National Australia Bank Limited · ASX:NAB
National Australia Bank — Debt Investor Presentation (February 2025)
50 slides from National Australia Bank's debt investor presentation, February 2025
Slide 1: Debt Investor Update
Debt Investor Update February 2025 This presentation is general background information about the Group. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor
Slide 2: Australia and NZ key economic indicators
Australia and NZ key economic indicators Australian economic indicators (%)1 NZ economic indicators (%)1 CY22 CY23 CY24(f) CY25(f) CY26(f) CY22 CY23 CY24(f) CY25(f) CY26(f) GDP growth2 2.6 1.6 1.0 2.2 2.3 GDP growth2 3.1 0.9 -1.6 2.6 2.9 Unemployment3 3.5 3.9 4.0 4.2 4.2 Unemployment3 3.4 4.0 5.1 5.
Slide 3: Australian economy on track for soft landing
Australian economy on track for soft landing Economic growth slowed in 2024 but expected to Cash rate expected to fall as inflation continues to recover in 2025 and 2026 moderate1 (%) • Cash rate cuts expected to commence from February Forecasts 2025 with gradual easing to 3.10% by early 2026 7 6 •
Slide 4: Businesses under pressure but resilient
Businesses under pressure but resilient Business conditions Conditions around the long run average; confidence remains soft and weakest in retail and wholesale1 • Business conditions have softened over 2024 and are now just below average; weakest in goods sectors (Net balance) • Continued easing in
Slide 5: House prices and rents growth has slowed
House prices and rents growth has slowed House prices growth1 Rents growth has slowed in most capital cities2 (Index) Sydney Melbourne Brisbane (%) 190 Sydney Melbourne Brisbane 180 Adelaide Perth Hobart 15 Adelaide Perth Hobart 170 160 10 150 5 140 130 0 120 110 -5 100 90 -10 2019 2020 2021 2022 20
Slide 6: 1Q25 Trading Update
1Q25 Trading Update1 As at 31 December 2024 Operating Performance Cash earnings 2% lower compared with the 2H24 quarterly average, mainly reflecting underlying profit growth of 4% offset by higher credit impairment charges and income tax expense: • Revenue grew 3%, primarily driven by higher Markets
Slide 7: Asset quality
Asset quality As at 31 December 2024 Credit impairment charges 1Q25 Key Considerations ($m) 247 • Credit impairment charge (CIC) of $267 million. Individually 267 assessed charges were $152 million driven mainly by Australian 235 244 business lending and unsecured retail portfolios. Collective 193 1
Slide 8: Capital remains above target range
Capital remains above target range As at 31 December 2024 Group Basel III CET1 capital ratio (%) (0.60) 0.17 (0.25) L1: 12.08 0.81 0.35 (0.28) L1: 11.4 12.15 12.35 11.6 11.6 Mar1 24 Cash earnings 2 Dividend 3 Credit4 RWA1 Other5RWA2 Share 6 Other 7 3 Sep8 24 Dec9 24 Dec1024 buy-back Pro forma 4 Cred
Slide 9: Strong funding and liquidity metrics
Strong funding and liquidity metrics Liquidity position well above regulatory minimums As at 31 December 2024 (%) 100 Minimum 130 140 139 137 139 117 116 118 116 118 Mar 23 Sep 23 Mar 24 Sep 24 Dec 24 Mar 23 Sep 23 Mar 24 Sep 24 Dec 24 LCR (qrtly avg) NSFR Term funding issuance1 & maturity profile2
Slide 10: Loss Absorbing Capacity and Additional Tier 1
Loss Absorbing Capacity and Additional Tier 1 Key messages APRA changes to major banks’ capital minimums • Based on the Group's RWA and Total Capital position at 31 20.2% Dec 24, NAB meets APRA’s Jan 26 LAC requirements 18.25% 18.25% • NAB has $0.6bn of existing AT1 and $2.4bn of existing Tier 2 Tie
Slide 11: Diversified & flexible term wholesale funding portfolio
Diversified & flexible term wholesale funding portfolio As at 31 January 2025 YTD issuance by product type1 YTD issuance by currency1 Other 2% NZD 6% Subordinated 18% USD 52% AUD 40% Senior 82% Outstanding issuance by product type1, 2 Outstanding issuance by currency1 RMBS 2% JPY 1% Other 5% GBP 5%
Slide 12: Additional information FY24 Results: Strategy
Additional information FY24 Results: Strategy
Slide 13: Our long-term strategy
national Our long-term strategy australia bank Why we are here To be the most customer-centric company in Australia and New Zealand Who we are here for Customers ([<e@>) Colleagues Customers who trust us and choose us to be their bank K@)y Customer obsessed colleagues who are proud to work at NAB We
Slide 14: Evolving our long-term strategy
Evolving our long-term strategy Our Strategic Ambition What we aim to deliver over the medium term1 Leading customer advocacy • Move to a more customer-centric, simpler and fast-paced organisation • Improved customer service and customer experiences • Reinforce execution disciplines Winning in marke
Slide 15: Sustainability is embedded in our Group Strategy
Sustainability is embedded in our Group Strategy Prioritising support for customers in three areas: Climate action Access to affordable housing First Nations economic advancement First Nations business and Environmental Affordable and specialist community organisation finance ambition housing lendin
Slide 16: Additional information FY24 Results: Financials
Additional information FY24 Results: Financials
Slide 17: Financial results
Financial results Underlying profit ($m) Cash earnings1 ($m) Statutory profit ($m) (1.8%) 0.2% (0.8%) 5,461 5,362 3,548 3,554 3,494 3,466 1H24 2H24 1H24 2H24 1H24 2H24 P&L key financial indicators 1H24 ($m) 2H24 ($m) 2H24 v 1H24 Net operating income 10,138 10,112 (0.3%) ex Markets & Treasury 9,282 9
Slide 18: Delivering improved shareholder returns over time
Delivering improved shareholder returns over time Cash return on equity1 Basic cash EPS1 (cents) 247 221 229 199 154 12.9% 11.7% 11.6% 10.7% FY20 FY21 FY22 FY23 FY24 8.3% Dividends per share (cents) 167 169 151 127 60 FY20 FY21 FY22 FY23 FY24 Payout ratio2 FY20 FY21 FY22 FY23 FY24 38.9% 63.7% 68.4%
Slide 19: Net interest margin
Net interest margin Net interest margin (HoH) -2bps decrease flat ex M&T (0.01%) 0.01% (0.02%) (0.01%) (0.02%) 0.03% NII/OOI offsets (revenue neutral) Includes 4bps (Aust) and 1bp (NZ) impact from higher 1.71% 1.72% replicating portfolio returns 1.70% Sep 23 Mar 24 Lending Margin Funding Costs Depos
Slide 20: 2H24 revenue
2H24 revenue Net operating income (HoH) ($m) HoH revenue decrease -0.3% (ex M&T 1.0% increase ) (52) 53 106 (15) (118) 10,125 10,138 10,230 10,112 Sep 23 Mar 24 Volumes Margin Fees & Other Sep 24 Markets & Sep 24 Commissions (ex M&T) Treasury Markets & Treasury (M&T) income breakdown Key revenue dri
Slide 21: Operating expenses
Operating expenses Operating expenses (YOY) ($m) +4.5% 100 157 4 (453) 99 237 260 4,421 Includes ~$40m Includes: 9,427 9,023 Citi productivity • $85m uplift for financial crime • $80m related to restructuring costs1 Sep 23 Salary related Volume related Technology Depreciation & Productivity Other EU
Slide 22: Investment spend and productivity
Investment spend and productivity Re-defining investment spend1 FY25 investment spend considerations2 ($m) ~$1,800m • Additional spend to support investment in: $1,638m • A range of existing and new initiatives to drive $1,574m improved customer advocacy 187 • The gradual replacement of complex and
Slide 23: Additional information FY24 Results: Asset Quality
Additional information FY24 Results: Asset Quality
Slide 24: Asset quality
Asset quality Non-performing exposures (NPL) as a % of GLAs Key 2H24 impacts Increase primarily driven by • Recent increase in Gross Impaired Assets (GIAs), but NPLs remain higher mortgage arrears and B&PB business lending dominated by Default but not impaired • CIC of $365m, up $2m 0.20% 0.15% • In
Slide 25: Strong provisioning maintained
Strong provisioning maintained Total provision balances higher Key considerations ($m) • Total provisions of $5.9bn represent 1.6x 100% base case scenario (after excluding $334m in 1.56% FLA balances from the 100% base scenario) 1.47% 1.47% 1.47% 1.35% 1.42% • CP of $5.2bn representing 1.47% CRWA 1.
Slide 26: Group non retail lending industry sector analysis
Group non retail lending industry sector analysis Key considerations • Challenging macro environment, broad-based deterioration across industries • Sep 24 NPL ratios overweight Business & Private Banking exposures and target sectors with FLAs 1 • Recent deterioration most evident in: • Construction,
Slide 27: 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 Mar 24 primarily reflects 2H24 deterioration in asset quality, partially offset by a net $m 100% Base 100% (probability release of $174m from forward looking provis
Slide 28: Additional information FY24 Results: Business Lending
Additional information FY24 Results: Business Lending
Slide 29: Australian business lending asset quality
Australian business lending asset quality Business lending credit impairment charge and as a % Business lending non-performing exposure as % of of GLAs GLAs 600 ($m) ($m) 1.66% 0.26% 1.33% 1.43% 500 0.24% 0.14% 0.15% 1.06% 1,001 400 652 626 300 596 200 3,404 295 339 2,664 3,001 100 189 181 2,013 0 -
Slide 30: Business & Private Banking business lending $155bn
Business & Private Banking business lending $155bn Non-performing exposures (NPLs) as % of GLAs Aligned to revised APS 2201 2.66% 2.14% 2.30% 0.60% 1.75% 1.66% 0.37% 0.39% 0.51% 0.33% 1.77% 1.91% 2.06% 0.72% 0.73% 1.33% 0.65% 0.66% 0.58% 0.51% 1.24% 0.30% 0.23% 0.21% 0.22% 0.35% 0.45% Sep 15 Sep 16
Slide 31: Target sector forward looking adjustments (FLAs)
Target sector forward looking adjustments (FLAs) Non retail target sectors non-performing exposures as % of lending EAD1 3.0% 2 2.0% CRE - office, retail & THE Retail Trade Construction 1.0% THE Total non retail lending 0.0% Sep 21 Sep 22 Mar 23 Sep 23 Mar 24 Sep 24 Collective provision target secto
Slide 32: Agriculture, forestry & fishing exposures
Agriculture, forestry & fishing exposures1 Group EAD $62.2bn September 2024 Key Australian considerations • Weather conditions have been mixed, with favourable conditions on the East Coast and rains in Western Australia, but dry conditions and recent frost events in Western Victoria and South Austra
Slide 33: Commercial real estate (CRE)
Commercial real estate (CRE)1 Gross loans & acceptances (GLAs) Breakdown by total GLAs By sector By geography New Australia Total2 Zealand QLD Residential WA Retail 16% Total CRE (A$bn) 67.1 7.0 74.1 11% VIC 26% Industrial 6% SA 26% 5% Increase/(decrease) from 20% 3.7 - 3.7 Sep 23 (A$bn) Tourism Oth
Slide 34: Commercial real estate
Commercial real estate1 Key asset quality considerations Sector considerations • Non-performing exposures above low levels of recent years but • Slower lending momentum observed in Development remain below longer term historical levels; current experience segment; labour shortages in construction se
Slide 35: Construction
Construction1 Exposure at default Key considerations • Key challenges continue to be around labour availability and subcontractors issues (both availability and completion risk); new housing EAD $13.8bn EAD $13.9bn starts have moderated in the face of rising interest and construction costs 1.9 • ~4%
Slide 36: Retail Trade
Retail Trade1 Exposure at default Key considerations • Despite population growth, ongoing cost of living pressures EAD $15.7bn EAD $15.8bn are resulting in a moderation in overall consumer demand • Consumer segments are being impacted differently 2.4 2.2 including a shift in consumer spending patter
Slide 37: Tourism, hospitality and entertainment
Tourism, hospitality and entertainment1 Exposure at default Key considerations • Industry data suggests trading performance for Tourism and EAD $14.8bn EAD $15.3bn Entertainment operators remains robust, notwithstanding wage input cost increases and reduced discretionary spending 2.0 1.8 • Impacts o
Slide 38: Manufacturing
Manufacturing1 Exposure at default Key considerations • Higher interest rates and input costs have led to deterioration in the Manufacturing industry, particularly those within the EAD $21.3bn EAD $20.3bn food and beverage supply chain 5.0 • Increase in NPL ratio in 2H24 primarily reflects a small n
Slide 39: Additional information FY24 Results: Housing Lending
Additional information FY24 Results: Housing Lending
Slide 40: Australian housing lending
Australian housing lending Strategy RBA owner occupier VR front book pricing1 (%) • Deliver seamless customer, banker and broker experiences supported by investment in digital, data and technology 3 • Continue to manage portfolio returns through a disciplined 2.64 2.67 2.59 approach 2.5 2.41 • Impro
Slide 41: Housing lending offset and redraw balances
Housing lending offset and redraw balances1 Offset & redraw balances Offset & redraw balances distribution by number of ($bn) accounts 95 14 90 30% 45% 12 40% 85 25% 10 35% 80 20% 30% 75 8 25% 15% 70 6 20% 65 10% 15% 4 60 10% 5% 2 5% 55 0% 0% 50 0 0 up to 5k 5k to 50k 25k to 50k 50k to 100k 100k to
Slide 42: Housing lending key metrics
Housing lending key metrics1 Australian housing lending Mar 23 Sep 23 Mar 24 Sep 24 Sep 23 Mar 24 Sep 24 Portfolio Drawdowns3 Total Balances (spot) $bn 333 338 344 3532 40 39 38 Average loan size $’000 per account 345 358 371 381 536 564 564 By product type - Variable rate 68.4% 76.8% 84.7% 89.6% 91
Slide 43: 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 44: Additional information Appendix
Additional information Appendix
Slide 45: NAB at a glance
NAB at a glance Cash earnings divisional splits % of Cash earnings1 Key financial data FY24 Business & Private Banking 46% Cash earnings1 $7,102m Personal Banking 16% Cash ROE 11.6% Corporate & Institutional Banking 25% Gross loans & acceptances (GLAs) $738.2bn New Zealand Banking 19% Corporate Func
Slide 46: Group lending mix
Group lending mix Gross loans and acceptances by product - $738.2bn Gross loans and acceptances by geography1 Other International 3% Asset New Zealand 13% Overdrafts 1% & lease financing 3% Credit card outstandings 1% Australia 84% Housing loans 56% Housing loans 57.00% Gross loans and acceptances b
Slide 47: AUSTRAC Enforceable Undertaking
AUSTRAC Enforceable Undertaking Overview of Enforceable Undertaking Status as at September 2024 • Following its investigation, AUSTRAC accepted an • An external auditor was appointed in May 2022 and Enforceable Undertaking (EU) from NAB in April 2022 to lift continues to report to NAB and AUSTRAC pe
Slide 48: Disclaimer
Disclaimer This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to any "U.S. person" (as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act")) or any other jurisdiction
Slide 49: Disclaimer
Disclaimer The Group’s financial statements, prepared in accordance with the Corporations Act 2001 (Cth) and Australian Accounting Standards, and audited (full year) or reviewed (half year) by the Group’s auditors in accordance with Australian Auditing Standards, are made available on the Group’s we
Slide 50: Disclaimer
Disclaimer The presentation is not being distributed to and must not be passed on to persons in the United Kingdom, except for persons (1) who are not UK retail investors* and (2) who: (i) are investment professionals in accordance with Article 19(5) of the Financial Services and Markets Act 2000 (F
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