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    National Australia Bank Limited ABN 12 004 044 937

    Our vision is to be Australia’s leading bank, trusted by customers for exceptional service.

    North West Ag Services NAB customer


    Our vision is to be Australia’s leading bank, trusted by customers for exceptional service.

    North West Ag Services NAB customer

    Steve Cameron

    “There have been some tough situations during drought years but NAB has been there every time.”

  • National Australia Bank Limited ABN 12 004 044 937

    This 2018 Annual Financial Report (Report) is lodged with the Australian Securities and Investments Commission and ASX Limited. National Australia Bank Limited (NAB) is publicly listed in Australia. The Report contains information prepared on the basis of the Banking Act 1959 (Cth), Corporations Act 2001 (Cth), Accounting Standards and interpretations issued by the Australian Accounting Standards Board and International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board. NAB also produces a non-statutory Annual Review which can be viewed online at www.nab.com.au/annualreports.

    To view the Report online, visit www.nab.com.au/annualreports. Alternatively, to arrange for a copy to be sent to you free of charge, call Shareholder Services on 1300 367 647 from within Australia, or +61 3 9415 4299 from outside Australia.

    Nothing in the Report is, or should be taken as, an offer of securities in NAB for issue or sale, or an invitation to apply for the purchase of such securities.

    All figures in the Report are in Australian dollars unless otherwise stated.

  • REPORT OF THE DIRECTORS 2 Operating and financial review 2 Directors’ information 24 Other matters 31 Auditor’s independence declaration 37 Remuneration report 39


    FINANCIAL STATEMENTS 70 Income statements 71 Statements of comprehensive income 72 Balance sheets 73 Cash flow statements 74 Statements of changes in equity 75





    GLOSSARY 171


    12018 Annual Financial Report

  • The directors of National Australia Bank Limited (NAB) present their report, together with the financial statements of the Group, being NAB and its controlled entities, for the year ended 30 September 2018.

    Certain definitions

    The Group’s financial year ends on 30 September. The financial year ended 30 September 2018 is referred to as 2018 and other financial years are referred to in a corresponding manner. The abbreviations $m and $bn represent millions and thousands of millions (i.e. billions) of Australian dollars respectively.

    Key terms used in this report are contained in the Glossary.

    Forward looking statements

    This report contains statements that are, or may be deemed to be, forward looking statements. These forward looking statements may be identified by the use of forward looking terminology, including the terms "believe", "estimate", "plan", "project", "anticipate", "expect", "target", "intend", "likely", "may", "will", "could" or "should" or, in each case, their negative or other variations or other similar expressions, or by discussions of strategy, plans, objectives, targets, goals, future events or intentions. Indications of, and guidance on, future earnings and financial position and performance are also forward looking statements. Users of this report are cautioned not to place undue reliance on such 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.

    The Operating and Financial Review describes certain initiatives relating to the Group’s strategic agenda (“Program”), including certain forward looking statements. These statements are subject to a number of risks, assumptions and qualifications, including: (1) detailed business plans have not been developed for the entirety of the Program, and the full scope and cost of the Program may vary as plans are developed and third parties engaged; (2) the Group’s ability to execute and manage the Program in a sequenced, controlled and effective manner and in accordance with the relevant project and business plan (once developed); (3) the Group’s ability to execute productivity initiatives and realise operational synergies, cost savings and revenue benefits in accordance with the Program plan (including, in relation to CTI and ROE targets, the extension of improvements beyond the current Program plan); (4) the Group’s ability to meet its internal net FTE reduction targets; (5) the Group’s ability to recruit and retain FTE and contractors with the requisite skills and experience to deliver Program initiatives; (6) there being no significant change in the Group’s financial performance or operating environment, including the economic conditions

    in Australia and New Zealand, changes to financial markets and the Group’s ability to raise funding and the cost of such funding, increased competition, changes in interest rates and changes in customer behaviour; (7) there being no material change to law or regulation or changes to regulatory policy or interpretation, including relating to the capital and liquidity requirements of the Group; (8) for the purpose of calculating FTE cost savings and redundancy costs, the Group has assumed an average FTE cost based on Group-wide averages, and such costs are not calculated by reference to specific productivity initiatives or individual employee entitlements; and (9) NAB's proposed divestment of its wealth management businesses (excluding JBWere and nabtrade) may have an impact on the timing, scope and cost of the Program, however the impact cannot be quantified at this time.

    Further information on important factors that could cause actual results to differ materially from those projected in such statements is contained on page 14 under “Disclosure on Risk Factors”.

    Rounding of amounts

    In accordance with ASIC Corporations (Rounding in Financial / Directors' Reports) Instrument 2016/191, all amounts have been rounded to the nearest million dollars, except where indicated. Any discrepancies between total and sums of components in tables contained in this report are due to rounding.

    Principal activities

    The principal activities of the Group during the year were banking services, credit and access card facilities, leasing, housing and general finance, international banking, investment banking, wealth management services, funds management and custodian, trustee and nominee services.

    Significant changes in the state of affairs

    A number of changes to the composition of the Executive Leadership Team have occurred or been announced during 2018, namely: • On 28 August 2018, Ms Rachel Slade was appointed

    Acting Group Executive Customer Products and Services following the resignation of Mr Antony Cahill.

    • In September 2018, NAB announced changes to the Executive Leadership Team, effective from 1 October 2018. The changes were: • Mr Shaun Dooley joined the Executive Leadership

    Team as Chief Risk Officer. • Mr David Gall, formerly the Chief Risk Officer, was

    appointed Chief Customer Officer, Corporate and Institutional Banking.

    • Mr Mike Baird, formerly the Chief Customer Officer, Corporate and Institutional Banking, was appointed Chief Customer Officer, Consumer Banking.

    • Customer Products and Services became Customer Experience - a division focussed on building advocacy and loyalty through the design and delivery of a leading banking experience. It includes Customer



    2 National Australia Bank

  • Experience, Marketing, Digital, Products, NAB Labs and NAB Ventures.

    • Ms Rachel Slade was appointed to the newly created role of Chief Customer Experience Officer (replacing the Chief Operating Officer role previously held by Mr Antony Cahill).

    • Mr Andrew Hagger is no longer a member of Executive Leadership Team and ceased employment with the Group on 14 November 2018.

    There were no other significant changes in the state of affairs of the Group that occurred during the financial year under review that are not otherwise disclosed in this report.

    The Group’s Business

    The Group is a financial services organisation with approximately 33,000 employees, operating through a network of more than 900 locations, with over 584,000 shareholders and serving approximately nine million customers.

    The majority of the Group's financial services businesses operate in Australia and New Zealand, with branches located in Asia, the United Kingdom (UK) and the United States (US). The Group's purpose is to back the bold who move Australia forward.

    In the September 2018 full year, the Group operated the following divisions: • Business and Private Banking focusses on serving the

    needs of three of NAB's priority customer segments – small businesses, medium businesses and investors. Customers are served through an integrated banking model locally led by managing partners through busines


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