National Australia Bank Limited · ASX:NAB
National Australia Bank — 1H24 Earnings Presentation
130 slides from National Australia Bank's earnings presentation, May 2, 2024
Slide 1: Half Year Results 2024 Investor Presentation
national australia bank Half Year Results 2024 Investor Presentation 2 May 2024 Andrew Irvine * Group Chief Executive Officer a Nathan Goonan aE Group Chief Financial Officer igi (©2024 National Australia Bank Limited ABN 12.004 044 987 AFSL and Australian Cradit Licence 230686,
Slide 2: NAB 2024 Half Year Results Index
NAB 2024 Half Year Results Index This presentation is general background information about NAB. It is intended to be used by a professional analyst audience and is not intended to be relied upon as financial advice. Refer to page 130 for legal disclaimer. Financial information in this presentation i
Slide 3: Overview
Overview Andrew Irvine Chief Executive Officer
Slide 4: Key messages
Key messages • 1H24 financial results reflect consistent execution across our businesses in a challenging environment • Balance sheet settings remain prudent • Majority of customers are resilient and we are supporting those who need it • New Executive Leadership Team to take NAB forward • Opportunit
Slide 5: Financial results
Financial results Metric 1H24 2H23 1H24 v 2H23 Statutory net profit ($m) 3,494 3,447 1.4% Continuing operations - Cash earnings basis1 Net operating income ($m) 10,138 10,125 0.1% Operating expenses ($m) (4,677) (4,602) 1.6% Underlying profit ($m) 5,461 5,523 (1.1%) Cash earnings ($m) 3,548 3,661 (3
Slide 6: Divisional performance aligned to our strategy
Divisional performance aligned to our strategy Underlying divisional profit ($m) Business & Private Corporate & Institutional Personal Banking New Zealand Banking2,3 Banking Banking1 (0.6%) 0.4% (9.3%) 4.1% 2,615 2,599 1,209 1,214 1,049 1,076 1,120 951 2H23 1H24 2H23 1H24 2H23 1H24 2H23 1H24 Cash ea
Slide 7: Delivering improved shareholder returns over time
Delivering improved shareholder returns over time Cash return on equity1 Basic cash EPS1 (cents) 130 114 117 114 12.9% 102 107 98 85 11.7% 11.7% 70 10.7% 8.3% 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 Dividends per share (cents) 83 84 84 78 67 73 60 30 30 FY20 FY21 FY22 FY23 1H24 1H20 2H20 1H21 2
Slide 8: Maintaining prudent balance sheet settings
Maintaining prudent balance sheet settings Capital ratio above target range of 11.0% - 11.5%1 Strong provisioning1 Group CET1 CP/CRWA $5.4bn CP includes $2.1bn of forward-looking provisions 11.51% 12.21% 12.22% 12.15% 11.75% 10.38% 1.42% 1.47% 1.47% 1.31% 0.96% Sep 19 Sep 22 Mar 23 Sep 23 Mar 24 Mar
Slide 9: Supporting customers
Supporting customers Helping customers manage higher interest rates and Protecting customers against scams & fraud and cost of living pressures cyber security risks NAB Assist • Prevented and recovered >$260m in scam losses for customers since Sep 21, including >$55m in 1H24 • Early and proactive cu
Slide 10: We have a clear long term strategic ambition
We have a clear long term strategic ambition Why we are here To serve customers well and help our communities prosper Who we are here for Colleagues Customers Trusted professionals that are proud to be a part of NAB Choose NAB because we serve them well every day What we will be known for Relationsh
Slide 11: Focusing on colleagues
Focusing on colleagues Who we are here for Colleagues Customers Trusted professionals that are proud to be a part of NAB Choose NAB because we serve them well every day Delivering better outcomes for our colleagues Colleague engagement score remains top quartile2 New Executive Leadership Team • Inte
Slide 12: Focusing on customers
Focusing on customers Who we are here for Colleagues Customers Trusted professionals that are proud to be a part of NAB Choose NAB because we serve them well every day Focus on delivering improved customer experiences Net Promoter Score relative to major bank peers #2 Mass Consumer1 #4 in Business2
Slide 13: Investing to grow Business & Private Banking
Investing to grow Business & Private Banking Relationship banking increasingly enabled by digital, data & analytics Strong balance sheet growth YoY Business lending – simplifying and digitising • More customers, products and channels capable of origination via digital lending platform • Increasing d
Slide 14: Disciplined growth in Corporate & Institutional Banking
Disciplined growth in Corporate & Institutional Banking Focused on consistent, through-cycle returns • Selective balance sheet usage, disciplined portfolio • Continued business and process simplification: management and prudent risk settings • 3 year wind down of NAB Asset Servicing (custody) from •
Slide 15: Building a simple and digital Personal Bank
Building a simple and digital Personal Bank Performance aligned to core strategic priorities 18% Deliberate balance sheet growth YoY 16% Simple Home Loans (SHL) delivery on track 14% Disciplined 12% growth • 95% Retail proprietary flow eligible through SHL in 1H24 10% 8% 6% • 68% reduction in retail
Slide 16: Integration of Citi Consumer Business is a key priority
Integration of Citi Consumer Business is a key priority Integration and migration timeline ✓ Key milestones delivered Timeline extended by 12 months Jun 22 Sep 22 Mar 23 Jun 23 Mar 24 Dec 251 Acquisition High Net Worth New New Mortgages, Target date to completed colleagues unsecured unsecured deposi
Slide 17: NZ Banking – executing well in a challenging market
NZ Banking – executing well in a challenging market Delivering on ambition to grow Personal and Business Strong growth in household segments YoY 10% Re-weight to less capital intense segments 8% • Increasing market share in underweight household segments 6% 4% 9.1% • Strong focus on returns given in
Slide 18: Execution of strategy delivering results
Execution of strategy delivering results Balance sheet momentum aligned to long term strategy 3 years from March 2021 – Mar 2024 35% 32% 24% 22% 16% 15% 16% B&PB Business Total Business Aust Business Aust Home Aust Household NZ Total NZ Customer lending lending deposits1 lending2 deposits1,2 lending
Slide 19: 1H24 Financials
1H24 Financials Nathan Goonan Chief Financial Officer
Slide 20: Group financial results
Group financial results Underlying profit ($m) Cash earnings1 ($m) Statutory profit ($m) (1.1%) (3.1%) 1.4% 5,523 5,461 3,661 3,548 3,447 3,494 2H23 1H24 2H23 1H24 2H23 1H24 P&L key financial indicators 1H24 ($m) 1H24 v 2H23 Net operating income 10,138 0.1% ex Markets & Treasury 9,282 (0.9%) Operati
Slide 21: 1H24 revenue impacted by lower margins
1H24 revenue impacted by lower margins Net operating income (HoH) ($m) HoH revenue increase 0.1% (ex M&T -0.9%) 115 (226) (32) 94 10,529 62 10,125 10,044 10,138 Mar 23 Sep 23 Volumes Margin Fees & Other Mar 24 Markets & Mar 24 Commissions (ex M&T) Treasury Markets & Treasury (M&T) income breakdown K
Slide 22: Net interest margin
Net interest margin Net interest margin (HoH) +1bp increase -3bps ex M&T 0.04% (0.04%) 0.01% (0.02%) 0.04% Largely revenue neutral 1.77% (0.02%) (asset mix and NII/OOI Primarily HL 1.71% competition Includes 3bps (Aust) and 1bp offsets) 1.72% (NZ) impact from higher replicating portfolio returns Mar
Slide 23: Australian housing lending
Australian housing lending Margin considerations RBA owner occupier VR front book pricing1 (%) • Front book/back book pricing pressures easing but 3.00 margins remain below historical levels 2.64 2.67 • Refinance % of market volumes declining 2.59 • More stable rate environment and lower fixed rate
Slide 24: Operating expenses
Operating expenses Operating expenses (HoH) ($m) Total expenses up 1.6% HoH (ex CSLR1 2.5%) 24 80 26 (189) 19 49 66 Includes $32m 4,421 4,677 4,421 4,602 uplift relating to financial crime Mar 23 Sep 23 Salary related Volume related Technology Depreciation and Productivity Other EU & Mar 24 & New bu
Slide 25: Asset quality
Asset quality Credit impairment charge (CIC) ($m) 0.54% 0.16% 0.38% 0.11% 0.12% 0.10% 0.60% 1,601 (0.04%) (0.03%) 0.00% 0.04% 1,600 0.00% 1,161 1,100 -0.60% 470 1,028 828 -1.20% 600 (89) 2 393 409 363 86 184 (128) 123 27 30 24 67 335 352 214 -1.80% 357 303 389 84 108 100 (14) 97 83 126 207 189 -2.40
Slide 26: Strong provisioning maintained
Strong provisioning maintained Collective provision (CP) balances higher1 Key considerations ($m) 1.56% • Collective provisions of $5.4bn representing 1.42% 1.47% 1.47% 1.35% 1.31% 1.47% CRWA • Total provisions of $5.8bn represent 1.7x 5,536 100% base case (after excluding $450m in 0.96% 5,214 5,351
Slide 27: Capital remains above target range
Capital remains above target range Group Basel III CET1 capital ratio (%) 0.80 (0.60) L1: 11.85 L1: 11.41 (0.25) 0.30 (0.23) (0.09) 12.22 12.15 11.75 Sep 23 Cash earnings Dividend Credit RWA1 Other RWA2 Share buy-back Other Mar 24 Mar 24 Pro forma3 CET1 considerations Credit risk-weighted assets ($b
Slide 28: Strong funding and liquidity metrics
Strong funding and liquidity metrics Key messages Liquidity position well above regulatory minimums (%) • Funding and liquidity position remains strong RSF impact of TFF1 remaining ~2% • Well placed for repayment of final tranches of the Term Funding Facility (TFF) in 3Q24 100 • Liquidity metrics we
Slide 29: Closing comments
Closing comments Andrew Irvine Chief Executive Officer
Slide 30: Australian economy on track for soft landing
Australian economy on track for soft landing Economic growth to remain soft in 2024 before Cash rate expected to fall as inflation continues to improving in 2025 and 2026 moderate1 • Australian GDP growth of 1.7% expected in 2024, improving (%) 8 to around trend growth of 2.3% in 2025 and 2026 7 For
Slide 31: Leadership Team to take NAB forward
Leadership Team to take NAB forward Andrew Irvine Group Chief Executive Officer and Managing Director Cathryn Carver Daniel Huggins Ana Marinkovic Rachel Slade Corporate & Institutional New Zealand Banking Personal Business & Private Banking1 Banking Banking Sharon Cook Shaun Dooley Nathan Goonan Le
Slide 32: Evolving our strategic priorities
Evolving our strategic priorities • No major pivot to our long term strategy • Key focus areas include greater customer centricity and ongoing simplification • Building on solid technology foundations and good progress on our digital & data program • Cost discipline and cultural changes embedded acr
Slide 33: Additional Group Information
Additional Group Information
Slide 34: NAB at a glance
NAB at a glance Cash earnings divisional splits 1 % of Cash earnings Key financial data 1H24 Business & Private Banking 47% Cash earnings1 $3,548m Personal Banking 16% Cash ROE 11.7% Corporate & Institutional Banking 25% Gross loans and acceptances $725.3bn New Zealand Banking 20% Customer deposits
Slide 35: Markets & Treasury income
Markets & Treasury income Markets & Treasury income breakdown ($m) 1,250 911 856 808 753 762 888 622 580 478 445 392 369 345 262 206 71 26 29 8 8 362 345 366 401 397 407 388 403 (17) (37) Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23 Sep 23 Mar 24 NAB risk management1 Derivative valuation adjustment2 Cu
Slide 36: Customer-related remediation
Customer-related remediation Customer-related remediation provision charges1 ($m) 1,189 749 1,011 380 654 268 87 137 240 43 245 58 138 21 143 45 40 178 117 35 95 135 31 97 45 8 130 20 21 27 47 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 Continuing Operations Discontinued Operations Custom
Slide 37: AUSTRAC Enforceable Undertaking
AUSTRAC Enforceable Undertaking Overview of Enforceable Undertaking Status as at Mar 24 • Following its investigation, AUSTRAC accepted an • An external auditor was appointed in May 22 and continues to Enforceable Undertaking (EU) from NAB in Apr 22 to lift its report to NAB and AUSTRAC periodically
Slide 38: Group cash earnings reconciliation to statutory net profit
Group cash earnings reconciliation to statutory net profit • NAB uses cash earnings (rather than statutory net profit attributable to owners of the Company) for its internal management reporting purposes and considers it a better reflection of the Group’s underlying performance. Accordingly, informa
Slide 39: Digital transformation, Technology and Innovation
Digital transformation, Technology and Innovation
Slide 40: Technology strategy
Technology strategy Focused on better outcomes for our customers and colleagues Ambition Enabling best in class banking experiences for our customers and colleagues through safe, simple and modern technology Across 8 pillars Digital First Data like Secure by Simplify Platform Expert Delivery Best Te
Slide 41: Customer Brain
Customer Brain Using data and AI to better understand customers and drive more personalised experiences Business & Private Bank Personal Bank Strengthen NAB’s business Deepen product experiences, banking position engagement and recognition Colleagues Business account form Customer Data Home Lending
Slide 42: Investing in our digital banking channels
Investing in our digital banking channels NAB Mobile app NAB Internet Banking NAB Connect Manage your money securely, Desktop digital banking for personal Digital banking platform for business whenever and wherever you are and small business customers and corporate customers 1H24 features delivered
Slide 43: More seamless & digital SME business lending
More seamless & digital SME business lending Continued build-out of digital business lending platform Increasing digital origination Increasing digital fulfilment & management • Small business lending via Quickbiz1 - direct & banker enabled • Digital documentation & execution - increasingly allowing
Slide 44: Making payments easier for SMEs
Making payments easier for SMEs Enhancing ecommerce and online payments solutions • Continued enhancements to NAB Gateway - providing SMEs with a simple and secure way to accept customer payments online, featuring: • A fast and simple set-up process • Strong security and fraud detection features • D
Slide 45: Building a simple and digital Personal Bank
Building a simple and digital Personal Bank Enhancing the digital customer experience Deepening customer relationships through our digital channels in 1H24 • ~54m personalised digital notifications sent • ~22k customers linked NAB cards to PayPal wallet via the NAB app with >1.8m NAB cards already l
Slide 46: Our ambition to build Australia’s simplest home loan
Our ambition to build Australia’s simplest home loan A digital end-to-end platform with ‘intervention by exception’ on track 1H24 update • Expanding eligibility in broker channel with 24% broker • Additional 35 minutes banker ‘touch time’ saved through home loans now approved via SHL (up from 15% in
Slide 47: Innovating with NAB Ventures
Innovating with NAB Ventures NAB’s venture capital arm that makes investments to promote strategic priorities The NAB Ventures team: Works alongside other parts of the bank to Manages over 20 investments spread Made follow-on investments in 1H24 into incubate and test innovative new customer across
Slide 48: Additional Divisional Information
Additional Divisional Information Business & Private Banking 50 Personal Banking 54 Corporate & Institutional Banking 56 New Zealand Banking 60
Slide 49: Divisional contributions
Divisional contributions Cash Earnings Underlying Profit Divisional cash earnings1 1H24 1H24 1H24 v 2H23 1H24 v 2H23 ($m) ($m) Business & Private Banking 1,673 4.3% 2,599 (0.6%) Personal Banking 553 (16.3%) 951 (9.3%) Corporate & Institutional Banking2 899 (1.7%) 1,214 0.4% New Zealand Banking3,4 75
Slide 50: Business & Private Banking
Business & Private Banking Cash earnings and revenue Net interest margin ($m) -2.4% (4.3% HoH) -0.9% (0.5% HoH) 3.27% 3.09% 3.00% 3.00% 4,152 4,094 4,116 1,714 1,604 1,673 1H23 2H23 1H24 1H23 2H23 1H24 2H22 1H23 2H23 1H24 Cash earnings Total Revenue Business and housing lending GLAs and deposits Cre
Slide 51: Business & Private Banking
Business & Private Banking Australia’s leading business bank servicing the business & personal banking needs of SME customers 1 More bankers in Deep sector Integrated High Net Deep credit Relationship-led more places specialisations Worth offering capability >6,000 customer roles Increasingly enable
Slide 52: Business & Private Banking business lending
Business & Private Banking business lending Diversified Australian business lending growth (YoY)1,2 Denotes lending balance as at 31 March 2024 23.1% 8.6% 8.2% 8.5% 9.8% 4.4% NAB B&PB3 Agri Health CRE4 Other NAB Small business3 $149bn $45bn $9bn $38bn $58bn $10bn SME lending market share (RBA)5 Agri
Slide 53: Integrated Private Wealth offering
Integrated Private Wealth offering • An integrated offer which brings together JBWere, NAB Private Private Banking housing Private Banking deposit Investments, nabtrade and Private Banking to deliver banking, lending balances balances investments and advice for high net worth (HNW) customers 13.8% 1
Slide 54: Personal Banking
Personal Banking Cash earnings and revenue Net interest margin ($m) -29.6% (-16.3% HoH) -12.2% (-2.8% HoH) 1.99% 2.08% 2,573 1.87% 1.79% 2,323 2,259 785 661 553 1H23 2H23 1H24 1H23 2H23 1H24 Sep 22 Mar 23 Sep 23 Mar 24 Cash earnings Total Revenue Housing lending GLAs and deposits Credit impairment c
Slide 55: 1H24 highlights
1H24 highlights Strong customer advocacy • Continued strong customer advocacy and volume growth Overall NPS1 Highly rated NPS1 <35 yrs app • 8% increase in total customers to ~800k with > 60% of new onboarded customers < 35 years of age +38 +41 4.7 #2 vs peers2 #2 vs peers2 out of 53 • New features
Slide 56: Corporate & Institutional Banking
Corporate & Institutional Banking1 Cash earnings Net interest margin ($m) (%) 1.98 2.14 2.08 -2.8% (-1.7% HoH) 1.76 925 915 899 1.04 0.87 0.97 0.76 1H23 2H23 1H24 Sep 22 Mar 23 Sep 23 Mar 24 C&IB Ex Markets Revenue breakdown2 Credit impairment charge and as a % of GLAs ($m) ($m) -0.7% (1.2% HoH) 0.0
Slide 57: Disciplined growth in Corporate & Institutional Banking
Disciplined growth in Corporate & Institutional Banking1 GLA outcomes Higher securitisation and Growing at call deposits over time2 ($bn) infrastructure lending ($bn) combined with disciplined At Call Term Deposits Custody & HK portfolio management 144 137 132 115 119 12 10 5 101 14 16 51 51 46 13 3
Slide 58: Corporate & Institutional Banking
Corporate & Institutional Banking Deep expertise & Long term Australian & New Zealand focused Disciplined balance leading capabilities relationship banking partnerships sheet usage Private Capital Strategic Supporting customers Seamless domestic/ Investors decarbonise and build Asset distribution AU
Slide 59: Corporate & Institutional Banking customer metrics
Corporate & Institutional Banking customer metrics Large Corporate & Institutional – Large Corporate & Institutional – Transactional Banking – NPS1 Relationship Strength Index1 Relationship Strength Index2 42 630 580 32 550 22 580 520 12 2 530 490 -8 460 -18 480 430 2017 2018 2019 2020 2021 2022 202
Slide 60: New Zealand Banking
New Zealand Banking1 Cash earnings and revenue Net interest margin (NZ$m) -7.7% (7.1% HoH) -0.3% (2.2% HoH) 2.45% 2.36% 2.37% 2.25% 1,767 1,723 1,761 813 700 750 1H23 2H23 1H24 1H23 2H23 1H24 Sep 22 Mar 23 Sep 23 Mar 24 Cash earnings Total Revenue Business and housing lending GLAs and deposits Credi
Slide 61: New Zealand Banking customer metrics
New Zealand Banking customer metrics #2 BNZ Consumer NPS1 #2 BNZ Business NPS2,3 #3 BNZ Large Corporate Relationship Strength Index (RSI)4 10 650 50 622 0 1 600 40 35 543 30 28 -10 -12 550 -16 500 540 23 -20 20 17 -18 450 462 10 12 -30 0 -40 400 Mar 20 Mar 21 Mar 22 Mar 23 Mar 24 Mar 20 Mar 21 Mar 2
Slide 62: New Zealand lending mix
New Zealand lending mix Portfolio breakdown by GLAs – Total NZ$104.9bn Mortgage portfolio breakdown by geography - Total NZ$58.8bn Other 11% Gisborne, Hawkes Bay & Northland 4% Auckland 48% Commercial Real Estate Mortgages Bay of Plenty 7% 7% 56% Waikato 8% Agriculture, Wellington Forestry and 11% F
Slide 63: New Zealand housing lending key metrics
New Zealand housing lending key metrics New Zealand housing lending Sep 22 Mar 23 Sep 23 Mar 24 Mar 23 Sep 23 Mar 24 Drawdowns1 Total Balances (spot) NZ$bn 54.8 56.4 57.7 58.8 5.7 5.9 5.4 By product - Variable rate 9.7% 8.9% 8.4% 8.9% 10.1% 8.9% 11.1% - Fixed rate 88.8% 89.6% 90.1% 89.5% 88.4% 89.3%
Slide 64: New Zealand customer deposits
New Zealand customer deposits1 Customer deposits balances by product (NZD) Customer deposits percentage by product (NZD) ($bn) (%) $78.5bn $80.0bn $74.6bn $71.1bn $74.2bn 3 4% 4% 3% 3% 3% 3 3 3 2 34% 38% 41% 37 44% 46% 24 28 31 35 24% 21% 17 16 21% 16 16 16 21% 20% 28 38% 37% 35% 27 26 25 24 32% 31%
Slide 65: Additional product information: Australian Housing Lending
Additional product information Australian Housing Lending
Slide 66: Housing lending key metrics
Housing lending key metrics1 Australian housing lending Sep 22 Mar 23 Sep 23 Mar 24 Mar 23 Sep 23 Mar 24 Portfolio Drawdowns2 Total Balances (spot) $bn 329 333 338 344 35 40 39 Average loan size $’000 per account 334 345 358 371 526 536 564 By product type - Variable rate 63.4% 68.4% 76.8% 84.7% 95.
Slide 67: Housing lending practices & policies
Housing lending practices & policies Key origination requirements Loan-to-value (LVR) limits • Income verified using a variety of documents including Principal & Interest – Owner Occupier 95% payslips and/or checks on salary credits into customers’ accounts Principal & Interest – Investor 90% • 10%
Slide 68: Housing lending volume and flow movements
Housing lending volume and flow movements Housing lending flow movements1 Housing lending volume growth1 ($bn) ($bn) Owner Occupier Investor 3.7% (2.2% HoH) 3.1% (1.2% HoH) (4) (12) 48 (26) 344 217.5 220.7 225.6 338 118.8 115.2 117.4 Sep 23 New fundings Interest Pre- External Mar 24 Mar 23 Sep 23 Ma
Slide 69: Housing lending portfolio profile
Housing lending portfolio profile Housing lending volume by borrower and repayment Australian mortgages profile1 type1 VIC/TAS 32% Owner Occupier Owner Interest Only, 3.0% Occupier Line of Credit, 2.7% Principal & QLD 14% Interest, Investor 60.8% Interest Only, 11.9% WA 7% NSW/ACT 43% SA/NT 4% Inves
Slide 70: Australian housing lending asset quality
Australian housing lending asset quality1 Offsets & redraws up despite higher mortgage repayments Higher house prices have improved average DLVR Average offset & redraw, and average repayment per account 2 Average DLVR and negative equity3 ($) +23% % with Negative Equity 45% Average DLVR +59% 42% 43
Slide 71: Housing lending fixed rate portfolio profile
Housing lending fixed rate portfolio profile1 Fixed rate (FR) lending book FR housing lending volume by borrower and repayment type • $43bn FR book, rolls to variable rate (VR) loan at expiry Investor • ~$27bn (~63%) has customer rates below 3%, and only Principal & $6.9bn still to expire after Sep
Slide 72: Housing lending repayment profile
Housing lending repayment profile Key considerations Profile of mortgage repayments at 4.35% cash rate1,2,3 • All VR loan repayments subject to quarterly repayment Repayment profile from April 22 FR expiring reviews from Feb 23 (previously annual) VR P&I4 at 4.35% cash rate by Mar 25 • $25bn FR loan
Slide 73: Housing lending offsets and redraw balances
Housing lending offsets and redraw balances1 Offset & redraw balances continue to increase Offset and redraw balances multiple of monthly repayments2 ($bn) 90 12 Sep 23 Mar 24 85 11 80 75 10 36% 36% 70 9 65 8 60 7 17% 15% 55 13% 14% 11% 14% 14% 50 6 11% 7% 7% Jun 22 Sep 22 Dec 22 Mar 23 Jun 23 Sep 2
Slide 74: Housing lending arrears profile
Housing lending arrears profile1 Key considerations Housing lending 90+DPD & GIAs as a % of GLAs • Recent state-based 90+ DPD trends are mixed 1.15% • Trajectory of arrears for 2017, 2018 and 2019 vintages impacted 2.0% 1.03% by COVID-19 responses 0.95% • Mixed early arrears trends for loans origina
Slide 75: Housing lending LVR
Housing lending LVR1 LVR breakdown at origination 60% 40% 20% 0% LVR LVR LVR LVR LVR ≤60% 60.01% - 70% 70.01% - 80% 80.01% - 90% >90% Sep 22 Mar 23 Sep 23 Mar 24 Dynamic LVR breakdown of drawn balance2 60% Mar 24 Dynamic LVR 39.2% 40% 20% 0% LVR LVR LVR LVR LVR LVR ≤60% 60.01% - 70% 70.01% - 80% 80.
Slide 76: Additional product information: Australian Deposits and Unsecured Personal Lending
Additional product information Australian Deposits and Unsecured Personal Lending
Slide 77: Deposits & transaction accounts
Deposits & transaction accounts1 Customer deposit mix by product Customer deposit percentage by product ($bn) (%) 514 523 501 505 45 47 8% 8% 8% 9% 9% 41 42 26% 29% 131 148 160 160 36% 31% 31% 362 29 129 142 29% 145 29% 28% 145 153 29% 26% 95 187 37% 34% 170 164 163 30% 32% 31% 109 Sep 19 Sep 22 Mar
Slide 78: Deposits & transaction accounts
Deposits & transaction accounts1 Business & Private Banking Personal Banking1 Corporate & Institutional Corporate Functions & ($bn) Banking2 Other3 214 157 144 206 151 5 3 137 137 201 148 147 132 191 30 5 10 1 1 7 6 8 7 2 31 27 5 34 26 38 19 25 25 18 17 53 34 52 54 46 16 25 32 30 73 80 65 52 29 25 2
Slide 79: Unsecured lending
Unsecured lending Key considerations Balance and market share1 ($bn) • Continued momentum in credit card growth in 1H24, 26.4% 26.7% supported by net account growth across the NAB and Citi 25.7% portfolios 0.22 • Portfolio quality remains sound • Arrears increased in 1H24 but remain below pre-COVID
Slide 80: Additional information: Group Asset Quality
Additional information Group Asset Quality
Slide 81: Group credit impairment charge
Group credit impairment charge Credit impairment charge as % of GLAs Global 1.4% Financial Crisis 1.2% 1.0% 0.8% 0.6% 0.4% Late 80’s / Early 90’s 0.10% 0.2% Recession -0.1% Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep
Slide 82: Group estimated long run loan loss rate
Group estimated long run loan loss rate Group business mix – GLAs by category Estimating long run loan loss rate NAB Australian Long run Long run Sep 1985 average average Personal geography net write off rates as a % of GLAs (1985 – 20232) (2004 – 20232) lending 8% Home lending3 0.03% 0.03% Home Com
Slide 83: Group lending mix
Group lending mix Gross loans and acceptances by product - $725.3bn Gross loans and acceptances by geography1 Other International 3% New Zealand 13% Overdrafts 1% Credit card outstandings 1% Asset & lease financing 3% Housing loans 57% Australia 84% Gross loans and acceptances by business unit Housi
Slide 84: Categorised assets
Categorised assets Watch loans1 and Non-performing2 exposures as % of GLAs 1.03% 0.21% 1.23% 0.94% 0.23% 0.41% 0.75% 0.29% 0.38% 0.30% 0.93% 0.97% 0.66% 0.79% 2.58% 0.66% 0.75% 2.30% 1.95% 1.47% 1.03% 1.03% 1.07% 0.92% 0.94% 1.07% Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23 Sep 23 Mar 24
Slide 85: Group provisions
Group provisions Collective provision Specific provision ($m) ($m) 1.31% 1.42% 1.47% 1.47% 0.72% 0.74% 0.74% 0 51.6% 49.4%1 0.70% 1 42.9% 42.8% 1 5,056 5,214 5,351 4,826 175 105 30.00% 135 252 25 0 70 63 60 59 32 33 33 4,541 4,849 5,046 5,221 461 458 479 487 -3% 0 0 -20.00% Sep 22 Mar 23 Sep 23 Mar
Slide 86: Provisions
Provisions Movement in provisions1 $182m change in probability weighted provisions for expected credit losses Sep 23 – Mar 24 ($m) 53 (93) 7 215 Net $40m release from forward looking provisions Sep 23 – Mar 24 5,767 5,370 5,585 Mar 23 Sep 23 Underlying Forward Looking Target sector Forward Specific
Slide 87: Expected Credit Losses (ECL) assessment
Expected Credit Losses (ECL) assessment ECL scenarios & weightings Key considerations Total Provision for ECL1,2,3 • Increase in ECL vs Sep 23 reflects volume growth in 1H24 B&PB and asset quality deterioration in the Australian $m 100% Base 100% (probability weighted) case Downside retail portfolio
Slide 88: Sectors of interest
Sectors of interest Non retail sectors of interest 90+ DPD and GIAs as % of EAD1 EAD 90+ DPD 3.0% Mar 24 change and GIAs EAD $bn since Mar as % 211 EAD 2.0% Retail Trade 15.7 8.3% 0.94% 1.0% Tourism, Hospitality & 14.8 9.6% 0.76% Entertainment (THE) 0.0% Construction 13.8 17.9% 1.33% Sep 19 Sep 20 S
Slide 89: ECL provisioning by stages
ECL provisioning by stages Loans and advances by stage1 Provisions by stage2 Provision coverage by stage3 ($bn) ($m) (%) 0.59 0.60 959 0.58 930 942 5,585 5,767 9 5,370 7 8 217 195 1,368 1,516 1,639 243 20.3 19.0 18.9 717 756 3,503 3,540 3,588 679 1.44 0.43 1.63 0.44 1.84 0.43 499 529 540 0.07 0.07 0
Slide 90: Probability of default (PD) analysis
Probability of default (PD) analysis Non-retail IRB EAD1 by probability of default2 ($bn) Investment grade Sub investment grade Default 68% Mar 24 32% Mar 24 0.6% Mar 24 200 150 100 50 0 0<0.03% 0.03<0.11% 0.11<0.55% 0.55<2.00% 2.00<5.01% 5.01<99.99% 100% Sep 22 Mar 23 Sep 23 Mar 24 Australia and NZ
Slide 91: Non retail industry sector analysis
Non retail industry sector analysis Non retail EAD by industry1,2 - $606bn % of 90+ DPD and GIA Mar 23 Sep 23 Mar 24 Finance & insurance 36% 0.02% 0.02% 0.02% Commercial property 13% 0.26% 0.36% 0.51% Govt & public utilities 10% 0.00% 0.00% 0.00% Agri, forestry & fishing 0.87%3 1.11%3 0.70%3 10% Oth
Slide 92: Australian Business lending asset quality
Australian Business lending asset quality Business lending credit impairment charge and as a % Business lending 90+DPD and GIAs and as % of GLAs of GLAs ($m) 0.64% 0.68% 600 ($m) 0.56% 500 0.24% 0.54% 0.15% 0.14% 0.07% 400 300 1,582 1,749 200 1,328 1,386 295 100 189 181 91 0 (100) Sep 22 Mar 23 Sep
Slide 93: Australian Business & Private Banking asset quality
Australian Business & Private Banking asset quality B&PB credit impairment charge and as % of GLAs1 B&PB 90+DPD and GIAs and as % of GLAs1 ($m) 0.25% ($m) 0.07% 0.21% 0.15% 0.99% 0.91% 0.87% 0.96% 316 2,613 2,462 252 14 2,156 2,142 200 997 980 68 999 904 281 87 161 209 1,465 1,633 92 1,157 1,238 (5)
Slide 94: Business & Private Banking business lending
Business & Private Banking business lending $149bn Key considerations 90+ DPD and GIAs as % of GLAs • SMEs entered more challenging period in good shape: • B&PB deposits up 42% since Sep 20 (up $8bn in 1H24) 1.18% • Utilisation rates modestly higher vs 1H23 but remain 1.02% 1.06% 1.08% 1.01% below p
Slide 95: Agriculture, forestry & fishing exposures
Agriculture, forestry & fishing exposures1 Group EAD $61.6bn March 2024 Key Australian considerations • Growing conditions have improved significantly since Sep 2023, with much of the East Coast seeing good rainfall which has benefitted crop and livestock production; West Australia has also seen imp
Slide 96: New Zealand Banking agriculture exposures
New Zealand Banking agriculture exposures1 EAD NZ$17.5bn March 2024¹ Key considerations • 90+ DPD and impaired assets lower in 1H24 primarily due to a reduction in restructured loans relating to customers affected by severe weather events Dairy 41% • Farming sector remains challenged by high farm in
Slide 97: Commercial real estate (CRE)
Commercial real estate (CRE)1 Gross loans & acceptances (GLAs) Breakdown by total GLAs By sector By geography New Australia Total2 Zealand QLD Retail Residential 16% WA Total CRE (A$bn) 64.7 6.8 71.5 VIC 27% 12% 6% SA 25% Increase/(decrease) from Industrial 5% 1.4 (0.2) 1.1 20% Sep 23 (A$bn) Tourism
Slide 98: Commercial real estate
Commercial real estate1 Key asset quality considerations Sector considerations • 90+ DPD and GIAs above low levels of recent years but remain • Slower lending momentum observed in development below longer term historical levels. Current bias towards arrears segment; labour shortages in construction
Slide 99: Construction
Construction1 Exposure at default Key considerations • Availability of labour and subcontractor risks remain key challenges; new housing starts have moderated in the face of EAD $13.0bn EAD $13.8bn rising interest & construction costs • ~2% non retail EAD including subcontractors and construction 2.
Slide 100: Retail Trade
Retail Trade1 Exposure at default Key considerations • Despite population growth and accumulated consumer EAD $15.0bn EAD $15.7bn savings, nominal retail trade demand is moderating reflecting continued pressure on consumers 2.4 2.3 • Consumption growth is expected to weaken over the 2.8 3.0 balance
Slide 101: Tourism, hospitality and entertainment
Tourism, hospitality and entertainment1 Exposure at default Key considerations • Industry data suggests trading performance for Tourism and EAD $14.3bn Entertainment operators remains robust, notwithstanding EAD $14.8bn wage/energy cost increases and reduced savings levels 1.9 2.0 • Impacts of softe
Slide 102: Additional information: Capital, Funding & Liquidity
Additional information Capital, Funding & Liquidity
Slide 103: Risk-weighted assets and IRRBB
Risk-weighted assets and IRRBB Risk-weighted assets IRRBB risk-weighted assets ($bn) ($bn) 33.6 30.2 29.5 (5.0) 26.8 8.3 2.4 15.3 (8.1) 21.4 16.5 17.5 13.3 Includes APRA’s removal 2.1 435.0 of NAB’s Operational 432.6 Risk capital add-on in 1.5 3.7 0.7 17.0 Mar 24 16.2 12.0 10.0 11.3 1.9 2.5 Sep 23 C
Slide 104: Capital & Deposit hedges
Capital & Deposit hedges NAB replicating portfolios NAB replicating portfolios1 (%) Replicating portfolio 5 Avg return of replicating portfolio 1H23 2H23 1H24 31 Mar 24 balance Invested out to term of 4 1.48% 1.81% 2.14% Capital AUD $41bn 3 years 3 Low rate deposits AUD $73bn 5 years BNZ replicating
Slide 105: Internationally comparable capital ratios
Internationally comparable capital ratios 27.3% 28.2% 28.4% 19.5% 20.5% 20.2% 17.3% 17.8% 17.5% 20.3% 13.9% 19.8% 14.2% 19.9% 14.1% 12.2% 12.2% 12.1% Mar 231 Sep 231 Mar 243 Equivalent internationally comparable ratios1 APRA Common Equity Tier 1 ratios APRA Tier 1 ratios APRA Total capital ratios AP
Slide 106: Key regulatory changes impacting capital and funding
Key regulatory changes impacting capital and funding Change CY24 CY25 CY26 Additional Tier 1 Capital Consult Market Risk (APS 116) Consult Implementation Counterparty Credit Risk (APS 180) Consult Implementation Interest Rate Risk in the Banking Book Implementation (APS 117) Liquidity (APS 210) Cons
Slide 107: Loss-absorbing capacity
Loss-absorbing capacity • Based on the Group's RWA and Total Capital position as NAB Tier 2 outstanding issuance at 31 Mar 24, NAB met the interim Group Total Capital requirement for Jan 24, and has an incremental $1.6bn requirement by Jan 26 GBP 5% JPY 1% CAD 4% • $3.4bn of NAB’s existing Tier 2 Ca
Slide 108: Asset Funding
Asset Funding Funded balance sheet Group source and uses of funds, 6 months to 31 March 24 ($bn) $973bn $973bn Short Term 13 Wholesale, 12% Term Funding 23 Liquid Assets1, 24% <12 months, 11 Other Deposits3 Other 2% 3 6% Short 5 Term 16 9 Assets2 2% Customer Other Short Term Term Term Liquid Assets
Slide 109: Liquidity
Liquidity Liquidity coverage ratio (quarterly average) Net stable funding ratio composition ($bn) Group NSFR 118% as at 31 Mar 24 131% LCR1 130% LCR 140% LCR 139% LCR $671bn $568bn Wholesale funding Liquids and 163 155 150 149 Other Other Assets Non- Financial 14 2 1 2 Corporate Other Loans Deposits
Slide 110: Term wholesale funding profile
Term wholesale funding profile Historical term funding issuance1 ($bn) 5.7 6.7 8.1 5.0 4.3 5.0 years years years years years years 39 40 33 1 1 29 3 26 23 14 29 30 18 21 18 13 10 5 9 9 5 2 2 FY19 FY20 FY21 FY22 FY23 1H24 Tenor2 RBNZ Funding Facilities RBA Term Funding Facility Senior Unsecured and S
Slide 111: Diversified & flexible term wholesale funding portfolio
Diversified & flexible term wholesale funding portfolio 1H24 Issuance by product type1 1H24 Issuance by currency1 Covered 21% AUD 47% EUR 10% NZD 3% Subordinated 9% Senior 70% USD 40% Outstanding issuance by product type1, 2 Outstanding issuance by currency1 RMBS 1% JPY 1% Other 6% Covered 22% GBP 5
Slide 112: Funding costs
Funding costs Indicative term wholesale funding issuance costs1 Average term wholesale funding portfolio costs2 (bps) (bps) 400 130 300 125 200 120 100 115 0 110 Mar Sep Mar Sep Mar Sep Mar Sep Mar Mar Sep Mar Sep Mar Sep Mar 20 20 21 21 22 22 23 23 24 21 21 22 22 23 23 24 3 yr senior 5 yr senior 10
Slide 113: Additional information: Sustainability
Additional information Sustainability
Slide 114: Sustainability is embedded in our Group Strategy
Sustainability is embedded in our Group Strategy Commercial responses to Resilient and sustainable Innovating for the future societal challenges business practices Our priorities • Climate and environmental action • Colleagues and culture • Our future core business and market-leading data analytics
Slide 115: 1H24 progress on our responses to societal challenges
1H24 progress on our responses to societal challenges Climate and environmental action Affordable and specialist housing • $6bn target by 30 September 2029 to help more Australians NAB will publish supplementary climate access affordable housing, progress includes: disclosures in June 2024 • Support
Slide 116: Energy generation exposures
Energy generation exposures Energy generation EAD by fuel source1,2 (AUD$bn) Pre revised capital Post revised capital framework3 framework4 • 77% of total energy generation financing to renewables (increase from 73% at 30 September 8.58 2023)2 0.49 7.54 7.39 0.00 • Growth in renewable portfolio cons
Slide 117: Resources exposures
Resources exposures Resources EAD by type1,2,3 (AUD$bn) Pre revised capital Post revised capital framework4 framework5 10.03 0.57 • Decreasing exposure to thermal coal, on 9.11 0.36 track to be effectively zero6 by 2030 0.81 0.42 excluding performance guarantees for 0.38 0.84 7.51 7.54 rehabilitatio
Slide 118: Thermal coal mining and oil and gas limits
Thermal coal mining and oil and gas limits Thermal coal mining (AUD$bn) exposure1 Oil and gas extraction - (USD$bn) exposure Pre revised capital Post revised capital Pre revised capital Post revised capital framework2 framework3 framework2 framework3 0.46 0.42 0.30 0.24 2.34 0.20 2.23 1.70 1.66 1.68
Slide 119: Additional information: Economic data
Additional information Economic data
Slide 120: Australia and NZ key economic indicators
Australia and NZ key economic indicators Australian economic indicators (%)1 NZ Economic indicators (%)1 CY21 CY22 CY23 CY24(f) CY25(f) CY21 CY22 CY23 CY24(f) CY25(f) GDP growth2 5.4 2.4 1.5 1.7 2.3 GDP growth2 2.6 2.2 -0.3 1.2 3.1 Unemployment3 4.7 3.5 3.9 4.5 4.4 Unemployment3 3.2 3.4 4.0 5.2 5.3
Slide 121: Consumers are adjusting, but the labour market has held up
Consumers are adjusting, but the labour market has held up Consumption growth has slowed1 The household savings rate is now below pre-COVID levels2 (%) (%) Household Savings Rate 20 16 Quarterly Year-ended 16 12 12 15 8 8 4 4 10 0 0 5 -4 -4 -8 -8 0 -12 -12 -16 -16 -5 2007 2011 2015 2019 2023 1993 19
Slide 122: House prices have rebounded and rents remain strong
House prices have rebounded and rents remain strong House prices have rebounded1 Rents growth is strong in most capital cities2 (Index) Sydney Melbourne Brisbane (%) 170 Sydney Melbourne Brisbane Adelaide Perth Hobart 15 160 Adelaide Perth Hobart 150 10 140 5 130 120 0 110 -5 100 90 -10 2019 2020 20
Slide 123: The business sector has remained resilient
The business sector has remained resilient Conditions are above average but confidence is soft1 Capacity utilisation is high2 (Net Bal.) (%) 20 85 0 -20 80 -40 Business Confidence Business Conditions 75 -60 -80 70 2008 2010 2012 2014 2016 2018 2020 2022 2024 2006 2009 2012 2015 2018 2021 2024 Invest
Slide 124: Inflation is high but moderating
Inflation is high but moderating Inflation has peaked but remains volatile1 Services inflation has been more persistent2 (%) (%) Quarterly Year-ended 6 6 8 4 4 6 Goods Services 4 2 2 2 0 0 0 -2 -2 -2 -42006 2009 2012 2015 2018 2021 2024 -4 2006 2009 2012 2015 2018 2021 2024 The exchange rate has wea
Slide 125: New Zealand economy
New Zealand economy Economy has contracted since Q3 2022, unemployment Commodity export prices (in NZ terms) have moved higher rate still low but has moved up1 in recent months, including for dairy2 (Index, January 2019 = 100) (GDP, $NZ billion, chain prices) (Unemployment rate, %) 180 75 6 160 70 5
Slide 126: New Zealand housing
New Zealand housing Gradual and uneven recovery in house prices which Sales volumes up over last year2 remain below their recent peak1 (Index) (‘000s) 4,500 10 4,000 8 3,500 6 3,000 4 Auckland 2,500 2 National ex Auckland 2,000 0 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 New reside
Slide 127: Abbreviations and disclaimers
Abbreviations and disclaimers
Slide 128: Abbreviations
Abbreviations ALA Alternative Liquid Assets LCR Liquidity Coverage Ratio CET1 Common Equity Tier 1 Capital LGD Loss given default CIC Credit impairment charge LMA Loan Market Association CLF Committed Liquidity Facility LSTA Loan Syndications and Trading Association CP Collective Provision LVR Loan
Slide 129: Source and notes
Source and notes Slide 12 (1) Sourced from DBM Consumer Atlas (part of RFI Global), measured on 6 month rolling average to Mar 2024. Mass Consumer NPS excludes consumers with Personal income of $260k+ and/or investible assets of $2.5m+ and/or footings of over $850k). Ranking based on absolute scores
Slide 130: Disclaimer
Disclaimer The material in this presentation is general background information about the NAB Group current at the date of the presentation on 2 May 2024. The information is given in summary form and does not purport to be complete. It is intended to be read by a professional analyst audience in conj