Annual Financial Report 2000
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ANNUAL FINANCIAL REPORT 2000 ANNUAL Annual Financial Report 2000 Principal establishments National Australia Bank HomeSide Lending Singapore Branch National Australia Group Limited Australia 5 Temasek Boulevard Europe Limited Group Offices and 120 Spencer Street 15-01 Suntec Five Tower The Athenaeum Australian Financial Melbourne Vic 3000 Singapore 038985 8 Nelson Mandela Place Services (GPO Box 14547 Melbourne Glasgow G2 1BN 500 Bourke Street City MC Vic 8001) Tel: + 65 338 0038 Scotland (GPO Box 84A) Fax: + 65 338 0039 Melbourne Vic 3000 Tel: (in Aust.) 13 24 64 Tel: +44 141 223 5958 Australia Fax: +61 3 9601 7711 Tokyo Branch Fax: +44 141 223 5959 Mitsui Nigokan Tel: +61 3 8641 3500 O2-e Limited 2-1-1, Nihonbashi London Office Fax: +61 3 8641 4916 Level 1 Muromachi 6 – 8 Tokenhouse Yard www.national.com.au 553 St Kilda Road Chuo-ku London EC2R 7AJ Melbourne Vic 3004 Tokyo 103-0022 United Kingdom Australia Japan National Wealth Tel: +44 171 710 2100 Management Holdings Tel: +61 3 9909 8900 Tel: + 81 3 3241 8781 Fax: +44 171 588 8356 Limited Fax: +61 3 9909 8999 Fax: + 81 3 3241 5369 105 – 153 Miller Street www.o2-e.com North Sydney NSW 2060 National Australia Life Australia Bangkok Representative 91 Gresham Street Michigan National Office London EC2V 7NT Tel: +61 2 9957 8000 Corporation 16/F, Sathorn Thani United Kingdom Fax: +61 2 9957 6881 27777 Inkster Road Building 1 (PO Box 9065) 90 North Sathorn Road Tel: +44 171 710 2100 Fax: +44 171 726 4926 MLC Farmington Hills MI 48333- Bangkok 10500 MLC Building 9065 Thailand 105 – 153 Miller Street United States Clydesdale Bank PLC Tel: +66 2 236 6016 30 St Vincent Place North Sydney NSW 2060 Tel: +1 248 473 3000 Fax: +66 2 236 6018 Australia Glasgow G1 2HL Fax: +1 248 473 3086 Scotland Tel: +61 2 9957 8000 www.michigannational.com Beijing Representative Fax: +61 2 9957 6881 Office Tel: +44 141 248 7070 MLC Adviser Hotline: HomeSide International Office 1904 CITIC Building Fax: +44 141 204 0828 133652 7301 Baymeadows Way 19 Jianguomenwai Dajie www.cbonlione.co.uk www.mlc.com.au Jacksonville Beijing 10004 Florida People’s Republic of China Northern Bank Limited United States 32256 PO Box 183 National Australia Financial Tel: +8610 6500 3581 Management Limited Donegall Square West Tel: +1 904 281 3000 Fax: +86 10 6500 3642 Belfast BT1 6JS 342 Flinders Street Fax: +1 904 281 3745 (GPO Box 9895) Northern Ireland www.homeloan.com Jakarta Representative Melbourne Vic 3000 Tel: +44 1232 245 277 Australia Office New York Branch 9/F, Bank Bali Tower Fax: +44 1232 893 214 Tel: +61 3 9245 2500 34th Floor, 200 Park Avenue JI. Jend Sudirmon Kav.27 www.nbonline.co.uk Tol free: 13 22 95 New York NY 10166-0001 Jakarta 12920 Fax: +61 3 9245 2522 United States Indonesia National Irish Bank Limited 7/8 Wilton Terrace Tel: +1 212 916 9500 Tel: + 62 21 250 0685/0687 Dublin 2 National Asset Fax: +1 212 983 1969 Fax: + 62 21 250 0690 Management Limited Republic of Ireland Level 6, 333 Collins Street Asia Regional Office and Labuan Branch Tel: +353 1 638 5000 Melbourne Vic 3000 Fax: +353 1 638 5198 Australia Hong Kong Branch Level 12 (C2) Main Level 27 One Pacific Place Office Tower www.nib.ie Tel: +61 3 9205 3345 88 Queensway Financial Park Labuan Fax: +61 3 9205 3440/3436 Hong Kong Jalan Merdeka Yorkshire Bank PLC 87000 W.P.Labuan 20 Merrion Way Tel: + 852 2822 9800 National Custodian Malaysia Leeds LS2 8NZ Fax: + 852 2822 9801 England Services Tel: + 852 2826 8111 Tel: + 60 87 44 3286/3287 5th Floor, 271 Collins Street (HK Branch) Fax: + 60 87 44 3288 Tel: +44 113 247 2000 (GPO Box 1406M) Fax: + 852 2845 9251 [email protected] Fax: +44 113 247 2115 Melbourne Vic 3000 (HK Branch) www.ybonline.co.uk Australia National Australia Bank Limited Kuala Lumpur Tel: +61 3 9659 6218 Seoul Branch Representative Office Bank of New Zealand ABN 12 004 044 937 Fax: +61 3 9659 7922 16th Floor 6/F, Wisma Genting BNZ Tower This Annual Financial Report 2000 includes the disclosure requirements for both Australia and the United States Korea Deposit Insurance 28 Jalan Sultan Ismail 125 Queen Street Auckland Securities and Exchange Commission (SEC). It will be lodged with the SEC as an annual report on Form 20-F. National Australia Trustees Bldg. 50250 Kuala Lumpur Limited 33 Da-dong, Chung-ku Malaysia New Zealand Nothing in this Annual Financial Report 2000 is, or should be taken, as an invitation or application or offer to 271 Collins Street (PO Box KPO 691) Seoul, Korea Tel: + 60 3 2163 6545/6546 Tel: +64 9 375 5179 subscribe for, or to buy, securities in the National Australia Bank. (GPO Box 247B) Fax: + 60 3 2163 6559 Fax: +64 9 375 1023 Melbourne Vic 3000 Tel: + 82 2 3705 4600 [email protected] www.bnz.co.nz All figures in this document are in Australian dollars unless otherwise stated. Australia Fax: + 82 2 3705 4601 Tel: +61 3 9659 7522 Fax: +61 3 9659 7511 Financial information and analysis for the year ended September 30, 2000 Table of Contents Financial Highlights 2 Description of Business 3 Financial Review Overview 9 Selected Financial Data for Five Years Ended September 30, 2000 11 Net Interest Income 14 Bad and Doubtful Debts 16 Other Operating Income 18 Other Operating Expenses 20 Abnormal Items 21 Operating Profit After Income Tax 22 Operating Profit by Segments 23 Assets and Shareholders’ Equity 27 Return on Average Shareholders’ Equity 27 Shareholder Value 27 Dividends and Earnings Per Share 28 Liquidity and Capital Resources 28 Changes in Financial Condition 29 Capital Adequacy 29 Gross Loans and Advances 32 Impaired Assets, Provisions and Allowance for Loan Losses 33 Deposits and Other Borrowings 36 Risk Management 37 People and Culture 40 European Economic and Monetary Union 41 Year 2000 Readiness Disclosures 41 Goods and Services Tax 42 Accounting Developments 42 Corporate Governance 45 Report of the Directors 48 Financial Report 54 Statement of Profit and Loss 55 Balance Sheet 56 Statement of Cash Flows Notes to the Financial Statements 57 Principal Accounting Policies 59 Supplementary Balance Sheet 66 Profit and Loss Notes 67 Asset Notes 76 Liability Notes 93 Capital Notes 102 Other Notes 111 Directors’ Declaration 163 Auditors’ Report 164 Form 20-F Cross Reference Index 165 Shareholder Information 166 Description of Business 1 Financial highlights Operating profit Profitability after tax and I Operating profit after tax and before before abnormals abnormal items increased 19.8 per cent I International activities contributed $1.598 billion profit after tax and before abnormal items I Other operating income increased 43.0 per cent and represents 50.6 per cent of total income I Cost to income ratio improved to 51.2 per cent (excluding the impact of MLC and the effect of the change in accounting for life insurance businesses) Earnings(1) I Earnings per share climbed 13.2 per cent to 211.3 cents Earnings and dividends per I Cash earnings per share (before goodwill share before amortisation) were 224.4 cents abnormals I EVA(2) increased 6.3 per cent I Return on equity was 18.1 per cent I Return on average tangible assets was 1.2 per cent I Dividends per share increased 9.8 per cent (1) All calculations are based on earnings before abnormal items. (2) EVA represents the excess of cash earnings over the cost of capital employed, plus the value of franking credits generated. EVA is the registered trademark of Stern Stewart & Co. Growth and diversification As at September 30, 2000 $ billion I Acquisition of MLC for $4.648 billion I Underlying growth of 30.6 per cent in total assets in local currency terms I Movements in exchange rates increased total assets by $12 billion I Gross loans and advances increased 14.2 per cent in local currency terms I Funds under management and administration (including MLC) moved up $40 billion to $61 billion I Assets under custody and administration was up 58.3 per cent to $285 billion 2 Financial Reviewhighlights Description of business Introduction • Manage the Group businesses to create maximum value through the implementation of EVA shareholder value principles National Australia Bank Limited (herein referred to as the National , throughout all areas of the Group; and the Company or the Group ) is an international financial services • Build diversified income streams to reduce the Group s reliance group providing a comprehensive and integrated range of financial on interest income and produce sustainable, reliable revenues. products and services across four continents and 15 countries. Globally, as at September 30, 2000, the National had: Global Business Operating Model • Total balance sheet assets of $344 billion In April 1998, the National introduced a business operating model to • Over $60 billion in assets under management and administration accelerate its transition to an international financial services group • $285 billion in assets under custody and administration and to assist in achieving its vision. • More than 12 million customers On May 4, 2000 the National announced a refinement to its corporate The National is the largest financial services institution listed on the structure. The aim of the updated business operating model is to Australian Stock Exchange and was the 22nd largest financial services ensure the National s structure enables it to optimise the value from company in the world by profitability and 34th by revenues, (Fortune its existing activities while progressively building its position in 500, July 2000).