National Australia Bank Limited · ASX:NAB
National Australia Bank — Investor Presentation (July 2006)
44 slides from National Australia Bank's investor presentation, Jul 19, 2006
Slide 1: UK Business - Market Update
UK Business - Market Update Lynne Peacock July 2006
Slide 2: Today's Programme
Today’s Programme Overview of the UK strategy An overview of the progress in each business area Update on other key initiatives Questions
Slide 3: 5 Key Issues in 2003 – A Reminder
5 Key Issues in 2003 – A Reminder Strategy, Leadership & Structure Undifferentiated strategy Significant duplication and multiple legal entities Insufficient management expertise in local market Distribution Very limited presence in wealthy South East of England No Third Party Distribution channel U
Slide 4: Strategic Initiatives 2003
Strategic Initiatives 2003 Differentiated GB business “ Playing a different game” “ Do what we do, but do it better” One efficient GB business “ Growth” initiatives Cons. Finance WME CIB CB YB NB NIB
Slide 5: UK Actions
UK Actions “Do what we do, but do it better” One Efficient Business Simplified product set Refreshed brands and improved understanding of customers Efficient back office Restructuring of cost base through a range of initiatives Margins & fee levels managed down to market competitive levels Improved
Slide 6: Today's Programme
Overview of the UK strategy An overview of the progress in each business area Update on other key initiatives Questions Today’s Programme
Slide 7: Retail Distribution
Retail Distribution
Slide 8: Retail Distribution
Retail Distribution Review of Distribution Footprint and Reduce Cost Base Rationalised branch network Investing in high potential high street locations (Flagship branches) Further increase in process / transaction centralisation Call sweeping completed Reductions in over the counter transactions Int
Slide 9: Retail Distribution – Network Now 'Right-Sized' Ahead of Schedule
Retail Distribution – Network Now ‘Right-Sized’ Ahead of Schedule 344 191 153 June 2006 449 232 217 March 2005 490 Total 239 YB 251 CB 2002 Total Number of Branches 449 344 344 Source - Internal 217 153 153 232 191 191 0 50 100 150 200 250 300 350 400 450 500 Mar-05 Mar-06 September 06 Target CB YB
Slide 10: Retail - Sales Performance Progress
Retail - Sales Performance Progress Retail Mortgage Performance Life & Critical Illness Penetration % of Mortgages Balances £4,165m Balances £3,867m Retail Deposits £6,925m £7,424m £m £m Source - Internal £606m £435m 0 100 200 300 400 500 600 700 H1 05 Drawdowns H1 06 Drawdowns 61% 49% 27% 16% 39% 0
Slide 11: Direct Channels Fit for Purpose
Direct Channels Fit for Purpose Grown direct channel transaction volumes by 31% Implemented new outsourced call centre partnership Implemented state of the art call centre platform Increased first call resolution from 39% to 73% Average cost per call down from £1.84 to £1.30 Developed direct sale ca
Slide 12: Portfolio Size & Asset Quality
Portfolio Size & Asset Quality Growth in personal lending primarily housing Increase in B&DD mainly in Personal Loans and Cards in the older part of lending portfolio Action taken to address this Recent additions to PL’s and cards books - good quality and in line with the market Personal Lending Boo
Slide 13: Integrated Financial Solutions
Integrated Financial Solutions
Slide 14: iFS South - Network of Financial Solution Centres Increased to 36 Sites
iFS South - Network of Financial Solution Centres Increased to 36 Sites Basildon Basingstoke Bath Bristol Bury St. Edmunds Cambridge Canary Wharf Cardiff Chelmsford Croydon Hertford Fleet Place Exeter Gloucester Guildford Crawley Ipswich Maidstone Paddington Piccadilly High Wycombe Oxford Norwich Mi
Slide 15: iFS South - Progress
iFS South - Progress Total of 650 people recruited in the South 210 top quartile people recruited in the last 12 months Negligible attrition On track to achieve breakeven projections Existing 3 sites have seen income grow by an average £750k
Slide 16: iFS North - Progress
iFS North - Progress 38 centres converted to iFS operating model Physical conversion of existing CB and YB business centres into FSCs well underway As at June 2006, 19 centres have been physically converted to the benchmark standard, with a further 3 in progress A further 8 centres are on track to b
Slide 17: iFS - Lending
iFS - Lending IFS National - Lending Drawdown Trend 0 100 200 300 400 500 600 Apr- 05 May- 05 Jun- 05 Jul- 05 Aug- 05 Sep- 05 Oct- 05 Nov- 05 Dec- 05 Jan- 06 Feb- 06 Mar- 06 Period £m IFS North - Lending Drawdown Trend 50 100 150 200 250 300 350 400 450 500 Apr- 05 May- 05 Jun- 05 Jul- 05 Aug- 05 Se
Slide 18: iFS - Growth H1 March 2006 vs H1 March 2005
Total Retail Deposits Total Core Lending Total Retail Deposits Total Core Lending Volume Growth North Volume Growth South 70% 88% 16% 22% iFS - Growth H1 March 2006 vs H1 March 2005 Balances £0.9bn Balances £2.4bn Balances £4.6bn Balances £9.9bn
Slide 19: iFS – Summary Progress
iFS – Summary Progress Achieving our objective of creating a strong national network of quality Financial Solution Centres covering all regional centres from Inverness to Plymouth Grown agribusiness with further growth planned 25 local Chairpersons / Ambassadors signed up Credit embedded within iFS
Slide 20: Third Party Distribution
Third Party Distribution
Slide 21: Third Party Distribution - Mortgage Growth
Third Party Distribution - Mortgage Growth 100% 100% Percentage of New to Bank Customers 13,580 since launch 4,289 Total of Customers Acquired 6 awards 2 awards Industry Recognition 440 307 Number of Brokers 40bps 40bps Average Procuration Fees £71,000 £66,000 Average Customer Income £185,000 £180,0
Slide 22: Third Party – Delivering Premium Customers
Third Party – Delivering Premium Customers Customer Distribution Wealth Status High Low High Low 32% 6% 14% 10% 5% 16% 5% 12% Income Source - Internal
Slide 23: UK Population Customer Distribution
UK Population Customer Distribution High Low High Low 10% 5% 15% 11% 8% 7% 16% 28% Income Customer Distribution Wealth Status Source - Internal
Slide 24: Third Party Distribution – Cross Sales
Third Party Distribution – Cross Sales 1.6 average product holding per customer 28% of mortgage customers have a Current Account with an average balance of £10,700 9% of mortgage customers have a Savings Account with an average balance of £56,900 Majority of customer base acquired in last 9 months E
Slide 25: Products and Margins
Products and Margins
Slide 26: UK banking net interest margin down 21bps on the March 2005 half
UK banking* net interest margin down 21bps on the March 2005 half 3.64% 0.03% (0.05%) (0.15%) (0.03%) (0.09%) (0.15%) 0.25% (0.20%) (0.05%) 3.85% 0.23% Mar 05 HY AIFRS Impact Mar 06 HY Lending vs Deposit Growth Irish Sale Proceeds Other NII Lending Product Margin Lending Mix Basis Risk Deposit Produ
Slide 27: Technology and Operations
Technology and Operations
Slide 28: Technology and Operations
Technology and Operations Customer Connect System rolled out to 190 YB branches Teller ported from BNZ and successfully launched in over 50 YB branches Technology components of BASEL Programme completed on schedule Convergence Programme on schedule for delivery 1 st quarter 2007 Workload removal pro
Slide 29: Today's Programme
Today’s Programme Overview of the UK strategy An overview of the progress in each business area Update on other key initiatives Questions
Slide 30: Irish Banks Migration
Irish Banks Migration Sale completed 1 st March 2005 Transitional services agreement to cover services until Easter 2006 Successful completion of data migration completed Easter 2006, on schedule and under cost Impact on cost income ratio 17,000 technology man days and 500 people across NAG UK worki
Slide 31: 2005 Restructuring Provision
2005 Restructuring Provision Announced March 2005 £73m of charge is personnel related, £36m surplus lease provision By 31 March 2006 £62m of the provision had been utilised As at March 2006, 73% (1,235 FTE) of the headcount reduction had been achieved Branch closure programme completed 6 months ahea
Slide 32: People & Culture – Major Pension Reform
People & Culture – Major Pension Reform The first retail Bank in the UK to achieve a comprehensive reform of pension arrangements September ’05 deficit £426m reduced by £265m Extensive communications program Employee ballot Follow up negotiations with trustees Preparation for Government pension chan
Slide 33: Other Initiatives
Other Initiatives CB Money Market Desk funding programme Sale of PCS and Custom Fleet businesses Outsourced Trust & Executry administration Moved to one chart of accounts Upgrade of General Ledger Millennium package Simplified payroll operations
Slide 34: UK Progress – Contribution from Irish Banks
UK Progress – Contribution from Irish Banks Replaced Core Lending (Spot, £bn) 20.4 20.7 Retail Deposits (Spot, £bn) 15.8 13.0 Underlying Profit (£m) 205 219 Cash Earnings before Tax (£m) 156 154 FTE (Spot) 12,865 9,246 Cost Income Ratio 68.2% 62.9% Income per FTE * 99 134 Cash Earnings Before Tax pe
Slide 35: Summary
Summary “Playing a Different Game” Organic growth of a new business in the South Roll out of Financial Solution Centres on track and effective Conversion of existing SME business to iFS model Creation of Third Party mortgage business “Do What We Do, But Do It Better” Restructure existing business in
Slide 36: Today's Programme
Today’s Programme Overview of the UK strategy An overview of the progress in each business area Update on other key initiatives Questions
Slide 37: Disclaimer
Disclaimer This document is a presentation of general background information about the Group’s activities current at the date of the presentation, 18 July, 2006. 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 po
Slide 38: UK Business – Market Update Appendix
UK Business – Market Update Appendix 1
Slide 39: Product Rationalisation
Product Rationalisation Total 397 Product Numbers October 2005 Money Transmission 17 Others 52 Savings 52 Go To February 2007 736 Products rationalised via sale of NIB & NB 347 CB, YB & CYB 2002 Product Set Total 1083 Money Transmission 48 Savings 99 Others 249 Total 121 Significant Product rational
Slide 40: Example of High Level Product Mapping – 'Go To' Product Set
Example of High Level Product Mapping – ‘Go To’ Product Set Retail Staff CA + Readycash CA Choice Paymaster Staff CA + Offset Student Current AC CA Extra card CA + Cashmaster Flexicash Youth Students CA Extra CA + Offset Flexicash Student Current AC Graduating Students CA Plus [Mass Market] CA Plus
Slide 41: Streamlining/Improving Processes – Significant Progress Now Being Made
Streamlining/Improving Processes – Significant Progress Now Being Made Customer Benefits – Some ‘Quantified’ Examples Process Before After Status Issue of First Cheque Book 10 days 4 days In Place Re-order cheque books 3 days Same Day if order received by 3:30pm In Place Advertising and marketing ca
Slide 42: Progress – Vision, Purpose and Leadership
Slightly disagree Disagree Strongly disagree Slightly agree Agree Strongly agree I am excited about my part in the future of our organisation Feb 06 May 05 People in our organisation share a common vision of our future Feb 06 May 05 Vision and Purpose Progress – Vision, Purpose and Leadership Senior
Slide 43: Disclaimer
Disclaimer This document is a presentation of general background information about the Group’s activities current at the date of the presentation, 18 July 2006. 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 pot
Slide 44: Appendix is available on the Group's website
Appendix 2 is available on the Group’s website http://www.nabgroup.com 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 LIMI
National Australia Bank — Investor Presentation (July 2006) on 6ix