national.com.au

National Australia BankPositioned for Growth

July 8 , 2002

Richard McKinnon, Chief Financial Officer

2. Competitive advantages in Banking

4. Targets and Summary

Agenda

3. Wealth Management in the National

1. The National today1. The National today

We are focused on integrated financial services in Australia,NZ, Great Britain and Ireland

Positioning for Growth provided room for investment while maintaining earnings momentum We are targeting 12% cash earnings per share growth in 2003 and 2004

While investing in Wealth Management in Australia and UK and banking across the group to underpin future growth

We have an active ongoing share buy-back

HomeSide risk reducing with MSR sale

The National today

We have a clear strategic intent by business and region

Banking

Australia NZUK/RoI Asia / US

Wholesale

Wealth Management

• Not ApplicableUniversally recognised as the top FS provider in Australia

• No. 1 in business and agri-business banking

• No. 1 in premium and private segments

To provide market leading integrated financial services

• Targeted operating strategies across franchises

• Leverage product including wealth management and wholesale

Maintain a leading position in the NZ market

• No 1 or 2 in market share in business and in retail banking

• Increased wealth management market share

To be recognised by clients as a high quality and innovative financial services partner

• No. 1 Wholesale Bank

To grow a relationship based business to support core clients in selected markets

To be recognised by clients as a high quality and innovative financial services partner

• No. 1 Wholesale Bank

To continue to service the needs of our core clients and pursue niche opportunities in selected markets

Leading business partner & outsource provider:

• No. 1 in Retail FUM and in Group & Personal insurance• A leading provider of outsourced corporate super & employee benefit solutions

A recognised investment platform with multi channel distribution capability:

•Top 10 in retail funds flow

Best practice bancassurer•Better than industry standard benchmark performance for WM penetration

Best practice bancassurer:• Better than industry

standard benchmark performance for WM penetration

• Top 2 Fund Manager • Top 2 in Life Insurance

Continue emerging market strategy:

• Hong Kong - Top 10 life insurer

• Thailand - Top 5 Coy by 2005 in new business

• Indonesia - Grow Value

We have a simplified structure with a strong and diverse leadership team

5 EGM’s in new roles

3 external appointments

Managing Director & CEO

Frank Cicutto

OPERATIONAL

SUPPORTEGM

People & Culture

Peter McKinnon

EGMRisk Management

Chris Lewis

EGM Corporate Development

Mike Laing

CFO

Richard McKinnon

CEOBNZ

Peter Thodey

EGM Financial

Services AU

Ian MacDonald

EGM FinancialServices

GB & Ireland

Steve Targett

EGM Wealth

Management

Peter Scott

EGM Corporate Development

Mike Laing

EGM Financial

Services AU

Ian MacDonald

EGM FinancialServices

GB & Ireland

Steve Targett

EGMRisk Management

Chris Lewis

EGMRisk Management

Chris Lewis

EGM WholesaleFinancialServices

Ian Scholes

EGM WholesaleFinancialServices

Ian Scholes

EGM WholesaleFinancialServices

Ian Scholes

EGM Financial

Services AU

Ian MacDonald

EGM FinancialServices

GB & Ireland

Steve Targett

EGM Corporate Development

Mike Laing

CIO

Ian Crouch

CIO

Ian Crouch

CIO

Ian Crouch

CIO

Ian Crouch

Our fist half result shows strong earnings momentum

Record Net Profit $ 2.256 billion

Profit 11.4 % up on Mar 01 and 13.1% up on Sep 01

ROE up 110bp to 20.1%

ROA up 15bp to 1.23%

Dividend per share up 5cto 72c

Additional $1 billion buy-back

0

500

1000

1500

2000

2500

H1/00 H2/00 H1/01 H2/01 H1/02

Half Years

$M's

Net profit excludingsignificant items

..and strong performances in core business units

Growth in Business Unit Net Profit

0

250

500

750

1000

Australia

Europe

NZ

WealthManagement

Wholesale

$ M’s

29.6%

19.5%

17.7%

Financial Services

16.1%0.3%

Mar-01 Sep-01 Mar-02

Positioning for Growth provided robust organic growth plans for 2003 and beyond

Strategic focus

Leverage past investments & capabilities

Capture growth opportunities

Revitalise organisation

$370M p.a. cost reduction by 2004

Increased revenues with 1380 new positions

Over $400M of investment in Wealth Management and Europe

Cultural change program

PositioningFor

Growth

2. Competitive advantages in Banking2. Competitive advantages in Banking

4. Targets and Summary

3. Growth opportunity in Wealth Management

1. The National today

We have strong market positions and distinct competitive advantages in banking ….

Leading relationship banking capabilities

Leading market positions in Australia (SME and Premium), New Zealand and Northern Ireland

Multiple specialised distribution platforms aligned to customer needs and value potential

Integration of product specialists and service delivery

Global best practice Customer Relationship Management

Financial Services Australia holds a dominant position in Business Banking

Source Greenwich Associates

MIDDLE MARKET

SOLE PROPRIETORS

CORPORATE

NATIONAL BANK'S SHARE(PENETRATION)

MARKET DEFINITION & SIZE

42%

61%

28%

• Turnover over $100m• 1,200 companies

Total Number of National Business customers: 305,000 (30%) Total Number of Business customers in Australia: 1,076,700

BFSASMALL

BUSINESS

Wholesale

• Turnover over >$5m - <$100m• 24,500 companies

• Turnover over <$5m• 506,000 companies

• Turnover over <$5m• 545,000 companies• No employees

… and is the leader at meeting customer needs

PRIME BANK CUSTOMERS VS TOTAL MARKET PENETRATION (%)

PRIME BANK CUSTOMERS - % SHARE OF WALLET

SERVED BY PRIME BANK

88

92

94

96

WBC CBA ANZ NAB

2629 29

42

ANZ WBC CBA NAB

1719 18

30

Source: Greenwich Associates

Source: Roy Morgan Research Dec 2001

2.2

2.42.5 2.5

CBA ANZ WBC NAB

Average number of products

32%

45% 45%47%

ANZ CBA WBC NAB

Premium Customers Share of Wallet

Financial Services Australia is also the leader at meeting personal customers’ needs

Wealthier customer base on segmented platforms

Long standing CRM capabilities

Broadest distribution channels

We have long standing and superior capabilities in customer relationship management

2001 NCDM Excellence AwardPresented by US National Centre for Direct Marketing

Best CRM Strategy, Nov 2001, Presented by Institute of Financial Services UK & British Telecom

Needs identification is cornerstone of relationship management approach

National Leads and CRM capabilities are key component

Developed over past decade

We are taking transferring capability to our European business

YBheartland

CBNatural

Marketing area

NBNatural

Marketing area

YB CB NB

Regional market share, % of personal current accounts

Regional customers, million

16% 17%

25% 2.3

1.10.6

Financial Services Europe has produced CAG of 12.5% in local currency over last 5 halves

WFS Composition by Equivalent S&P RatingMarch 2002

Investment Grade84%

B+ to B3%

BB+ to BB-12%

B- to CCC1%

Asset Composition - March 2002

BFS Secured26%

PFS Secured20%

BFS Partly Secured

11%

PFS Partly Secured

12%

BFS

5%

PFS

3%

WFS Sub-Investment

4%

WFS

19%

Investment

Unsecured

Unsecured

Credit risk management is a core strength

2. Competitive advantages in Banking

4. Targets and Summary

3. Growth opportunity in Wealth Management3. Growth opportunity in Wealth Management

1. The National today

In Wealth Management we differentiate ourselves from our competitors by:

Manager of Managers investment approach

Advice based distribution philosophy

A focused strategy across - Australia, Europe and Asia

A diverse portfolio of businesses

Multiple distribution channel management

Customer base - bank client base potential

Strong track record with Manager of Manager approach

We have achieved 29% annual growth in retail net funds flow since 1998 in Australia

Wea

lth

Wealth Accumulation

Wealth Consumption

Retirement

Asset/ Product Selection, Transactions, Reporting

Tax Management, Estate Management,

Risk Management

Asset Allocation, Investment Strategy

Debt & Cashflow Management

25+ 30+

* Source: Hypercompetition, Credit Suisse, November 2001

Our strategic intent is to lead the evolution of the model to holistic financial planning...

Horizon 1

Horizon 2

Horizon 3

GB/Ireland

Time

HK/Indonesia/Thailand

...across the markets in which we operateGrowth

Australia/NZ

The Wealth Management business continues to evolve to meet market needs

Life Co Fund ManagerInvestment & Advice Platforms

Process Simplification

Product Simplification

MasterKey, FlexiPlan

Re-engineered distribution and advice capability

Sale of non-core businesses

Integration of WM Businesses

Acquired Deutsche FP and JANA

360 dealership infrastructure

Launch UK Investment and Advice Service

Sale of non-core businesses

Business Partner and Outsource

Provider

Enhance Advice Platform

Move towards Holistic Advice Model and IFS

International Expansion

1995 1998 2000/2001 2002/Future

Target Business Model - Generic

Ad

vice

Dea

lers

hip

sS

trat

egic

Ad

vice

Pla

tfo

rm

Inte

rnal

an

dE

xte

rnal

Pro

vid

ers

InvestmentSolutions

InsuranceSolutions

Debt Solutions

General, health

and riskproviders

Mortgages,margin lending

Direct securities,personal andnon-custodial

assets

Business Coaching

Practice Management and Advice Support

EmbeddedAdvice

InvestmentChoice

Estate Planning

Tax

Management

Other SecuritiesSolutions

Related AdviceSolutions

Consolidated Reporting for Advisers and their clients across:

Aligned Self-EmployedAdvisersD

irect

SalariedAdvisers

ExternalDealerships

Life

Administration and Servicing -Seamless Integration

1

The U.K. wealth management market represents a significant expansion opportunity for the National

Significant banking share in small market 0.6 million customers

Smaller market1.1 million customers

Small share of large primarily retail markets2.3 million customers

We have commenced building our offer and advice capability...

Ad

vice

Dea

lers

hip

sS

trat

egic

Ad

vice

Pla

tfo

rmIn

tern

al a

nd

Ext

ern

al P

rovi

de

rs

Investment

Solutions

Insurance

Solutions

Debt Solutions

General, health

and risk

providers

Mortgages,margin lending

Direct securities,

personal andnon-custodial

assets

Business CoachingPractice Management and Advice Support

Embedded

Advice

Investment

Choice

Estate Planning

Tax

Management

Other Securities

Solutions

Related Advice

Solutions

Consolidated Reporting for Advisers and their clients across:

Bank Based

Life

Administration and Servicing -Seamless Integration

Internal IFA’s External IFARelationships

Launched Financial

Planning and Investment Service in November

2001

Undertaken a significant re-engineering program of Insurance business

Capabilityexists

In process of implementing long-term vision for Wealth Management in the UK

Launched Financial Planning and Investment Service in November 2001

Committed further investment to expand advice proposition to the UK intermediated advice channel

UK Funds under Management

500

520

540

560

580

Dec-01 Jan-02 Feb-02 Mar-02 Apr-02

GBPm

Source: Association of Unit Trusts and Investments Funds (AUTIF)

Growth since launch

11%

…with positive early results

Target UK Business Model 2005A

dvi

ceD

eale

rsh

ips

Str

ateg

ic A

dvi

ceP

latf

orm

Inte

rnal

an

dE

xte

rnal

Pro

vid

ers

Investment

Solutions

Insurance

Solutions

Debt Solutions

General, health

and risk

providers

Mortgages,margin lending

Direct securities,

personal andnon-custodial

assets

Business CoachingPractice Management and Advice Support

Embedded

Advice

Investment

Choice

Estate Planning

Tax

Management

Other Securities

Solutions

Related Advice

Solutions

Consolidated Reporting for Advisers and their clients across:

Bank Based

Life

Administration and Servicing -Seamless Integration

Internal IFA’s External IFARelationships

Capability

2. Competitive advantages in Banking

4. Targets and Summary4. Targets and Summary

3. Growth opportunity in Wealth Management

1. The National today

Group Targets to 2004

Cash EPS Growth- 2001/02: Between 7 - 10%

(includes impact from HomeSide)

- 03 and 04: Greater than 12%

Return on Equity > 18% p.a.

EVA Growth > 5% p.a.

Capital Management

- Maintain capacity for active capital management

Clear strategic focus

Strong earnings momentum driven by relationship banking and wealth management capabilities

Unique growth opportunities in wealth management and Europe

Reducing risk profile with MSR sale

Capital generation strong. Ongoing buy-back.

Positioning for Growth outcomes will enhance momentum

Summary

The preceding material is a presentation of general background information about the National’s activities current at the date of the presentation, July 8, 2002. 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

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