FILE NO 1-9945
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant
to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2006
National Australia Bank Limited
ACN 004 044 937
(Registrant’s Name)
Level 24
500 Bourke Street
MELBOURNE VICTORIA 3000
AUSTRALIA
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
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Form 20-F |
ý |
Form 40-F |
o |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
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Yes |
o |
No |
ý |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
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NATIONAL AUSTRALIA BANK LIMITED |
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Signature: |
/s/ Michaela J Healey |
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Date: 11 May 2006 |
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Name: Michaela J Healey |
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Title: Company Secretary |
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Searchable text section of graphics shown above
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[LOGO] |
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John Stewart |
Michael Ullmer |
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Group Chief Executive Officer |
Director, Finance & Risk & Group CFO |
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11 May, 2006 |
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[LOGO] |
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Agenda
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Introduction |
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John Stewart |
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Group Results & Outlook |
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Michael Ullmer |
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Company Update |
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John Stewart |
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Questions and Answers |
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2
Group highlights
• Good Progress in ‘fixing’ the businesses
• Good Momentum in Businesses
• Costs contained
• Good asset quality
• Effective Portfolio Management
• Cash earnings up 11.4% on March 2005 half
• Cash earnings on average equity* 17.4%
Doing what we said we would do
*before significant items
3
Focus on the fundamentals is delivering
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Culture and People |
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Regulatory & Compliance |
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Simplicity |
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Revenue Growth |
4
All APRA culture requirements closed
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• |
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Culture driven from the top – review cultural norms and clearly articulate the expected standard of behaviour |
þ |
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• |
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These standards be built into the organisational and HR systems |
þ |
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• |
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Codes of conduct and disciplinary procedures be vigorously enforced |
þ |
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• |
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Reinforce policies to support ‘whistle-blowing’ |
þ |
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Review incentive arrangements to remove potential conflicts of interest on Risk Management staff |
þ |
5
Momentum back in all businesses
Cash earnings before significant items
[CHART]
• Cash earnings up 11.4% to $1,840m (on an AIFRS basis from the March 2005 half)
• Cash earnings up 14.9% to $1,840m (on an AIFRS basis from the September 2005 half)
• Dividend maintained at 83 cents per share (80% franked)
6
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Introduction |
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John Stewart |
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Group Results & Outlook |
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Michael Ullmer |
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Company Update |
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John Stewart |
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Questions and Answers |
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7
Group Scorecard
• Complex agenda – progressing on a number of fronts
• Core underlying profit up 14.9% over prior period – up 15.1% over prior corresponding period
• Improved financial disciplines – reshaping business portfolio
• Successful implementation of strategic change
• Financial highlights – strong volume growth, good margin control, costs maintained within guidance
• Restructuring on track – but more to be done
• Asset quality sound
• Adequate capital to absorb AIFRS impacts
8
Group Performance
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Mar 06 |
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Sep 05 |
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Mar 05 |
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Core+ Change |
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HY |
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HY |
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HY |
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Sep 05 |
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Mar 05 |
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$m |
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$m |
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$m |
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HY % |
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HY % |
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Net Interest Income |
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4,198 |
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3,472 |
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3,270 |
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5.4 |
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11.9 |
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Other Operating Income |
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2,233 |
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2,673 |
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2,527 |
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3.4 |
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9.3 |
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Net Operating Income |
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6,431 |
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6,145 |
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5,797 |
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4.5 |
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10.8 |
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Operating Expenses |
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(3,637 |
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(3,739 |
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(3,396 |
) |
2.2 |
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(7.7 |
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Core Underlying Profit^ |
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2,794 |
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2,406 |
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2,401 |
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14.9 |
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15.1 |
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Wealth Management Australia as reported* |
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174 |
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202 |
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201 |
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23.9 |
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16.9 |
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Cash earnings as reported* |
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1,840 |
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1,601 |
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1,652 |
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14.9 |
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11.4 |
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Diluted cash earnings per share (cents)* |
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114.5 |
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101.4 |
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105.0 |
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Cash earnings on average equity* |
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17.4 |
% |
14.9 |
% |
16.0 |
% |
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Return on average assets |
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0.73 |
% |
0.70 |
% |
0.74 |
% |
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Net interest margin |
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2.31 |
% |
2.14 |
% |
2.12 |
% |
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^ Excludes Wealth Management Australia and Irish Banks (in Mar 05 half)
* Cash earnings before significant items
+ Excludes impact of AASB 139/132/4 and for Wealth Management Australia removes impact of IORE, transitional tax relief and AIFRS
9
Restructuring activities and cost saves
• A further 670 redundancies in the half
• program 50% complete Group wide
• Occupancy rationalisation accelerating with good progress in the UK
• program 40% complete Group wide
• “Other” restructuring, including asset write downs, well advanced
• program 80% complete Group wide
• On target for cumulative annualised restructuring benefits in 2006 of $290 million
• 70% of estimated total
10
March 2006 half cash earnings by division
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% Change on |
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Mar 05 |
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Mar 06 |
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Sep 05 |
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Mar 05 |
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Sep 05 |
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HY |
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HY |
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HY |
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HY |
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HY |
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Ongoing^ |
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$m |
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$m |
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$m |
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Total Australia* |
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1,192 |
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1,099 |
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1,180 |
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8.5 |
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1.0 |
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Total UK |
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257 |
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229 |
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307 |
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12.2 |
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(4.8 |
) |
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Total New Zealand |
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167 |
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164 |
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153 |
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1.8 |
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9.2 |
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Institutional Markets & Services |
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286 |
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279 |
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298 |
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2.5 |
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(2.4 |
) |
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Other (incl Group Funding & Corporate Centre) |
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65 |
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(61 |
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(191 |
) |
large |
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large |
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Distributions |
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(127 |
) |
(109 |
) |
(95 |
) |
(16.5 |
) |
(33.7 |
) |
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Cash earnings before significant items |
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1,840 |
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1,601 |
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1,652 |
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14.9 |
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14.7 |
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* Includes Asia
^ Excludes Irish Banks
11
Australian Region core* growth up 14.1% on Sep 2005 half
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Reported |
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Core* |
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Half year to |
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Change |
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Mar 06 |
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Sep 05 |
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Sep 05 |
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Mar 05 |
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$m |
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$m |
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HY % |
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HY % |
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Australian Banking |
|
|
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|
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Net interest income |
|
2,299 |
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1,958 |
|
2.3 |
|
8.1 |
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|
|
|
|
|
|
|
|
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Other operating income |
|
1,083 |
|
1,351 |
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1.9 |
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8.3 |
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|
|
|
|
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Total income |
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3,382 |
|
3,309 |
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2.1 |
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8.2 |
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|
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|
|
|
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Operating expenses |
|
(1,861 |
) |
(1,875 |
) |
0.4 |
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(13.8 |
) |
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Underlying banking profit |
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1,521 |
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1,434 |
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5.4 |
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2.0 |
|
|
|
|
|
|
|
|
|
|
|
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Charge to provide for doubtful debts |
|
(115 |
) |
(127 |
) |
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Wealth Management cash earnings |
|
174 |
|
202 |
|
23.9 |
|
16.9 |
|
|
|
|
|
|
|
|
|
|
|
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Reported Australian region cash earnings |
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1,192 |
|
1,099 |
|
8.5 |
|
1.0 |
|
|
|
|
|
|
|
|
|
|
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- core growth |
|
|
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|
14.1 |
|
4.7 |
|
Franchise scorecard*
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Number of customers |
|
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Revenue per customer |
|
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|
ROA |
|
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|
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Profit/FTE |
|
|
|
|
|
Cost/Income Ratio |
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|
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Number of FTEs |
|
|
|
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Avg CRS quality |
|
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|
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Margins (incl. acceptances) |
|
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Customer Satisfaction |
|
* Excludes impact of AASB 139/132/4 and for Wealth Management Australia removes impact of IORE, transitional tax relief and AIFRS
12
Wealth Management – core* underlying performance
|
|
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|
|
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% Growth |
|
||
|
|
|
March |
|
Sept |
|
March |
|
Sept |
|
Mar |
|
|
|
|
2006 |
|
2005 |
|
2005 |
|
2005 |
|
2005 |
|
|
|
|
$m |
|
$m |
|
$m |
|
|
|
|
|
|
Gross Revenue |
|
977 |
|
951 |
|
902 |
|
2.7 |
|
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume Expenses |
|
(442 |
) |
(417 |
) |
(396 |
) |
(5.9 |
) |
(11.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs |
|
(335 |
) |
(348 |
) |
(311 |
) |
3.7 |
|
(7.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WM Australia core underlying performance |
|
145 |
|
117 |
|
124 |
|
23.9 |
|
16.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IORE – AIFRS Basis |
|
29 |
|
— |
|
— |
|
|
|
|
|
|
IORE – AGAAP Basis |
|
— |
|
60 |
|
41 |
|
|
|
|
|
|
Other AIFRS Adjustments |
|
— |
|
10 |
|
12 |
|
|
|
|
|
|
Impact of transitional tax |
|
— |
|
15 |
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported WM Cash Earnings |
|
174 |
|
202 |
|
201 |
|
(13.9 |
) |
(13.4 |
) |
* Excludes impact of IORE, transitional tax relief and AIFRS
13
Core* change in UK underlying profit up 4.0% on the September 2005 half
|
|
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Reported |
|
Core* |
|
||||
|
|
|
Half year to |
|
Change |
|
||||
|
|
|
Mar 06 |
|
Sep 05 |
|
Sep 05 |
|
Mar 05 |
|
|
|
|
£m |
|
£m |
|
HY % |
|
HY % |
|
|
Net interest income |
|
374 |
|
341 |
|
1.8 |
|
6.8 |
|
|
Other operating income |
|
250 |
|
264 |
|
2.7 |
|
22.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
624 |
|
605 |
|
2.1 |
|
13.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
(405 |
) |
(406 |
) |
(1.2 |
) |
(16.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
219 |
|
199 |
|
4.0 |
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge to provide for doubtful debts |
|
(65 |
) |
(53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported UK cash earnings |
|
108 |
|
95 |
|
13.7 |
|
(1.8 |
) |
|
Franchise scorecard* |
|
|
|
|
|
Number of customers |
|
|
|
|
|
Revenue per customer |
|
|
|
|
|
ROA |
|
|
|
|
|
Profit/FTE |
|
|
|
|
|
Cost/Income Ratio |
|
|
|
|
|
Number of FTEs |
|
|
|
|
|
Avg CRS quality |
|
|
|
|
|
Margins |
|
|
|
|
|
Customer Satisfaction |
|
* Excludes impact of AASB 139/132/4 and Irish Banks (in March 2005 half)
14
Core* change in New Zealand underlying profit up 7.2% on the September 2005 half
|
|
|
Reported |
|
Core* |
|
||||
|
|
|
Half year to |
|
Change |
|
||||
|
|
|
Mar 06 |
|
Sep 05 |
|
Sep 05 |
|
Mar 05 |
|
|
|
|
NZ$m |
|
NZ$m |
|
HY % |
|
HY % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
438 |
|
405 |
|
5.4 |
|
7.6 |
|
|
Other operating income |
|
273 |
|
299 |
|
0.7 |
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
711 |
|
704 |
|
3.4 |
|
4.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(415 |
) |
(412 |
) |
(0.7 |
) |
5.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
296 |
|
292 |
|
7.2 |
|
21.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge to provide for doubtful debts |
|
(25 |
) |
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported NZ Cash earnings |
|
183 |
|
180 |
|
1.7 |
|
11.6 |
|
|
Franchise scorecard* |
|
|
|
|
|
Number of customers |
|
|
|
|
|
Revenue per customer |
|
|
|
|
|
ROA |
|
|
|
|
|
Profit/FTE |
|
|
|
|
|
Cost/Income Ratio |
|
|
|
|
|
Number of FTEs |
|
|
|
|
|
Avg CRS quality |
|
|
|
|
|
Margins |
|
|
|
|
|
Customer Satisfaction |
|
* Excludes impact of AASB 139/132/4
15
Institutional Markets & Services cash earnings up 2.5% on the September 2005 half
|
|
|
Reported |
|
Core* |
|
||||
|
|
|
Half year to |
|
Change |
|
||||
|
|
|
Mar 06 |
|
Sep 05 |
|
Sep 05 |
|
Mar 05 |
|
|
|
|
$m |
|
$m |
|
HY% |
|
HY % |
|
|
Net interest income |
|
434 |
|
244 |
|
20.9 |
|
14.3 |
|
|
Other operating income |
|
294 |
|
423 |
|
3.5 |
|
(13.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
728 |
|
667 |
|
9.9 |
|
(3.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
(366 |
) |
(372 |
) |
1.6 |
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
362 |
|
295 |
|
24.4 |
|
(6.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
B&DD write back |
|
17 |
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(93 |
) |
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported cash earnings |
|
286 |
|
279 |
|
2.5 |
|
(4.0 |
) |
* Excludes impact of AASB 139/132/4
+ Annualised return based on cash earnings for the half and calculated using the Internal Model and excluding Irish Banks
^ On a product basis
Reported Total Income up 9.1%^
[CHART]
[CHART]
16
Portfolio remains sound with write-off levels and key quality indicators stable
Total Net Write-offs to Risk-Weighted Assets
[CHART]
Half Yearly Net Write-Offs by Geography
[CHART]
Institutional/Corporate and Business Customer Rating Distribution*
* External Ratings Equivalent
[CHART]
Institutional/Corporate and Business % of well secured lending
[CHART]
18
Non-accrual volumes fall – slight increase in 90+ delinquency rate
Gross Non-Accrual Loans
[CHART]
|
90+ Delinquency and Gross 12 Month |
|
Proportion of 90 day past due loans to |
|
|
|
|
|
[CHART] |
|
[CHART] |
19
Provision ratio remains sound
Coverage Ratio*
[CHART]
* Impaired Assets identified per APRA definition.
Coverage ratio includes Irish Banks up to 30 September 2004
20
Asset quality – transition to AIFRS
• Drivers of provision charge under AGAAP
• Expected loss over term to maturity
• Loss applied to committed facility
• Drivers of provision charge under AIFRS
• Observable evidence of impairment
• Loss applied against drawn amount
• $91 million impact on capital adequacy as AGAAP applies until 1 July 2006
21
Regulatory environment
Basel II
• Parallel run on track; showing a decline in RWA’s
• On track for submissions to RBNZ in July 2006 and FSA in September 2006
Report Into Irregular Currency Options Trading
• 11 requirements open, of which 5 have been submitted to APRA for review
• All culture requirements now closed by APRA
• Aiming to lodge our application for a return to the internal model by the end of the year
SOX
• SOX operating model successfully embedded in the business
• Targeting SOX 404 compliance at September 2006
22
Disciplined Approach to Funding
[CHART]
• Improving retail deposit growth
[CHART]
• Diversity of wholesale funding
[CHART]
• Reduced reliance upon short-term wholesale funding
Capital summary
• Gaining more clarity on AIFRS impacts
• Some significant issues outstanding
• Capital base adequate to absorb AIFRS changes
24
Capital position remains strong
[CHART]
• Surplus provides flexibility to cater for capital impact of AIFRS, 1 July 2006
• Continued focus on improving ROE and internal capital allocation
|
Targets |
|
Current Target |
|
31 Mar 06 |
|
|
ACE/RWA |
|
4.75 – 5.25 |
|
5.77 |
|
|
Tier 1 |
|
7.00 – 7.50 |
|
8.05 |
|
|
Total Regulatory |
|
10.00 – 10.50 |
|
10.73 |
|
25
AIFRS impact on regulatory capital is significant
|
Estimated Tier 1 Impacts ($ bn) |
|
Mar 06 |
|
30 September 2005 |
|
Comments |
|
|
UK defined benefit schemes |
|
(0.6 |
) |
(1.0 |
) |
Pension reforms |
|
|
Prepaid pension asset |
|
(0.6 |
) |
(0.6 |
) |
|
|
|
WM value-in force, at acquisition |
|
(1.5 |
) |
(1.5 |
) |
|
|
|
WM historical adjustment re NAFiM |
|
(0.2 |
) |
(0.2 |
) |
|
|
|
Revenue recognition -effective yield |
|
— |
|
(0.3 |
) |
APRA change |
|
|
Credit provisioning |
|
0.2 |
|
0.2 |
|
|
|
|
Hedging |
|
— |
|
0.1 |
|
|
|
|
Capitalised Software |
|
(0.6 |
) |
|
|
APRA change |
|
|
Other |
|
(0.3 |
) |
(0.3 |
) |
|
|
|
Total |
|
(3.6 |
) |
(3.6 |
) |
|
|
Awaiting final APRA AIFRS standards – position above is therefore not final
AIFRS effective for capital 1 July 2006 - transitional relief is available until 1 January 2008
26
Disposals announced during first half
|
Business |
|
Announced |
|
Price |
|
|
MLC Life Hong Kong / Indonesia |
|
21 Feb 06 |
|
A$575m |
|
|
|
|
|
|
|
|
|
BNZ Investment Management |
|
30 Nov 05 |
|
Not disclosed |
|
|
|
|
|
|
|
|
|
UK Discretionary Investment Management* |
|
16 Jan 06 |
|
A$13m |
|
|
|
|
|
|
|
|
|
Custom Fleet^ |
|
5 May 06 |
|
A$550m |
|
* Price quoted is based on estimate of PCS clients agreeing to transfer to Tilney Investment Management
^ Subject to regulatory approval
• Mar 2006 HY profit stream $56m
• ACE Capital released $950m
• Tier 1 Capital released $780m
28
Key Takeouts
• Revenue momentum maintained
• Cost contained within guidance on track
• Asset quality maintained
• Implemented a comprehensive term funding program
• Reshaping business portfolio, and redeployment of capital
• Issues to contend with:
• earnings impact of businesses sold
• some slowing of credit growth
• impact of Basel II roll out
• reduced earnings from IMS balance sheet
• cost of funding initiative
• Systems and infrastructure development
29
Agenda
|
Introduction |
|
John Stewart |
|
|
|
|
|
|
|
Group Results & Outlook |
|
Michael Ullmer |
|
|
|
|
|
|
|
Company Update |
|
John Stewart |
|
|
|
|
|
|
|
Questions and Answers |
|
|
|
30
Low underlying Australian region cost growth — creating room for investments
Region 1H06 operating costs
[CHART]
Source: Internal
31
Revenue drivers moving in right direction
Excellent growth in business
NAB volume growth
YoY percentage change
[CHART]
Note: Source and Time periods
~ NAB(RBA Financial System Aggregates definitions) 2006 data based on 30/9/05-31/3/06 annualised
^ NAB(APRA Monthly Banking Statistics definitions) 31/3/04-30/9/04 annualised; 30/9/05-31/3/06 annualised
* DEXX&R: 2006 data based on 30/9/05–31/12/05 annualised
** Plan for Life: 2006 data based on 30/9/05–31/12/05 annualised
Market share gains
Change in market share, Mar 05—Mar 06
Basis points
|
|
|
|
|
Market |
|
NAB |
|
|
Business lending (inc bills)^ |
|
150 |
|
1 |
|
86.3 |
# |
|
Total lending |
|
51 |
|
2 |
|
213.1 |
|
|
Retail/household deposits |
|
19 |
|
3 |
|
37.4 |
|
|
Business deposits |
|
14 |
|
1 |
|
51.5 |
|
|
Individual risk |
|
11 |
|
1 |
|
0.5 |
|
|
Housing lending (inc securitisn) |
|
2 |
|
2 |
|
104.6 |
|
|
Retail funds (exc cash mgt) |
|
1 |
|
2 |
|
52.3 |
|
|
Credit cards |
|
-120 |
|
4 |
|
4.2 |
|
|
|
* |
NAB/APRA Monthly Banking Statistics (Mar 06 data). Ranking among the authorised banks |
|
|
† |
NAB/APRA Monthly Banking Statistics (Mar 06 data). Plan for Life Retail Funds exc Cash Mgt data and DEXX&R data as at Dec 2005, market share movement from Mar 2005 to Dec 2005. Note that Plan For Life and DEXX&R data is available on a quarterly basis only |
|
|
^ |
APRA definition of Bills excludes Bank Held Bills |
|
|
# |
Includes Institutional Markets and Services |
Limited margin impact
[CHART]
Australian bank net interest margin
Net Interest Margin (incl. acceptances)
Source: Internal
Non-retail asset quality remaining high
|
|
|
Sep 04 |
|
Sep 05 |
|
Mar 06 |
|
|
Customer rating system* |
|
6.0 |
|
5.9 |
|
5.8 |
|
|
Proportion of loans secured |
|
76.5 |
% |
76.2 |
% |
74.1 |
% |
* CRS: 1=lowest risk; 16=highest risk
Source: Internal — excludes housing and personal loans
32
Significant improvement in customer satisfaction
MFI customer satisfaction, March 2006
Percentage
|
|
|
% of each institutions’ |
|
Monthly change |
|
Quarter change |
|
Half year change |
|
Annual change |
|
|
Major bank 1 |
|
78 |
|
-0.5 |
|
0.4 |
|
1.1 |
|
1.7 |
|
|
NAB |
|
72 |
|
1.5 |
|
2.5 |
|
4.5 |
|
3.6 |
|
|
Major bank 2 |
|
72 |
|
-0.5 |
|
-2.0 |
|
0.2 |
|
-0.3 |
|
|
Major bank 4 |
|
65 |
|
-0.4 |
|
0.2 |
|
0.4 |
|
-0.9 |
|
|
Average of 4 major banks |
|
70 |
|
-0.2 |
|
0.1 |
|
1.1 |
|
0.4 |
|
|
Total market^ |
|
75 |
|
-0.1 |
|
0.1 |
|
0.5 |
|
0.2 |
|
* Satisfaction is based on customers who answered very or fairly satisfied, for customers aged 14+(rounded figures).
^ Total Market includes Banks, Building Societies and Credit Unions
All time periods relate to a 6 month average.
Source: Customer Satisfaction — Roy Morgan Research
33
Wealth Management - strongly positioned
|
Current Australian Market Share |
|
Current Share of New |
|
||||||
|
Product |
|
Market Share |
|
Rank |
|
Market |
|
Rank |
|
|
Retail (exCMT) |
|
12.9 |
|
2 |
|
9.3 |
|
3 |
|
|
MasterFunds |
|
16 |
|
1 |
|
11 |
|
2 |
|
|
Corporate Super |
|
20 |
|
1 |
|
15 |
|
2 |
|
|
Total Individual |
|
15 |
|
1 |
|
12 |
|
2 |
|
Source:
Retail (ex CMT)Plan for Life QDF Report Dec 2005
Masterfunds (Marketer View): Plan for Life Market Share & Dynamics Dec 2005
Corporate Super: Plan for Life Market & Dynamics Dec 2005
Total Individual Insurance: DEXX&R Life Analysis Dec 2005
35
New Zealand
Consistent strategy in a highly competitive market
[GRAPHIC]
• Consistent execution of strategy
• Profitable market share focus
• Delivery of quality result
|
|
|
Better |
Better |
|
|
|
|
|
|
|
|
Better |
Better |
36
Institutional Markets & Services
Strong demand and speedy execution is delivering results
[GRAPHIC]
• Stabilised and building the business
• Increased earnings on lower capital base
• Strong sales performance and favourable trading conditions
• Accelerated execution of new business initiatives
• Broader product range for new capital pools
• Driving efficiency
37
United
Kingdom
2002 Strategy Themes
2004
|
CB |
YB |
|
NB |
NIB |
One efficient business
• Integration of systems
• Convergence of processes
38
United
Kingdom
Strategy for Differentiation
2004
|
CB |
YB |
|
|
|
|
NB |
NIB |
“Do what we do, but do it better”
One efficient GB business
“Do what we do, but do it better”
Differentiated GB business
“Playing a different game”
39
Over the last six months
• Completed branch rationalisation
• Roll out of IFS
• Expanded third party
• Migrated to Danske platform
40
Corporate Centre
• Emphasis on clear accountability for decisions and outcomes
Corporate Centre to focus on:
• Value creation
• Target/ expectation setting and sign off of proposed strategies
• Performance monitoring
• Validation and oversight required to provide assurance required for financial and risk governance
• Capital and balance sheet management
• Merger and acquisitions
41
Economic environment
Gathering momentum in our key markets
• Global economy continues to expand despite higher oil prices
• Economic activity strengthening both domestically and globally, New Zealand to remain subdued
• Credit growth to moderate in Australia and New Zealand. UK to stabilise at current levels
42
NAB Group Planning & Development Approach
Strategic & Operational Planning
|
|
|
Group Strategies |
|
Objectives |
|
Focus of Group |
|
|
|
|
|
|
|
|
|
STRATEGIC & OPERATIONAL PLANNING |
|
1 Increasing performance of current businesses |
|
• Ensure current businesses are positioned to deliver against realistic performance targets |
|
Develop a common and robust approach to strategic & operational planning across all operations |
|
|
|
|
|
|
|
|
|
PORTFOLIO MANAGEMENT |
|
2 Effectively managing the portfolio |
|
• Set the strategic direction by agreeing the connected logic across the portfolio moving forward |
|
|
|
|
|
|
|
• Make portfolio moves to: |
|
Agree portfolio priorities for the |
|
|
|
|
|
• Address known concerns with the portfolio; |
|
Group |
|
|
|
|
|
• Create sustainable competitive advantage by proactively targeting opportunities; or |
|
|
|
|
|
|
|
• Block key strategic threats |
|
|
|
|
|
|
|
|
|
|
|
GROUP DEVELOPMENT |
|
3 Fostering Innovation |
|
• Identifying and effectively delivering new growth opportunities |
|
Create an environment for innovation |
43
NAB Group Planning & Development Approach
Portfolio Management
|
|
|
Group Strategies |
|
Objectives |
|
Focus of Group Planning & |
|
|
|
|
|
|
|
|
|
STRATEGIC & OPERATIONAL PLANNING |
|
1 Increasing performance of current businesses |
|
• Ensure current businesses are positioned to deliver against realistic performance targets |
|
Develop a common and robust approach to strategic & operational planning across all operations |
|
|
|
|
|
|
|
|
|
PORTFOLIO MANAGEMENT |
|
2 Effectively managing the portfolio |
|
• Set the strategic direction by agreeing the connected logic across the portfolio moving forward |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Make portfolio moves to: |
|
Agree portfolio priorities for |
|
|
|
|
|
• Address known concerns with the portfolio; |
|
the Group |
|
|
|
|
|
• Create sustainable competitive advantage by proactively targeting opportunities; or |
|
|
|
|
|
|
|
• Block key strategic threats |
|
|
|
|
|
|
|
|
|
|
|
GROUP DEVELOPMENT |
|
3 Fostering Innovation |
|
Identifying and effectively delivering new growth opportunities |
|
Create an environment for innovation |
45
NAB Group Planning & Development Approach
Group Development
|
|
|
Group Strategies |
|
Objectives |
|
Focus of Group Planning & |
|
|
|
|
|
|
|
|
|
STRATEGIC & OPERATIONAL PLANNING |
|
1 Increasing performance of current businesses |
|
• Ensure current businesses are positioned to deliver against realistic performance targets |
|
Develop a common and robust approach to strategic & operational planning across all operations |
|
|
|
|
|
|
|
|
|
PORTFOLIO MANAGEMENT |
|
2 Effectively managing the portfolio |
|
• Set the strategic direction by agreeing the connected logic across the portfolio moving forward |
|
|
|
|
|
|
|
• Make portfolio moves to: |
|
Agree portfolio priorities for the |
|
|
|
|
|
• Address known concerns with the portfolio; |
|
Group |
|
|
|
|
|
• Create sustainable competitive advantage by proactively targeting opportunities; or |
|
|
|
|
|
|
|
• Block key strategic threats |
|
|
|
|
|
|
|
|
|
|
|
GROUP DEVELOPMENT |
|
3 Fostering Innovation |
|
• Identifying and effectively delivering new growth opportunities |
|
Create an environment for innovation |
46
NAB Group Planning &
Development Approach
Change in focus
|
|
|
Group Strategies |
|
Objectives |
|
Focus of Group |
|
|
|
|
|
|
|
|
|
STRATEGIC & OPERATIONAL PLANNING |
|
1 Increasing performance of current businesses |
|
• Ensure current businesses are positioned to deliver against realistic performance targets |
|
Develop a common and robust approach to strategic & operational planning across all operations |
|
|
|
|
|
|
|
|
|
PORTFOLIO MANAGEMENT |
|
2 Effectively managing the portfolio |
|
• Set the strategic direction by agreeing the connected logic across the portfolio moving forward |
|
|
|
|
|
|
|
• Make portfolio moves to: |
|
Agree portfolio priorities for the |
|
|
|
|
|
• Address known concerns with the portfolio; |
|
Group |
|
|
|
|
|
• Create sustainable competitive advantage by proactively targeting opportunities; or |
|
|
|
|
|
|
|
• Block key strategic threats |
|
|
|
|
|
|
|
|
|
|
|
GROUP DEVELOPMENT |
|
3 Fostering Innovation |
|
• Identifying and effectively delivering new growth opportunities |
|
Create an environment for innovation |
Top 100 senior executive’s
focus shifting from fixing to
performance to development
47
Summary
• Good progress in rebuilding the businesses;
• Considerable value creation potential;
• But further work still to do;
• Importantly, we have done what we said we would do, and
• Will continue to do
48
Agenda
|
Introduction |
|
John Stewart |
|
|
|
|
|
Group Results & Outlook |
|
Michael Ullmer |
|
|
|
|
|
Company Update |
|
John Stewart |
Questions and Answers
49
Appendix
• Group Performance
• Divisional Performance
• Capital
• Other Matters
• Economic Outlook
50
Core* income growth
Net Interest Income - $m
[CHART]
Other Operating Income^ - $m
[CHART]
* Excluding AIFRS
^ Excluding net life Insurance income, revaluation losses on Excaps and significant items
52
Net interest margin up 17 bps on the September 2005 half
|
|
|
Sep 05 |
|
NIM |
|
Mar 06 |
|
AIEA |
|
% of Group |
|
|
|
||||
|
|
|
HY |
|
Change |
|
HY |
|
Mar 06 HY |
|
AIEA |
|
Impact on |
|
||||
|
|
|
NIM |
|
AIFRS |
|
Other |
|
NIM |
|
$Bn |
|
Sep 05 HY Mar 06 HY |
|
Group NIM |
|
||
|
Australian Banking |
|
2.46 |
% |
(11bps |
) |
2bps |
|
2.37 |
% |
194.5 |
|
49 |
% |
54 |
% |
6bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK Banking |
|
3.73 |
% |
27bps |
|
(36bps |
) |
3.64 |
% |
48.3 |
|
13 |
% |
13 |
% |
(2bps |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Zealand Banking |
|
2.48 |
% |
5bps |
|
1bps |
|
2.54 |
% |
31.5 |
|
9 |
% |
9 |
% |
(1bp |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Markets & Services |
|
0.37 |
% |
19bps |
|
8bps |
|
0.64 |
% |
135.6 |
|
41 |
% |
37 |
% |
9bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
(0.46 |
)% |
(14bps |
) |
(20bps |
) |
(0.80 |
)% |
(45.8 |
) |
(12 |
)% |
(13 |
)% |
5bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Impact |
|
2.14 |
% |
|
|
|
|
2.31 |
% |
364.1 |
|
100 |
% |
100 |
% |
17bps |
|
Australian banking movement has been calculated based on adjusting for bills in the current period
53
Volume growth across the Group
Australian
Banking
(quarterly
average)
[CHART]
UK Banking*
(quarterly
average)
[CHART]
NZ Banking
(quarterly average)
[CHART]
* Excludes Irish Banks
54
Expenses* across the group declined 3.9% during the half
[CHART]
* Expenses are on cash earnings basis and include $54 million ongoing costs of the UK defined benefit plans and exclude $5 million impairment of goodwill
+ Includes productivity as well as restructuring benefits
55
Impact of AIFRS* on Australian Banking Result
Net Interest Income
[CHART]
Other Operating Income
[CHART]
Other Operating Expenses
[CHART]
* AASB 139 and 132 impacts only
57
Impact of AIFRS* on Total UK^ Result
Net Interest Income
[CHART]
Other Operating Income
[CHART]
Other Operating Expenses
[CHART]
* AASB 139 and 132 impacts only
^ Ongoing operations
58
Impact of AIFRS* on Total NZ Result
Net Interest Income
[CHART]
Other Operating Income
[CHART]
* AASB 139 and 132 impacts only
59
Impact of AIFRS* on Institutional Markets & Services Result
Net Interest Income
[CHART]
Other Operating Income
[CHART]
* AASB 139 and 132 impacts only
60
Australian banking net interest margin down 9bps on the September 2005 half
[CHART]
Acceptances reclassification impact calculated by restating prior period
62
UK banking* net interest margin down 21bps on the March 2005 half
[CHART]
* Ongoing operations, excludes Irish Banks.
65
Australian Banking: market share
|
Market share |
|
Mar 06 |
|
Sep 05 |
|
Mar 05 |
|
Sep 04 |
|
Mar 04 |
|
Rank at |
|
|
Business Lending (incl Bills^)+ |
|
24.4 |
% |
24.3 |
% |
22.9 |
% |
21.6 |
% |
22.0 |
% |
#1 |
|
|
Housing (incl Securitisation) |
|
16.6 |
% |
16.7 |
% |
16.6 |
% |
16.5 |
% |
17.0 |
% |
#2 |
|
|
Credit Cards |
|
15.1 |
% |
15.4 |
% |
16.3 |
% |
16.7 |
% |
17.8 |
% |
#4 |
|
|
Other Personal Lending |
|
24.7 |
% |
25.7 |
% |
25.9 |
% |
25.8 |
% |
26.2 |
% |
#1 |
|
|
Business Deposits |
|
26.8 |
% |
26.5 |
% |
26.6 |
% |
27.7 |
% |
27.7 |
% |
#1 |
|
|
Household Deposits |
|
13.5 |
% |
13.3 |
% |
13.3 |
% |
13.4 |
% |
13.6 |
% |
#3 |
|
+ Includes Institutional Markets & Services
^ Excludes Bank Held Bills
* Ranking among authorised banks
Source: APRA Monthly Banking Statistics / National (March 2006)
69
Wealth Management Australia – market share
Masterfund market share plus flows
[CHART]
Insurance - Retail Risk Market Share
[CHART]
Source: Plan for Life Australian Retail & Wholesale Investments Market Share & Dynamics Report as at 31 December 2005 DEXX&R Life Analysis Reports as at 31 December 2005
70
Wealth Management Australia – inflows and attrition
Share of annual inflows
[CHART]
Attrition rate
[CHART]
Source: Plan for Life Australian Retail & Wholesale Investments Market Share & Dynamics Report as at 31 December 2005
71
Australian Housing metrics
Low Doc Loans
• $1.7bn outstanding
• LVR capped at 60% (without LMI)
Inner City Apartments
• $2.4bn outstanding
• 90 days past due improving
Origination source - Flows
|
|
|
Mar 05 |
|
Sep 05 |
|
Mar 06 |
|
|
Proprietory |
|
72 |
% |
70 |
% |
72 |
% |
|
Introducer |
|
10 |
% |
12 |
% |
12 |
% |
|
Broker |
|
18 |
% |
18 |
% |
16 |
% |
72
Housing Segmentation - Australia
Majority of growth attributable to owner occupied housing.
Housing portfolio segmentation
for Australia September 2005
[CHART]
Housing portfolio segmentation
for Australia March 2006
[CHART]
Note: Introduction of new datamart enables split between owner and investor inner city to be more accurately identified
73
|
|
|
Potential Amount |
|
Status |
|
Amount |
|
||
|
ExCaps capital raising |
|
A$552 million |
(1) |
In dispute |
|
$ |
|
Nil |
|
|
NZ structured finance transactions |
|
NZ$548 million |
(2) |
In dispute |
|
$ |
|
Nil |
|
|
MLC reinsurance transaction |
|
A$54 million |
(3) |
Under review |
|
$ |
|
Nil |
|
• ExCaps remains in dispute – $12 million tax effect on interest not claimed in half year results.
• NZ structured finance transactions remain in dispute – underlying transactions all terminated in 2005.
• MLC reinsurance transaction - Group currently preparing response to ATO position paper. Group believes that based on work to date the position adopted is correct under tax law. Amended assessments have not been issued.
(1) Includes primary tax, penalties and interest (net of tax)
(2) Includes primary tax and interest (net of tax); any penalties have not been determined at this time
(3) Includes primary tax only; any interest and penalties have not been determined at this time.
77
|
[LOGO] |
Economic Outlook
The following slides contain forward looking statements. Refer to disclaimer on page 82
Global economy strong and only marginally weaker in 2006
Global Forecasts - Annual Growth %
[CHART]
• Global growth strong
• Growth underpinned by US, China and India
• Inflationary concerns remain
• Upward bias on rate rises
• European growth to remain sluggish
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Economic outlook
Economic outlook differs across key markets: But overall reasonable
• GDP picking up in Australia and the UK in 2006, but slower in New Zealand,
• In 2006 we expect GDP growth of 3 ¼ % in Australia, 2 ¼ % in UK, but only 1 ¼ % in New Zealand. In 2007 GDP, in both Australia and the UK, is expected to marginally strengthen but little improvement is expected in New Zealand.
• Overall credit growth in 2006 across our key markets much the same as in 2005 (around 13 %) but the mix somewhat changed – with business credit stronger than personal and household credit. Moderately slower credit growth in 2007 (to around 10 ½ %) - mainly due to moderately weaker demand in Australia (and especially business).
• Underlying inflation expected to move higher in Australia and to remain high in New Zealand for some time. UK outlook little changed. Rates expected to begin to fall in late 2006 in New Zealand (given weak economic outlook) but to remain unchanged in the UK.
• In Australia, rates likely to be on hold following RBA’s recent moves - but risks clearly still up. Outcomes very data dependent and will need to reflect no acceleration in wages and the eventuation of an expected slowing in domestic demand over 2006/07 (following the re-acceleration in early 2006).
80
Macro risks to outlook estimates
• Geo politics - Both political, oil & trade tensions overhang the outlook.
• New Zealand’s Economic Outlook is hard to read – with significant volatility in the currency and rate expectations. That could well continue.
• In Australia, New Zealand and UK household leverage – high household gearing, leaves some consumers vulnerable to higher interest rates and or an unexpected loss of jobs. For Australia (and to a lesser extent the UK) the risks probably relate more to higher than expected interest rates. For New Zealand the risks revolve more about delays to rate cuts in an environment of still overvalued house prices and below trend growth.
• Commodity prices are very high and providing a significant boost to Australian incomes and equity markets. Our forecasts involve only moderate further upside in 2006 followed by a moderate correction in 2007. Extreme movements in either direction could considerably complicate policy responses and economic outcomes in Australia.
• Oil prices have remained stubbornly high. Those effects have to some extent been masked by wealth effects: including equity markets (Australia) and house prices (NZ and the USA). Further hikes in oil could bring about powerful global headwinds to growth – especially if wealth effects wain faster than expected
• Bird flu – Likely to be contained, albeit watch for human pandemic.
81
Disclaimer
This document is a presentation of general background information about the Group’s activities current at the date of the presentation, 11 May, 2006. It is information in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, whendeciding if an investment is appropriate.
This announcement contains certain “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934 and the US Private Securities Litigation Reform Act of 1995. The words “anticipate”, “believe”, “expect”, “project”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. For further information relating to the identification of forward-looking statements and important factors that could cause actual results to differ materially from those projected in such statements, see “Presentation of Information - Forward-Looking Statements” and “Risk Factors” in the Group’s Annual Report on Form 20-F filed with the US Securities & Exchange Commission.
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