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 2005

 

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

 

 



 

 

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FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

 

 

John Stewart,

Michael Ullmer,

 

 

 

 

Managing Director
and CEO

Director, Finance
and Risk

 

 

 

 

 

 

 

November 9, 2005

 

 



Agenda

 

Introduction

 

John Stewart

 

 

 

Group Results

 

Michael Ullmer

 

 

 

Outlook & Update

 

John Stewart

 

 

 

Questions and Answers

 

 

 

 

 

 

 

[LOGO]

 

2



Focus on the fundamentals is delivering

 

Culture and People

 

Regulatory and Compliance

 

 

 

Simplicity

 

Restart revenue

 

Getting costs under control has been the biggest challenge

 

3



Turnaround is on track

 

Cash earnings before significant items

 

[CHART]

 

             Cash earnings up 4.6% to $1,692m

 

             Ongoing operations up 7.8%

 

             Dividend maintained at 83 cents per share (80% franked)

 

             Net profit for the year $4,132m, up 30.1% from $3,177m in 2004

 

4



Agenda

 

Introduction

 

John Stewart

 

 

 

Group Results

 

Michael Ullmer

 

 

 

Outlook & Update

 

John Stewart

 

 

 

Questions and Answers

 

 

 

5



Group Scorecard

 

                 Cash earnings up 4.6% for the half, but down 4.4% year on year

 

                 Banking net interest income down 0.6% for the half

 

                 Strong growth in other income

 

                 Banking cost pressures came through – up 11.3%* for the half, 9.1%* for the year

 

                 Restructure charge of $838m, with estimated benefits of $424m by end FY07

 

                 Investment program of $2.5 bn over 3 years

 

                 Strong credit quality maintained

 

                 Strong capital base notwithstanding AIFRS changes

 


* Excludes Irish banks and one-off losses

 

6



Group Performance

 

 

 

Sep 05

 

Mar 05

 

% Change on

 

 

 

HY

 

HY

 

Mar 05 HY

 

Sep 04 FY

 

 

 

$m

 

$m

 

Group

 

Ongoing^

 

Ongoing^

 

Banking net income*

 

5,760

 

5,659

 

1.8

 

7.0

 

4.9

 

Banking operating expenses*

 

(3,345

)

(3,246

)

(3.0

)

(9.8

)

(14.5

)

Underlying profit

 

2,415

 

2,413

 

0.1

 

3.5

 

(5.6

)

Charge to provide for doubtful debts

 

(253

)

(281

)

(10.0

)

8.0

 

2.8

 

Banking cash earnings

 

1,559

 

1,484

 

5.1

 

8.7

 

(6.1

)

Wealth Management cash earnings

 

242

 

229

 

5.7

 

5.2

 

35.2

 

Cash earnings **

 

1,692

 

1,618

 

4.6

 

7.8

 

(2.3

)

 

 

 

 

 

 

 

Sep 05 FY

 

Sep 04 FY

 

Diluted cash earnings per share (cents)

 

107.1

 

103.0

 

210.1

 

226.0

 

Cash earnings on average equity**

 

14

%

14

%

14

%

16.2

%

Return on average assets**

 

0.91

%

0.76

%

0.83

%

0.83

%

Net interest margin

 

2.20

%

2.19

%

2.20

%

2.35

%

 


*                Before inter-divisional eliminations

**         Before significant items and after outside equity interest

^                 Excludes Irish Banks, UK National Custodian Services and National Australia Life Company

 

7



September 2005 half cash earnings by division

 

 

 

Sep 05
HY

 

Mar 05
HY

 

Change on
Mar 05 HY
Ongoing^

 

Change on
Sep 04 FY
Ongoing^

 

 

 

$m

 

$m

 

%

 

%

 

Total Australia*

 

1,130

 

1,145

 

(1.3

)

(1.6

)

 

 

 

 

 

 

 

 

 

 

Total UK

 

229

 

297

 

(11.9

)

(5.9

)

 

 

 

 

 

 

 

 

 

 

Total New Zealand

 

168

 

163

 

3.1

 

7.8

 

 

 

 

 

 

 

 

 

 

 

Institutional Markets & Services+

 

305

 

308

 

0.7

 

12.8

 

 

 

 

 

 

 

 

 

 

 

Other (incl Group Funding & Corporate Centre)

 

(31

)

(200

)

85.0

 

(53.9

)

 

 

 

 

 

 

 

 

 

 

Distributions

 

(109

)

(95

)

(14.7

)

(9.1

)

 

 

 

 

 

 

 

 

 

 

Cash earnings before significant items

 

1,692

 

1,618

 

7.8

 

(2.3

)

 


*                Includes Wealth Management Asian operations

+                Cash earnings after outside equity interest

^                 Excludes Irish Banks, UK National Custodian Services and National Australia Life Company

 

8



Australia cash earnings* down 1.3% on the March 2005 half

 

 

 

Half year to

 

Change on

 

 

 

Sep 05

 

Mar 05

 

Mar 05

 

Sep 04

 

Australian Banking

 

$m

 

$m

 

HY %

 

FY %

 

Net interest income

 

1,995

 

1,888

 

5.7

 

4.9

 

Other operating income

 

1,154

 

1,081

 

6.8

 

5.3

 

 

 

 

 

 

 

 

 

 

 

Total income

 

3,149

 

2,969

 

6.1

 

5.1

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

(1,730

)

(1,479

)

(17.0

)

(15.8

)

 

 

 

 

 

 

 

 

 

 

Underlying profit

 

1,419

 

1,490

 

(4.8

)

(4.7

)

 

 

 

 

 

 

 

 

 

 

Charge to provide for doubtful debts

 

(127

)

(130

)

2.3

 

(27.9

)

 

 

 

 

 

 

 

 

 

 

Australian Banking cash earnings

 

910

 

951

 

(4.3

)

(6.6

)

Wealth Management cash earnings+

 

220

 

194

 

13.4

 

29.4

 

 

 

 

 

 

 

 

 

 

 

Total Australia cash earnings+

 

1,130

 

1,145

 

(1.3

)

(1.6

)

 

Volume Growth

(quarterly average)

 

[CHART]

 

Net Interest Margin^

 

[CHART]

 


*                 Before significant items

+                 Includes Asian operations

^                  Excludes changes to internal capital allocations

 

9



UK ongoing operations+ cash earnings* down 10.4% on the March 2005 half

 

 

 

Half year to

 

Change on

 

 

 

Sep 05

 

Mar 05

 

Mar 05

 

Sep 04

 

 

 

£m

 

£m

 

HY %

 

FY %

 

Net interest income

 

350

 

334

 

4.8

 

0.9

 

Other operating income

 

222

 

183

 

21.3

 

18.4

 

 

 

 

 

 

 

 

 

 

 

Total income

 

572

 

517

 

10.6

 

6.8

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

(374

)

(330

)

(13.3

)

(9.8

)

 

 

 

 

 

 

 

 

 

 

Underlying profit

 

198

 

187

 

5.9

 

1.6

 

 

 

 

 

 

 

 

 

 

 

Charge to provide for doubtful debts

 

(53

)

(35

)

(51.4

)

(10.0

)

 

 

 

 

 

 

 

 

 

 

UK ongoing operations+

 

95

 

106

 

(10.4

)

(5.2

)

 

 

 

 

 

 

 

 

 

 

Ireland and Custody

 

 

15

 

large

 

large

 

 

 

 

 

 

 

 

 

 

 

Total UK cash earnings*

 

95

 

121

 

(21.5

)

(12.9

)

 

Volume Growth

(quarterly average)

 

[CHART]

 

Net Interest Margin^

 

[CHART]

 


+                  Excludes Irish Banks, UK National Custodian Services and National Australia Life Company

*                Before significant items

^                 Excludes changes to internal capital allocations

Note: volume growth reflects changes in classification of products between categories

 

10



New Zealand cash earnings* up 4.5% on the March 2005 half

 

 

 

Half year to

 

Change on

 

 

 

Sep 05

 

Mar 05

 

Mar 05

 

Sep 04

 

 

 

NZ$m

 

NZ$m

 

HY %

 

FY %

 

Net interest income

 

428

 

420

 

1.9

 

4.7

 

 

 

 

 

 

 

 

 

 

 

Other operating income

 

222

 

219

 

1.4

 

(2.6

)

 

 

 

 

 

 

 

 

 

 

Total income

 

650

 

639

 

1.7

 

2.1

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

(353

)

(366

)

3.6

 

(1.3

)

 

 

 

 

 

 

 

 

 

 

Underlying profit

 

297

 

273

 

8.8

 

3.1

 

 

 

 

 

 

 

 

 

 

 

Charge to provide for doubtful debts

 

(28

)

(13

)

large

 

(70.8

)

 

 

 

 

 

 

 

 

 

 

Cash earnings*

 

184

 

176

 

4.5

 

3.4

 

 

Volume Growth

(quarterly average)

 

[CHART]

 

Net Interest Margin^

 

[CHART]

 


*                Before significant items

^                 Excludes changes to internal capital allocations

 

11



Institutional Markets & Services ongoing+ cash earnings* up 0.7% on the March 2005 half

 

 

 

Half year to

 

Change on+

 

 

 

Sep 05

 

Mar 05+

 

Mar 05

 

Sep 04

 

 

 

$m

 

$m

 

HY %

 

FY %

 

Net interest income

 

262

 

277

 

(5.4

)

(11.3

)

 

 

 

 

 

 

 

 

 

 

Other operating income

 

433

 

478

 

(9.4

)

7.8

 

 

 

 

 

 

 

 

 

 

 

Total income

 

695

 

755

 

(7.9

)

(0.2

)

 

 

 

 

 

 

 

 

 

 

Total expenses

 

(369

)

(361

)

(2.2

)

(5.2

)

 

 

 

 

 

 

 

 

 

 

Underlying profit

 

326

 

394

 

(17.3

)

(5.1

)

 

 

 

 

 

 

 

 

 

 

Charge to provide for B&DD

 

24

 

(48

)

large

 

(80.0

)

 

 

 

 

 

 

 

 

 

 

Cash earnings*

 

305

 

303

 

0.7

 

12.8

 

 

 

 

 

 

 

 

 

 

 

Return on Avg RWA

 

0.87

%

0.80

%

8.7

 

18.3

 

 

Total Income down 7.9%+

 

[CHART]

 


*                 Before significant items and after outside equity interest

+                 Excludes Irish Banks

 

12



Total banking income^ showing positive trends

 

[CHART]

 


Constant exchange rates

^                 Before significant items, excluding Irish Banks and UK National Custodian Services

*                Excludes Irish Banks and UK National Custodian Services

+                  Excludes Irish Banks

 

13



Key areas of focus

 

1.

 

Margins

 

 

 

2.

 

Expenses

 

 

 

3.

 

Asset Quality

 

 

 

4.

 

Capital

 

14



Key area 1 - Margins

 

            Regional declines in line with expectation

 

            Group outcome result of portfolio effect

 

15



Group margin down 15 bps for the year, but up 1 basis point for the half

 

 

 

Sep 04 FY
NIM

 

NIM
Contraction

 

Sep 05 FY
NIM

 

AIEA
Sep 05 FY
$Bn

 

% of Group
AIEA

 

Impact on
Group NIM

 

Sep 04 FY

 

Sep 05 FY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australian Banking

 

2.65

%

(14bps)

 

2.51

%

155

 

46

%

48

%

(1bp)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK Banking

 

3.96

%

(24bps)

 

3.72

%

49

 

18

%

15

%

(13bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Zealand Banking

 

2.61

%

(18bps)

 

2.43

%

32

 

9

%

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional Markets & Services

 

0.47

%

(6bps)

 

0.41

%

134

 

42

%

42

%

(3bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

(0.00

)%

(10bps)

 

(0.10

)%

(48

)

(15

)%

(15

)%

2bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Impact

 

2.35

%

 

 

2.20

%

322

 

100

%

100

%

(15bps)

 

 

Net Interest Margin Mar 05 Half

 

2.19

%

 

 

 

 

Net Interest Margin Sep 05 Half

 

2.20

%

 

16



Key area 2 - Expenses

 

                  Bow wave of costs coming through

 

                  Tactical initiatives implemented

 

                  Restructuring plans developed

 

                  Comprehensive three year investment slate

 

17



Banking expenses* increased $788m in the September 2005 year

 

[CHART]

 


*                 Before significant items, Irish Banks and exchange rate effects

 

18



Finalised restructuring charge

 

Costs

 

05 FY
$m

 

FTE Related
Reduction

 

Australia

 

409

 

2,248

 

UK

 

266

 

1,700

 

NZ

 

14

 

38

 

IMS

 

121

 

471

 

Corporate Centre

 

28

 

205

 

Total

 

838

 

4,662

 

 

Run- rate benefits
FY ending

 

05
$m

 

06
$m

 

07
$m

 

Australia

 

38

 

117

 

193

 

UK

 

51

 

118

 

165

 

NZ

 

0

 

1

 

2

 

IMS

 

11

 

41

 

50

 

Corporate Centre

 

2

 

12

 

14

 

Total

 

102

 

289

 

424

 

 

19



Investment spend

 

                  Investment spend of $2.5b over the next three years

 

                  in line with prior years

 

                  Approximately 70% will be in the Australian region

 

                  Compliance and infrastructure programmes continue to be the focus in the short term

 

                  Weighting will change in favour of franchise development over time

 

20



Key area 3 – Asset Quality

 

            Strong growth in business banking

 

            Pick up in mortgage lending

 

            UK expansion

 

            Devolved credit processes with Group oversight

 

            Consistent methodology

 

21



Portfolio remains sound with write-off levels down and key quality indicators improving

 

Total Net Write-offs to Risk-Weighted Assets (excl Housing)

 

[CHART]

 

Well Secured lending % of Total Balance*

 

[CHART]

 

CRS 1-6* % of Total Balance

 

[CHART]

 


* Excludes Housing and all Personal Loans

 

22



Provisioning coverage levels remain sound

 

General Provision to Risk-Weighted Assets

 

[CHART]

 

23



Credit Provisioning will change on transition to AIFRS

 

                  Transition to AIFRS currently estimated to result in a decrease in the general (collective) provision for doubtful debts of approximately $350m

 

                  This would give coverage of non-housing RWA’s

  AGAAP

0.99%

  IFRS

0.83%

 

24



Key area 4 - Capital

 

            Gaining more clarity on AIFRS impacts

 

            Some significant issues outstanding

 

            Capital base adequate to absorb changes

 

25



Strong ACE and Tier 1 ratios maintained

 

[CHART]

 

             Surplus provides flexibility to cater for expected impact of AIFRS

 

             Continued focus on improving ROE and internal capital allocation

 

 

 

Target

 

30 Sep 05

 

Targets

 

Ranges (%)

 

Actual

 

 

 

 

 

 

 

ACE/RWA

 

4.75 – 5.25

 

5.49

 

 

 

 

 

 

 

Tier 1

 

7.00 – 7.50

 

7.86

 

 

 

 

 

 

 

Total Regulatory

 

10.00 – 10.50

 

10.45

 

 

26



AIFRS impact on capital is significant

 

 

 

Estimated impact on Capital

 

 

 

$bn

 

 

 

ACE

 

Tier 1

 

Defined benefit schemes

 

(1.0

)

(1.0

)

Prepaid pension asset

 

(0.6

)

(0.6

)

WM value-in-force, at acquisition

 

 

(1.5

)

WM historical adjustment re NAFiM

 

(0.2

)

(0.2

)

Revenue recognition – effective yield

 

(0.3

)

(0.3

)

Other

 

(0.3

)

(0.3

)

Hedging

 

0.1

 

0.1

 

Credit provisioning

 

0.2

 

0.2

 

Total

 

(2.1

)

(3.6

)

 

                      APRA framework still in draft form

                      Effective 1 July 2006, but expect transitional relief

                      APRA hybrid discussion paper released

 

27



Final dividend of 83 cents, 166 cents for the year

 

[CHART]

 

Current half

                 Payout ratio of 77%

                 Franking of 80%

 

Full year

                 Payout ratio of 79%

                 Franking of 80%

 

28



Group Scorecard

 

                  Our results bottomed in the first half

 

                  Acceptable growth by each of the regional businesses

 

                  Franchises being rebuilt and extended

 

                  Compliance and infrastructure programmes will continue

 

                  Objective to deliver satisfactory long-term returns to our shareholders

 

29



Agenda

 

Introduction

John Stewart

 

 

Group Results

Michael Ullmer

 

 

Outlook & Update

John Stewart

 

 

Questions and Answers

 

 

30



Economic environment to soften in our key markets

 

            Economic outlook is subdued

 

            Slowing credit growth

 

            But business momentum is building

 

31



Headwinds for 2006

 

             Continuing reinvestment in core infrastructure

 

             Compliance cost

        Basel ‘gaps’, enforceable undertakings, APRA

        Compliance Infrastructure

        Internal model re–accreditation

 

           Wealth Management – transitional tax relief

 

             Current year IORE due to market levels

 

             IMS business continues to rebase

 

32



Regional accountability model

 

                      Refreshed Leadership

 

                      Leaders demonstrating the Corporate Principles

 

                      Setting high standards for our customers

 

                      Rewarding behaviours & results

 

                      Clear direction – clear accountabilities

 

33



Corporate Centre

 

                      Emphasis on clear accountability for decisions and outcomes

 

Corporate Centre to focus on:

 

                      Value creation

 

                      Target/ expectation setting and sign off of proposed strategies

 

                      Performance monitoring

 

                      Validation and oversight required to provide assurance required for financial and risk governance

 

                      Capital and balance sheet management

 

                      Mergers and acquisitions

 

34



Businesses largely stabilised

 

[CHART]

 

35



IMS

IMS

Focus on 5 strategies

 

In Decline

Stabilising

 

[GRAPHIC]

 

[LOGO]

 

          Reduce reliance on low ROE lending

 

          Increase capital velocity

 

          Align presence to market potential

 

           Drive efficiency

 

           Create products for the new capital pools

 

36



 

 

UK

 

United Kingdom

 

 

Providing the evidence of a healthy growing business

Rebuilding Capability

 

[GRAPHIC]

 

             Continued management of margins, product simplification and rationalisation

 

             Grow retail deposit and CB wholesale funding volumes

 

             Continue Cost Reduction Programme

 

             Increase staff satisfaction

 

             Embed National IFS model with circa 78 sites across the UK

 

             Complete the redefinition of the retail branch footprint, moving to a branch network of 343 with 57 Flagship branches

 

             Expanding Third Party Distribution

 

37



 

Australia

Australia

Retail     Wealth     B&P

Helping our customers fulfil their aspirations

 

 

Rebuilding Capability

 

[GRAPHIC]

 

38



 

Retail     Wealth     B&P

Australian Region – Retail

 

Rebuilding through people capability

 

 

Rebuilding Capability

 

[GRAPHIC]

 

             Major rebuilding program across the entire Retail network

 

             Focusing our brand on key customer segments and geographic locations

 

             Focus on building sales capabilities in key branches

 

             Customer driven product innovation including wealth products

 

             Distribution model with executives having full P&L accountability and ownership of their local market

 

39



 

Retail     Wealth     B&P

Australian Region – Wealth

 

Improve returns and leverage bank channels

 

 

Rebuilding Capability

 

[GRAPHIC]

 

             Accelerate insurance sales by broadening distribution

 

             Offer our bank customers simple, integrated solutions

 

             Assert our Manager of Managers credentials and build new investment offers

 

             Continue to develop our leading platform proposition

 

40



Australian Region - Business & Private

Retail     Wealth     B&P

Lead the market, grow through innovation

 

 

Rebuilding Capability

 

[GRAPHIC]

 

                  Greater banker empowerment, quick decisions, decentralised, streamlined servicing process

 

                  New client segment businesses and specialisation- health and education

 

                  New Sales & Service program ‘Go National’

 

                  Innovative products, quick to market:

 

                 CBIB Transaction Banking Platform (internet)

 

                 New protected loans (integrating insurance)

 

                 Alternative investments

 

41



 

New Zealand

New Zealand

 

Focus on key markets

Truly Competitive

 

[GRAPHIC]

 

                  Capitalise on consistent strategy

 

                  Strength in middle business, agri, cards

 

                  SME focus

 

                  Housing – increase share in personal markets

 

                  Youth

 

                  Leverage cultural change already evident via six sigma

 

42



Summary

 

                  Revenue momentum is building

 

                  Costs are under control

 

                  Turnaround is on track

 

43



Agenda

 

Introduction

 

John Stewart

 

 

 

Group Results

 

Michael Ullmer

 

 

 

Outlook & Update

 

John Stewart

 

 

 

Questions and Answers

 

 

 

44



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 



Appendix

 

                  Group Performance

 

                  Divisional Performance

 

                  Asset Quality

 

                  Capital & Funding

 

                  Other Matters

 

                  Economic Outlook

 

[LOGO]

 

46



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

Group Performance

 



Volume growth across the Group

 

Group Lending Growth*^

 

Retail Deposits Growth*

(quarterly average)

 

(quarterly average)

 

 

 

[CHART]

 

[CHART]

 


*                At constant exchange rates

^                 Excludes Irish Banks and UK National Custodian Services

+                Excludes securitisation

 

[LOGO]

 

48



Net interest margin up 1 bp on the March 2005 half

 

 

 

 

 

 

 

 

 

AIEA

 

% of Group

 

 

 

 

 

Mar 05 HY

 

NIM

 

Sep 05 HY

 

Sep 05 HY

 

AIEA

 

Impact on

 

 

 

NIM

 

Contraction

 

NIM

 

$Bn

 

Mar 05 HY

 

Sep 05 HY

 

Group NIM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australian Banking

 

2.52

%

(3bps)

 

2.49

%

160

 

46

%

50

%

8bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK Banking

 

3.68

%

9bps)

 

3.77

%

44

 

17

%

14

%

(10bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Zealand Banking

 

2.50

%

(14bps)

 

2.36

%

33

 

10

%

10

%

1bp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional Markets & Services

 

0.40

%

1bp

 

0.41

%

128

 

43

%

40

%

(1bp)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

(0.00

)%

(22bps)

 

(0.22

)%

(45

)

(16

)%

(14

)%

3bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Impact

 

2.19

%

 

 

2.20

%

320

 

100

%

100

%

1bp

 

 

49



Banking net interest income reflects strong volume growth.

 

[CHART]

 


^                 Excludes Irish Banks

 

50



Banking other operating income* up $217m in the September 2005 half

 

[CHART]

 


*                Before significant items, Irish Banks and exchange rate effects

^                 Excludes Irish Banks

 

51



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

 

Divisional

 

Performance

 



Australian banking net interest margin down 14bps in the September 2005 year

 

[CHART]

 

[LOGO]

 

53



Australian banking net interest margin down 3bps in the September 2005 half

 

[CHART]

 

54



Australian Banking: market share

 

Market share

 

Sep 05

 

Mar 05

 

Sep 04

 

Mar 04

 

Rank at
Sep 05*

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Lending (incl Bills^)+

 

24.3

%

22.9

%

21.6

%

22.0

%

#1

 

Housing (incl Securitisation)

 

16.7

%

16.6

%

16.5

%

17.0

%

#2

 

Credit Cards

 

15.4

%

16.3

%

16.7

%

17.8

%

#4

 

Business Deposits

 

26.9

%

26.7

%

27.8

%

27.7

%

#1

 

Household Deposits

 

13.3

%

13.3

%

13.4

%

13.6

%

#3

 

 


+                  Includes Institutional Markets & Services

^                 Excludes Bank Held Bills

*                Ranking among authorised banks

 

Source: APRA Monthly Banking Statistics / National (September 2005)

 

55



Wealth Management Australia+ underlying cash earnings* up 13.4% on the March 2005 half

 

 

 

Sep 05

 

Mar 05

 

Change on

 

 

 

HY

 

HY

 

Mar 05 HY

 

Sep 04 FY

 

 

 

$m

 

$m

 

%

 

%

 

 

 

 

 

 

 

 

 

 

 

Investments

 

105

 

115

 

(8.7

)

10.6

 

 

 

 

 

 

 

 

 

 

 

Insurance

 

85

 

74

 

14.9

 

(3.6

)

 

 

 

 

 

 

 

 

 

 

Other (incl. regulatory programs)

 

(37

)

(42

)

11.9

 

(25.4

)

 

 

 

 

 

 

 

 

 

 

Profit from operations (after tax)

 

153

 

147

 

4.1

 

(0.3

)

 

 

 

 

 

 

 

 

 

 

Investment earnings shareholders’ retained profits & capital from life business (IORE)

 

67

 

47

 

42.6

 

65.2

 

 

 

 

 

 

 

 

 

 

 

Underlying operating profit after tax & OEI

 

220

 

194

 

13.4

 

11.9

 

 

 

 

 

 

 

 

 

 

 

Prior year adjustments

 

 

 

 

large

 

 

 

 

 

 

 

 

 

 

 

Cash earnings*

 

220

 

194

 

13.4

 

29.4

 

 

 

 

 

 

 

 

 

 

 

Revaluation profit/ (loss) after tax

 

294

 

51

 

large

 

large

 

 


+                Includes Asian operations

*                Before significant items

 

56



Wealth management revaluation profit

 

[CHART]

 

Revaluation profit before tax:

 

$

335m

 

 

 

 

 

Tax (incl. Impact of tax consol’n)

 

$

10m

 

 

 

 

 

Revaluation profit after tax

 

$

345m

 

 

Changes in
Assumptions &
Experience

 

                 Higher investment earnings generating higher FUM

                 Ongoing robust cost containment

                 Lower assumed margins for retail and corporate funds management products

 

57



Wealth Management Australia – market share

 

Masterfund market share plus flows

 

[CHART]

 

Insurance - Retail Risk Market Share

 

[CHART]

 

Source: Plan for Life Australian Retail & Wholesale Investments Market Share & Dynamics Report as at 30 June 2005

 

58



Wealth Management Australia – inflows and attrition

 

Share of annual inflows

 

[CHART]

 

Attrition rate

 

[CHART]

 

Source: Plan for Life Australian Retail & Wholesale Investments Market Share & Dynamics Report as at 30 June 2005

 

59



UK banking ongoing operations^ net interest margin down 14bps in the September 2005 half

 

[CHART]

 


^                 Excludes Irish Banks and UK National Custodian Services

 

60



UK banking ongoing operations^ net interest margin down 32bps in the September 2005 year

 

[CHART]

 


^                 Excludes Irish Banks and UK National Custodian Services

 

61



New Zealand banking net interest margin down 14bps in the September 2005 half

 

[CHART]

 

62



New Zealand banking net interest margin down 18bps in the September 2005 year

 

[CHART]

 

63



Total IMS Return on Risk Weighted Assets+ (RWA) and Total IMS External Assets Vs RWA

 

[CHART]

 

             Strong improvement in Return on Risk Weighted Assets

 

             Reduction of $565m (14.5%) in capital since September 2004 *

 

             Reduction of $29Bn (23.2%) in External Assets since September 2004

 


*                Based off the mid-point of the ACE target range

+                Excludes Irish Banks

 

64



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

Asset Quality

 



 

Non-accrual levels stable

 

Gross Non-Accrual Loans

 

[CHART]

 

90+ Delinquency and Gross 12 Month Rolling Write Off Rates Total Personal Lending

 

[CHART]

 

[LOGO]

 

66



Australian Housing metrics

 

Low Doc Loans

                  $1.3bn outstanding

                  LVR capped at 60%

 

Inner City Apartments

                  $2.0bn outstanding

                  90 days past due improving

 

Origination source

 

 

 

Mar 05

 

Sep 05

 

 

 

 

 

 

 

Proprietory

 

72

%

70

%

 

 

 

 

 

 

Introducer

 

10

%

12

%

 

 

 

 

 

 

Broker

 

18

%

18

%

 

67



Housing Segmentation - Australia

 

Majority of growth attributable to owner occupied housing.

 

Housing portfolio segmentation

 

Housing portfolio segmentation

for Australia March 2005

 

for Australia September 2005

 

 

 

[CHART]

 

[CHART]

 

68



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

Capital & Funding

 



Core capital movement

 

Movement in ACE ratio

 

[CHART]

 

70



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

Other Matters

 



Pro-forma cash earnings under AIFRS

 

 

 

$m

 

Cash earnings under AGAAP for the year to 30 September 2005

 

3,310

 

 

 

 

 

Defined Pension benefits adjustment

 

36

 

Share based payment expense

 

(66

)

Wealth Management revenue and expense recognition

 

(12

)

Other

 

24

 

Tax effect impact

 

10

 

 

 

 

 

*Cash earnings under AIFRS for the year to 30 September 2005

 

3,302

 

 

Indicative cash earning impact is a decrease of $8m or 0.3%.

 

Excludes impact of IFRS standards applying from 1 October 2005 onward (refer next slide).

 


*                Definition of AIFRS cash earnings under review

 

[LOGO]

 

72



Pro- forma cash earnings under AIFRS

 

             Indicative impact of a reduction of $8 million driven largely by recognition of expense for share based payments of $66 million, offset by a decrease in pension expense of $36 million, together with a number of other small adjustments.

 

             These numbers will form the basis of comparatives within 2006 results.

 

             Definition of AIFRS cash earnings under review.  For the purposes of this slide this excludes the impact of Treasury shares (movement in value of Wealth Management trusts holdings in NAB own shares).

 

             Excludes impact of AIFRS standards that do not apply until 1 October 2005 onwards.

 

             Primary area of impact from 1 October 2005 is Financial Instruments standard – AASB 139. This covers loan loss provisioning and hedging.  This is likely to give rise to increased volatility in cash earnings going forward.

 

73



Project / investment spend - IFRS and Basel II

 

 

 

Global/

 

Wealth

 

 

 

 

 

 

 

IFRS Project ($m)

 

Aust

 

Management

 

Europe

 

NZ

 

Total

 

Enabling Infrastructure

 

40

 

2

 

6

 

 

48

 

Process Automation

 

10

 

 

4

 

2

 

16

 

Compliance Delivery

 

33

 

11

 

18

 

3

 

65

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Cash Budget

 

83

 

13

 

28

 

5

 

129

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational Expense

 

 

 

 

 

 

 

 

 

94

 

Capital Budget

 

 

 

 

 

 

 

 

 

35

 

Cash spend to date (September 2005)

 

 

 

 

 

 

 

 

 

120

 

Estimated Completion

 

 

 

 

 

 

 

 

 

Dec 05

 

 

 

 

Global/

 

Wealth

 

 

 

 

 

 

 

Basel II and similar Projects ($m)

 

Aust

 

Management

 

Europe

 

NZ

 

Total

 

Enabling Infrastructure

 

13

 

 

35

 

1

 

49

 

Process Automation

 

72

 

1

 

38

 

9

 

120

 

Compliance Delivery

 

89

 

2

 

20

 

3

 

114

 

Other

 

22

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Cash Budget

 

196

 

3

 

93

 

13

 

305

*

 

 

 

 

 

 

 

 

 

 

 

 

Operational Expense

 

 

 

 

 

 

 

 

 

223

 

Capital Budget

 

 

 

 

 

 

 

 

 

82

 

Cash spend to date (September 2005)

 

 

 

 

 

 

 

 

 

193

 

Estimated Completion

 

 

 

 

 

 

 

 

 

Dec 07

 

 


*                Includes Risk Appetite work, internal model and Basel II ‘Gap’ functionality

 

74



Taxation

 

 

 

Potential

 

 

 

 

 

 

 

Amount in

 

 

 

Amount

 

 

 

Dispute

 

Status

 

Provided

 

TrUEPrs capital raising

 

$

210 million

 

In-principle agreement

 

$

96.5million

 

 

 

 

 

 

 

 

 

 

 

ExCapscapital raising

 

$

552 million

*

In dispute

 

$

Nil

 

 

 

 

 

 

 

 

 

 

 

NZ structured finance transactions

 

NZ$

533 million

**

In dispute

 

$

Nil

 

 

             TrUEPrS tax dispute - in-principle agreement to settle with ATO for $96.5 million

 

             ExCaps remains in dispute – confidence of legal merits of case reinforced by recent Macquarie Finance decision

 

             NZ structured finance transactions remain in dispute – underlying transactions have all terminated following legislative change effective 1 July 2005

 


*                Includes primary tax, penalties and interest (net of tax)

 

**         Includes primary tax and interest (net of tax) but not the possible imposition of penalties

 

75



FULL YEAR

 

05

 

[LOGO]

RESULTS

 

 

Economic Outlook

 

The following slides contain forward looking statements.  Refer to disclaimer on page 82

 



Global economy strong and only marginally weaker in 2006

 

World GDP Growth

 

[CHART]

 

             Global growth strong

 

             Growth underpinned by US, China and India

 

             Inflationary concerns remain

 

             Upward bias on rate rises

 

             European growth to remain sluggish

 

[LOGO]

 

77



Economic outlook

 

Economic environment to soften in our key market:

 

             Overall, sustained income and credit growth, albeit at a bit slower. Slightly higher unemployment & inflation. Monetary conditions remain about “neutral”.

 

             2005/06 GDP growth is forecast to be 3% in Australia, 2.5% in the UK & 2.2% in NZ

 

             In Australia, some moderation in domestic activity (largely household spending) offset by a pick up in exports.

 

             In NZ, domestic conditions are forecast to moderate significantly during the next year, due to tighter financial conditions & slower immigration.

 

             In the UK, business activity is expected to ease back to trend reflecting some moderation in household spending & external demand.

 

78



Sustained growth & low unemployment

 

Economic Growth & Unemployment

 

Australia

 

New Zealand

 

 

 

[CHART]

 

[CHART]

 

UK

 

Group - Asset Wtg

 

 

 

[CHART]

 

[CHART]

 

79



Credit growth to moderate slightly

 

System Credit Growth

 

Australia

 

New Zealand

 

 

 

[CHART]

 

[CHART]

 

UK

 

Group - Asset Wtg

 

 

 

[CHART]

 

[CHART]

 

80



Economic outlook estimates

 

Group Weighted Key Assets

 

 

 

Annual average %

 

Growth

 

2005

 

2006

 

2007

 

Real GDP

 

2.3

 

2.8

 

3.1

 

System Credit

 

13.3

 

10.3

 

8.8

 

Housing Credit

 

12.9

 

10.4

 

9.7

 

Other Personal

 

11.4

 

9.7

 

9.2

 

Business Credit

 

12.0

 

8.8

 

5.6

 

 

81



Macro risks to outlook estimates

 

             Geo politics - Both political, oil & trade tensions overhang the outlook.

 

             Unbalanced global growth – Much still depends on the US & Asia. Continental Europe continues to lag.

 

             Australia, New Zealand and UK household leverage – Increased household gearing, low savings and “expensive” housing leaves some consumers vulnerable to higher interest rates & sustained loss of jobs.

 

             Financial instability – As interest rates rise to more “normal” levels, some asset valuations may become volatile & lead to instability amongst investors and institutions.

 

             Oil prices - Sustained high prices would prove a headwind to the global recovery under way.

 

             Bird flu – Likely to be contained, albeit watch for human pandemic.

 

82



Disclaimer

 

This document is a presentation of general background information about the Group’s activities current at the date of the presentation, 9 November, 2005.  It is information 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.

 

This document contains certain “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934 and the US Private Securities Litigation Reform Act of 1995.  The words “anticipate”, “believe”, “expect”, “project”, “estimate”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements.  Indications of and guidance on future earnings and financial position and performance are also forward-looking statements.  Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group, that may cause actual results to differ materially from those expressed or implied in such statements.  There can be no assurance that actual outcomes will not differ materially from these statements.  For further information relating to the identification of forward-looking statements and important factors that could cause actual results to differ materially from those projected in such statements, see “Presentation of Information - Forward-Looking Statements” and “Risk Factors” in the Group’s Annual Report on Form 20-F filed with the US Securities & Exchange Commission.

 

83



 

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

 

 

 

 

 

 

 

 

 

  /s/

Brendan T. Case

 

 

 

 

Brendan T. Case

Date:

14 November 2005

Title:

Associate Company Secretary