National Australia Bank Limited · ASX:NAB
National Australia Bank — FY2023 Earnings Presentation
139 slides from National Australia Bank's earnings presentation, Nov 9, 2023
Slide 1: Full Year Results 2023 Investor Presentation
Full Year Results 2023 Investor Presentation 9 November 2023 Ross McEwan Chief Executive Officer Nathan Goonan Chief Financial Officer National Australia Bank Limited ABN 12 004 044 937 national australia bank %
Slide 2: NAB 2023 Full Year Results Index
NAB 2023 Full 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 139 for legal disclaimer. Financial information in this presentation i
Slide 3: Overview
Overview Ross McEwan Chief Executive Officer
Slide 4: Key messages
Key messages • Strong FY23 financial performance across our businesses • 2H23 performance reflects a more challenging environment which is expected to persist in FY24 • Balance sheet settings remain prudent • Strong growth in our core SME franchise, with a more measured approach to growth in Home Le
Slide 5: Strong financial results in FY23
Strong financial results in FY23 Metric FY23 FY22 FY23 v FY22 Statutory net profit ($m) 7,414 6,891 7.6% Continuing operations1 Net operating income ($m) 20,654 18,296 12.9% Operating expenses ($m) 9.1% (9,023) (8,274) (5.6% ex Citi and CSLR2) Underlying profit ($m) 11,631 10,022 16.1% Cash earnings
Slide 6: 2H23 impacted by a more challenging environment
2H23 impacted by a more challenging environment Underlying divisional profit Business and Private Banking Personal Banking ($m) ($m) 21.6 % 11.2% pcp 3.0% (10.2%) pcp (3.1%) HoH (18.4%) HoH 5,315 4,372 2,268 2,335 2,352 2,700 2,615 1,168 1,286 1,049 FY22 FY23 2H22 1H23 2H23 FY22 FY23 2H22 1H23 2H23
Slide 7: Delivering improved shareholder returns
Delivering improved shareholder returns Cash return on equity1 Basic cash EPS (Cents) 247 12.9% 228 12.4% 221 199 11.7% 154 10.7% FY19 FY20 FY21 FY22 FY23 8.3% Dividends per share (Cents) 166 167 151 127 60 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 (1) FY19 and FY20 ROE exclude large notable
Slide 8: Maintaining strong balance sheet settings
Maintaining strong balance sheet settings Strong provisioning • Strong provisioning with CP/CRWA increasing to 1.47% CP/CRWA • LCR and NSFR well above regulatory minimums Sep 23 includes $1.4bn of additional forward looking provisions vs Sep 19 • CET1 ratio remains above the target range of 11-11.5%
Slide 9: Sustainably growing customer deposits
Sustainably growing customer deposits Growing deposit market share1 GLAs increasingly funded by deposits Customer Deposits Term Wholesale Funding 2 Customer Aust Business Aust Household NZ Household deposits3 1.4x system growth 1.1x system growth 1.1x system growth $418bn $559bn $582bn 93% 101% 102%
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: Focus on colleagues
Focus on colleagues Colleague engagement score now top quartile1 People leader score remains broadly stable and above top quartile target1 86 88 88 87 85 76 77 76 78 77 Jul 20 Jul 21 Aug 22 Jul 23 Top Quartile Jul 20 Jul 21 Aug 22 Jul 23 Top Quartile Target Target (1) Source NAB Heartbeat survey. To
Slide 12: Focus on customers
Focus on customers Net Promoter Score relative to major bank peers #1 Consumer1 #2 in Business2 #2 Large Corporate and Institutional NPS3 40 10 36 -2 5 21 -3 3 20 -7 -6 -9 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23 2017 2018 2019 2020 2021 2022 2023 NAB Peer 1 Peer 2 Peer
Slide 13: Largest lender to Australian businesses with growth aligned to strategic focus
Largest lender to Australian businesses with growth aligned to strategic focus #1 business lending in Australia with increasing tilt to SMEs1 1.0x system growth FY20 – FY23 21.7% 18.1% 15.2% 13.6% NAB Peer 1 Peer 2 Peer 3 SME growth focus in Business & Private Banking Disciplined growth in Corporate
Slide 14: Business and Private Banking
Business and Private Banking Australia’s leading business bank servicing the business & personal banking needs of SME customers1 Deep sector More bankers in Integrated HNW Deep credit Relationship-led specialisations more places offering capability Increasingly enabled Agri, Health, CRE >6,000 custo
Slide 15: Disciplined growth in home lending to support long term value
Disciplined growth in home lending to support long term value Navigating a challenging market environment Maintained market share in home lending over 2 years1 • Some easing in front book pricing pressure but margins NAB NAB excl Citi Peer 1 Peer 2 Peer 3 continue to reflect competitive environment
Slide 16: Supporting customers
Supporting customers Helping customers manage higher interest rates and Protecting customers against scams and fraud cost of living pressures • Early and proactive customer engagement: since May • Prevented and recovered >$200m in scam losses for 2022 >620,000 wellbeing check-ins with Personal custo
Slide 17: Investing for long term growth and sustainable cost efficiency
Investing for long term growth and sustainable cost efficiency Multi-year investment aligned to strategic priorities Focused on productivity benefits to offset investment and cost headwinds ($m) $1,259m $1,393m $1,413m ~$1.4bn 55% 54% ~55% 60% 465 411 398 ~400 40% 45% 46% ~45% 1 FY21 FY22 FY23 FY24
Slide 18: FY23 Financials
FY23 Financials Nathan Goonan Chief Financial Officer
Slide 19: Group Financial Results
Group Financial Results Underlying profit ($m) Cash earnings1 ($m) Statutory profit ($m) 16.1% 8.8% 7.6% (9.6%) (10.0%) (13.1%) 11,631 7,731 6,891 7,414 10,022 7,104 6,108 5,523 4,070 3,661 3,967 3,447 FY22 FY23 1H23 2H23 FY22 FY23 1H23 2H23 FY22 FY23 1H23 2H23 P&L key financial indicators FY23 ($m)
Slide 20: 2H23 revenue impacted by lower margins
2H23 revenue impacted by lower margins Net operating income (HoH) ($m) HoH revenue decline -3.8% (-2.7% ex M&T) 94 (313) (22) (15) (149) 10,529 10,273 10,124 9,468 Sep 22 Mar 23 Volumes Margin Fees & Other Sep 23 M&T Sep 23 Commissions (Ex M&T) Markets & Treasury (M&T) income breakdown Key revenue d
Slide 21: Net interest margin
Net interest margin Net interest margin (HoH) Primarily HL Includes 4bps (Aust) and 1bp Mainly NII/OOI competition (NZ) impact from higher offset replicating portfolio returns (0.07%) (0.00%) 0.01% (0.04%) 0.04% 1.77% Includes -3bps higher term 1.67% deposit costs and -2bps mix 1.70% 1.71% impact Se
Slide 22: Operating expenses
Operating expenses Operating expenses (YoY) ($m) Expenses up 5.6% YoY ex Citi impact and CSLR1 (HoH up 3.2% ex CSLR1) 146 88 (398) 251 40 172 (78) 169 359 Includes FY23 Citi $98m uplift 8,732 costs of 9,023 8,274 relating to $402m financial crime 1 Sep 22 Salary Volume related Technology Depreciatio
Slide 23: Asset quality
Asset quality Credit impairment charge (CIC) Key 2H23 drivers ($m) 0.54% • Underlying CIC of $559m reflecting deterioration in asset 0.38% 0.11% 0.12% 0.60% 0.16% (0.04%) (0.03%) 0.00% 0.04% quality, volume growth in B&PB and a higher level of specific 1,601 1,600 0.00% provision charges off a low b
Slide 24: Australian housing lending $338bn GLAs
Australian housing lending $338bn GLAs1 Offsets & redraws up despite higher mortgage repayments Higher house prices have improved average DLVR Average offset & redraw, and average repayment per account2 Average DLVR and negative equity3 ($) +17% Sep 23 negative equity ex LMI 0.4% 48% +47% % with Neg
Slide 25: Business & Private Banking business lending $143bn
Business & Private Banking business lending $143bn Key considerations 90+ DPD and GIAs as % of GLAs • SMEs enter more challenging period in good shape: • B&PB deposits up 36% since Sep 20 (up $5bn in 2H23) 1.18% • Utilisation rates remain below pre COVID-19 levels 1.02% 1.06% 1.01% • Higher arrears
Slide 26: Strong provisioning maintained
Strong provisioning maintained Collective provision balances Total provisions for expected credit losses ($m) ($m) Sep 23 includes $1.4bn of additional forward looking provisions vs Sep 19 6,376 5,379 5,357 5,577 5,753 514 5,536 5,214 153 363 417 4,715 4,826 5,056 331 1,565 1,588 1,511 1,744 1,781 4
Slide 27: Capital remains above target range
Capital remains above target range Level 2 Basel III CET1 capital ratio (%) Organic capital generation +29bps (0.60) L1: 12.13 0.84 0.04 0.01 L1: 11.83 (0.07) (0.21) 12.21 12.22 11.94 1 Mar 23 Cash earnings Dividend Credit RWA Other RWA Share buy-back Other Sep 23 Sep 23 pro forma 2 CET1 considerati
Slide 28: Strong funding and liquidity metrics
Strong funding and liquidity metrics Key messages Liquidity position well above regulatory minimums (%) • Continued strong liquidity RSF impact of • NSFR expected to continue to moderate to pre COVID-19 TFF1 ~2% levels reflecting the TFF1 transition 100% minimum • Term funding issuance well diversif
Slide 29: Closing comments
Closing comments Ross McEwan Chief Executive Officer
Slide 30: Australian economy has slowed but remains resilient
Australian economy has slowed but remains resilient Economic conditions expected to remain soft in FY24 Cash rate expected to stabilise as inflation moderates1 • Australian economy expected to slow with below trend 8.0% 0 GDP growth of less than 2% in 2023 and 2024 7.0% Forecasts 0 • Unemployment to
Slide 31: Portfolio tilt and strategic execution driving returns
Portfolio tilt and strategic execution driving returns Portfolio mix increasingly tilted to high returning B&PB Delivering a higher ROE, while maintaining a strong balance sheet GLAs by division RoRWA2 CET1 capital ROE up 4.6% ($bn) 19% 12.9% 11.5% 11.9%3 6951 8.3% 3 yr 2.16% 5861 95 NZ FY23 2.33% 1
Slide 32: Key priorities in FY24 aligned to our long term strategy
Key priorities in FY24 aligned to our long term strategy Maintaining strategic momentum Our long-term strategy - “What we will be known for” • Support our customers and colleagues Relationship-led • Relationships are our strength • Retain balance sheet strength and prudent risk settings Easy • Simpl
Slide 33: Additional Group Information
Additional Group Information
Slide 34: NAB at a glance
NAB at a glance % of FY23 Cash Key Financial Data FY23 Cash earnings divisional split1 Earnings Business and Private Banking 43% Cash Earnings1 $7,731m Personal Banking 19% Cash ROE 12.9% Corporate and Institutional Banking 24% Gross Loans & Acceptances $708.5bn New Zealand Banking 18% Customer depo
Slide 35: Operating expenses
Operating expenses Operating expenses (HoH) ($m) Total expenses up 3.2% HoH (excl CSLR1) 54 27 (91) 51 (26) 40 88 38 4,562 4,602 4,421 1 Mar 23 Salary Volume related & Technology Depreciation & Productivity Other EU & Sep 23 CSLR Sep 23 increases New Business & Investment Amortisation Remediation (1
Slide 36: Markets & Treasury income
Markets & Treasury income Markets & Treasury income breakdown ($m) 1,250 808 911 578 753 622 762 888 580 392 369 478 345 277 206 262 387 362 345 366 397 407 388 401 (86) 0 71 8 (17) (37) 26 29 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23 Sep 23 3 Derivative valuation adjustment 1 Customer risk m
Slide 37: Customer-related remediation
Customer-related remediation Customer-related remediation provision charges1 ($m) 1,189 749 1,011 380 654 268 240 43 137 138 245 58 21 117 143 45 35 95 178 135 31 97 45 8 130 27 20 21 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 Continuing Operations Discontinued Operations Customer-related rem
Slide 38: AUSTRAC Enforceable Undertaking
AUSTRAC Enforceable Undertaking Overview of Enforceable Undertaking Status as at Sep 23 Following its investigation, AUSTRAC accepted an An external auditor was appointed in May 2022 and continues Enforceable Undertaking (EU) from NAB in April 2022 to lift its to report to NAB and AUSTRAC period
Slide 39: 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 40: Digital transformation, Technology and Innovation
Digital transformation, Technology and Innovation
Slide 41: Our technology strategy
Our technology strategy Focused on better outcomes for our customers and colleagues 1 2 3 4 Simplify and Data like Secure by Digital First Automate Electricity Design Seamless and A radically reduced Trusted, predictable Unwavering trust in adaptable customer & and standardised & continuously our se
Slide 42: Technology transformation
Technology transformation Delivering resilient, safe and simple services for customers & colleagues Building resilience and ensuring De-risking the bank and protecting Simplifying and modernising our always-on services our customers technology • 99.89% average availability across our top • Significa
Slide 43: 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 FY23 features delivered
Slide 44: Building a simple and digital Personal Bank
Building a simple and digital Personal Bank Enhancing the digital customer experience Continued improvements to simplify the digital service experience • ~40m personalised digital notifications sent • ~2.1m conversations across 800k customers via ‘NAB Messaging’ now with push notifications when new
Slide 45: SME business lending supported by digital
SME business lending supported by digital Continued expansion of customers, products, actions and channels capable of digitisation • Better business lending experiences supported by digital business • Continuing to expand digital document eligibility across more lending platform including Quickbiz1
Slide 46: Making payments easier for SMEs
Making payments easier for SMEs HICAPS: simplifying & innovating in healthcare Nextgen EPTPOS terminal rollout underway payments • 4G connectivity, modern design, leading accessibility features Nextgen terminal rollout • Review settlements and print via • >30k in-field currently the terminal • Impro
Slide 47: Customer Brain
Customer Brain Creating personalised experiences for our customers, simply and at scale Real-time decisioning NAB Data & insights Connecting with customer Customer experience driving Next Best Actions for our customers across three action types Using our rich data ecosystem and Connecting with custo
Slide 48: 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’ 2H23 Simple Home Loans (SHL) update Median TTUA1 reduction Touch time per SHL app vs FY19 • 50% SHL applications receive same-day unconditional 52% -70% reduction2 approval -67% • 15%
Slide 49: 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 that Manages over 20 investments spread Made three new investments in FY23 and follow on incubate and test innovative new custo
Slide 50: Additional Divisional Information
Additional Divisional Information – We Have Clear Growth Opportunities 51 – Business and Private Banking 53 – Personal Banking 57 – Corporate and Institutional Banking 59 – New Zealand Banking 64
Slide 51: We have clear growth opportunities
We have clear growth opportunities Corporate and Business and Private Personal Banking Institutional BNZ ubank Banking Banking Clear market leadership Simple & digital Disciplined growth Grow in personal New customer & SME acquisition • Industry-leading relationship • Professional and flexible • Hig
Slide 52: Divisional contributions
Divisional contributions Divisional cash earnings1 FY23 ($m) FY23 v FY22 2H23 ($m) 2H23 v 1H23 Business and Private Banking 3,318 10.1% 1,604 (6.4%) Personal Banking 1,446 (9.1%) 661 (15.8%) Corporate and Institutional Banking 1,870 14.9% 930 (1.1%) New Zealand Banking2 1,522 8.5% 697 (15.5%) (1) Re
Slide 53: Business and Private Banking
Business and Private Banking Cash earnings Revenue and margin ($m) ($m) 10.1% 17.2% (6.4%) (1.4%) 3.27% 8,246 3.09% 7,036 3.00% 3,013 3,318 2.82% 1,714 4,152 4,094 1,604 FY22 FY23 1H23 2H23 FY22 FY23 1H23 2H23 Mar 22 Sep 22 Mar 23 Sep 23 Total revenue Net interest margin Business and housing lending
Slide 54: Business and Private Banking customer metrics
Business and Private Banking customer metrics Net Promoter Score relative to major bank peers #1 High Net Worth1 #2 in Medium Business2 -5 17 -7 12 -8 9 6 -9 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23 Sep 22 Dec 22 Mar 23 Jun 23 Sep23 NAB Peer 1 Peer 2 Peer 3 NAB Peer 1 Peer 2 Peer 3 #4 Small Business2 #1 M
Slide 55: Business and Private Banking business lending
Business and Private Banking business lending Diversified Australian business lending growth (YoY)1,2 Denotes lending balance 22% 20% as at 30 September 2023 18% 16% 14% 12% 23.5% 10% 8% 6% 4% 9.2% 8.3% 9.6% 8.4% 2% 5.6% 0% 3 Agri Health CRE Other NAB NAB B&PB 4 Small Business 5 $44bn $9bn $33bn $57
Slide 56: Integrated Private Wealth offering
Integrated Private Wealth offering • An integrated offer which brings together JBWere, NAB Private Banking home Private Banking deposit Private Investments, nabtrade and Private Banking to deliver lending balances balances banking, investments and advice for high net worth (HNW) 14.3% 22.2% customer
Slide 57: Personal Banking
Personal Banking Cash earnings Revenue and margin ($m) ($m) (9.1%) 6.9% (9.7%) (15.8%) 4,579 4,896 1.93% 1.99% 2.08% 1.87% 1,591 1,446 2,573 2,323 785 661 FY22 FY23 1H23 2H23 FY22 FY23 1H23 2H23 Mar 22 Sep 22 Mar 23 Sep 23 Total revenue Net interest margin Housing lending GLAs and deposits Credit im
Slide 58: Update on Citi Consumer Business acquisition
Update on Citi Consumer Business acquisition Ambition to deliver market leading capability in unsecured lending FY23 Update • Citi branded portfolio is outperforming retention targets • FY23 Citi costs of $402m relative to FY22 run-rate of $450m1 for both mortgages and deposits • Citi costs expected
Slide 59: Corporate and Institutional Banking
Corporate and Institutional Banking Cash earnings Net interest margin ($m) (%) 14.9% 2.14 1.98 1.76 (1.1%) 1.65 1,870 1,628 0.97 0.86 940 930 0.74 0.75 0.40 FY22 FY23 1H23 2H23 Mar 22 Sep 22 Mar 23 Sep 23 C&IB ex Markets Revenue breakdown1 Credit impairment charges and as a % of GLAs ($m) ($m) Non-m
Slide 60: Disciplined growth in Corporate and Institutional Banking
Disciplined growth in Corporate and Institutional Banking GLA outcomes Growing deposit balances and average deposit ($bn) Lower funds utilisation rates, reduced securitisation relationship tenure1 exposures and disciplined portfolio management Years 18 16 14 18 18 115 16 14617 138 109 15 115 119 105
Slide 61: Corporate and Institutional Banking
Corporate and Institutional Banking Deep expertise & Long term Australian & New Zealand focused Disciplined balance leading capabilities relationship banking partnerships sheet usage Targeted growth Sustainability Leading Transaction Leading Debt Capital Focused Global segments Banking capability Ma
Slide 62: Corporate and Institutional Banking customer metrics
Corporate and Institutional Banking customer metrics Large Corporate and Institutional Large Corporate and Institutional – Transactional Banking – NPS1 Relationship Strength Index2 Relationship Strength Index3 42 630 580 32 550 22 580 520 12 2 530 490 -8 460 -18 480 430 2017 2018 2019 2020 2021 2022
Slide 63: FY23 highlights
FY23 highlights Strong volume growth ($bn) • All original ubank customers upgraded to new platform - 29% 24% customer migration now complete • New features released include simplified automated savings to help customers meet their goals, PayTo launch to put 18.6 14.4 17.0 12.7 customers in control o
Slide 64: New Zealand Banking
New Zealand Banking1 Cash earnings Revenue and margin 38bps impact from (NZ$m) (NZ$m) the transfer of liquidity portfolio 8.5% 11.9% (15.5%) (2.8%) 2.57% 1,403 1,522 3,418 2.38% 2.36% 2.27% 3,055 825 697 1,733 1,685 FY22 FY23 1H23 2H23 FY22 FY23 1H23 2H23 Mar 22 Sep 22 Mar 23 Sep 23 Total revenue Ne
Slide 65: 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 50 10 650 622 40 33 0 -1 600 28 -10 543 30 -10 550 23 -16 540 20 -20 500 16 -24 10 10 -30 450 462 0 -40 400 Sep 19 Sep 20 Sep 21 Sep 22 Sep 23 Sep 19 Sep 20 Sep
Slide 66: New Zealand lending mix
New Zealand lending mix Portfolio breakdown by GLAs – Total NZ$102.4bn Mortgage portfolio breakdown by geography - Total NZ$57.7bn Other 13% Auckland 49% Gisborne, Hawkes Commercial Bay & Northland 4% Real Estate Mortgages 7% 56% Bay of Plenty 5% Waikato 8% Agriculture, Wellington Forestry and 11% C
Slide 67: New Zealand housing lending key metrics
New Zealand housing lending key metrics New Zealand housing lending portfolio Mar 22 Sep 22 Mar 23 Sep 23 Sep 22 Mar 23 Sep 23 Drawdowns1 Total Balances (spot) NZ$bn 54.5 54.8 56.4 57.7 5.4 5.7 5.9 By product - Variable rate 10.6% 9.7% 8.9% 8.4% 13.9% 10.1% 8.9% - Fixed rate 88.0% 88.8% 89.6% 90.1%
Slide 68: NZ customer deposits by interest rate
NZ customer deposits by interest rate Customer deposits balances by product (NZD) Customer deposits percentage by product (NZD) ($bn) (%) $77.7bn $73.7bn $72.3bn $68.6bn 3% 3% 4% 4% 3% $65.4bn 3 3 3 2 2 35% 37% 44% 40% 44% 27 30 34 24 29 25% 22% 21% 17 16 16 16 24% 21% 16 37% 37% 35% 32% 25 27 26 25
Slide 69: Additional product information: Australian Housing Lending
Additional product information Australian Housing Lending
Slide 70: Housing lending key metrics
Housing lending key metrics1 Australian housing lending Mar 22 Sep 22 Mar 23 Sep 23 Sep 22 Mar 23 Sep 23 Portfolio Drawdowns2 Total Balances (spot) $bn 322 329 333 338 42 35 40 Average loan size $’000 per account 324 334 345 358 489 526 536 By product type - Variable rate 58.7% 63.4% 68.4% 76.8% 86.
Slide 71: Housing lending practices & policies
Housing lending practices & policies Key origination requirements Loan-to-value (LVR) limits • Income verified using a variety of documents including Principal & Interest – Owner Occupier 95% payslips and/or checks on salary credits into customers’ accounts Principal & Interest – Investor 90% • 10%
Slide 72: Housing lending volume and flow movements
Housing lending volume and flow movements Housing lending flow movements1 Housing lending volume growth1 ($bn) ($bn) Owner Occupier Investor 2.6% (1.5% HoH) (4) (14) 50 (27) 3.4% (1.9% HoH) 333 338 215.2 217.5 220.7 113.5 115.2 117.4 Mar 23 New fundings Interest Pre- External Sep 23 Sep 22 Mar 23 Se
Slide 73: 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, 4.8% Occupier Principal & QLD 14% Interest, Investor 60.5% Interest Only, 12.9% WA 7% NSW/ACT 43% SA/NT 4% Investor Principal & Inter
Slide 74: 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 • $68bn FR book, rolls to variable rate (VR) loan at expiry, and ~91% to expire over the next two years Investor Principal & • 73% originated since Oct 20 Interest, Own
Slide 75: Housing lending repayment profile
Housing lending repayment profile Key considerations Profile of forecast 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 Sep 24 • $31b
Slide 76: Housing lending offsets and redraw balances
Housing lending offsets and redraw balances Offset & redraw balances continue to increase Offset and redraw balances multiple of monthly repayments1 ($bn) 85 11 Mar 23 Sep 23 80 10 75 36% 36% 70 9 65 8 60 18% 17% 7 13% 13% 14% 14% 11% 11% 55 6% 7% 50 6 2% 2% Jun 22 Sep 22 Dec 22 Mar 23 Jun 23 Sep 23
Slide 77: Housing lending arrears profile
Housing lending arrears profile Key considerations Housing lending 90+DPD & GIAs as a % of GLAs1 • Recent state-based 90+ DPD trends fairly consistent • Trajectory of arrears for 2017, 2018 and 2019 vintages impacted 1.18% by COVID-19 responses 2.0% 0.87% • To date, early arrears trends for loans or
Slide 78: 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% Mar 22 Sep 22 Mar 23 Sep 23 Dynamic LVR breakdown of drawn balance Sep 23 Dynamic LVR 41.2% 80% 60% 40% 20% 0% LVR LVR LVR LVR LVR LVR ≤60% 60.01% - 70% 70.01% - 80%
Slide 79: Additional product information: Australian Deposits and Unsecured Personal Lending
Additional product information Australian Deposits and Unsecured Personal Lending
Slide 80: Deposits & transaction accounts
Deposits & transaction accounts1 Customer deposit mix by product Customer deposit percentage by product ($bn) (%) 506 515 503 41 42 45 431 403 8% 8% 8% 8% 8% 9% 362 35 33 132 149 160 20% 86 27% 26% 29% 31% 29 36% 108 129 143 29% 127 146 146 27% 28% 29% 28% 109 26% 95 183 187 38% 42% 37% 153 169 164
Slide 81: Deposits & transaction accounts
Deposits & transaction accounts1 Business and Private Personal Banking1 Corporate and Institutional Corporate Functions and Banking Banking Other3 ($bn) 201 206 146 191 151 138 138 184 17 18 148 147 16 128 3 15 133 34 31 25 25 26 1 1 38 5 3 38 23 7 6 54 53 6 25 30 32 39 54 52 65 73 16 38 10 10 8 7 5
Slide 82: Unsecured lending
Unsecured lending Key considerations Balance and market share1 ($bn) • Strong growth in credit cards in FY23, supported by net new 26.4% account openings in NAB and Citi portfolios 25.3% 25.7% • Portfolio quality remains sound 22.00% • Arrears increased in 2H23 but remain below pre-COVID 19 levels 6
Slide 83: Additional information: Group Asset Quality
Additional information Group Asset Quality
Slide 84: 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 0.11% 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 85: 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 86: Group lending mix
Group lending mix Gross loans and acceptances by product - $708.5bn Gross loans and acceptances by geography1 Other Credit card International outstandings 3% 1% Housing loans Australia 57% 84% Overdrafts 1% Asset & lease New Zealand financing 3% 13% Gross loans and acceptances by business unit New O
Slide 87: Business and Private Banking business lending
Business and Private Banking business lending $143bn Well diversified EAD by industry Agriculture, Forestry & Fishing Transport & Storage 3% 26% Finance & Insurance 4% Accommodation, Cafes, Pubs & Restaurants 3% Commercial Property 25% Health and Community Services 5% Other 4% Construction 5% Proper
Slide 88: Group provisions
Group provisions Collective provisions Specific provisions ($m) ($m) 1 1.42% 1.47% 1.31% 1.31% 5,056 5,214 54.9% 51.6% 4,634 4,826 1,500 2 2 42.9% 42.8% 175 135 173 252 $5,000.0 33 38 33 32 30.00% 622 539 531 521 4,849 5,046 93 70 60 4,423 4,541 63 529 461 458 479 -1% $1,000.0 -100 Mar 22 Sep 22 Mar
Slide 89: Provisions
Provisions Movement in provisions1 $215m change in probability weighted provisions for expected credit losses Mar 23 – Sep 23 ($m) 6000 5500 347 (193) 43 18 5000 4500 4000 Net $150m release from forward looking 5,370 5,585 3500 5,056 provisions Mar 23 – Sep 23 3000 2500 2000 Total Provisions Total P
Slide 90: Expected Credit Losses (ECL) assessment
Expected Credit Losses (ECL) assessment ECL scenarios & weightings Key considerations Total Provisions for ECL1,2 • Increase in ECL vs Mar 23 reflects deterioration in asset 2H23 quality across the Group’s lending portfolio and volume $m 100% Base 100% (probability case Downside growth in Business a
Slide 91: Sectors of interest
Sectors of interest 90+ DPD Non retail sectors of interest 90+ DPD and GIAs as Sep 23 EAD EAD1 change and GIAs $bn1 since Sep 20 % of EAD as % EAD 3.0% Retail Trade 15.0 3.4% 0.94% Tourism, Hospitality & 14.3 1.4% 0.75% 2.0% Entertainment (THE) Construction 13.0 12.1% 1.23% Australian Energy 29.6 8.
Slide 92: ECL provisioning by stages
ECL provisioning by stages Loans and advances by stage1 Provisions by stage2 Provision coverage by stage3 ($bn) ($m) (%) 913 942 0.55 0.58 0.59 930 5,585 6.5 5,056 5,370 6.7 8.0 234 243 217 1,368 1,516 1,332 20.6 20.3 19.0 672 679 717 3,276 3,503 3,540 1.40 1.44 1.63 0.41 0.43 0.44 448 499 529 0.07
Slide 93: Probability of default (PD) analysis
Probability of default (PD) analysis Non-retail IRB EAD1 by probability of default2,3 ($bn) Investment grade Sub investment grade Default 68% Sep 23 32% Sep 23 0.6% Sep 23 200 150 100 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% Mar 22 Sep 22 Mar 23 Sep 23 Australia and
Slide 94: Non retail industry sector analysis
Non retail industry sector analysis Non retail EAD by industry1,2 - $597bn % of 90+ DPD and GIA Sep 22 Mar 23 Sep 23 Finance & insurance 36% 0.02% 0.02% 0.02% Commercial property 13% 0.30% 0.26% 0.36% Govt & public utilities 11% 0.00% 0.00% 0.00% Agri, forestry & fishing 0.57% 0.87%3 1.11%3 10% Othe
Slide 95: Australian Business lending asset quality
Australian Business lending asset quality Business lending credit impairment charge and as a Business lending 90+DPD and GIAs and as % of GLAs % of GLAs ($m) 0.64% ($m) 0.57% 0.54% 0.56% 600 500 0.15% 0.24% 0.07% 400 300 (0.01%) 1,582 1,343 1,328 1,386 200 295 100 189 91 0 (10) Mar 22 Sep 22 Mar 23
Slide 96: Australian Business and Private Banking asset quality
Australian Business and Private Banking asset quality B&PB credit impairment charge and as % of GLAs1 B&PB 90+DPD and GIAs and as % of GLAs1 ($m) 0.25% ($m) 0.21% 0.07% 316 1.07% 0.96% 0.91% 0.87% 0.10% 252 21 (0.02%) $290.0 23 2,382 2,462 87 2,156 2,142 (27) 161 281 -0.15% 1,168 997 0 999 904 7 5 9
Slide 97: Agriculture, forestry & fishing exposures
Agriculture, forestry & fishing exposures1 Group EAD $61.0bn September 2023 Key Australian considerations • Deterioration in asset quality from Mar 2023 off low levels of recent years • Conditions becoming more challenging in some areas following several years of good conditions: Australia New • Ons
Slide 98: New Zealand Banking agriculture exposures
New Zealand Banking agriculture exposures1 EAD NZ$17.4bn September 2023¹ Key considerations • 90+ DPD and impaired assets higher since Sep 21 given lower commodity Dairy 42% prices, high farm inputs inflation (fuel, fertiliser, wages) and interest rate rises • Largest sector exposure is dairy at 42%
Slide 99: Commercial real estate (CRE)
Commercial real estate (CRE)1 Gross loans & acceptances (GLAs) Breakdown by total GLAs By sector By geography New Australia Total2 Zealand QLD Retail Residential 16% WA Total CRE (A$bn) 63.3 7.0 70.4 VIC 5% SA 27% 12% 24% 5% Increase/(decrease) from Industrial 4.6 (0.1) 4.5 Sep 22 (A$bn) Tourism 19%
Slide 100: Commercial real estate
Commercial real estate1 Key asset quality considerations Sector considerations • Higher interest rates have lowered Interest Cover Ratios, but a • Discretionary income exposed assets are of continued more stable interest rate outlook and rental growth prospects focus, given recent slowdown in retail
Slide 101: Construction
Construction1 Exposure at default Key considerations • Availability of labour and subcontractor risks remain key challenges. Input prices stabilised but remain elevated EAD $12.8bn EAD $13.0bn • ~2% non retail EAD including subcontractors and construction services 2.1 2.1 • Highly diversified and se
Slide 102: Retail Trade
Retail Trade1 Exposure at default Key considerations • Nominal retail trade spend remains robust, led by spending EAD $15.0bn EAD $15.0bn at cafes & restaurants, offsetting slower spend on goods 2.3 2.3 • Consumption growth expected to weaken further over 3.1 2.8 balance of 2023 and into 2024 • Prov
Slide 103: Tourism, hospitality and entertainment
Tourism, hospitality and entertainment1 Exposure at default Key considerations • Industry data suggests trading performance for Tourism and EAD $13.5bn EAD $14.3bn Entertainment operators remains robust, notwithstanding wage/electricity cost increases and reduced savings levels 1.9 1.9 • Consumer co
Slide 104: Australian Energy
Australian Energy1 Exposure at default Key considerations Mar 23 Sep 23 • The outlook for domestic energy prices remains elevated including as a result of geographical tensions EAD EAD $15.0bn EAD $16.1bn EAD • Manufacturing and Transport expected to be $13.9bn $13.5bn disproportionately impacted by
Slide 105: Additional information: Capital, Funding & Liquidity
Additional information Capital, Funding & Liquidity
Slide 106: Risk-weighted assets and IRRBB run off
Risk-weighted assets and IRRBB run off Risk-weighted assets IRRBB risk-weighted assets ($bn) ($bn) 33.6 30.2 29.5 26.8 (0.8) 0.0 0.3 0.7 16.2 10.0 12.0 11.3 3.7 0.7 11.6 1.5 2.1 436.2 435.0 0.9 1.3 16.5 17.5 13.3 15.3 9.4 Mar 23 Credit Operational Market IRRBB Sep 23 Sep 21 Mar 22 Sep 22 Mar 23 Sep
Slide 107: Capital & Deposit hedges
Capital & Deposit hedges NAB replicating portfolios NAB replicating portfolios1 (%) Replicating portfolio 5 Avg return of replicating portfolio 2H22 1H23 2H23 30 Sep 23 balance Invested out to term of 4 1.05% 1.48% 1.81% Capital AUD $42bn 3 years 3 Low rate deposits AUD $75bn 5 years BNZ replicating
Slide 108: APRA to minimum internationally comparable CET1 ratio reconciliation
APRA to minimum internationally comparable CET1 ratio reconciliation 27.3% 28.2% 26.0% 19.5% 20.5% 19.1% 17.8% 16.9% 17.3% 18.2% 19.8% 19.9% 13.1% 12.2% 13.9% 12.2% 14.2% 11.5% Sep 22 1 Mar 23 2 Sep 23 2 APRA Common Equity Tier 1 ratios APRA Tier 1 ratios APRA Total capital ratios Equivalent Interna
Slide 109: Key regulatory changes impacting capital and funding
Key regulatory changes impacting capital and funding Change CY23 CY24 CY25 CY26 Capital Adequacy (APS 110) Implemented 1 January Credit Risk (APS 112/ APS113) Implemented 1 January Additional Tier 1 Capital Discussion Paper Consult Market Risk (APS 116) Consult Implementation Counterparty Credit Ris
Slide 110: Transition to the Revised Capital Framework
Transition to the Revised Capital Framework Migration to APRA’s Revised Capital Framework reduced credit RWA by $17.8bn (or +47bps of CET1) at 1 January 2023 Mortgages Income Producing Real Estate (IPRE) and Corporate Lending • Lower risk (Owner Occupier, P&I) mortgages attract 1.4x • Income Produci
Slide 111: Loss-absorbing capacity
Loss-absorbing capacity • Based on the Group’s RWA and Total Capital position as NAB Tier 2 outstanding issuance at 30 Sep 23, NAB has met the interim Group Total Capital requirement for Jan 24, and has an incremental $3.6bn AUD requirement by Jan 26 34% • $3.4bn of NAB’s existing Tier 2 Capital has
Slide 112: Asset Funding
Asset Funding1 Funded balance sheet Group source and uses of funds, 12 months to 30 Sep 23 ($bn) Short Term Wholesale, 11% Liquid Assets2, Term Funding 23% <12 Months, 40 38 Other Deposits4, 2% 6% Other 8 12 1 2 2 Short Term 21 21 Assets3, 3% Customer Other Equity Other Term Term Short Term Liquid L
Slide 113: Liquidity
Liquidity Liquidity coverage ratio (quarterly average) Net stable funding ratio composition ($bn) Group NSFR 116% as at 30 Sep 23 131% LCR1 128% LCR1 130% LCR1 140% LCR $646bn $556bn Wholesale Liquids and 173 200 Funding & Other 200 209 Other Assets Non- Other Loans 25 14 Financial 2 1 Corporate Ret
Slide 114: Treatment of marketable securities and cash
Treatment of marketable securities and cash 1 $224bn • NAB’s marketable securities and cash of $224bn are largely regulatory compliant HQLA with small holdings 13% Other Marketable Fair value – either for customer activities Securities through Profit and Loss or through Other • Over half of the regu
Slide 115: Term wholesale funding profile
Term wholesale funding profile Historical term funding issuance1 ($bn) 5.2 5.7 6.7 8.1 5.0 4.3 yrs yrs yrs yrs yrs yrs 39 40 33 1 1 28 26 29 3 29 30 14 18 23 21 13 10 5 5 9 9 2 2 FY18 FY19 FY20 FY21 FY22 FY23 Tenor2 Secured Senior Unsecured and Subordinated Debt RBA Term Funding Facility RBNZ Fundin
Slide 116: Diversified & flexible term wholesale funding portfolio
Diversified & flexible term wholesale funding portfolio FY23 Issuance by product type1 FY23 Issuance by currency1 AUD 33% Senior 68% Covered Other 7% 24% GBP 6% USD 41% Subordinated EUR 9% 8% NZD 4% Outstanding issuance by product type1, 2 Outstanding issuance by currency1 RMBS 2% AUD 27% Senior 62%
Slide 117: Funding costs
Funding costs Indicative term wholesale funding issuance costs1 Average term wholesale funding costs2 (bps) (bps) 400 130 300 125 200 120 100 115 0 110 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23 Sep 23 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 3 yr senior 5 yr senior 10 yr senior
Slide 118: Additional information: Sustainability
Additional information Sustainability
Slide 119: 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 action • Colleagues and culture • Our future core business and market-leading data analytics • Affordable and s
Slide 120: FY23 progress against our climate strategy
FY23 progress against our climate strategy Supporting customers to decarbonise and Reducing financed build resilience emissions • #1 Australian bank for global renewables transactions1 • 7 interim sector-specific decarbonisation targets now set • New targets published for aluminium, iron & steel and
Slide 121: Reducing financed emissions
Reducing financed emissions Target-setting status (10 emissions-intensive sectors)1 Targets set in 2022 Targets set in 2023 Target work ongoing Power Cement Thermal Oil and gas Iron and Aluminium Transport Transport Commercial Agriculture Residential generation coal steel (Aviation) (Remaining) real
Slide 122: Understanding customer transition plans
Understanding customer transition plans Maturity assessments of 100 of our largest Approach to Customer Transition Plans greenhouse gas (GHG) emitting customers • From 1 October 2025, NAB intends to require a Customer Transition • Completed the assessment of transition maturity for 100 Plan to be in
Slide 123: Energy generation exposures
Energy generation exposures Energy generation EAD by fuel source1,2 (AUD$bn) Pre revised capital framework3 Post4 7.54 7.36 7.39 • 73% total energy generation financing to 7.18 7.35 renewables 0.68 0.54 0.48 0.70 0.00 0.78 0.00 0.00 0.00 • From March 2022, NAB has no direct lending2 to 0.09 1.23 1.4
Slide 124: Resources exposures
Resources exposures Resources EAD by type1,2,3 (AUD$bn) Pre revised capital framework4 Post5 10.03 9.16 9.11 0.57 0.36 • Decreasing exposure to thermal coal, on track to be 0.79 0.81 0.42 effectively zero6 by 2030 excluding performance 0.35 0.38 0.84 7.51 7.49 guarantees for rehabilitation of existi
Slide 125: 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 framework2 Post3 Pre revised capital framework2 Post3 0.65 0.52 0.46 0.42 0.30 36% 0.24 2.23 2.34 2.09 20% 21% 23% 35% 42% 1.70 1.66 Mar 21 Sep 21 Mar 22 S
Slide 126: Natural capital and biodiversity
Natural capital and biodiversity Supporting customers to consider and manage nature-related risks and opportunities Supporting customers to manage their natural assets Nature-related impact and dependency preliminary • Agri Green Loan: Tailored finance for customers investing to assessment (Australi
Slide 127: Commercial responses to societal challenges
Commercial responses to societal challenges Economic advancement for First Nations people Affordable and specialist housing Announced target to more than double NAB’s Finance provided in FY23, against target to lend at $1bn lending to First Nations businesses and community $2.2bn least a further $6b
Slide 128: Additional information: Economic data
Additional information Economic data
Slide 129: Australia and NZ key economic indicators
Australia and NZ key economic indicators Australian economic indicators (%)1 NZ Economic indicators (%)1 CY20 CY21 CY22 CY23(f) CY24(f) CY20 CY21 CY22 CY23(f) CY24(f) GDP growth2 -0.1 4.6 2.7 1.4 1.7 GDP growth2 1.0 3.3 2.4 0.6 1.8 Unemployment3 6.8 4.7 3.5 3.8 4.5 Unemployment3 4.9 3.2 3.4 4.3 5.7
Slide 130: Consumers are adjusting, but the labour market has held up
Consumers are adjusting, but the labour market has held up Discretionary spending had declined slightly1 The household savings rate is now below pre-COVID levels2 (Index December quarter 2019 = 100) (%) 110 Household Savings Rate 20 100 15 10 90 Total 5 80 Essentials 0 Discretionary 70 -5 2018 2019
Slide 131: House prices have rebounded and rents remain strong
House prices have rebounded and rents remain strong House prices have rebounded1 Rents growth is strong across most capital cities2 (Index) Sydney Melbourne Brisbane (%) 160 Sydney Melbourne Brisbane Adelaide Perth Hobart 15 150 Adelaide Perth Hobart 140 10 130 5 120 0 110 -5 100 90 -10 2019 2020 20
Slide 132: The business sector has remained resilient
The business sector has remained resilient Conditions are favourable but confidence is soft1 Capacity utilisation is high2 (%) 20 85 0 -20 80 -40 Business Confidence Business Conditions 75 -60 -80 70 2007 2010 2013 2016 2019 2022 2006 2009 2012 2015 2018 2021 Investment Intentions are around average
Slide 133: 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 -4 2007 2010 2013 2016 2019 2022 -4 2007 2010 2013 2016 2019 2022 The exchange rate has weakened3 Co
Slide 134: New Zealand economy
New Zealand economy Slowdown in growth since Q3 2022, unemployment rate Commodity export prices decline, including dairy2 still low but has moved up1 (Index, January 2019 = 100) (GDP, $NZ billion, chain prices) (Unemployment rate, %) 180 75 6 160 70 5 140 65 120 4 60 100 Total index Dairy 80 55 3 20
Slide 135: New Zealand housing
New Zealand housing House prices have bottomed out1 Sales volumes also stabilising2 (Index) (‘000s) 4,500 12 4,000 10 8 3,500 6 3,000 Auckland 4 2,500 2 National ex Auckland 2,000 0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 New residential mortgage lending has also steadied3 Dwelling approva
Slide 136: Abbreviations and disclaimers
Abbreviations and disclaimers
Slide 137: Abbreviations
Abbreviations ALA Alternative Liquid Assets KYC Know Your Customer AML Anti Money Laundering 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 Trad
Slide 138: 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 Sep 2023. Consumer NPS excludes consumers with Personal income of $260k+ and/or investible assets $1m. Ranking based on absolute scores, not statistically significant difference
Slide 139: Disclaimer
Disclaimer The material in this presentation is general background information about the NAB Group current at the date of the presentation on 9 November 2023. 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
National Australia Bank — FY2023 Earnings Presentation on 6ix