FILE NO 1-9945
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For the month of November 2004
National Australia Bank Limited
ACN 004 044 937
(Registrant’s Name)
Level 24
500 Bourke Street
MELBOURNE VICTORIA 3000
AUSTRALIA
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
|
Form 20-F ý |
Form 40-F o |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
|
Yes o |
No ý |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82
Searchable text section of graphics shown above
|
FULL YEAR RESULTS 04 |
[LOGO] |
John Stewart,
Managing Director and CEO
Michael Ullmer,
Group Chief Financial Officer
November 10, 2004
Agenda
|
Introduction |
|
John Stewart |
|
|
|
|
|
Financial Overview |
|
Michael Ullmer |
|
|
|
|
|
Issues and Actions |
|
John Stewart |
|
|
|
|
|
Questions and Answers |
|
|
[LOGO]
2
Overview of Performance for the September 2004 half
|
|
|
v Mar 04 |
|
Sep 04 |
|
Bank Peer |
|
|
|
Cash earnings* growth |
|
12.9% |
|
$ |
1,611 |
M |
9.3 |
% |
|
Return on assets* |
|
26 bps |
|
0.70 |
% |
0.99 |
% |
|
|
Return on equity* |
|
5.7% points |
|
13.1 |
% |
18.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder return |
|
|
|
|
|
|
|
|
|
1 year |
|
|
|
(7 |
)% |
13 |
% |
|
|
3 year |
|
|
|
4 |
% |
14 |
% |
|
|
5 year |
|
|
|
8 |
% |
17 |
% |
|
* Before significant items
** Simple average calculated on half year including results for CBA (June 04), ANZ, SGB, WBC (Mar 04)
3
Rebuilding the National
Progress so far:
• Board and executive teams renewed
• Underlying problems identified
• Transitioning to a new operating model
• Embedding cultural change
• FX remedial actions
• Implementing Europe plans
4
Agenda
|
Introduction |
|
John Stewart |
|
|
|
|
|
Financial Overview |
|
Michael Ullmer |
|
|
|
|
|
Issues and Actions |
|
John Stewart |
|
|
|
|
|
Questions and Answers |
|
|
5
Key areas impacting the Group during the second half
• Net interest income
• Other operating income
• Expenses
• Corporate & Institutional Banking
• Financial Services Australia
• Financial Services Europe
• Capital
• Significant items and balance sheet adjustments
• Business response to regulatory issues
6
Group profit and loss for September 2004 half
|
|
|
Half year to |
|
Change on |
|
Change on |
|
||
|
|
|
Sep 04 |
|
Mar 04 |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Banking net interest income |
|
3,540 |
|
3,519 |
|
0.6 |
|
(3.3 |
) |
|
Banking other operating income |
|
1,952 |
|
2,044 |
|
(4.5 |
) |
(6.6 |
) |
|
Wealth Management income** |
|
1,046 |
|
933 |
|
12.1 |
|
52.9 |
|
|
Net operating income |
|
6,538 |
|
6,496 |
|
0.6 |
|
1.3 |
|
|
Banking operating expenses |
|
(3,115 |
) |
(2,800 |
) |
(11.3 |
) |
(6.6 |
) |
|
Wealth Management operating expenses |
|
(461 |
) |
(436 |
) |
(5.7 |
) |
(11.3 |
) |
|
Charge to provide for doubtful debts |
|
(254 |
) |
(305 |
) |
16.7 |
|
11.7 |
|
|
Cash earnings before tax and OEI* |
|
2,708 |
|
2,955 |
|
(8.4 |
) |
(3.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash earnings before significant items |
|
1,611 |
|
1,850 |
|
(12.9 |
) |
(15.0 |
) |
* Before significant items and net of eliminations
** Includes net interest, net life insurance and other operating income
[LOGO]
8
Drivers of the Group result
• Margin compression
• FSE
• FSA
• CIB
• Other income
• Retail banking stalled across the Group
• CIB down dramatically
• Excessive cost growth across Group
• Poor culture of cost containment
• Regulatory & compliance
• Protecting the Australian franchise
• Amortisation of deferred expenditure
• Specific provision down
9
September 2004 half cash earnings+
|
|
|
Sep 04 |
|
Mar 04 |
|
Change on |
|
Change on |
|
|
|
|
|
|
|
|
% |
|
% |
|
|
Old Divisions |
|
|
|
|
|
|
|
|
|
|
Financial Services Australia |
|
877 |
|
999 |
|
(12.2 |
) |
flat |
|
|
Financial Services Europe |
|
290 |
|
308 |
|
(5.8 |
) |
(33.3 |
) |
|
Financial Services New Zealand |
|
171 |
|
158 |
|
8.2 |
|
5.8 |
|
|
Corporate & Institutional Banking |
|
243 |
|
375 |
|
(35.2 |
) |
(29.5 |
) |
|
Wealth Management |
|
188 |
|
221 |
|
(14.9 |
) |
9.4 |
|
|
New Regional Structure* |
|
|
|
|
|
|
|
|
|
|
Australia |
|
1,151 |
|
1,250 |
|
(7.9 |
) |
|
|
|
Europe |
|
324 |
|
294 |
|
10.2 |
|
|
|
|
New Zealand |
|
191 |
|
188 |
|
1.6 |
|
|
|
|
Institutional Markets & Services |
|
103 |
|
329 |
|
(68.7 |
) |
|
|
|
Group Funding & Corporate Centre |
|
(65 |
) |
(117 |
) |
44.4 |
|
|
|
+ Cash earnings before significant items
* Regions include the Financial Services business, Wealth Management and former Corporate and Institutional Banking (CIB) Businesses of Transaction Banking, Custodian Services and Corporate Banking. The remainder of the CIB business is within Institutional Markets & Services
10
Net interest margin September 2004 down 18bps on the year
|
|
|
Sep 03 Yr |
|
NIM |
|
Sep 04 Yr |
|
AIEA |
|
% of Group |
|
|
|
||
|
|
|
|
|
|
|
|
Group NIM |
|
|||||||
|
|
|
|
|
|
|
Sep 03 Yr |
|
Sep 04 Yr |
|
|
|||||
|
|
|
|
|
|
|
|
|
$Bn |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services Australia |
|
3.14 |
% |
(33 |
)bps |
2.81 |
% |
126 |
|
38.2 |
% |
41.2 |
% |
(13 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services Europe |
|
4.30 |
% |
(27 |
)bps |
4.03 |
% |
53 |
|
18.5 |
% |
17.2 |
% |
(4 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services New Zealand |
|
2.71 |
% |
(13 |
)bps |
2.58 |
% |
27 |
|
8.2 |
% |
8.8 |
% |
(1 |
)bp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking |
|
0.62 |
% |
(12 |
)bps |
0.50 |
% |
134 |
|
46.5 |
% |
43.9 |
% |
(5 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (inc WM & Elims) |
|
(0.22 |
)% |
(16 |
)bps |
(0.38 |
)% |
(34 |
) |
(11.4 |
)% |
(11.1 |
)% |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub Total |
|
2.53 |
% |
|
|
2.35 |
% |
306 |
|
100.0 |
% |
100.0 |
% |
(23 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Divisional Mix* |
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Impact |
|
|
|
|
|
|
|
|
|
|
|
|
|
(18 |
)bps |
* In the Results Announcement this is allocated across the Divisional contributions to Group NIM contraction
11
Net interest margin September half down 11bps on the March half
|
|
|
Mar 04 HY |
|
NIM |
|
Sep 04 HY |
|
AIEA |
|
% of Group |
|
Group NIM |
|
||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
Mar 04 HY |
|
Sep 04 HY |
|
|
|||||
|
|
|
|
|
|
|
|
|
$Bn |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services Australia |
|
2.91 |
% |
(20 |
)bps |
2.71 |
% |
129 |
|
41.2 |
% |
41.2 |
% |
(8 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services Europe |
|
4.16 |
% |
(24 |
)bps |
3.92 |
% |
56 |
|
16.7 |
% |
17.7 |
% |
(4 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services New Zealand |
|
2.56 |
% |
4 |
bps |
2.60 |
% |
28 |
|
8.7 |
% |
8.9 |
% |
0 |
bp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking |
|
0.56 |
% |
(11 |
)bps |
0.45 |
% |
137 |
|
43.9 |
% |
43.8 |
% |
(5 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (inc WM & Elims) |
|
(0.12 |
)% |
(13 |
)bps |
(0.25 |
)% |
(36 |
|
(10.5 |
)% |
(11.6 |
)% |
3 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub Total |
|
2.40 |
% |
|
|
2.29 |
% |
314 |
) |
100.0 |
% |
100.0 |
% |
(14 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Divisional Mix * |
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Impact |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11 |
)bps |
* In the Results Announcement this is allocated across the Divisional contributions to Group NIM contraction
12
Volume growth in the September half
Group
Lending Growth*
(average)
[CHART]
Retail
Deposit Growth*
(average)
[CHART]
* At constant exchange rates
13
Banking other operating income* down $83M in the September 2004 half
[CHART]
* Before significant items
14
Banking expenses* increased $324M in the September 2004 half.
[CHART]
* Before significant items
+ Excludes performance-based remuneration
15
Significant drivers of banking expense growth
|
|
|
Increase over Mar 04 HY |
|
|
|
1. Regulatory spend |
|
|
|
|
|
Basel ll and IFRS |
|
$ |
23 |
m |
|
Sarbanes Oxley |
|
$ |
4 |
m |
|
|
|
|
|
|
|
2. Regulatory spend - NAB specific |
|
|
|
|
|
APRA |
|
$ |
9 |
m |
|
SEC auditor independence |
|
$ |
4 |
m |
|
Management changes and business reviews |
|
$ |
32 |
m |
|
|
|
|
|
|
|
3. Australian franchise re-investment |
|
|
|
|
|
Branding and advertising |
|
$ |
33 |
m |
|
Reversing previous front line staff cuts |
|
$ |
13 |
m |
|
Docklands |
|
$ |
8 |
m |
|
|
|
|
|
|
|
4. UK Investment |
|
|
|
|
|
Strategic review and integration |
|
$ |
14 |
m |
|
Growth related initiatives |
|
$ |
4 |
m |
|
Regulatory and compliance |
|
$ |
5 |
m |
|
|
|
|
|
|
|
5. Corporate & Institutional Banking |
|
|
|
|
|
Sale of the UK Custody business |
|
$ |
17 |
m |
16
Corporate & Institutional Banking cash earnings* down 36.3%+ on the March half
|
|
|
Half year to |
|
% Change on+ |
|
||||
|
|
|
Sep 04 |
|
Mar 04 |
|
Mar 04 HY |
|
Sep 03 FY |
|
|
|
|
$m |
|
$m |
|
ex FX |
|
ex FX |
|
|
Net interest income |
|
307 |
|
371 |
|
(19.4 |
) |
(15.8 |
) |
|
Other operating income |
|
452 |
|
596 |
|
(25.5 |
) |
(1.0 |
) |
|
Total income |
|
759 |
|
967 |
|
(23.2 |
) |
(7.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(458 |
) |
(400 |
) |
(11.5 |
) |
(18.5 |
) |
|
Underlying profit |
|
301 |
|
567 |
|
(47.6 |
) |
(23.8 |
) |
|
Cash earnings* |
|
243 |
|
375 |
|
(36.3 |
) |
(26.5 |
) |
Revenue v expense growth
[CHART]
* Before significant items and after outside equity interest
+ At constant exchange rates
[LOGO]
18
CIB income declined 23.2%* while expense increased 11.5%* on the March half
Income down 23.2%*
[CHART]
Expenses up 11.5%*
[CHART]
Before significant items
*At constant exchange rates
19
Strategic issues facing CIB
• Deployment of assets in non-core markets - focus on capital, risk-weighted assets consumed, and returns generated.
• Earnings decline in transaction driven business - relationship driven business held up
• Impact of currency options restrictions.
• Clients waiting for full product suite.
• External research indicates:
• Corporate Banking: % of lead relationships down from 41% to 37% (1)
• Transactional Banking: 1.5% improvement in market share but still 4th (2)
• Markets: Remain strong in the corporate bond market. However, overall league table ranking has slipped from top 3 position (1)
((1) source: Peter Lee & Associates, Large Corporate Banking Report 2004)
((2) source: East & Partners, Transactional Banking Report 2004)
20
Financial Services Australia cash earnings* down 12.2% on the March half
|
|
|
Half year to |
|
Change on |
|
||||
|
|
|
Sep 04 |
|
Mar 04 |
|
Mar 04 HY |
|
Sep 03 FY |
|
|
|
|
$m |
|
$m |
|
% |
|
% |
|
|
Net interest income |
|
1,753 |
|
1,799 |
|
(2.6 |
) |
0.9 |
|
|
Other Operating Income |
|
1,004 |
|
989 |
|
1.5 |
|
2.2 |
|
|
Total income |
|
2,757 |
|
2,788 |
|
(1.1 |
) |
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(1,401 |
) |
(1,254 |
) |
(11.7 |
) |
(6.1 |
) |
|
Underlying profit |
|
1,356 |
|
1,534 |
|
(11.6 |
) |
(2.6 |
) |
|
Cash earnings* |
|
877 |
|
999 |
|
(12.2 |
) |
0.3 |
|
Average Volume Growth
[CHART]
* Before significant items
21
Financial Services Australia expenses* increased by $147M in the half
[CHART]
* Before significant items
23
Financial Services Australia: current state of the franchise
|
Market share |
|
Sep 04 |
|
Mar 04 |
|
Rank* |
|
|
Business Lending & (incl Bills^) |
|
21.6 |
% |
22.0 |
% |
#1 |
|
|
Housing (incl Securitisation) |
|
16.7 |
% |
17.2 |
% |
#2 |
|
|
Credit Cards |
|
16.7 |
% |
17.8 |
% |
#4 |
|
|
Business Deposits |
|
27.8 |
% |
27.7 |
% |
#1 |
|
|
Household Deposits |
|
13.4 |
% |
13.6 |
% |
#3 |
|
FSA Customer Numbers
[CHART]
* Ranking among licensed banks
& Includes Corporate & Institutional Banking
^ Excludes Bank Held Bills
Source: APRA Monthly Banking Statistics / National (September 2004)
24
Financial Services Europe cash earnings* down 11.6% on the half
|
|
|
Half year to |
|
Change on |
|
||||
|
£m |
|
Sep 04 |
|
Mar 04 |
|
Mar 04 HY |
|
Sep 03 FY |
|
|
|
|
|
|
|
|
% |
|
% |
|
|
Net interest income |
|
428 |
|
436 |
|
(1.8 |
) |
(2.6 |
) |
|
Other operating income |
|
167 |
|
172 |
|
(2.9 |
) |
(5.0 |
) |
|
Total income |
|
595 |
|
608 |
|
(2.1 |
) |
(3.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(390 |
) |
(374 |
) |
(4.3 |
) |
(16.3 |
) |
|
Underlying profit |
|
205 |
|
234 |
|
(12.4 |
) |
(25.2 |
) |
|
Cash earnings* |
|
114 |
|
129 |
|
(11.6 |
) |
(28.5 |
) |
Average Volume Growth
[CHART]
* Before significant items
25
Financial Services Europe – expense* growth driven by projects
[CHART]
* Before significant items
27
Financial Services Europe: current state of the franchise
Net Movement FSE - Personal Customer Numbers
[CHART]
BFS Scotland Core Advances Volumes
[CHART]
28
Financial Services New Zealand cash earnings* up 5.6% on the March half
|
|
|
Half year to |
|
Change on |
|
||||
|
NZ$m |
|
Sep 04 |
|
Mar 04 |
|
Mar 04 HY |
|
Sep 03 FY |
|
|
|
|
|
|
|
|
% |
|
% |
|
|
Net interest income |
|
404 |
|
382 |
|
5.8 |
|
8.4 |
|
|
Other operating income |
|
185 |
|
182 |
|
1.6 |
|
— |
|
|
Total income |
|
589 |
|
564 |
|
4.4 |
|
5.6 |
|
|
Total expenses |
|
(299 |
) |
(280 |
) |
(6.8 |
) |
(5.5 |
) |
|
Underlying profit |
|
290 |
|
284 |
|
2.1 |
|
5.7 |
|
|
Cash earnings* |
|
190 |
|
180 |
|
5.6 |
|
6.6 |
|
Average Volume Growth
[CHART]
* Before significant items
29
Financial Services New Zealand: current state of the franchise
|
Market share * |
|
Sep 04 |
|
Mar 04 |
|
Rank |
|
|
Cards (outstandings) |
|
29.9 |
% |
30.2 |
% |
#1 |
|
|
Housing |
|
15.6 |
% |
15.3 |
% |
#4 |
|
|
Agribusiness |
|
17.5 |
% |
18.5 |
% |
#2 |
|
|
Retail Deposits |
|
19.0 |
% |
19.0 |
% |
#3 |
|
|
Middle Market^ |
|
34.7 |
%** |
33.0 |
%& |
#1 |
|
* source RBNZ
^ Corporate Value Associates
** Represents Mar 04 data
& Represents Mar 03 data
Satisfaction with Main Bank - Personal Market
“How would you rate
your main provider of financial services on its overall service?”
(Margin of error for BNZ = +/-5%)
[CHART]
31
Wealth Management profit* down 14.9% in the September 2004 half
|
|
|
Half year to |
|
Change on |
|
||||
|
Operating profit after tax |
|
Sep 04 |
|
Mar 04 |
|
Mar 04 HY |
|
Sep 03 FY |
|
|
|
|
$m |
|
$m |
|
% |
|
% |
|
|
Investments |
|
102 |
|
87 |
|
17.2 |
|
33.1 |
|
|
Insurance |
|
107 |
|
121 |
|
(11.6 |
) |
11.8 |
|
|
Private Bank |
|
30 |
|
32 |
|
(6.3 |
) |
10.7 |
|
|
Other (incl. Regulatory programs) |
|
(15 |
) |
(37 |
) |
59.5 |
|
10.3 |
|
|
Spend on new platforms |
|
(23 |
) |
(16 |
) |
(43.8 |
) |
(39.3 |
) |
|
Profit from Operations (after tax) |
|
201 |
|
187 |
|
7.5 |
|
22.8 |
|
|
Investment earnings shareholders’ retained profits & capital from life business |
|
27 |
|
44 |
|
(38.6 |
) |
22.4 |
|
|
Underlying operating profit after tax & OEI |
|
228 |
|
231 |
|
(1.3 |
) |
22.7 |
|
|
Prior year adjustments |
|
(40 |
) |
(10 |
) |
large |
|
large |
|
|
Operating profit after tax & OEI |
|
188 |
|
221 |
|
(14.9 |
) |
9.4 |
|
* Operating profit after tax and OEI and before significant items and revaluation profit
32
Revaluation profit reflects changing industry dynamics
[CHART]
Changes in Assumptions & Experience
• Lower near term sales growth for Retail investments
• Lower margins on wholesale business
• Impact of business decisions to close products
• Continued cost containment
33
Wealth Management
Master Fund Market Share plus Flows
[CHART]
Insurance - Retail Risk Market Share
[CHART]
34
Adjustment to the general provision
• Review undertaken of emerging trends in industry practice
• Consideration of developments in accounting literature
• Discount rate applied to cumulative probabilities of default reduced
• Increase general provisions by $292m
• Treated as a significant item
38
General provisioning coverage levels have increased
Provision Coverage Ratios
[CHART]
General Provisions to Risk Weighted Assets (Excluding Housing)
[CHART]
39
Portfolio remains sound with write off levels down and key quality indicators improving
Total Net Write-offs to Risk-Weighted Assets (excl Housing)
[CHART]
Group Fully Secured lending % of Total Balance*
[CHART]
CRS 1-6* % of Total Balance
[CHART]
* Excludes Housing and All Personal Loans
40
Non-accrual levels down but impacted by reclassifications
Gross Non-Accrual Loans
[CHART]
90+ Delinquency and Gross 12 Month Rolling Write Off Rates Total Personal Lending
[CHART]
41
Review of particular balance sheet items
• Capitalised software – Significant item $409m
• General loan loss provision - Significant item $292m
• Defined benefit pension accounting
• Wealth Management internally generated goodwill
• Capitalised mortgage broker commissions
[LOGO]
43
Capital remains within or above target ranges
[CHART]
|
|
|
Target Ranges |
|
Sep 04 |
|
|
Targets |
|
(%) |
|
Actual |
|
|
ACE/RWA |
|
4.75 – 5.25 |
|
5.30 |
|
|
|
|
|
|
|
|
|
Tier 1 |
|
7.00 – 7.50 |
|
7.34 |
|
|
|
|
|
|
|
|
|
Total Regulatory |
|
10.00 – 10.50 |
|
10.58 |
|
44
Regulation & compliance update
• Wide range of regulatory reviews.
• Significant direct and indirect costs.
• Must embed effective regulatory and compliance behaviours.
• Response to APRA
• Have submitted 65 of 81 remedial actions
• 24 actions have been closed
47
Project / investment spend - IFRS and Basel II
|
IFRS Project ($m) |
|
Global/ |
|
Wealth |
|
Europe |
|
NZ |
|
Total |
|
|
Enabling Infrastructure |
|
32 |
|
2 |
|
15 |
|
— |
|
49 |
|
|
Process Automation |
|
11 |
|
— |
|
4 |
|
2 |
|
17 |
|
|
Compliance Delivery |
|
35 |
|
12 |
|
24 |
|
3 |
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Budget |
|
78 |
|
14 |
|
43 |
|
5 |
|
140 |
|
|
Operational Expense |
|
|
|
|
|
|
|
|
|
99 |
|
|
Capital Budget |
|
|
|
|
|
|
|
|
|
41 |
|
|
Cash spend to date |
|
|
|
|
|
|
|
|
|
60 |
|
|
Estimated Completion |
|
|
|
|
|
|
|
|
|
Sep 05 |
|
|
Basel II Project ($m) |
|
Global/ |
|
Wealth |
|
Europe |
|
NZ |
|
Total |
|
|
Enabling Infrastructure |
|
11 |
|
— |
|
19 |
|
1 |
|
31 |
|
|
Process Automation |
|
56 |
|
1 |
|
27 |
|
9 |
|
93 |
|
|
Compliance Delivery |
|
52 |
|
1 |
|
2 |
|
2 |
|
57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Budget |
|
119 |
|
2 |
|
48 |
|
12 |
|
181 |
|
|
Operational Expense |
|
|
|
|
|
|
|
|
|
125 |
|
|
Capital Budget |
|
|
|
|
|
|
|
|
|
56 |
|
|
Cash spend to date |
|
|
|
|
|
|
|
|
|
55 |
|
|
Estimated Completion |
|
|
|
|
|
|
|
|
|
Jan 06 |
|
48
Taxation
Wealth Management
Concessionally taxed life product fees to be taxed at the corporate tax rate from 1 July 2005.
|
Other Issues |
|
Received |
|
Potential |
|
||||
|
NZ Structured Finance deals |
|
NZ$ |
57M |
|
NZ$ |
387M |
|
||
|
|
|
|
|
|
|
|
|
||
|
EXCAPS |
|
$ |
307M |
|
$ |
135M |
|
||
|
|
|
|
|
|
|
|
|
||
|
TrUEPrS |
|
$ |
150M |
|
$ |
20M |
|
||
No provisions have been raised
* Based on primary tax only; interest and penalties may also apply
49
March ‘05 half
Restructuring Charges
• Developing detailed plans to move to the regional model
• Changes already underway within wealth management
• Some regions more progressed than others
• Restructuring activity ongoing through the first half
• Plans and charges finalised by the 04/05 half year result
50
Agenda
|
Introduction |
|
John Stewart |
|
|
|
|
|
Financial Overview |
|
Michael Ullmer |
|
|
|
|
|
Issues and Actions |
|
John Stewart |
|
|
|
|
|
Questions and Answers |
|
|
51
Underlying issues identified
|
1. Culture and People |
|
2. Regulatory & Compliance |
|
|
|
|
|
|
|
|
|
3. Business Inefficiency |
|
3. Stalled Revenue |
|
• Complexity |
|
• Inward looking |
|
• Bureaucratic |
|
• Business processes not customer focused |
52
Employee engagement
|
NAB Employee Engagement |
|
36 |
% |
|
Australian Financial Services |
|
54 |
% |
|
Global High Performing Companies |
|
69 |
% |
|
Australian Best Employers |
|
77 |
% |
[CHART]
Benchmark Averages
53
People and behaviours
• Michael Ullmer
• Ahmed Fahour
• Cameron Clyne
• Gavin Slater
• Graeme Willis
• Ian MacDonald
• Peter Scott
• John Hooper
• Lynne Peacock
• Elizabeth Hunter*
• Ross Pinney*
• Peter Thodey*
* Not at results presentation
54
Embedding cultural change
• New Leadership team
• Corporate principles
• Clarity of roles and responsibilities
• Reward strategy
• Performance Management Framework
• Talent Management Strategy
55
Group compliance and risk
Compliance and Quality Failures
|
|
|
Cost |
|
|
|
Homeside |
|
$ |
3,873m |
|
|
NAFiM unit repricing issues |
|
$ |
110m |
|
|
UK investment sales review |
|
$ |
61m |
|
|
FX options trading |
|
$ |
360m |
|
|
NIB Investigations |
|
$ |
98m |
|
56
Compliance and risk actions
• New Finance and Risk structure
• FX remedial actions
• Clarifying roles and responsibilities
• Compliance embedded in performance management framework
57
Indirect costs
Proportion of costs charged to one business unit by another business unit
|
|
|
2002 |
|
2003 |
|
2004 |
|
|
Europe |
|
|
|
|
|
|
|
|
Clydesdale |
|
36 |
% |
36 |
% |
38 |
% |
|
Yorkshire |
|
36 |
% |
38 |
% |
41 |
% |
|
National Irish |
|
33 |
% |
32 |
% |
34 |
% |
|
Northern |
|
34 |
% |
31 |
% |
39 |
% |
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
Business |
|
58 |
% |
55 |
% |
56 |
% |
|
Personal |
|
55 |
% |
59 |
% |
52 |
% |
|
Cards |
|
39 |
% |
41 |
% |
47 |
% |
|
Agri Business |
|
42 |
% |
43 |
% |
47 |
% |
58
Amortisation burden
|
$m |
|
2001 |
|
2002 |
|
2003 |
|
2004 |
|
CAGR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Spend |
|
(814 |
) |
(510 |
) |
(496 |
) |
(489 |
) |
-16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
|
(65 |
) |
(106 |
) |
(152 |
) |
(189 |
) |
43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software write-downs |
|
(18 |
) |
(147 |
) |
(59 |
) |
(444 |
) |
|
|
|
Year End Software Balance |
|
840 |
|
884 |
|
955 |
|
655 |
|
|
|
59
Regional operating model
|
|
|
Old Model |
|
|
|
|
|
|
|
|
|
One customer |
|
|
|
|
|
|
|
|
|
Three discrete offerings |
|
|
|
|
|
|
|
|
By |
Three separate businesses |
|
|
|
|
|
|
|
|
With |
Three separate infrastructures |
|
|
|
|
New Model |
|
|
|
|
|
|
|
|
|
One customer |
|
|
|
|
|
|
|
|
|
One integrated offering |
|
|
|
|
|
|
|
|
By |
One customer focused business |
|
|
|
|
|
|
|
|
With |
One streamlined infrastructure |
|
61
Europe
Integration and efficiency
• Legal entity merger
• Moving from 77 to 16 core products
• Integrating back offices
• New operating model
62
Europe
Growth
• Brand repositioning
• New products – offset mortgage
• IFS opened 8 new centres
• Third party mortgage distribution launched in April ‘04
• Customer attrition has declined by 5.8% in 2004
• Customer acquisition has grown 6% in last 6 months after declining for the prior 2 years
63
Tightening risk settings
Housing Lending - Australia
Annual Growth Rates (%)
[CHART]
Source: RBA/FSA
66
Restoring risk settings
Consumer risk settings
• More high rated approvals at front line
• Restore LVR ratios for investment properties
Business risk settings
• Removing 24 restrictions on banker’s authorities
• Simplify credit applications and processes
67
Outlook
• Poor result
• Baked in costs and slowing revenue momentum make our starting point for ‘05 difficult
• Expect earnings to bottom in current half and recover in following 12 months
• Expect to maintain first half dividend at current levels
68
Looking Forward
• Platform for change
• Relentless execution is the key
• Great franchises
• Know what needs to be done
69
Disclaimer
The preceding material is a presentation of general background information about the National’s activities current at the date of the presentation, November 10, 2004. 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.
70
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
|
|
NATIONAL AUSTRALIA BANK LIMITED |
||
|
|
|
||
|
|
|
||
|
|
Susan Crook |
|
|
|
Date: 10 November 2004 |
Title: |
Associate Company Secretary |
|