National Australia Bank Limited · ASX:NAB
National Australia Bank — FY2022 Earnings Presentation
134 slides from National Australia Bank's earnings presentation, Nov 9, 2022
Slide 1: Full Year Results 2022 Investor Presentation
national australia bank Full Year Results 2022 Investor Presentation 9 November 2022 Ross McEwan Group Chief Executive Officer Gary Lennon Group Chief Financial Officer | £§ af i] / f ! ! r in © 2022 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686 \ Pao e
Slide 2: NAB 2022 Full Year Results Index
NAB 2022 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 134 for legal disclaimer. Financial information in this presentation i
Slide 3: Overview
Overview Ross McEwan Group Chief Executive Officer
Slide 4: Key messages
Key messages • Pleasing performance across our businesses • Executing our strategy to drive ongoing momentum • Delivering improved shareholder returns • Ongoing cost discipline to help offset higher inflation in FY23 • Changing environment may challenge some customers, but strong savings and low une
Slide 5: Strong financial results
Strong financial results Metric FY22 FY21 FY22 v FY21 Statutory net profit ($m) 6,891 6,364 8.3% Continuing operations (incl acquisition of Citi Consumer Business1) Net operating income ($m) 18,296 16,806 8.9% 5.8% Operating expenses ($m) (8,274) (7,817) (3.9% ex Citi1) Underlying profit ($m) 10,022
Slide 6: Delivering improved shareholder returns
Delivering improved shareholder returns Cash Return on Equity Earnings and Dividends per share Cents Basic Cash EPS DPS 12.4% 11.7% 10.7% 228 8.3% 221 199 166 154 151 127 60 FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22 6
Slide 7: Maintained balance sheet strength
Maintained balance sheet strength Strong provisioning Increasing share of GLAs funded by deposits CP/CRWA $418bn $461bn $496bn $559bn 101% 101% 101% 93% 23% 22% 20% 23% 1.56% 1.35% 1.31% 0.96% 70% 78% 79% 81% Sep 19 Sep 20 Sep 21 Sep 22 Sep 19 Sep 20 Sep 21 Sep 22 Customer 1 2 Customer Deposits Term
Slide 8: We have a clear strategic ambition
We have a clear strategic ambition Why we are here To serve customers well and help our communities prosper Who we are here for Colleagues Customers Trusted professionals that are proud to be a part of NAB Choose NAB because we serve them well every day What we will be known for Relationship-led Eas
Slide 9: Focus on colleagues
Focus on colleagues Investing in our colleagues Colleague engagement scores broadly stable • Continue to invest in developing the skills and capability • Broadly stable engagement reflected in record high of our colleagues through programs such as colleague participation in most recent survey (84% p
Slide 10: Focus on customers
Focus on customers #1 Consumer1 #2 in Business2 #1 Large Corporate and Institutional – Net Promoter Score Net Promoter Score Relationship Strength Index3 0 630 1 -2 -5 580 -5 -7 -6 530 -14 Sep 21 Dec 21 Mar 22 Jun-22 Sep-22 Sep 21 Mar 22 Sep-22 480 2016 2017 2018 2019 2020 2021 2022 NAB Peer 1 Peer
Slide 11: Balance sheet growth aligned to strategy
Balance sheet growth aligned to strategy GLA change YoY ($bn) Deposits change YoY ($bn) +13% +12% +7.1%1 +4.8% % +17% +11%1 +5.4% Growth YoY 9.02 6.02 28.8 25.8 22.1 15.6 17.5 4.6 3.7 Aus Aus Aus New Zealand Aus Business Aus New Zealand SME Lending 3 Business Home (NZD) Deposits (ex FI)5 Households
Slide 12: Investing to grow Business and Private Banking
Investing to grow Business and Private Banking Continued investment in relationship banking Broad business lending growth (YoY)3 increasingly enabled by digital, data and analytics Key industry drivers include: • Property & Business services • Wholesale trade 18% • More than 300 customer facing role
Slide 13: Simple and easy payment solutions for small business
Simple and easy payment solutions for small business Investing to improve merchant services and support growth in our small business franchise Launch of NAB Easy Tap in September NAB Easy Tap – A low cost, simple & easy way to accept payments An app which turns a merchant’s Android phone into an EFT
Slide 14: Disciplined growth in home lending
Disciplined growth in home lending Simplifying our home loan experience Well positioned to manage changing market dynamics • Ongoing process and technology improvements • Market dynamics are changing: volume growth expected to contributing to improved customer experience in FY22 slow in FY23, higher
Slide 15: Building a simple and digital Personal Bank
Building a simple and digital Personal Bank Increased digital engagement … and enhanced digital self-service Delivering improved multi-channel and sales1… capability1 digital customer experience >70% simple everyday • More personalised, Online Banking NPS (=#1)3 banking products opened continuous th
Slide 16: Update on Citi Consumer Business acquisition
Update on Citi Consumer Business acquisition Aligned to Personal Banking “simple and digital” Update on integration and timetable strategy • Acquisition completed 1 June 2022 • Leveraging scale and expertise to deliver market leading • Integration managed by dedicated team capability in unsecured le
Slide 17: Targeted investment spend in FY23
Targeted investment spend in FY23 Expected additional investment spend of~$100m2 in FY23 reflects increased spend on systems to help keep customers and the bank safe while maintaining spend on discretionary projects which support long term growth ~$1.5bn1,2 $1,393m1 Non-discretionary investment $1,2
Slide 18: Maintaining cost discipline in a challenging environment
Maintaining cost discipline in a challenging environment Focus on productivity to offset investment and cost Cost to income ratio headwinds • Facing a number of cost headwinds in FY23 including higher inflationary pressure and ongoing costs related to • Cost to income compliance with the AUSTRAC Enf
Slide 19: Our progress on Climate
Our progress on Climate Key areas of focus in FY22 Continue to be a leader in Sustainable Finance • Member of the Net Zero Australian bank for Global renewables #1 transactions2 Banking Alliance • Inaugural Climate Report in environmental financing since 2015, met and published in FY22 reporting $70
Slide 20: FY22 Financials
FY22 Financials Gary Lennon Group Chief Financial Officer
Slide 21: Group Financial Results
Group Financial Results Underlying profit ($m) Cash Earnings1 ($m) Cash ROE (%) 80 bps 11.5% 100 bps 8.3% 6.0% 4.1% 11.7 11.3 12.1 10,022 6,558 7,104 10.7 8,989 4,865 5,157 3,480 3,624 FY21 FY22 1H22 2H22 FY21 FY22 1H22 2H22 FY21 FY22 1H22 2H22 P&L key financial indicators FY22 ($m) FY22 v FY21 2H22
Slide 22: Underlying divisional profit
Underlying divisional profit Business and Private Banking Personal Banking ($m) ($m) 19.2% 0.9% 16.4% 6.2% 4,372 3,669 2,248 2,268 2,020 2,352 1,100 1,168 FY21 FY22 1H22 2H22 FY21 FY22 1H22 2H22 Corporate and Institutional Banking New Zealand Banking1 ($m) ($m) 13.0% 18.2% 2.3% 10.5% 2,094 2,002 1,8
Slide 23: Strong revenue growth
Strong revenue growth Net operating income ($m) HoH revenue increase 7.2% 406 (60) (18) (131) 180 263 HoH revenue increase 6.7% ex M&T & Citi1 9,419 9,288 9,468 8,828 8,367 Sep 21 Mar 22 Volumes Margin Fees & Other Sep 22 M&T Sep 22 ex Citi 1 Citi 1 Sep 22 Commissions (Ex M&T) Markets & Treasury (M&
Slide 24: Net interest margin
Net interest margin Net interest margin Primarily HL Primarily 4Q NIM competition and Includes 5bps impact from OOI offset 1.72% rate lag higher Australian replicating (up 10bps portfolio returns on 3Q) (0.07%) 0.18% 0.02% (0.02%) (0.02%) (0.05%) 1.71% 1.63% Includes 10bps impact 1.71% 1.67% from Au
Slide 25: Operating expenses
Operating expenses Operating expenses (YoY) ($m) Total expenses up 3.9% YoY Underlying expenses up 1.3% YoY 233 140 99 (465) 150 135 (43) 208 Includes EU Investment in growth related costs 7,817 7,916 8,124 8,274 of $103m Sep 21 Salary Growth and New Technology Depreciation & Productivity Other Unde
Slide 26: Continued low CICs and improved asset quality
Continued low CICs and improved asset quality Credit impairment charge (CIC) Key 2H22 considerations ($m) 0.54% • Underlying CIC of $196m reflecting continued low specific 0.38% 0.60% 0.16% (0.04%) (0.03%) 0.00% 0.04% charges, improved asset quality and volume growth 1,601 1,600 0.00% 1,161 • Forwar
Slide 27: Australian housing lending
Australian housing lending $329bn1 More challenging outlook Increase in VR P&I repayments at 3.60% cash rate3 • Peak to trough expected house price falls ~20% (5% to end Sep 22) • Impact of higher cash rate on repayments is accelerating Total VR P&I book • Mitigants include: ($178bn) • Strong employ
Slide 28: Business and Private Banking business lending
Business and Private Banking business lending $132bn1 Strong origination practices Security profile Sep 222 EAD by industry • Well diversified, highly secured Agriculture Well diversified 6% Transport & portfolio with material discounts Storage 3% Forestry & within sectors applied to market valuatio
Slide 29: Strong provisioning maintained
Strong provisioning maintained Collective provision balances Collective provision coverage ($m) Sep 22 includes $1.6bn of additional forward looking provision vs Sep 19 1.56% 1.35% 1.31% 1.31% 5,536 4,715 4,826 0.96% 0.93% 4,634 3,360 1,565 0.75% 0.70% 0.70% 1,511 1,637 1,744 0.56% 97 1,029 641 845
Slide 30: Capital remains above target range
Capital remains above target range Group Basel III Common Equity Tier 1 capital ratio (%) Organic capital generation +3bps (+19bps ex Other RWA) Estimated impact of revised capital framework 0.81 (0.54) (~40bps) (0.08) (0.16) (0.44) (0.24) ~11.8% (0.32) 12.48 11.51 11.38 1 2 3 Mar 22 Cash Dividend C
Slide 31: Funding and liquidity strong
Funding and liquidity strong Key messages Liquidity position well above regulatory minimums (%) • Strong funding and liquidity position, well above regulatory minimums despite market volatility and 100% widening credit spreads minimum • The Group returned to more normalised term wholesale funding is
Slide 32: Closing comments
Closing comments Ross McEwan Group Chief Executive Officer
Slide 33: Well positioned for uncertain times
Well positioned for uncertain times Entering this period with momentum across our business #1 in SME Business Lending1 Disciplined Home Lending2 Strong total Customer Largest ROE improvement and above system growth growth Deposit2 growth of major banks5 ($bn) ($bn) ($bn) 1.3x system3 1.1x system4 1.
Slide 34: Priorities in FY23 – disciplined execution of our strategy
Priorities in FY23 – disciplined execution of our strategy • Be there to support our customers and colleagues and maintain strategic momentum • Retain balance sheet strength • Continue disciplined approach to managing costs with a focus on productivity • Progress agreed plan for AUSTRAC Enforceable
Slide 35: Additional Financial Information
Additional Financial Information
Slide 36: NAB at a glance
NAB at a glance % of FY22 Cash Key Financial Data FY22 Cash earnings divisional split1 Earnings Business and Private Banking 43% Cash Earnings1 $7,104m Personal Banking 22% Cash ROE 11.7% Corporate and Institutional Banking 23% Gross Loans & Acceptances $688bn New Zealand Banking 18% Customer deposi
Slide 37: Divisional contributions
Divisional contributions Divisional cash earnings1 FY22 ($m) FY22 v FY21 2H22 ($m) 2H22 v 1H22 Business and Private Banking 3,013 21.5% 1,584 10.8% Personal Banking 1,591 (3.6%) 803 1.9% Corporate and Institutional Banking 1,628 34.9% 822 2.0% New Zealand Banking2 1,403 14.1% 735 10.0% (1) Refer to
Slide 38: Operating expenses (HoH)
Operating expenses (HoH) Operating expenses ($m) Opex ex Citi Consumer Business increase 5.0% Underlying increase 1.5% 150 55 (25) 33 90 137 22 (114) EU related Investment in growth $37m 4,161 4,311 3,963 4,024 1 Mar 22 Salary Growth and New Technology Depreciation & Productivity Other Underlying Se
Slide 39: Markets & Treasury income
Markets & Treasury income Markets & Treasury income breakdown ($m) 1,250 940 838 808 753 578 888 580 622 572 453 392 369 277 206 262 372 402 362 345 366 387 401 397 (4) (17) (86) 0 71 8 (17) (37) Mar 19 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 3 Derivative valuation adjustment 1 Customer ris
Slide 40: Customer-related and payroll remediation
Customer-related and payroll remediation Customer-related remediation provision charges1 ($m) 2H22 Continuing Operations 1,189 charges of $97m mainly relate to legacy matters - both higher cost to do and 749 customer payments 1,011 380 654 268 240 137 138 245 58 21 117 143 95 178 135 31 130 21 97 27
Slide 41: AUSTRAC Enforceable Undertaking
AUSTRAC Enforceable Undertaking Overview of Enforceable Undertaking Status as at September 2022 Following its investigation, AUSTRAC accepted an An External Auditor was appointed in May and will report to Enforceable Undertaking (EU) from NAB in April 2022 to lift its NAB and AUSTRAC periodicall
Slide 42: Group cash earnings reconciliation to statutory net profit
Group cash earnings reconciliation to statutory net profit • NAB uses cash earnings (rather than statutory net profit attributable to owners of NAB) for its internal management reporting purposes and considers it a better reflection of the Group’s underlying performance. Accordingly, information is
Slide 43: Additional information Divisional performances
Additional information Divisional performances – We Have Clear Growth Opportunities 44 – Business and Private Banking 45 – Personal Banking 50 – Corporate and Institutional Banking 52 – New Zealand Banking 55
Slide 44: We have clear growth opportunities
We have clear growth opportunities Corporate and Business and Private Personal Banking Institutional BNZ ubank Banking Banking Clear market leadership Simple & digital Disciplined growth Grow in personal New customer & SME acquisition • Industry-leading relationship • Investing in professional • Hig
Slide 45: Business and Private Banking
Business and Private Banking Cash earnings Revenue and margin ($m) ($m) 21.5% 13.2% 10.8% 12.2% 3,013 7,036 3.00% 2,480 6,216 2.83% 2.85% 2.82% 1,584 3,315 3,721 1,429 FY21 FY22 1H22 2H22 Mar 21 Sep 21 Mar 22 Sep 22 FY21 FY22 1H22 2H22 Total revenue Net interest margin Business and housing lending G
Slide 46: Business lending growth and market share
Business lending growth and market share Australian business lending growth (YoY)1 18% 1.3x 16% 14% 12% 10% 8% 16.4% 6% 13.8% 13.4% 9.2% 10.0% 10.5% 4% 7.9% 2% 0% 3 Agri Health CRE 2 Other NAB NAB (RBA SME) System (RBA SME) 3 B&PB $41bn $8bn $31bn $52bn $132bn Denotes lending balance as at 30 Septem
Slide 47: Making payments easier for SMEs
Making payments easier for SMEs NAB Easy Tap launched Uplifting healthcare payments • Turns a merchant’s Android phone into an EFTPOS reader to • Rollout of nextgen HICAPS terminals – improved accept contactless card payments security and reliability; better usability including larger screen and vis
Slide 48: Making banking easier for SMEs
Making banking easier for SMEs Easier access to lending Improved digital banking experience for business customers • Expansion of Quickbiz digital small business • Moved our business banking platform, NAB Connect, to our unsecured lending offer: new target state architecture, delivering improved usa
Slide 49: Integrated high net worth offering
Integrated high net worth offering • Single leadership of Private Bank, JBWere and Growth in home lending balances Growth in deposit balances nabtrade and a differentiated whole of customer balance sheet approach 2.6X system growth in FY224 2.8X system growth in FY224 • Closer alignment between NAB
Slide 50: Personal Banking
Personal Banking Cash earnings Revenue and margin ($m) ($m) 6bps related to Citi Consumer Business (3.6%) 3.0% 1.9% 10.2% 2.05% 1,650 1,591 4,445 4,579 2.01% 1.99% 788 803 2,178 2,401 1.93% FY21 FY22 1H22 2H22 FY21 FY22 1H22 2H22 Mar 21 Sep 21 Mar 22 Sep 22 Total revenue Net interest margin Housing
Slide 51: ubank strategy to deliver a market leading digital proposition
Combining ubank’s established customer base and name with acquired Strategy to technology and innovation capability deliver a Relaunched ubank brand in May 2022 market leading digital Accelerating new customer acquisition proposition with >2x growth rate post brand relaunch ~60% of new customers are
Slide 52: Corporate and Institutional Banking
Corporate and Institutional Banking Cash earnings Margins and revenue breakdown ($m) ($m) Revenue Margins 34.9% 0.4% 1.76% Markets 1.68% 1.68% 1.65% 2.0% 353 254 revenue down 28% 1,628 Non Markets 1,207 1,379 1,485 revenue up 0.75% 0.74% 0.75% 806 822 0.73% 8% 1H22 2H22 Mar 21 Sep 21 Mar 22 Sep 22 F
Slide 53: Disciplined growth in Corporate and Institutional Banking
Disciplined growth in Corporate and Institutional Banking Moderating 2H22 GLA growth Reducing capital intensity1 ($bn) ($bn) Active returns focused management 126 122 116 118 115 105 115 113 98 113 88 90 91 91 105 Mar 21 Sep 21 Mar 22 Sep 22 Sep 21 Mar 22 Sep 22 Spot RWA Spot RWA ex Markets Spot GLA
Slide 54: Corporate and Institutional Banking customer metrics
Corporate and Institutional Banking customer metrics Large Corporate and Institutional – Interest Rate Hedging - Foreign Exchange – Relationship Strength Index1 Relationship Strength Index2 Relationship Strength Index3 630 650 640 600 600 580 560 550 530 520 500 480 480 440 450 2016 2017 2018 2019 2
Slide 55: New Zealand Banking
New Zealand Banking Cash earnings Revenue and margin (NZ$m) (NZ$m) 14.1% 13.6% 10.0% 9.1% 2.57% 1,403 3,055 2.38% 1,230 2,689 2.29% 2.29% 668 735 1,461 1,594 FY21 FY22 1H22 2H22 FY21 FY22 1H22 2H22 Mar 21 Sep 21 Mar 22 Sep 22 Total revenue Net interest margin Business and housing lending GLAs Credit
Slide 56: New Zealand Banking customer metrics
New Zealand Banking customer metrics BNZ Consumer NPS1,3,4,5 BNZ Business NPS2,3,6 BNZ Large Corporate Relationship Strength Index (RSI)7 40 25 650 34 15 600 594 30 28 5 546 -7 550 20 21 -5 544 -16 500 13 -15 10 450 -25 -21 451 0 -35 -33 400 Sep 18 Sep 20 Sep 22 Sep 18 Sep 20 Sep 22 2017 2018 2019 2
Slide 57: New Zealand lending mix
New Zealand lending mix Portfolio breakdown – Total NZ$99.7bn Mortgage portfolio breakdown by geography - Total NZ$54.8bn Other 17% Auckland Bay of Plenty 48% Commercial 5% Real Estate Mortgages 8% Waikato 8% 55% Wellington Agriculture, 11% Forestry and Canterbury Fishing 11% 15% Agribusiness portfo
Slide 58: New Zealand housing lending key metrics
New Zealand housing lending key metrics New Zealand Housing Lending Portfolio Mar 21 Sep 21 Mar 22 Sep 22 Sep 21 Mar 22 Sep 22 Drawdowns1 Total Balances (spot) NZ$bn 49.5 52.7 54.5 54.8 9.6 7.4 5.4 By product - Variable rate 12.9% 11.3% 10.6% 9.7% 10.1% 12.8% 13.9% - Fixed rate 85.5% 87.3% 88.0% 88.
Slide 59: NZ customer deposits by interest rate
NZ customer deposits by interest rate NZ customer deposits by interest rate (NZD)1 ($bn) 28.7 29.2 17.6 18.3 16.3 6.3 6.0 5.2 1.1 10.6 less than or equal 0.25% between 0.26% to 1.00% between 1.01% to 2.00% between 2.01% to 3.00% more than 3.00% Mar 22 Sep 22 Customer deposits balances by product (NZ
Slide 60: Additional information Digital and Technology
Additional information Digital and Technology
Slide 61: Strong technology foundations now in place
Strong technology foundations now in place Improving the resilience and flexibility of our technology Key areas of focus Achievements since FY18 • 70% of applications now running on the cloud – more reliable and sustainable Cloud, microservices and APIs • Built >400 microservices and >3,900 APIs – i
Slide 62: Our refreshed technology strategy
Our refreshed technology strategy Focused on better outcomes for our customers and colleagues 1 2 3 4 Simplify and Data like Secure by Digital First Automate Electricity Design Seamless and A radically reduced Trusted, predictable Unwavering trust in adaptable customer & and standardised & continuou
Slide 63: NAB Digital Platform
NAB Digital Platform Seamless and adaptable digital experiences for our customers and colleagues, accelerating our Digital, Data & Analytics strategic priorities Our Our Personalised Consistent across customers colleagues experience channels • NAB Digital Platform is • Core channels (NAB an assembly
Slide 64: Innovating with NAB Ventures
Innovating with NAB Ventures NAB Ventures is NAB’s venture capital arm that makes investments to promote strategic priorities The NAB Ventures team: • Works alongside other parts of the bank • Manages over 20 investments • Made six new investments in FY22 that incubate and test innovative new spread
Slide 65: Additional information Australian Business Lending
Additional information Australian Business Lending
Slide 66: Business lending asset quality
Business lending asset quality Business lending credit impairment charge and as a % Business lending 90+DPD and GIAs and as % of GLAs of GLAs ($m) ($m) 0.74% 0.62% 600 0.57% 0.54% 500 0.25% Includes (0.01%) 0.07% $248m 400 of Aviation sale 0.04% 300 related CICs 200 1,528 274 1,362 1,343 1,328 100 4
Slide 67: Business and private banking asset quality
Business and private banking asset quality 0.15% B&PB credit impairment charge and as % of GLAs1 B&PB 90+DPD and GIAs and as % of GLAs1 ($m) ($m) 0.07% 0.07% $250.0 1.53% 0.04% 1.25% 3,025 1.07% 70 87 0.91% 39 (0.02%) 2,596 2,382 2,156 0 7 1,611 92 1,351 1,168 84 6 (27) 999 40 7 (21) 5 (7) (5) 1,414
Slide 68: Additional information Australian Housing Lending
Additional information Australian Housing Lending
Slide 69: Housing lending portfolio profile
Housing lending portfolio profile Housing lending flow movements1 Housing lending volume growth1 ($bn) ($bn) Owner Occupier Investor 6.6% (2.4% HoH) 6.3% (1.9% HoH) 106.8 111.4 113.5 (4) (14) 51 (26) 201.8 210.1 215.2 322 329 Mar 22 New fundings Interest Pre- External Sep 22 Sep 21 Mar 22 Sep 22 Sep
Slide 70: Housing lending portfolio profile
Housing lending portfolio profile Housing lending volume by borrower and repayment Australian mortgages profile1,2 type1 VIC/TAS 32% Investor Principal & Interest, 22.4% QLD 14% Investor Interest Only, Owner 10.7% Occupier Principal & WA 7% Line of Credit, Interest, NSW/ACT 3.7% 60.5% 42% SA/NT 4% O
Slide 71: Housing lending portfolio profile
Housing lending portfolio profile Offset and redraw balances multiple of monthly Dynamic LVR breakdown of drawn balance2 repayments1 80% 36% 36% 19% 19% 60% Sep 22 Dynamic LVR 40.5% 13% 13% 11% 11% 13% 13% 6% 6% 2% 2% 40% > 1-2 3-12 1-3 <1 On time Behind 20% 2 years years months months month Mar 22
Slide 72: 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 • $108bn FR book, rolls to VR loan at expiry Investor • ~78% of fixed rate loans expire over the next two years, Principal & with early engagement planning underway Int
Slide 73: Housing lending practices & policies
Housing lending practices & policies Key origination requirements Loan-to-value (LVR) limits • Income verified using a variety of documents including payslips and/or checks on salary credits Principal & Interest – Owner Occupier 95% into customers’ accounts Income Principal & Interest – Investor 90%
Slide 74: Housing lending key metrics
Housing lending key metrics1 Australian Housing Lending Mar 21 Sep 21 Mar 22 Sep 22 Sep 21 Mar 22 Sep 22 Portfolio Drawdowns2 Total Balances (spot) $bn 300 309 322 329 49 49 42 Average loan size $’000 per account 310 315 324 334 427 468 489 By product type - Variable rate 67.8% 61.3% 58.7% 63.4% 41.
Slide 75: Housing lending repayment profile
Housing lending repayment profile Key considerations Profile of mortgage repayments at 3.60% cash rate1,3 FR expiring • All variable rate (VR) loan repayments will be reviewed at Repayment profile from April 22 VR P&I by Sep 23 least once by early Jan 23 with payments adjusted at 3.60% cash rate $17
Slide 76: Our ambition to build Australia’s simplest home loan
Our ambition to build Australia’s simplest home loan Simple home loans: A digital end-to-end platform with ‘intervention by exception’ Stage 1 – Application Stage 2 – to Unconditional Approval Stage 3 – to Settlement Lodge via Simple Home Unconditional Loans platform Submit approval Settlement Retai
Slide 77: Additional information Other Australian Products
Additional information Other Australian Products
Slide 78: Deposits & transaction accounts
Deposits & transaction accounts1 Customer deposits by interest rate2 $250.2bn $152.6bn $145.7bn $92.4bn $98.3bn $45.5bn $34.2bn $20.3bn $3.6bn $12.7bn less than or equal 0.01% between 0.02% to 0.25% between 0.26% to 0.75% between 0.76% to 1.00% more than 1.00% Mar 22 Sep 22 Customer deposit balances
Slide 79: Divisional customer deposits by product
Divisional customer deposits by product Business and Private Personal Banking1 Corporate and Institutional Other2 Banking Banking ($bn) ($bn) ($bn) ($bn) 184 191 128 146 162 168 15 16 148 119 13 133 111 3 12 38 38 128 25 121 3 29 34 23 23 7 3 54 22 6 2 39 35 38 52 6 25 31 40 5 16 30 19 17 46 34 37 3
Slide 80: Other banking products
Other banking products Personal lending balance Cards balance and market share2,3 ($bn) ($bn) 25.3% 22.00% 13.3% 13.4% 13.5% 3.31 6.0 0.61 11.00% 1.0 1.0 1.0 1.0 4.6 4.2 4.4 4.7 0.0 0.00% Mar 21 Sep 21 Mar 22 Sep 22 Mar 21 Sep 21 Mar 22 Sep 22 NAB Citi Consumer Business NAB Citi Consumer Business Ma
Slide 81: Additional information Group Asset Quality
Additional information Group Asset Quality
Slide 82: 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 0.2% Recession 0.02% -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 83: 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 1985 average average Personal geography net write off rates as a % of GLAs (1985 – 20222) (2003 – 20222) lending 8% Home lending3 0.03% 0.03% Home Commerc
Slide 84: Group lending mix
Group lending mix Gross loans and acceptances by product - $687.7bn Gross loans and acceptances by geography1 Other International 3% Australia 84% Credit card outstandings 1% Housing loans Overdrafts 1% 57% New Zealand 13% Asset & lease financing 2% Gross loans and acceptances by business unit Other
Slide 85: Group provisions
Group provisions Collective provisions Specific provisions ($m) ($m) 1.50% 1.35% 1.31% 1.31% 5,209 54.9% 4,715 1,500 52.8% 51.6% 4,634 4,826 47.6% 191 43 155 173 252 $5,000.0 39 794 38 33 664 30.00% 622 108 531 100 93 4,975 4,521 4,423 4,541 70 686 564 529 461 -1% $1,000.0 -100 -20.00% Mar 21 Sep 21
Slide 86: Provisions
Provisions Movement in provisions1 ($m) 6000 5500 201 107 (190) (89) 5000 4500 4000 3500 5,171 5,027 5,056 3000 2500 2000 Total Provisions Total Provisions Underlying Forward looking Target sector Specific provision Total Provisions Sep 21 Mar 22 collective provision Economic forward looking Sep 22
Slide 87: ECL assessment
ECL assessment ECL scenarios & weightings Key considerations Total Provisions for ECL1,2 • Increase in ECL vs Mar 22 includes growth in the 2H22 Australian business lending portfolio, the acquisition of $m 100% Base 100% (probability case Downside the Citi Consumer Business and deterioration in the
Slide 88: Target sector FLAs
Target sector FLAs Collective provision target sector FLAs ($m) 1,250 1,029 458 845 781 372 182 155 168 591 133 147 48 202 128 81 150 160 135 89 95 64 139 136 127 115 80 62 190 170 177 179 173 25 25 59 58 14 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Other Commercial Property Australian Retail Trade Austral
Slide 89: ECL provisioning by stages
ECL provisioning by stages Loans and advances by stage1,2,3 Provisions by stage4 Provision coverage by stage5 ($bn) ($m) (%) 0.62 0.58 0.55 833 871 913 5,171 5,027 5,056 7.2 6.4 6.5 250 269 234 1,539 1,388 1,332 21.4 21.5 20.6 596 672 3,376 3,375 3,276 576 1.35 0.44 1.26 1.40 0.42 0.41 256 264 448 0
Slide 90: Probability of default (PD) analysis
Probability of default (PD) analysis Non retail corporate EAD1 by probability of default Investment grade Sub investment grade Default 62% Sep 22 37% Sep 22 1% Sep 22 120 100 80 60 40 20 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 20 Mar 21 Sep 21 Mar 22 Sep 22 Austral
Slide 91: Non retail industry sector analysis
Non retail industry sector analysis Non retail EAD by industry1 - $645bn % of 90+ DPD and GIA Sep 21 Mar 22 Sep 22 Finance & insurance 40% 0.02% 0.02% 0.02% Commercial property 13% 0.34% 0.33% 0.30% Govt & public utilities 10% 0.00% 0.00% 0.00% Agri, forestry & fishing 0.56% 0.47% 0.57% 9% Transport
Slide 92: Group agriculture, forestry & fishing exposures
Group agriculture, forestry & fishing exposures1 Group EAD $58.5bn September 2022 Key considerations • Sector outlook is broadly positive in terms of main agricultural commodity prices, but headwinds exist in terms of elevated energy and fertiliser costs, labour Australia shortages and rising intere
Slide 93: Group commercial real estate (CRE)
Group commercial real estate (CRE)1 Gross loans & acceptances (GLAs) Breakdown by total GLAs ($65.9bn) New By sector By geography Aust Total2 Zealand Total CRE (A$bn) 58.7 7.1 65.9 Retail QLD Residential VIC WA 27% 15% 11% 25% 5% Increase/(decrease) from SA 5.5 (0.5) 5.1 Industrial Sep 21 (A$bn) 5%
Slide 94: Group commercial real estate
Group commercial real estate1 Key asset quality considerations Group CRE Security Profile2 Partially secured • Strong market activity over the past 18 months has started to 6% slow, as participants monitor inflation and the rising interest Unsecured rate environment; quality CRE assets with strong l
Slide 95: Construction
Construction1 Exposure at default Key considerations • Elevated shipping costs and supply chain issues are starting to moderate; labour shortages and costs remain a challenge EAD $12.4bn EAD $12.7bn • ~2% non retail EAD including subcontractors and construction services 1.8 1.8 • Highly diversified
Slide 96: Retail Trade
Retail Trade1 Exposure at default Key considerations • While retail spending has remained robust, higher official EAD $15.1bn EAD $15.6bn Sep 22 EAD $15.6bn interest rates are likely to put pressure on disposable income and lead to reduced spending, with the main 2.2 2.2 impact on consumption growth
Slide 97: Tourism, hospitality and entertainment
Tourism, hospitality and entertainment1 Exposure at default Key considerations • Industry data suggests the outlook for Tourism & Entertainment EAD $13.8bn EAD $14.2bn continues to improve. Accommodation performance is region specific, with regional areas outperforming CBDs which remain 1.9 1.8 more
Slide 98: Australia Energy
Australia Energy1 Exposure at default at Sep 22 Key considerations • Manufacturing and certain sub-sectors within Transport are EAD $16.4bn expected to be disproportionately impacted by elevated and EAD $11.7bn rising energy costs due to their high energy consumption 6.1 • Greatest concerns are for
Slide 99: Additional information Capital Funding & Liquidity
Additional information Capital Funding & Liquidity
Slide 100: Risk weighted assets
Risk weighted assets Total risk weighted assets ($bn) 4.1 0.0 (1.1) 6.9 8.1 449.9 431.9 Mar 22 Citi Credit Operational Market IRRBB Sep 22 acquisition 1 risk risk risk Credit risk weighted assets ($bn) 8.1 (1.0) (3.6) 1.5 1.3 5.9 Credit quality & portfolio mix -$4. 6bn 367.3 355.1 Mar 22 Volume Citi
Slide 101: IRRBB risk weighted assets
IRRBB risk weighted assets Key messages Embedded Gain/Loss RWA Run off profile ($bn) • The Investment Term of Capital (IToC) smooths the impact of (Based on yield curves as at 30 Sep 22) interest rate volatility on NAB’s NIM and earnings profile. NAB currently applies a 3 year IToC 20 • IRRBB regula
Slide 102: Capital & Deposit hedges
Capital & Deposit hedges NAB replicating portfolios NAB replicating portfolios1 (%) Replicating portfolio Ave return of replicating portfolio 4.0 30 Sep 22 balance Invested out to term of 2H21 1H22 2H22 0.75% 0.75% 1.05% Capital AUD $42bn 3 years 3.0 Low rate deposits AUD $80bn 5 years 2.0 BNZ repli
Slide 103: Group Basel III Capital Ratios
Group Basel III Capital Ratios 25.54% 26.02% 25.97% 20.05% 20.01% 17.95% 19.11% 17.88% 16.89% 18.91% 18.55% 18.17% 13.00% 14.64% 14.07% 13.14% 12.48% 11.51% Sep 21 Mar 22 Sep 22 APRA Common Equity Tier 1 ratios APRA Tier 1 ratios APRA Total Capital ratios Equivalent Internationally Comparable ratios
Slide 104: Key regulatory changes impacting capital and funding
Key regulatory changes impacting capital and funding Change 2HCY22 CY23 CY24 CY25 CY26 Capital Adequacy (APS 110) Implementation Credit Risk (APS 112/113) Implementation Operational Risk (APS 115) (implemented) 1 Market Risk (APS 116) Finalise Implementation Counterparty Credit Risk (APS 180) Consul
Slide 105: APRA's revised capital framework – ‘Unquestionably strong’
APRA's revised capital framework– ‘Unquestionably strong’ Summary • APRA has finalised the revised ADI capital framework, with the aim to: improve flexibility via increasing regulatory capital buffers. implement more risk-sensitive risk-weights. enhance competition via a capital floor for IRB
Slide 106: Loss-absorbing capacity
Loss-absorbing capacity • Based on the Group’s RWA and Total Capital position as at 30 NAB Tier 2 outstanding issuance Sep 22, NAB has met the incremental Group Total Capital requirement for Jan 24, and has a $6.6bn requirement by Jan AUD 26 36% Bullet • $3.6bn of NAB’s existing Tier 2 Capital has o
Slide 107: Asset Funding
Asset Funding1 Funded balance sheet2 Source and use of funds, 12 months to 30 Sep 22 $931bn $931bn ($bn) Short Term 26 Wholesale, 14% Term Funding 40 Liquid Assets3, <12 Months, 4% 26 11 24% 1 26 8 4 Other Short Other Term Deposits5, 6% 66 58 Assets, 3% Customer Central Short Term Term Term Liquid O
Slide 108: Liquidity
Liquidity Liquidity coverage ratio (quarterly average) Net stable funding ratio composition Group NSFR 119% as at 30 Sep 22 136% LCR 128% LCR 134% LCR 137% LCR $623bn $525bn Wholesale 163 173 200 Liquids and 137 Funding & Other Other Assets 47 28 25 14 Non-Financial Other Loans Corporate Retail/SME
Slide 109: Liquid Assets
Liquid Assets Liquid assets1 ($bn) 266 286 234 234 66 64 64 40 27 32 32 34 162 170 193 136 Mar 21 Sep 21 Mar 22 Sep 22 Government, Cash & Central Bank Bank, Corporates & Other Internal RMBS (post haircuts) (1) Spot Liquid Assets as at end of each period 109
Slide 110: Term wholesale funding profile
Term wholesale funding profile Historical term funding issuance1 ($bn) 4.8 5.2 5.7 6.7 8.1 5.0 yrs yrs yrs yrs yrs yrs 37 39 33 1 28 26 29 3 29 32 14 18 23 21 13 10 5 5 5 9 2 2 FY17 FY18 FY19 FY20 FY21 FY22 5 Tenor2 Secured Senior Unsecured and Subordinated Debt RBA Term Funding Facility RBNZ Fundin
Slide 111: Diversified & flexible term wholesale funding portfolio
Diversified & flexible term wholesale funding portfolio FY22 issuance by product type1 FY22 issuance by currency1 AUD 27% RMBS 4% Senior 67% Other 7% USD 39% Covered 19% GBP 8% Subordinated EUR 16% NZD 3% 10% Outstanding issuance by product type1 Outstanding issuance by currency1 AUD 28% RMBS 3% Sen
Slide 112: Funding costs
Funding costs Indicative term wholesale funding issuance costs1 Average term wholesale funding costs2 (bps) 400 130 300 125 120 200 115 100 110 0 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 3 yr senior 5 yr senior 10 yr senior 10NC5 Tier 2 Term F
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 society’s biggest challenges business practices Our priorities • Climate action • Colleagues and culture • Our future core business and market-leading data analytics • Afforda
Slide 115: Four key pillars to our climate strategy
Four key pillars to our climate strategy Grow by supporting our customers Reducing financed emissions to decarbonise and to build resilience • Supporting customers with their transition plans and • Member of Net Zero Banking Alliance working with 100 of our largest GHG emitting customers • Goal of a
Slide 116: Grow by supporting our customers to decarbonise
Grow by supporting our customers to decarbonise A leader in sustainable financing Developing product offerings across divisions #1 Australian bank for Global renewables transactions1 • Offering eligible home loan customers4 lower variable in environmental financing since 2015, met and rates on homes
Slide 117: Grow by supporting our customers to decarbonise
Grow by supporting our customers to decarbonise Supporting customers with their transition plans • In 2020, set a target to work with 100 largest GHG emitting Transition maturity assessment completed for 86 customers by September 2023 to support them as they customers develop or improve transition p
Slide 118: Investing in climate capabilities
Investing in climate capabilities Investing in colleagues to support customer Involvement in partnerships, research and industry transition initiatives • >100 corporate and institutional bankers enrolled in the • Commissioned “All Systems Go: FINSIA/Chartered Banker Institute ‘Green and Sustainable
Slide 119: Reducing operational emissions
Reducing operational emissions Working to achieve net zero emissions in our operations • 74% reduction in Scope 1 and Scope 2 emissions as at 30 June 2022, against a 30 June 2015 baseline1 • 72% of electricity consumption from renewable sources, increased from 31% prior year, against target of 100%
Slide 120: Energy generation exposures
Energy generation exposures 73% of energy generation financing is to renewables Energy generation EAD by fuel source1 (AUD$bn) Energy generation EAD split by renewable and non-renewable (%) 7.54 7.38 7.18 7.36 6.83 0.68 0.70 0.98 0.78 0.00 0.78 0.00 31% 31% 29% 29% 27% 0.08 0.09 1.23 42% 0.08 1.30 1
Slide 121: Resources exposures
Resources exposures Resources (AUDbn) exposure by type Thermal coal mining (AUDbn) exposure2,3 10.03 0.67 0.65 9.33 0.52 0.46 9.16 9.11 0.57 0.42 0.36 1.08 8.41 0.79 0.42 36% 0.81 20% 21% 23% 0.60 0.35 0.38 0.84 0.63 0.52 0.32 0.46 0.67 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 0.65 0.93 0.95 2H22 movement
Slide 122: Our responses to society’s biggest challenges
Our responses to society’s biggest challenges Affordable and specialist housing Supporting Indigenous Australians • Surpassed our existing target1 to provide cumulative $2bn • Launch of NAB’s Indigenous Business Strategy, investing in a (since 2020) in affordable and specialist housing financing new
Slide 123: ESG governance and performance
ESG governance and performance Board committees Audit Customer Nomination & People & Remuneration Risk & Compliance Committee Committee Governance Committee Committee Committee Chair: David Armstrong Chair: Ann Sherry Chair: Philip Chronican Chair: Anne Loveridge Chair: Simon McKeon Updates on ESG r
Slide 124: Additional information Economic data
Additional information Economic data
Slide 125: Australia and NZ key economic indicators
Australia and NZ key economic indicators Australian economic indicators (%)1 NZ economic indicators (%)1 CY20 CY21 CY22(f) CY23(f) CY24(f) CY20 CY21 CY22(f) CY23(f) CY24(f) GDP growth2 -0.7 4.5 2.5 0.8 0.9 GDP growth2 0.3 3.0 2.8 -0.1 2.5 Unemployment3 6.8 4.7 3.5 4.2 4.5 Unemployment3 4.9 3.2 3.2 3
Slide 126: Housing market has softened but vacancies are low
Housing market has softened but vacancies are low House prices are falling across the states1 New rents growth has been strong2 (Index) Sydney Melbourne Brisbane (%) Sydney Melbourne Brisbane 160 Adelaide Perth Hobart 15 150 Adelaide Perth Hobart 140 10 130 5 120 0 110 -5 100 90 -10 2019 2020 2021 2
Slide 127: The business sector has remained resilient
The business sector has remained resilient Conditions are high but confidence is soft1 Capacity utilisation is high1 (Net Bal.) (%) 20 85 0 -20 80 -40 Business Confidence Business Conditions 75 -60 -80 70 1998 2001 2004 2007 2010 2013 2016 2019 2022 2006 2009 2012 2015 2018 2021 Investment Intention
Slide 128: Monetary Policy is tightening and inflation is high
Monetary Policy is tightening and inflation is high The cash rate expected to reach 3.6%1 Headline inflation is yet to peak2 (%) Forecasts (%) 7.0 Cash Rate Target 7 Quarterly Year-ended 7 6.0 6 6 5 5 5.0 4 4 4.0 3 3 2 2 3.0 1 1 2.0 0 0 -1 -1 1.0 -2 -2 0.0 -3 -3 2007 2009 2011 2013 2015 2017 2019 20
Slide 129: New Zealand economy
New Zealand economy Economy over last year bounced around by COVID-19; Dairy prices have come off but remain solid3 unemployment rate very low1 NZ GDP ($NZ billion, chain prices) Unemployment rate (%) Dairy export prices (October 2018 = 100) 70 6.0 180 World price index 66 5.0 160 4.0 62 140 3.0 58
Slide 130: New Zealand housing
New Zealand housing Housing Market – prices and sales volumes have fallen1 (Index) ('000s) House prices Dwelling sales transacted 4500 12 3500 Auckland 10 8 2500 6 National ex Auckland 1500 4 500 2 -500 0 Sep 14 Sep 16 Sep 18 Sep 20 Sep 22 Sep 14 Sep 16 Sep 18 Sep 20 Sep 22 Slower pace of new lendin
Slide 131: Abbreviations and disclaimers
Abbreviations and disclaimers
Slide 132: Abbreviations
Abbreviations ALA Alternative Liquid Assets ICMA International Capital Market Association AML Anti Money Laundering KYC Know Your Customer APLMA Asia Pacific Loan Market Association LCR Liquidity Coverage Ratio CET1 Common Equity Tier 1 Capital LGD Loss given default CIC Credit impairment charge LMA
Slide 133: Source and notes
Source and notes Slide 10 (1) DBM Consultants Business and Consumer Atlas, measured on 6 month rolling average. A number of changes have been made to our Strategic NPS measure to align more closely to the Group Strategy. Consumer NPS now excludes consumers with Personal income of $260k+ and/or inves
Slide 134: Disclaimer
Disclaimer The material in this presentation is general background information about the NAB Group current at the date of the presentation on 09 November 2022. 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 i
National Australia Bank — FY2022 Earnings Presentation on 6ix