Half Year 2022 National Australia Bank Ltd Earnings Presentation Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Guys, well done firstly on the really good growth in the business bank, especially the diversification across the industry. It's really good to see it's supporting the economy. I've got a question on one of my favorite slides, which is on Slide 78, which just looks at the risk in the business book itself, because it's easy to grow a book, but doing it well without extra risk is always a challenge. If you look at the probability of default, it actually fell down to 10% this period. When you take on new customers, generally, there's going to be higher risk than existing customers by definition, because they're taking on more debt. So this indicates that you're still seeing net upgrades coming through. So my question is, if you actually look at that on the new flow of business rather than the existing book, so the flow rather than the stock, how would that look? And the second part to that is that given the greater use of data, and Andrew and everyone talked to a few people over time about using data more. Does that actually mean you can, with better use of data, move slightly further out what you've historically thought of is a riskier customer without actually -- with the data being able to take that exposure on and potentially less security than you historically would have done? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2022 / 12:30AM, NAB.AX - Half Year 2022 National Australia Bank Ltd Earnings Presentation

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : And just a quick second question, if I could. You talked at the beginning about the ROA going sustainably into the double-digit area. At the moment, you've got a tailwind of effectively no credit losses coming through. So if that normalizes over time, you'd expect that to be more of a headwind. So your view on the improvement in ROA that you're expecting, could you just break that down between how much you think to come from higher margins as you go into a higher rate environment, offsetting that against operating leverage and potentially lower capital. Where do you see the biggest areas of upside on that ROA? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2022 / 12:30AM, NAB.AX - Half Year 2022 National Australia Bank Ltd Earnings Presentation

Question: Victor German - Macquarie Research - Analyst : Yes, I was hoping to also follow up a couple of questions relating to Slide 21. First, just maybe a technical question for you, Gary. Obviously, if I look at $111 billion and multiply by 25 basis points, we get more than 2. So is it the bid that you've captured in that 2 basis point guidance is deposits that you think will be rate insensitive? Or are there any other offsets sort of in that calculation, just so we get the basis of the calc?

Question: Victor German - Macquarie Research - Analyst : Understood. And second question, slightly more broad. I mean, if we look over the last couple of years, one of the things that benefited your margins substantially appears to be the case that historical premium that you used to pay for deposits has really come down in this low rate environment. To what extent do you feel like you've made investments into the franchise to make sure that as interest rates increase, you will not need to pay up more for deposits like you historically had paid?

Question: Victor German - Macquarie Research - Analyst : And do you think the potential offsets are going to be sort of broadly consistent with peers? Or would you feel like that could be different for you guys?