For personal use only Note: Information in this document is presented on a cash earnings basis, unless otherwise stated. Cash earnings is a key financial performance measure used by NAB, the investment community and NAB’s Australian peers with similar business portfolios. NAB also uses cash earnings for its internal management reporting as it better reflects what NAB considers to be the underlying performance of the Group. It is not a statutory financial measure and is not presented in accordance with Australian Accounting Standards nor audited or reviewed in accordance with Australian Auditing Standards. “Cash earnings” is calculated by excluding some items which are included within the statutory net profit attributable to owners of the Company. A definition of cash earnings is set out on page 146 of the 2012 Full Year Results Announcement. A discussion of non-cash earnings items and a full reconciliation of the cash earnings to statutory net profit attributable to owners of the Company for the September 2012 full year is included on pages 22 and 137 of the 2012 Full Year Results Announcement. The Group’s audited financial statements, prepared in accordance with the Corporations Act 2001 (Cth) and Australian Accounting Standards, will be published in its 2012 Annual Financial Report on 19 November 2012. Disclaimer: This document is a presentation of general background information about the Group’s activities current at the date of the presentation, 31 October 2012. It is information in a summary form and does not purport to be complete. It is to be read in conjunction with the National Australia Bank Limited Full Year Results filed with the Australian Securities Exchange on 31 October 2012. 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, when deciding if an investment is appropriate. This document contains certain "forward-looking statements". The words "anticipate", "believe", "expect", "project", "forecast", "estimate", “outlook”, “upside”, "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, which 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. Further information on important factors that could cause actual results to differ materially from those projected in such statements is contained in the Group’s Annual Financial Report. For further information visit www.nab.com.au or contact: Ross Brown Brian Walsh Executive General Manager, Investor Relations General Manager, Media and Public Affairs Mobile | +61 (0) 477 302 010 Mobile | +61 (0) 411 227 585 Craig Horlin Meaghan Telford Senior Manager, Investor Relations Head of Group Media Mobile | +61 (0) 417 372 474 Mobile | +61 (0) 457 551 211 2
Result reflects the strong core franchise and challenges in the UK FY12 FY12 vs FY11 2H12 vs 1H12 Underlying profit ($m) 10,396 8.1% 1.6% For personal use only Cash earnings ($m) 5,433 (0.5%) (7.9%) Cash earnings (ex Economic cycle adjustment) ($m) 5,608 2.7% (1.7%) APRA Basel III Common Equity Tier 1 ratio (estimated) 7.91% 82bps 33bps Dividend (100% franked cps) 180 4.7% - Cash ROE 14.2% (100bps) (150bps) Statutory net profit attributable to owners ($m) 4,082 (21.8%) (1.1%) 3 Environment remains difficult Increased cost of funding an Australian variable System credit growth % change year-on-year rate mortgage Funding cost over the RBA cash rate (bps) (%) 180 18.0 160 140 Recovery via repricing 14.0 Liquidity and other wholesale funding 120 10.0 100 Term Funding 6.0 80 2.0 60 Customer Deposits -2.0 40 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 20 Bank Bill / Overnight Index Swap Spread Australia New Zealand UK 0 Pre Crisis Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Sep 12 RBA Financial System, RBNZ, Bank of England, NAB Forecasts UK 2012 GDP growth Divergent conditions across Australia – average of independent forecasts (‘000) Australian employment (%) Change since March 2008 2.5% Health Care & 300 Social Assistance 2.0% 200 1.5% Mining 1.0% 100 0.5% Education & Training 0 0.0% Retail Trade -100 -0.5% Feb 11 May 11 Aug 11 Nov 11 Feb 12 May 12 Aug 12 Manufacturing -200 2008 2009 2010 2011 2012 GDP forecast 2012 GDP forecast 2013 ABS, NAB HM Treasury, NAB 4
Continued focus on strategic priorities To deliver sustainable, satisfactory returns to shareholders Balance sheet Efficiency, People, culture Portfolio (focus on core strength quality & service & reputation Australian franchise) For personal use only Keep the bank safe Transform the way we Differentiate NAB for our Focus in Australia do business people, customers and Strong capital, funding Maintain value communities and liquidity More competitive cost and options structure Shape our future internationally Tight controls environment and risk settings Reduce operational risk Wholesale Banking refocused on Replace ageing core franchise infrastructure Improve customer experience and service delivery 5 Core franchise continues to perform strongly Results excluding UK ($bn) 14% CAGR 7% CAGR 11% CAGR 5.65 5.17 9.71 16.47 4.38 8.79 15.62 14.52 7.89 Sep 10 Sep 11 Sep 12 Sep 10 Sep 11 Sep 12 Sep 10 Sep 11 Sep 12 Cash earnings Net operating income Underlying profit Australian market share Operating expenses ($m) 45.9% 43.7 % 41.3 % 22.8% 22.8% 21.5% 14.8% 14.6% 14.5% 14.1% 13.5% 13.3% 7,974 7,862 7,828 Housing lending* Business lending* Household deposits^ Sep 10 Sep 11 Sep 12 Sep 10 Sep 11 Aug 12 % Banking CTI Ratio (*) RBA Financial System / NAB 6 (^) APRA Banking System / NAB
Progress on legacy issues Progress on UK restructuring UK CRE transfer portfolio run-off profile 2 • ~£5.6bn of mainly CRE assets (before provisions) transferred (£bn) from Clydesdale Bank to NAB October 2012 7 6 • Reductions of 468 FTEs in FY12 5 Clydesdale Bank pro forma 1 SFI of 111% versus 92% • 4 reported; smaller reliance on Group 3 For personal use only Clydesdale Bank pro forma 1 Tier 1 capital ratio 11.6% versus • 2 9.6% reported 1 • Begun back office and distribution footprint rationalisation 0 2013 2014 2015 2016 2017 2018 Mar 12 Sep 12 Contractual maturity Actual Total UK CRE provision coverage – Sep 12 SGA RWAs ($bn) 25.3 24.3 5.2% 20.5 18.0 2.4% 15.0 15.1% 2.5% 9.9% 8.0 7.2 5.0% Specific Collective UK CRE Total Partial write- Implied CRE Provision Provision overlay provision offs Coverage Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Note: CRE provision to CRE GLAs (1) Pro forma is after adjusting for CRE asset transfer on 5 October 2012 (2) Reflects contractual maturity which is subject to ability of customers to refinance or repay on maturity 7 Balance sheet strength Collective provisions and GRCL top-up to APRA Basel III Common Equity Tier 1 ratio credit risk weighted assets: peer comparison 1 1.30% 1.20% 1.24% 1.08% 0.25% 0.11% 0.07% 7.91% 7.58% 1.17% 1.08% 1.09% 1.05% 7.09% Sep 11 Mar 12 Sep 12 Peer 1 Peer 2 NAB Peer 3 APRA Basel III Common Equity Tier 1 ratio (estimated) APRA Basel III Common Equity Tier 1 ratio target (>7.5%) Collective Provision GRCL top-up Customer deposit growth vs lending growth Customer funding index 2 ($bn) 40 Customer deposit growth (pa) 30 20 66% 65% 64% 10 59% Lending growth (pa) 0 56% -10 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep 09 Sep 10 Sep 11 Sep 12 (1) Peer ratios as last reported (2) September 12 funding ratios have been restated. Net working capital is no longer adjusted from core assets and central bank 8 deposits are now excluded from customer deposits
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