!its!high!share!price.!!NABG’s!average!share!price!has!been!the!
second!highest!amongst!its!competitors!since!2006.!!
Based!on!the!minutes!of!the!Reserve!Bank!of!Australia’s!(RBA)!August!2015!meeting,!
the!RBA!has!reassured!Australian!banks!that!it!is!unlikely!to!increase!interest!rates!in!
the!year!ahead.!!Furthermore,!leading!economists!are!tipping!that!the!RBA!wont!raise!
the!official!cash!rate!for!up!to!three!years!(Australian!Financial!Review,!2015).!!
! !

!
! 34!
Operational Risk
NABG(Operational(Risk(Analysis(
Operational(Risk(
( ( (
( ( 1. Reduce! wholesale! funding!
(deposits)!to!reduce!high!borrowing!
cost! which! translates! to! low! net!
interest!margins!(NIM).!!
2. Tighten!cost!in!NABG’s!UK!banking!
operations.!!
(
NABG(Net(Interest(Margin(
(
Figure(20:(NABG(Net(Interest(Margin(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
!
!
0.00!
0.50!
1.00!
1.50!
2.00!
2.50!
3.00!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Net(Interest(Margin([%]((

!
! 35!
Operational Risk
With!interest!rates!at!historic!lows!in!Australia,!NABG!faces!intense!competition!on!both!
sides!of!its!balance!sheet.!!In!2015,!NABG!had!the!lowest!net!interest!margin!(NIM)12!of!
1.68! per! cent! compared! to! its! peer! average! of! 1.87! per! cent.! NABG’s! lower! NIM! was!
largely!a!result!of!higher!competitive!pressure,!increased!holdings!of!liquid!assets!and!
higher!borrowing!cost!due!to!the!Bank’s!large!exposure!to!wholesale!deposits.!!
(
Cost(to(Income(Ratio((
(
Figure(21:(NABG(Cost(to(Income(Ratio(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
NABG!recorded!a!significant!increase!in!the!Bank’!cost!to!income!ratio!from!44.73!per!
cent!in!2013!to!53.78!per!cent!in!2014.!The!Bank’s!high!cost!to!income!ratio!in!2014!was!
largely!attributable!to!higher!costs!incurred!in!the!Bank’s!UK!banking!operations!and!
continued!investment!in!NextGen.!!
!
(
(
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
12!NABG’s!NIM!was!computed!by!dividing!Net!Interest!Income!(Interest!Income!minus!Interest!Expense)!
to!Total!Earnings!Assets!
0.00!
10.00!
20.00!
30.00!
40.00!
50.00!
60.00!
70.00!
80.00!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Cost(to(Income(Ratio([%](

!
! 36!
Operational Risk
Based! on! our! review! of! the! Bank’s! operational! risk,! we! recommend! that! the! Bank!
reduce!its!exposure!to!wholesale!funds!(deposits)!and!increase!retail!deposits!to!reduce!
the!Bank’s!borrowing!costs,!which!translates!to!a!higher!NIM!ratio.!!!Additionally,!as!the!
Bank’s! high! cost! in! 2014! was! largely! attributable! to! charges! in! its! UK! banking!
operations,!we!recommend!that!the!Bank!tighten!its!expenses!in!its!UK!operations.!!
!
(
! !

!
! 37!
Foreign Exchange Risk
NABG(Foreign(Exchange(Risk(Analysis(
Foreign(Exchange(Risk(
( ( (
1. NABG’s!overall!exposure!to!foreign!
exchange! risk! has! been! historically!
low!compared!to!its!competitors.!!!
noted.!!
(
Foreign(Exchange(Exposure((
(
(
Figure(22:(NABG(Foreign(Exchange(Exposure(Peer(Analysis,(2006(U(2014((Bankscope,(2015)(
!
!
!
! !
d$10,000.00!!
!$d!!!!
!$10,000.00!!
!$20,000.00!!
!$30,000.00!!
!$40,000.00!!
!$50,000.00!!
!$60,000.00!!
!$70,000.00!!
2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!
Fair(Value(of(Foreign(Exchange(Related(
Contracts([$,(Million](
NAB! Westpac! CBA! ANZ! Average!

!
! 38!
Stability Ratios
Management(by(Exception((MBE)(Analysis(
Stability(Ratios(
( ( (
1. NABG’s! stability! ratios! fall! within!
the!upper!and!lower!control!limit!–!
hence!no!exceptions!were!noted.!!
noted.!!
(
NABG(Return(on(Average(Assets((ROAA)(
(
(
Figure(23:(NABG(Movement(in(ROAA,(2006(U(2014((Bankscope,(2015)(
(
(
(
(
(
(
(
(
0.0%!
0.2%!
0.4%!
0.6%!
0.8%!
1.0%!
1.2%!
1.4%!
2005! 2007! 2009! 2011! 2013! 2015!
Return(on(Average(Assets(%(
Year(
Movement(in(ROAA(%(
ROAA!%!
Upper!Control!Limit!
Lower!Control!Limit!

!
! 39!
Stability Ratios
NABG(Gearing(Ratio(
(
Figure(24:(NABG(Movement(in(Gearing(Ratio,(2006(U(2014((Bankscope,(2015)(
(
NABG(Liquidation(Value((
(
Figure(25:(NABG(Liquidation(Value(Per(Dollar(of(Share(Price,(2006(U(2014((Bankscope,(2015)(
(
3.0%!
3.5%!
4.0%!
4.5%!
5.0%!
5.5%!
6.0%!
2005! 2007! 2009! 2011! 2013! 2015!
Gearing(Ratio(%(
Year(
Movement(in(Gearing(Ratio(
Gearing!Ratio!%!
20.0%!
30.0%!
40.0%!
50.0%!
60.0%!
70.0%!
80.0%!
90.0%!
2005! 2007! 2009! 2011! 2013! 2015!
Liquidation(Value(per(one(Dollar(of(
share(price((%)(
Liquidation!value!per!$!of!
share!price!(%)!

!
! 40!
Concluding Remarks
!
This!report!concludes!that!the!major!areas!of!weakness!require!remedial!action!by!the!
Bank’s!management!and!executives.!Risk!management!begins!at!the!top!management!
level! and! has! a! strong! impact! on! the! Bank’s! reputation.! Based! on! our! review! of! the!
Bank’s! business! and! financial! risk,! NABG! has! a! sound! and! comprehensive! risk!
management!framework!in!place,!however,!the!Bank!requires!certain!enhancements!to!
strengthen!its!competitive!position!in!the!market.!These!enhancements!are!crucial!to!
avoid! financial! disruptions! which! will! in! turn! lead! to! a! counter! effect! on! the!
shareholders,!investors,!creditors!and!other!stake!holders!of!the!banks.!
!
!
!

!
! 41!
Bibliography
2. Bidders!circle!as!NAB!offloads!nondperforming!British!loans.!(2014,!July!17).!The$
Australian$Business$Review.!Retrieved!from!
http://www.theaustralian.com.au/business/biddersdcircledasdnabdoffloadsd
nonperformingdbritishdloans/storyde6frg8zxd1226991490962!
3. National!Australia!Bank!d!Wikipedia,!the!free!encyclopedia.!(n.d.).!
Retrieved!October!6,!2015,!from!
https://en.wikipedia.org/wiki/National_Australia_Bank#cite_noted91!
4. Risk$and$Capital$Report$2012.!(2012).!Retrieved!from!National!Australia!Bank!
website:!http://www.afr.com/rw/Wires/Stories/2012d11d
19/ASXAnnouncements/NAB_01357361.pdf!
5. Risk$and$Capital$Report$2013.!(2013).!Retrieved!from!National!Australia!Bank!
website:!http://capital.nab.com.au/docs/March2013_RCR.pdf!
6. World's!Top!Banks.!(n.d.).!Retrieved!from!http://www.relbanks.com/worldsd
topdbanks!
7. Retrieved!from!http://www.worldbank.org/financialcrisis/pdf/levragedratiod
web.pdf!
8. ANZ$annual$report.!(2005).!Retrieved!from!
https://www.shareholder.anz.com/pages/annualdreportdarchive!

!
! 42!
14. ANZ$annual$report.!(2011).!Retrieved!from!http://media.corporated
ir.net/media_files/IROL/96/96910/2011_Annual_Report_ANZ.pdf!
https://www.shareholder.anz.com/sites/default/files/2012AnnualReport.pdf!
http://shareholder.anz.com/sites/default/files/emtnd
16_pages_72_to_188_of_the_2013_annual_report_final.pdf!
https://www.shareholder.anz.com/sites/default/files/2014dANZdAnnuald
Report.pdf!
18. Bendigo$Adelaide$annual$report.!(2008).!Retrieved!from!
http://www.bendigoadelaide.com.au/public/shareholders/annual_reports.asp!

!
! 43!
25. Bendigo$annual$report.!(2005).!Retrieved!from!
28. Commbank$annual$report.!(2004).!Retrieved!from!
https://www.commbank.com.au/aboutdus/shareholders/financiald
information/2004d2010dannualdreports.html!

!
! 44!
information/annualdreports.html!
39. Consumer!price!index!|!Australian!Taxation!Office.!(n.d.).!Retrieved!from!
https://www.ato.gov.au/Rates/Consumerdpricedindex/!

!
! 45!
40. Factors!that!Affect!Bank!Stability!Liberty!Street!Economics.!(n.d.).!Retrieved!from!
http://libertystreeteconomics.newyorkfed.org/2014/02/factorsdthatdaffectd
bankdstability.html#.Vhobheyqqkp!
41. Liquidation!Value!Definition!|!Investopedia.!(n.d.).!Retrieved!from!
http://www.investopedia.com/terms/l/liquidationdvalue.asp!
42. Monash!Students!and!Staff!Only,!Monash!University!Library.!(n.d.).!Retrieved!
from!
http://datanalysis.morningstar.com.au.ezproxy.lib.monash.edu.au/af/company/
pricehistoryd
monthlyadj?glossaryPage=company%2Fpricehistory&ASXCode=NAB&xtmd
licensee=datpremium&page=3&resultsperpage=50&xsl_start_date=2005d09d
30&xsl_end_date=2015d06d30&xsl_frequence=Monthly&xsl_type=Adjusted&xsld
graphtype=tr10&active=PRC_Sec1!
43. Monash!Students!and!Staff!Only,!Monash!University!Library.!(n.d.).!Retrieved!
from!https://bankscopedbvdinfod
com.ezproxy.lib.monash.edu.au/Search.QuickSearch.serv?_CID=1&context=15UL
8IBZSOSV033!
44. NAB$annual$report.!(2005).!Retrieved!from!
http://www.nab.com.au/content/dam/nab/aboutdus/shareholderd
centre/Reportdarchive/AnnualdFinancialdReportd2005.pdf!

!
! 46!
centre/Reportdarchive/AnnualdReportd2007.pdf!
49. NAB$annual$report.!(2010).!Retrieved!from!http://cr.nab.com.au/docs/2010d
annualdfinancialdreport.pdf!
centre/Reportdarchive/2011AnnualFinancialReview.pdf!
https://www.nab.com.au/vgnmedia/downld/asxdnabdfyrad12.pdf!
52. New!Zealand!GDP!|!1960d2015!|!Data!|!Chart!|!Calendar!|!Forecast!|!News.!(n.d.).!
Retrieved!from!http://www.tradingeconomics.com/newdzealand/gdp!
53. RBA:!Cash!Rate!Target.!(n.d.).!Retrieved!from!
http://www.rba.gov.au/statistics/cashdrate/cashdrated2002d2007.html!
54. Westpac$annual$report.!(2005).!Retrieved!from!
https://www.westpac.com.au/docs/pdf/aw/ic/WAR2005FINREP.pdf!
https://www.westpac.com.au/docs/pdf/aw/ic/WAR2006_Financial.pdf!

!
! 47!
https://www.westpac.com.au/docs/pdf/aw/ic/WAR2007_AnnualReport_optimi
1.pdf!
http://info.westpac.com.au/Sites/1/pdf/WBC08AR_Online.pdf!
https://www.westpac.com.au/docs/pdf/aw/ic/annualreportd2009.pdf!
https://www.westpac.com.au/docs/pdf/aw/ic/WBC2010_Annual_Report_ASX.p
df!
http://www.westpac.com.au/docs/pdf/aw/ic/2011_Annual_Report.pdf!
https://www.westpac.com.au/docs/pdf/aw/ic/2012_Annual_Report.pdf!
https://www.westpac.com.au/docs/pdf/aw/ic/2013_WBC_Annual_Report.pdf!
63. Westpac$Annual$Report.!(2014).!Retrieved!from!
https://www.westpac.com.au/docs/pdf/aw/ic/2014WestpacGroupAnnualRepo
rt.pdf!
64. Yearly!Average!Exchange!Rates!d!Oz!Forex!Foreign!Exchange.!(n.d.).!Retrieved!
from!http://www.ozforex.com.au/forexdtools/historicaldratedtools/yearlyd
averagedrates!
!

!
! 48!
65. Long,!S.!(2004,!February!2).!Frank!Cicutto!resigns!as!NAB!boss.!ABC$World.!
Retrieved!from!
http://www.abc.net.au/worldtoday/content/2004/s1036288.htm!
66. Cathy!Walter:!parent,!achiever,!dissident.!(2004,!April!4).!The$Age.!Retrieved!
from!http://www.theage.com.au/articles/2004/04/03/1080941721594.html!
67. NAB!mixes!job!cuts!with!record!profits.!(2005,!May!11).!The$Age![Melbourne].!
Retrieved!from!http://www.theage.com.au/news/Business/NABdmixesdjobd
cutsdwithdrecorddprofits/2005/05/11/1115584998575.html!
68. Foo,!F.!(2010,!March!23).!Tridgeneration!plant!to!cut!bank's!energy!bill.!The$
Australian.!Retrieved!from!
http://www.theaustralian.com.au/business/technology/tridgenerationdplantdtod
cutdbanksdenergydbill/storyde6frgakxd1225844000091!
69. Foo,!F.!(2010,!November!30).!Human!error!triggered!NAB!software!corruption.!
The$Australian.!Retrieved!from!
http://www.theaustralian.com.au/business/technology/humanderrord
triggereddnabdsoftwaredcorruption/storyde6frgakxd1225962953523!
70. Bouris,!&!Joye.!(2012,!February!7).!Our!banks:!too!big!to!fail,!too!few!to!be!
competitive.!The$Drum$News.!Retrieved!from!
http://www.abc.net.au/news/2012d02d07/joyedd/3815636!
71. NAB!failed!subprime!risk!assessment,!court!told.!(2012,!September!5).!
News.com.au.!Retrieved!from!http://www.news.com.au/finance/reald
estate/nabdfaileddsubprimedriskdassessmentdcourtdtold/storydfndbarftd
1226465226522!

!
! 49!
72. Smith,!P.!(2014,!April!28).!NAB!starts!digital!review!as!Nextgen!questions!
remain.!Financial$Review.!Retrieved!from!
http://www.afr.com/technology/enterprisedit/nabdstartsddigitaldreviewdasd
nextgendquestionsdremaind20140428dihy8n!
73. RBA:$SMP$February$2015KDomestic$Economic$Conditions.!(n.d.).!Retrieved!from!
http://www.rba.gov.au/publications/smp/2015/feb/html/domdecodcond.html!
74. Yeates,!C.!(2015,!May!9).!Competition,!rising!costs,!regulation:!why!Australian!
banks!are!finding!it!tough.!The$Sydney$Morning$Herald.!Retrieved!from!
http://www.smh.com.au/business/bankingdanddfinance/competitiondrisingd
costsdregulationdwhydaustraliandbanksdaredfindingditdtoughd20150507d
ggw6cw.html!
75. Powell,!R.!(2015,!May!11).!RBA!unlikely!to!raise!interest!rates!'until!at!least!
2018'.!Australian$Financial$Review.!Retrieved!from!
http://www.afr.com/markets/rbadunlikelydtodraisedinterestdratesduntildatdleastd
2018d20150511dggyo62!
76. Letts,!S.!(2015,!July!13).!Big!four!banks!Commonwealth,!Westpac,!NAB,!ANZ!
facing!$30b!capital!shortfall.!ABC$News.!Retrieved!from!
http://www.abc.net.au/news/2015d07d13/bigdfourdbanksdfacingd2430bdcapitald
shortfall/6615448!
77. Tasch,!B.,!&!Macias,!A.!(2015,!July!15).!The!17!safest!banks!in!the!world.!Business$
Insider.!Retrieved!from!http://www.businessinsider.com.au/worldsdsafestd
banksd2015d7#17dnationaldaustraliadbankd1!

!
! 50!
Appendix 1
NABG(Background(
!
!
In! terms! of! market! capitalisation! and!
customers,! National! Australia! Bank,!
NABG,! is! one! of! the! fourth! largest!
financial!institutions!in!Australia.!!NABG!
is! currently! ranked! as! the! 21st! largest!
bank! in! the! world! as! measured! by!
market! capitalisation! and! 41st! largest!
bank!in!the!world!as!measured!by!total!
assets! in! 2014! (World's! Top! Banks,!
Relbanks.com,! 2014).! ! NABG! operates!
1,771!branches!and!service!centres!and!
4,578! ATMs! across! Australia,! New!
Zealand,!UK,!USA!and!Asia!serving!12.7!
million! customers! (Annual! Report,!
NABG,! 2014).! ! The! bank! has! an! "AAd"!
longdterm! issuer! rating! by! Standard! &!
Poor's! (Annual! Report,! NABG,! 2014).!
NABG! ranked! equal! first! among!
financial! service! companies! in! the!
Global! 500! companies! in! the! 2010!
Carbon! Disclosure! Leadership! Index!
(“Environment”,!NABG,!2011).!
!
(
(
(

!
! 51!
Appendix 1
NABG(Business(Overview(
NABG!is!organised!into!nine!divisions,!spread!across!four!geographic!regions:!
Region! Division! Description!
Australia(
Business(Banking( Australia's!largest!business!bank!by!assets!
(APRA,!2012)!
Employees:!5,427!
Clients:!~700,000!
Personal(Banking( Australia's!fourth!largest!retail!bank!
Employees:!8,705!
Customers:!~3,000,000!(~100,000!UBank!
customers)!
Brands!Include:!NABG!Retail,!UBank,!
Homeside!and!Advantedge!
UBank( An!internet!centric!direct!bank!
Deposits:!~A$15bn!
Customers:!~100,000!
MLC(&(NABG(
Private(Wealth(
Employees:!5,909!
Investment,!superannuation,!insurance!and!
private!wealth!solutions!to!individual!
investors!and!corporate!customers!
Brands!Include:!MLC,!JBWere,!Navigator,!Plum,!
JANA,!NABG!Private!Wealth!
United(
Kingdom(
UK(Banking( Clydesdale!Bank!and!Yorkshire!Bank!
Retail,!business!and!corporate!banking!
services!
Employees:!8,351!
Customers:!~2.7!million!!

!
! 52!
New(Zealand(
NZ(Banking( Bank!of!New!Zealand!
Retail,!business!and!agribusiness!banking!and!
insurance!services!
Employees:!4,641!
Customers:!~1!million!
USA(
Great(Western(
Bank(
Great!Western!Bank!
Consumer,!business!and!agridbanking!
Employees:!1,492!
Customers:!~300,000!!
125!branches!located!across!seven!states,!
mainly!in!the!MiddWest!agricultural!region!of!
the!US!
Global(
Wholesale(
Banking(
2,889!employees!located!in!Australia,!New!
Zealand,!Asia,!the!United!Kingdom!and!the!
United!States!
Capabilities:!capital!markets,!foreign!
exchange,!derivatives,!project!
finance,!custodian!services!
Sector!Specialisations:!Financial!
institutions,!Infrastructure,!Natural!Resources!
Specialised(Group(
Assets(
Bad!bank!containing!approximately!A$15!
billion!of!exposures!including!CDOs!and!high!
yield!debt!
Created!in!aftermath!of!the!Global!Financial!
Crisis!
Aim!for!orderly!wind!down!of!assets!over!time!
Corporate(
Functions(and(
Other(
Includes!the!Group's!operations!in!Asia,!as!well!
as!Group!Funding!and!other!service!functions!
Table(1:(NABG(Business(Overview((Wikipedia,(2015)(

!
! 53!
Appendix 1
Corporate(Responsibility(
In!2008,!NABG!invested!$33.5m!in!corporate!responsibility!initiatives.!In!March!2010,!
NABG!stated!it!expected!to!save!nearly!$1m!in!annual!power!costs!from!a!$6.5m!trid
generation!plant!at!its!main!data!centre!(The!Australian,!2010).!NABG!became!one!of!
Australia's! largest! carbon! neutral! companies! in! September! 2010! (Dynamic! Business,!
2010).!NABG!ranked!equal!first!among!financial!service!companies!in!the!Global!500!
companies! in! the! 2010! Carbon! Disclosure! Leadership! Index! (NABG! Corporate!
Responsibility!Policy,!2011).!!
(
Foreign(Currency(Trader(Staff(Fraud(
In! 2004,! investigations! by! PriceWaterhouse! Coopers! and! the! Australian! Prudential!
Regulation!Authority,!APRA,!discovered!that!losses!totalling!$360m!had!been!covered!
up!as!a!result!of!unauthorised!spot!trades!on!NABG’s!foreign!currency!options!desk.!In!
2006,!two!former!NABG!foreign!currency!options!traders!were!sentenced!on!charges!
brought!by!the!Australian!Securities!and!Investments!Commission,!ASIC,!and!incurred!
jail!terms!(ASIC,!2006).!!
!
NABG(Financial(Planner(Fleeces(Retirees(of(AU$7m
In!2006,!a!NABG!financial!planner!based!in!Sydney!pleaded!guilty!to!deceit!charges!of!
deliberately! making! financial! recommendations! between! 1997! to! 2001! to! NABG’s!
clients,! mostly! retirees,! to! invest! in! a! fraudulent! unapproved! entity! called! BSI! Corp!
based!in!the!Bahamas.!!
(
Tax(evasion(and(customer(overcharging(in(Ireland(
Nine!senior!managers!from!NABG’s!Irish!subsidiary,!National!Irish!Bank,!were!barred!
from! being! an! officer! of! any! company! for! overcharging! the! bank’s! customers! and!
engaging!in!tax!evasion!schemes!prior!to!1998.!
!
(
(

!
! 54!
Appendix 1
HomeSide(Write(Downs(
NABG!recorded!two!major!writeddowns!associated!with!HomeSide!in!2001:!first!in!July!
2001!($450m)!and!second!in!September!2001!($1.75b).!NABG!recorded!to!total!of!$2.2b!
in!losses!due!to!HomeSide.!!
!
Executive(Changes((
Prior(to(2006( The!foreign!currency!trader!fraud!was!the!catalyst!for!the!
resignations!of!CEO!Frank!Cicutto!and!Chairman!Charles!Allen!
(ABC!World,!2004).!!
The!resignations!were!preceded!by!a!Board!revolt!where!
Catherine!Walters!emerged!as!a!whistle!blower!citing!serious!
culture!issues!at!the!company!having!led!to!the!string!of!
failures!(The!Age,!2004).!!
In!2005,!NABG!announced!a!cut!of!2,000!Australian!jobs!as!
part!of!a!global!costdcutting!program!(The!Age,!2005).!!
In!late!2005,!NABG!sold!Northern!Bank!and!National!Irish!
Bank!to!the!Danish!Danske!Bank.!
Over!200!additional!jobs!had!been!sent!offshore!by!2006.!
Between( 2006( U(
2009(
By!2006,!NABG!had!a!major!revamp:!Recorded!~$4.3b!profit!
and!won!2!local!“Bank!of!the!Year”!awards.!!
In! July! 2008,! NABG’s! announcement! of! an! additional! of! ~!
$830m!in!provisions!associated!with!the!deterioration!of!the!
US!real!estate!market!lead!to!the!biggest!singledday!fall!of!the!
bank’s!share!price!in!21!years.!!
Launched!UBank,!branchless!direct!banking,!in!October!2008!
NABG!claimed!~10,000!new!customers!in!a!month!for!UBank!
in!its!2009!Annual!Report.!!
UBank! acknowledge! for! driver! of! NABG’s! fast! growth! in!
deposit!market!share!compared!to!its!competitors!(Australian!
Financial!Review,!2009).!!

!
! 55!
New(Strategy(2009(U(
2014(
UBank!launched!USaver,!new!online!savings!account!made!to!
differentiate!through!its!easy!online!application!process.!!
In!December!2009,!USaver!was!awarded!“Best!of!Best’!award!
by!Money!Magazine.!!
In! 2009,! along! with! a! couple! of! other! purchases,! NABG!
acquired!Challenger!Financial!Services!for!$385m!in!order!to!
boost! its! brokerage! sector! (ASX,! 2009).! ! This! strategy! was!
later! questioned! as! NABG’s! net! profit! dropped! by! 22%! in!
2012!compared!to!the!previous!year.!!
In!December!2009,!NABG!attempted!to!purchase!AXA!but!was!
blocked! twice! by! the! Australian! Competition! and! Consumer!
Commission.!!
In!November!2010,!NABG!suffered!a!systems!malfunction,!due!
to! a! failure! in! accounts! processing,! resulting! in! the! loss! of!
~60,!000!baking!transactions.!!These!transactions!had!to!be!
subsequently!manually!recovered.!This!issue!was!claimed!by!
some!to!be!biggest!failure!in!the!Australian!banking!system!
(The!Australian,!2010).!!
In! October! 2012,! NABG’s! CEO,! Cameron! Clyne! claimed! that!
UBank! had! raised! a! total! of! ~! $16b! in! deposits! (Business!
Spectator,!2012).!!
In! 2012,! UBank! launched! its! first! home! loan! product! called!
UHomeloan.!!
In! 2012,! UBank! was! named! “Best! Online! Operator”! in! the!
2012!Australian!Lending!Awards.!!
NABG’s! CEO! Cameron! Clyne! undertakes! new! strategies! to!
revamp! the! bank’s! reputation,! emphasise! on! wealth!
management!and!focus!on!the!bank’s!operations!in!Australia.!!
NABG! focuses! on! increasing! market! share! by! competing! on!
prices! and! cutting! fees! (The! Age,! 2011).! ! This! strategy!
however!resulted!in!overall!lower!Operating!Margins!for!the!
bank.!!

!
! 56!
A!new!core!banking!platform!upgrade!called!NextGen!was!set!
out! to! replace! the! bank’s! old! Oracle! based! system! and! was!
expected!to!be!completed!in!2014.!The!NextGen!program!was!
however!reported!to!encounter!growing!difficulties!and!delay!
in!its!implementation!(Financial!Review,!2014).!!
Table(2:(NABG(Executive(Changes(
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!

!
! 57!
Appendix 2
NABG(Industry(Review(
NABG’s(Major(Competitors(
The! Australian! financial! system! is! characterized! by! a! large! number! of! players,! both!
traditional! and! new,! and! wellddeveloped! equity! and! corporate! bond! markets!
(Datamonitor,!2010).!NABG!faces!fierce!competition!from!large!domestic!banks!such!as!
Commonwealth! Bank! Australia! (CBA),! ANZ! and! Westpac,! which! together! with! NABG!
form! the! ‘Big! four’! Australian! banks.! Additionally,! NABG! faces! stiff! competition! from!
foreign! banks,! smaller! niche! banks,! nondbank! financial! intermediaries,! credit! unions!
and!finance!companies!such!as,!amongst!others,!Bendigo!and!Adelaide!Bank,!Bank!of!
Queensland,!Heritage!Bank!and!Citigroup.!!
!
Economic(Impact(on(NABG(and(the(Australian(Financial(System(
Being! amongst! the! largest! mixed! market! economies! in! the! world,! the! Australian!
economy! has! a! GDP! of! USD$1.525! trillion! as! of! 2014! (Central! Intelligence! Agency,!
2014).! The! Australian! economy! is! dominated! by! its! service! sector! and! is! largely!
dependent!on!the!mining!and!agriculture!sector.!!
(
In!terms!of!the!financial!system,!Australia!relies!on!four!major!banks:!CBA,!Westpac,!
ANZ!and!NABG.!These!banks!control!up!to!90!precent!of!all!financial!transactions!across!
the!country.!For!the!first!time!in!Australia,!during!the!GFC,!the!government!introduced!a!
guarantee/backing! system! that! left! the! big! four! with! a! competitive! advantage.! As! a!
result!of!this!support,!the!big!four!are!now!regarded!by!rating!agencies!and!investors!as!
‘toodbigdtodfail’.!The!credit!ratings!of!these!aforementioned!banks!have!been!lifted!two!
notches!ever!since!the!government!support!system!was!first!introduced.!This!allows!the!
aforementioned!banks!to!raise!cheaper!money!compared!to!its!smaller!peers.!Moreover,!
although!ranked!amongst!the!top!30!largest!banks!in!the!world,!the!majors!have!had!the!
privilege! of! excluding! themselves! from! extra! capital! charges! imposed! on! most!
‘systematically! important’! banks.! Due! to! premium! ratings,! the! majors! have! since!
enjoyed!healthier!profits!and!safety!from!smaller!and!foreign!competitors.!!
!

!
! 58!
Appendix 2
Despite!these!advantages,!the!big!four!Australian!banks,!NABG!included,!are!certainly!
not! immune! to! risks.! Similar! to! its! major! competitors,! NABG! is! vulnerable! to! the!
slowdown!in!global!and!domestic!markets.!In!2010,!the!Australian!GDP!took!a!hit!as!a!
result!of!consumer!weakness,!lower!commodity!prices!and!high!unemployment!rates.!
Although!the!Australian!economy!has!grown!around!two!and!a!half!per!cent!on!average!
in! the! past! two! years,! declining! mining! investment! has! continued! to! weigh! on! the!
economy! (RBA,! 2015).! Australia’s! over! reliance! on! emerging! markets! posses! as! a!
significant! threat! to! the! aforementioned! banks! as! growth! in! emerging! markets! like!
China! begun! to! slow! down.! Furthermore,! as! unemployment! rates! in! New! Zealand!
continue! to! rise,! NABG’s! business! in! New! Zealand! will! continue! to! pose! as! a! major!
challenge.!Amongst!the!four!banks,!CBA!is!the!largest!and!is!most!domestically!focused.!!
!
Domestic(Economic(Conditions(and(Forecasts((
In!2014,!the!Australian!economy!has!grown!around!2!½!per!cent!on!average!from!the!
past!two!years!(RBA,!2015).!The!Reserve!Bank!of!Australia!foresees!the!Australian!GDP!
to! grow! by! 3! to! 4! ½! per! cent! by! June! 2017.! Supported! by! low! interest! rates!
environment,!mining!investments!and!nondmining!activities!have!strengthened!relative!
to!2013.!Consumption!growth!remains!below!average!despite!low!interest!rates!due!to!
slow!growth!of!labour!income.!Nevertheless,!consumption!has!been!growing!faster!than!
household!incomes,!with!saving!ratio!declining!gradually!over!the!past!couple!of!years!
(RBA,! 2015).! Consumption! growth! in! New! South! Wales! and! Victoria,! which! has!
experienced! the! strongest! rising! property! prices,! has! been! the! fastest! in! Australia.!
Consumption!growth!in!Queensland!and!Western!Australia!has!been!the!lowest!due!to!
contraction!in!mining!investment.!!
!
As!of!March!2015,!business!investments!continue!to!decline!particularly!in!the!mining!
sector!(RBA,!2015).!Exports!continue!to!grow!particularly!in!the!resource!sector.!The!
depreciation!of!the!Australian!exchange!rate!has!supported!exports!of!services,!such!as!
tourism,!while!service!imports!have!declined.!House!prices!continue!to!rise!particularly!
in!New!South!Wales!and!Victoria.!!

!
! 59!
Appendix 2
NABG(SWOT(Analysis
S!
!
! Strong!brand!name!
! Good!customer!loyalty!
! Leading!financial!player!with!diversified!business!line!and!
geography!
! Australia’s!largest!business!bank!by!assets!size!
! Strong,!more!conservative!balance!sheet!compared!to!Australian!
peers!!d!conservative!capital,!funding!and!liquidity!position!
! In!2009,!NABG!issued!$600m!Tier!1!Hybrid!Capital!Notes.!As!a!
result!of!this,!NABG’s!Tier!1!capital!rose!from!7.35%!in!2008!to!
8.96%!in!2009!!
! In!2015,!NABG!Ranked!18th!safest!bank!in!the!world!(safest!bank!
in!Australia)!in!Global!Finance!Magazine's!Safest!Bank!Rating!
(Business!Insider,!2015)!
!
W(
!
! Decline!in!credit!quality!!
! Over!reliance!on!wholesale!funding!
! Since!2006,!NABG!has!undergone!several!executive!changes!(see!
table!2,!Appendix!1)!which!signals!weak!management!
!
O(
!
! Expansion!to!Asia!and!International!markets!like!China!will!allow!
NABG!to!expand!their!business!and!diversify!their!portfolio!of!
products!and!services!
! Profitable!acquisitions!and!joint!ventures!may!likely!accelerate!
growth!!
!
!

!
! 60!
T(
!
! Continuously!changing!government!regulations!!
! Global,!emerging!markets!and!domestic!economic!slow!downs!will!
continue!to!affects!NABG’s!business!profitability!
! Slow!down!in!Australian!economy!due!consumer!weakness!and!
lower!commodity!prices!
! NABG’s!business!in!NZ!faces!challenges!!
! Stiff!competition!with!other!local!banks!in!the!market!can!
potentially!lower!NABG’s!profitability(
! Australian!financial!services!industry!has!a!large!number!of!
players:!both!large!and!niche.!NABG!faces!strong!competition!
from!Commonwealth!Bank!of!Australia,!ANZ,!Westpac!and!a!
number!of!niche!players!like!BendigodAdelaide!Bank,!and!nond
bank!financial!intermediaries(
! In!order!for!NABG!to!grow!in!a!mature!market,!the!bank!has!to!
increase!its!market!share!which!can!be!difficult!and!expensive(
! Volatile!interest!rate!environment!means!that!NABG!has!to!
vigorously!manage!its!assets!and!liabilities!which!could!lead!to!
increase!in!cost!and!development!delays(
(
Table(3:(NABG(SWOT(Analysis!

!
! 61!
Appendix 2
Porter’s(Five(Forces((
(
!
! !

!
! 62!
Appendix 3
This!page!is!intentionally!left!blank.!!

BFF5280_NAB Risk Assessment Report_S2,2015

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