FINANCIAL SUMMARY

GROUP RESULTS

for the year ended 30 September

2010
$m 2009
$m 2008
$m 2007
$m 2006
$m
Net interest income 12,288 12,072 11,142 9,765 8,777
Other operating income 2,838 3,766 3,015 3,519 3,554
MLC net operating income 1,512 1,068 1,257 1,286 1,123
Net operating income 16,638 16,906 15,414 14,570 13,454
Operating expenses (7,862) (7,580) (7,276) (7,428) (7,360)
Underlying profit 8,776 9,326 8,138 7,142 6,094
Charge to provide for bad and doubtful debts (2,263) (3,815) (2,489) (790) (605)
Cash earnings before tax, loRE, distributions and non-controlling interest 6,513 5,511 5,649 6,352 5,489
Income tax expense (1,777) (1,451) (1,408) (1,722) (1,563)
Cash earnings before loRE, distributions and non-controlling interest 4,736 4,060 4,241 4,630 3,926
Net Profit – non-controlling interest (1) – 1 – –
loRE 61 26 (14) 39 56
Distributions (215) (245) (312) (283) (254)
Cash earnings from ongoing operations 4,581 3,841 3,916 4,386 3,728
Disposed operations – – 3 8 175
Cash earnings 4,581 3,841 3,919 4,394 3,903
Non-cash earnings items (after tax) (357) (1,252) 617 184 489
Net profit attributable to owners of the Company 4,224 2,589 4,536 4,578 4,392

SELECTED PERFORMANCE INDICATORS

for the year ended 30 September

2010
$m 2009
$m 2008
$m 2007
$m 2006
$m
Key indicators
Cash earnings per share (cents) – basic 214.5 198.4 238.4 270.1 233.0
Cash earnings per share (cents) – diluted 212.8 197.5 237.3 268.5 230.6
Cash return on equity (ROE) 13.2% 11.8% 14.3% 17.1% 15.9%
Profitability, performance and efficiency measures
Dividends per share (cents) 152 146 194 182 167
Dividend payout ratio 70.9% 73.6% 81.4% 67.4% 71.7%
Cash earnings on average assets 0.69% 0.56% 0.64% 0.84% 0.81%
Bank cost to income ratio 45.9% 43.9% 46.9% 50.8% 54.5%
Capital Basel II Basel II Basel II Basel I Basel I
Tier 1 ratio 8.91% 8.96% 7.35% 6.67% 7.35%
Total capital ratio 11.36% 11.48% 10.93% 9.99% 10.81%
Risk weighted assets ($bn) 344.7 342.5 343.5 355.3 318.3
Volumes ($bn)
Average interest earning assets 546.6 559.4 506.5 429.1 375.7
Asset quality
Gross impaired assets to gross loans and acceptances 1.35% 1.26% 0.49% 0.28% 0.26%
Collective provision to credit risk-weighted assets (excluding housing)⁽¹⁾ 1.48% 1.46% 1.07% n/a n/a
Specific provision to gross impaired assets 25.2% 28.2% 30.0% 28.1% 20.4%
Other
Full Time Equivalent Employees (no.) 44,551 38,953 39,729 38,822 38,419

(1) The Group was accredited under Basel II during the September 2008 year. Comparative information is not available for 2006–2007.

BALANCE SHEET SUMMARY

as at 30 September

2010
$m 2009
$m 2008
$m 2007
$m 2006
$m
Assets
Cash and liquid assets 26,072 25,834 18,209 12,796 12,768
Due from other banks 37,679 33,265 46,996 25,144 24,372
Marketable debt securities 54,182 47,681 39,463 40,682 16,621
Loans and advances at fair value 36,700 29,567 25,732 19,564 16,774
Other assets at fair value 709 1,963 4,868 5,625 5,349
Other financial assets at fair value 37,409 31,530 30,600 25,189 22,123
Loans and advances including acceptances 404,513 399,809 406,456 366,525 325,503
Investments relating to life insurance business 64,560 54,254 52,896 62,630 54,784
Other assets 61,537 61,747 62,179 41,254 28,614
Total assets 685,952 654,120 656,799 574,220 484,785
Liabilities
Due to other banks 37,612 36,148 52,423 42,566 37,489
Deposits at fair value 10,212 10,365 14,485 14,133 10,622
Other liabilities at fair value 9,675 10,946 9,099 7,717 7,058
Other financial liabilities at fair value 19,887 21,311 23,584 21,850 17,680
Deposits and other borrowings 353,232 336,188 327,466 263,742 222,277
Liability on acceptances 12,549 16,891 16,075 30,443 32,114
Bonds, notes and subordinated debt 93,203 90,792 98,239 80,983 65,006
Life policy liabilities 54,354 47,314 46,150 53,097 46,475
Other liabilities 76,161 67,641 60,016 51,654 35,772
Total liabilities 646,998 616,285 623,953 544,335 456,813
Net assets 38,954 37,835 32,846 29,885 27,972
Equity
Equity (parent entity interest) 38,940 37,815 32,790 29,571 27,804
Minority interest in controlled entities 14 20 56 314 168
Total equity 38,954 37,835 32,846 29,885 27,972

(1) The consolidation policy in relation to consolidation as it applies to special purpose entities changed during the 2008 year. 2007 comparative information was restated to reflect this.
(2) The 2006 comparative amounts reflect the application of certain accounting, valuation and consolidation methods that were modified to comply with AIFRS.

The financial data presented in our Annual Review is aligned to our management view, rather than the statutory Annual Financial Report. As such, the Review focuses on cash earnings. Cash earnings are one of the main financial targets we use to manage the Group and are a key performance measure used by the investment community. By presenting financial information on an ongoing basis, the results of operations that will not form part of the continuing Group (for example, entities that have been sold) are excluded for the current year and all prior periods shown. Cash earnings do not refer to or in any way purport to represent the cash flows, funding or liquidity position of the NAB Group. A full definition of cash earnings and selected performance indicators along with a reconciliation to our statutory net profit after tax can be found in our 2010 Full Year Results Announcement, available at www.nabgroup.com

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FINANCIAL

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GROUP RESULTS

SELECTED PERFORMANCE INDICATORS

BALANCE SHEET SUMMARY