The more we look … the more we see what really matters Annual Review 2014

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national australia bank logo with the tagline more give, less take
The more we look …

the more we see what really matters
Annual Review 2014

NAB has produced this accessible version of its 2014 Annual Review, with the aim that

every reader can read with ease and proficiency. The content has been reformatted to achieve that aim.

National Australia Bank Limited ABN 12 004 044 937 (NAB or the Company).

NAB Group is NAB and its controlled entities.


Annual Review 2014 1

2014 at a glance 3

2014 at a glance 3

Key results 3

Business highlights 4

Chairman’s and CEO’s messages 6

Chairman’s and CEO’s messages 6

Chairman’s message – Michael Chaney 6

CEO’s message – Andrew Thorburn 7

Our business – National Australia Bank 10

Our business – National Australia Bank 10

About us 10

Challenges and opportunities 12

Our strategy 14

Our strategy 14

Simplify and digitise 14

Building world class relationships 16

Broadening services for Asia active customers 17

Ageing and superannuation 17

Our international portfolio 18

NAB essentials – the foundations of success 20

NAB essentials – the foundations of success 20

Strong risk culture 20

Balance sheet strength 21

Corporate responsibility – creating a wealth of opportunity 22

People, culture and reputation 25

Clear and effective governance 27

Board of Directors 28

Executive Leadership Team 31

Our performance 34

Our performance 34

Group performance 34

Business unit performance 36

Shareholder information 38

Shareholder information 38

2014 Annual Reporting suite 38

Annual General Meeting 38

Dividend package 38

Join us in cutting paper use 38

Helping convert your shares to benefit Australian charities 38

2015 Financial Calendar 39

Contact details 39

Glossary and definitions 40

2014 at a glance

NAB has remained focused on what matters most to our customers, our people, our shareholders and our communities. Our 2014 Annual Review is your chance to see how we’ve performed in 2014. It aims to show how we’re creating value across our business through our strategy, operating environment, governance and financial and non-financial activities.

Key results

$5.3b net profit attributable to the owners of the Company 1.1% decrease from 2013

$5.18b cash earnings1, 9.8% decrease from 2013

$1.98 dividend per share, 4.2% increase from 2013

11.8% cash return on equity, 2.3 percentage point decrease from 2013

$67.6m community investment, 1.7% increase from 2013

69% employee engagement2, 1 percentage point increase from 2013

100,000+ microfinance loans to people on low incomes since 2005

NAB has provided project finance for around 65%3 of Australian utility scale renewable energy projects since 2000

Cash earnings1

$ (million)

Australian Banking


NAB Wealth


NZ Banking


UK Banking


NAB UK Commercial Real Estate


Corporate Functions and Other


Business highlights

Five years of putting customers front and centre

Five years ago NAB set out to make banking fairer in Australia. It was a commitment to keep fees and charges fair and help customers achieve their financial goals. By differentiating from the other major banks in this way, we’ve positioned ourselves as a bank that does the right thing by helping our customers and communities realise their potential.

Fairer banking

In the past five years we’ve helped customers save fees, charges and interest, and maintained the lowest standard variable home loan rate of all the major Australian banks.

Our customer numbers have grown from 11.3m in 2010 to more than 12.7m in 2014.

Since 2009:

Our share of business lending market is up from 20.1% to 22.8%4

Transaction accounts have grown from 2.5m to 3.9m5

Our share of the mortgage market is up from 12.8% to 15.5%6

NAB Care has helped customers in financial hardship manage 100,000+ accounts.

››› For more on how we’ve performed, see ‘Our performance’ on pages 35–39.

Reducing risk in our business

Over the past five years we have taken action to reduce risk in our business.

We have done this by reducing our exposure to higher risk segments, including NAB UK Commercial Real Estate (NAB UK CRE) as well as improvements in asset quality in Australian Banking and the UK.

While we have seen some impacts in terms of reduced business volumes and revenue as a result of reducing our risk exposure, the benefits can be clearly seen by a 54.7% reduction in our bad and doubtful debt charges for 2014.

We are also actively managing our conduct issues in the UK and have made additional provisions for UK conduct charges primarily in relation to Payment Protection Insurance (PPI) and interest rate hedging products.


54.7% reduction in bad and doubtful debt charges for 2014

1.6% increase in risk-weighted assets for 2014

››› For more on how we’re managing our portfolio, see ‘Our strategy’ on page 18.

Customer focused products and services

Our aim is to provide a range of products that meet and exceed our customers’ evolving banking needs. This year we continued to develop our products and services to attract new customers to the bank and retain existing ones. Here are some examples:

Mobile banking mortgage sales – we introduced more mobile bankers in the past year, and saw an increase in mortgage sales through mobile banking.

Traveller Card – simplifying NAB’s Traveller Card in June 2014 has helped deliver a 30% increase in the amount of funds customers load when travelling.

Stronger deposit product – more incentives for regular savers made our NAB Rewards Saver one of our strongest growing deposit products.

Corporate bond milestone – launching NAB’s first unlisted senior unsecured bond represented a milestone in the Australian corporate bond market.

Simpler product offer – we simplified our offer by rationalising 21 products and taking 25 credit cards off sale.

More Super products – we met demand from self-managed super fund customers with the launch of SMSF@NAB and SMSF Cash Maximiser.

Better customer accounts – improvements to more than 1.3m accounts over four years has resulted in many customers being upgraded to products with greater features at a better price.

››› For more on our digitise and simplify agenda, see ‘Our strategy’ on page 14.

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