1sthalf2000 stategy

Slide1 : Frank Cicutto Managing Director www.national.com.au 1999/00 First Half Results May 2000


Disclaimer : The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 4th May 2000. It is information given 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 when deciding if an investment is appropriate. Disclaimer


Agenda : Agenda Strategic Progress MLC Acquisition Progress & Integration Operating Environment Focus Ahead


Our 5 Core Strategies : Our 5 Core Strategies Drive performance and growth in businesses that rely on relationship management Accelerate the growth of selected global businesses Stake out positions in areas key to the evolution of financial services Manage our other businesses for value Build diversified income streams


Drive performance and growth in businesses that rely on relationship management : Drive performance and growth in businesses that rely on relationship management Premier position in Australian SME market Business Financial Services


Leading small business bank : Leading small business bank Market Share of Small Business Customers Australia Source: Greenwich Associates Industry Reports


Leading lender to small business : Leading lender to small business Market Share of Small Business Loans Australia Source: Greenwich Associates Industry Reports %


Leading in small business deposits : Leading in small business deposits Market Share of Small Business Deposits Australia Source: Greenwich Associates Industry Reports


Slide9 : Source: Greenwich Associates Leading share of wallet in small business market Australia Small Business - Share of Wallet (Financial System)


Slide10 : Premier position in Australian SME market Implemented new business model for “package” business in Sydney and Melbourne Additional Business Financial Planners Completed plan to implement dedicated business platform in northern England & commenced recruitment of additional business bankers Offered debt collection service to UK customers Drive performance and growth in businesses that rely on relationship management Business Financial Services


Slide11 : Increased Share of Wallet in Australia Drive performance and growth in businesses that rely on relationship management Premium Financial Services


Slide12 : Leading share of wallet in Premium market Source: Roy Morgan Australia Premium - Share of Wallet (Financial System)


Slide13 : Increased Share of Wallet in Australia Expanded Financial Planners in Australia to 300 Launched “Global Plus Mortgage” in New Zealand Implemented Premium Banking in Michigan National Bank Completed business plans for UK Premium & Private platforms Drive performance and growth in businesses that rely on relationship management Premium Financial Services


Slide14 : Wealth Management Agreement to acquire MLC Drive performance and growth in businesses that rely on relationship management


The acquisition of MLC will provide immediate scale in funds under management : Source: December 1999 ASSIRT Market Share Report; Australia only High proportion of attractive retail FUM segment Wholesale FUM has lower margins $ billion Retail FUM Wholesale FUM National / MLC #3 $52 billion The acquisition of MLC will provide immediate scale in funds under management


Slide16 : Proposed MLC acquisition Strong organic growth in retail funds under management Wealth Management Drive performance and growth in businesses that rely on relationship management


Slide17 : Retail Funds Under Management have grown 17% over the past 12 months 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Jun '95 Dec '95 Jun '96 Dec '96 Jun '97 Dec '97 Jun '98 Dec '98 Jun '99 Dec '99 $ M


Slide18 : Rapid growth in “Manager of Managers” investment product National "All in One” Account Funds Under Management


Slide19 : Proposed MLC acquisition Strong organic growth in retail funds under management Launched National On-Line Trading Wealth Management Drive performance and growth in businesses that rely on relationship management


Slide20 : Continued refinement of predictive data models and lead generation in Australia Drive performance and growth in businesses that rely on relationship management Customer Relationship Management


Slide21 : National leads delivered $3 Billion in drawn down personal sales over the last 6 months No of Leads $M


Slide22 : Continued refinement of predictive data models and lead generation in Australia Siebel “front end” rollout progressing “National Leads” to Business Bankers in July Planning completed for global rollout of National Leads Drive performance and growth in businesses that rely on relationship management Customer Relationship Management


Our 5 Core Strategies : Our 5 Core Strategies Drive performance and growth in businesses that rely on relationship management Accelerate the growth of selected global businesses Stake out positions in areas key to the evolution of financial services Manage our other businesses for value Build diversified income streams


Accelerate the growth of selected global businesses : Accelerate the growth of selected global businesses Global Wholesale Financial Services Global capital markets distribution network completed Auto FX dealing platform implemented in Australia, NZ & UK Strengthened Project & Structured Finance capability


Accelerate the growth of selected global businesses : Accelerate the growth of selected global businesses Australian rollout to be completed by June Internet channel capabilities expanding HomeSide Global capital markets distribution network completed Auto FX dealing platform implemented in Australia, NZ & UK Strengthened Project & Structured Finance capability Global Wholesale Financial Services


Accelerate the growth of selected global businesses : Accelerate the growth of selected global businesses Continued growth in Australian and UK markets Global Securities Services Australian rollout to be completed by June Internet channel capabilities expanding HomeSide Global capital markets distribution network completed Auto FX dealing platform implemented in Australia, NZ & UK Strengthened Project & Structured Finance capability Global Wholesale Financial Services


Our 5 Core Strategies : Our 5 Core Strategies Drive performance and growth in businesses that rely on relationship management Accelerate the growth of selected global businesses Stake out positions in areas key to the evolution of financial services Manage our other businesses for value Build diversified income streams


Stake out positions in areas key to the evolution of financial services : Established separate “NOVA” organisation to identify and develop new economy business opportunities Finalised business model and appointed key personnel Identified initial business opportunities for fast track development Vivid Alice Co FreeOnline E-procurement Stake out positions in areas key to the evolution of financial services


Our 5 Core Strategies : Our 5 Core Strategies Drive performance and growth in businesses that rely on relationship management Accelerate the growth of selected global businesses Stake out positions in areas key to the evolution of financial services Manage our other businesses for value Build diversified income streams


Manage our other businesses for value : Manage our other businesses for value Reducing distribution costs


Slide31 : Over the Counter Transactions Teller Workload Customer Satisfaction Staff Satisfaction PILOT RESULTS Reducing distribution costs - Operation First Choice Over the Counter Transactions Customer Satisfaction Outlets refocussed to sales BY 2003 27% 35% 10% 30% 10% 7% <


Slide32 : Manage our other businesses for value Reducing distribution costs Leveraging new, efficient distribution channels


Slide33 : Acquired 17k customers; 95% of whom are new to the Group; Written £140M in mortgages and personal loans; Internet channel growing strongly Has achieved initial targets - currently looking at options to aggressively expand in the UK and for entry into selected geographies Leveraging new distribution channels - Vivid


Slide34 : Reducing distribution costs Leveraging new, efficient distribution channels Aggressively growing on-line capability Manage our other businesses for value


On-line delivery continues to accelerate : On-line delivery continues to accelerate National in top 2 most active Australian bank sites on the Web since Oct ‘99 121,000 183,000 204,000 220,000 220,000 +101% +236% +155% +100% +100% Target 2000 350,000 Source: Ord Minnet 210,000 +285%


Our 5 Core Strategies : Our 5 Core Strategies Drive performance and growth in businesses that rely on relationship management Accelerate the growth of selected global businesses Stake out positions in areas key to the evolution of financial services Manage our other businesses for value Build diversified income streams


Build diversified income streams : Build diversified income streams Income Sources Estimated Impact of MLC * Other Operating Income Net Interest Income * Pro Forma Only: Estimated MLC impact using published accounts as at 31.12.99; Consolidation is dependent on completion of the purchase


Changing the National : Actively managing portfolio of businesses for earnings growth Expanding in ‘early adopter’ markets Sharpening performance management and talent development Ensuring the National Business Model supports our strategies and maximises value from our global organisation Actively embracing emerging technologies to reshape our businesses Building improved relationships with stakeholders How We Are Running The Company Changing the National


Slide39 : Focus Measurement Motivation Management Systems Mindset Work step Timing Group EVA by Jun LOB/Region EVA by Jul EVA based incentive by Oct plan for senior managers Integrate EVA into: - Planning by Oct - Prioritising resources late 2000 - Pricing models late 2000 Communicate to late 2000 investment community Educate managers Ongoing Actively managing portfolio of businesses for earnings growth EVA Project: Phase 1 Focus & Deliverables


Changing the National : Actively managing portfolio of businesses for earnings growth Expanding in ‘early adopter’ markets Sharpening performance management and talent development Ensuring the National Business Model supports our strategies and maximises value from our global organisation Actively embracing emerging technologies to reshape our businesses Building improved relationships with stakeholders How We Are Running The Company Changing the National


Ensuring the National Business Model supports our strategies and maximises global value : The existing global business model has delivered value Rapid transfer of best practice Standardisation of products and processes globally Global consistency with local execution Leveraging global scale Effective use of global talent pool Ensuring the National Business Model supports our strategies and maximises global value


Ensuring the National Business Model supports our strategies and maximises global value : Further refinement is necessary to Support our growth strategy Increase local accountability with global consistency Reflect differing management styles and objectives appropriate for individual business growth potential Create smaller Executive Office and Corporate Centre The existing global business model has delivered value Rapid transfer of best practice Standardisation of products and processes globally Global consistency with local execution Leveraging global scale Effective use of global talent pool Ensuring the National Business Model supports our strategies and maximises global value


Slide43 : Group structure aligned to growth opportunities Group MD/CEO Corporate Centre Business & Personal Financial Services Global Shared Services HomeSide Lending Inc Global Wholesale Financial Services Specialist & Emerging Growth Businesses Global Investments, Insurance & Superannuation J. Pickett G. Barnes P. Scott NOVA M. Soden I. MacDonald S. Targett R. Pinney * * * Upon completion of the MLC acquisition


Slide44 : Retailer’s structure focussed on regions with global segment consistency Group MD/CEO Corporate Centre Global Business Financial Services TBA Global Personal Financial Services P. Flavel Global Channel Management R. Bishop Global Marketing Services C. Williams Global Product & Process Management TBA Australia M. Pratt Business & Personal Financial Services Global Shared Services HomeSide Lending Inc Global Wholesale Financial Services Specialist & Emerging Growth Businesses Global Investments, Insurance & Superannuation NOVA New Zealand P. Thodey USA D. Ebert Great Britain S. Grimshaw All Ireland D. Price * * Upon completion of the MLC acquisition


Slide45 : Group MD/CEO Risk Management Organisational Capability & HR Finance & Planning Corporate & Technology Strategy Office of CEO P. McKinnon B. Miller R. McKinnon TBA R. Prowse Corporate Centre Structure


Changing the National : Actively managing portfolio of businesses for earnings growth Expanding in ‘early adopter’ markets Sharpening performance management and talent development Ensuring the National Business Model supports our strategies and maximises value from our global organisation Actively embracing emerging technologies to reshape our businesses Building improved relationships with stakeholders How We Are Running The Company Changing the National


Slide47 : Creating web based internal & external networks Distributing content internally & externally Converging to Internet Protocols Broadband Communication Browser-Based Interfaces/Devices Providing the platform to streamline business process Fundamental Process Reengineering including:- workflow management self service straight through processing once only data capture CRM & ISI Actively embracing emerging technologies to reshape our businesses .com’ing is the building of infrastructure, processes and mindset to prepare the enterprise for the new economy


Agenda : Agenda Strategic Progress MLC Acquisition & Integration Operating Environment Focus Ahead


Slide49 : MLC acquisition and integration Deal completion is proceeding according to schedule Regulatory approvals are under way Joint NAB / MLC team is undertaking detailed integration planning No customer or staff disruption Target completion remains late June


Agenda : Agenda Strategic Progress MLC Acquisition & Integration Operating Environment Focus Ahead


Operating environment : Operating environment


Focus for the next half : Focus for the next half Continue Group Transformation Program Complete MLC acquisition - begin integration Progress strategic positioning of northern hemisphere businesses Increase pace of e-Commerce program Maintain momentum in core businesses


Slide53 : www.national.com.au