Annual report pg0&151 10/1/97 4:18 PM Page 1 A Banking Heritage National Australia Bank Limited has a long and proud Financial calendar Annual General heritage. Established in Melbourne in 1858 as The National Meeting • Full year results announced Bank of Australasia, the National has successfully expanded 21 November 1996. The Annual General Meeting its banking activities and absorbed other banking • Record date (books closing of the members of National institutions. date) for final dividend is Australia Bank Limited will Banks acquired by the National Australia Bank Group 27 December 1996 for be held at 10.00am include The Colonial Bank of Australasia (established in 1855) shareholders on the (Melbourne time) on in 1918, The Bank of Queensland (1886) in 1922, The Australian register. Thursday 23 January 1997 Queensland National Bank (1872) in 1948 and The Ballarat • Shares quoted ex-dividend on in the John Batman Theatre, Banking Company (1865) in 1955. In 1981 The National the Australian Stock Exchange Level 3, World Congress Centre, Bank of Australasia merged with The Commercial Banking on 17 December 1996. corner Spencer and Flinders Company of Sydney (1834) to form what is now National • Final dividend payable on Streets, Melbourne, Victoria, Australia Bank. Earlier, in 1927, The Commercial Banking 22 January 1997 (44c per share). Australia. Company of Sydney acquired the Bank of Victoria (1853). • Interim results for the 1996-97 financial year to be Shareholders’ As National Australia Bank, the National made its first announced on 15 May 1997. gatherings overseas acquisitions in 1987 when it bought Clydesdale Bank • Full year results for the 1996-97 (1838) in Scotland, Northern Bank (1824) in Northern Ireland Gatherings of members of financial year to be announced and National Irish Bank (1986) in the Republic of Ireland. National Australia Bank Limited on 6 November 1997. Yorkshire Bank (1859) was added to the Group in 1990. will be held at 9.45am (Sydney • Interim dividend for the time) on Thursday 23 January Overseas expansion continued in 1992 with the acquisition 1996-97 financial year payable 1997 in the Grand Ballroom of Bank of New Zealand (1861). In 1995 the Group July 1997, and final dividend at the Sheraton Wentworth, established a significant presence in the United States with payable December 1997. 61 Philip Street, Sydney; and the acquisition of Michigan National Corporation (1941). at 8.45am (Brisbane time) on Today, National Australia Bank Group is ranked as one of Thursday 23 January 1997 in the world’s largest and most successful banking and financial the Grand Ballroom at the services organisations. Brisbane Hilton, 190 Elizabeth Street, Brisbane. Group Mission Group debt ratings To provide core banking and selected financial services professionally, efficiently and competitively to achieve a The Group’s debt is rated by a pre-eminent position in chosen markets. number of rating agencies. At the date of this Annual Report, Values the following ratings were applicable to the Group. • Service to our customers • Quality in everything we do Short Long term term • Professionalism and ethics in all our actions S&P/Australian Ratings A1+ AA • Competitiveness and a will to win IBCA A1+ AA • Growth and development of our people Moody’s Investor Services P–1 AA3 • Continuous productivity improvement • Growing profit for our shareholders 4881-01 Text.243.TC.02 9/1/97 8:33 AM Page 2 Summary of Key Business Units National Australia Bank Group is a geographically diverse banking and financial services group. At September 30, 1996, overseas assets accounted for 45.9% of the Australian Bank Group’s assets. Established 1858 A strategy of overseas expansion has been pursued over the past decade to increase the Group’s potential market and diversify its sources of income. Under this strategy, the Bank of New Zealand Group has identified the United Kingdom, Established 1861 Ireland, New Zealand and the United States as preferred overseas markets. The Group owns full service banks in all of these markets, and is actively developing the banking and financial service activities of each bank Clydesdale Bank within its region. Established 1838 Asia is also a preferred market. The Group has branches or representative offices in ten major business capitals in the Asian region, which have provided trade finance and treasury services for many years. The Group’s presence Yorkshire Bank in the region is being expanded through the Established 1859 development of markets in wholesale and consumer banking. National Irish Bank Established 1986 Geographic distribution of assets September 1996 Australia UK and Europe Northern Bank 54.1% 22.9% Established 1824 New Zealand 10.9% United States Michigan National Corporation 8.3% Asia Established 1941 3.8% National Australia Financial Management Established 1985 2 4881-01 Text.243.TC.02 9/1/97 4:23 PM Page 3 Business Operations 1996 Results Outlook • National Australia Bank is the largest bank • Net operating profit of $1,307 million – • Competition to intensify further, placing in Australia in terms of assets. The National steady with the previous year. continued pressure on interest margins. offers a full range of banking and financial • Continued growth in share of housing • Well positioned in core banking markets services across all Australian states and market, strong growth in sales of financial and in financial services. major territories. services. • Slowing economic activity will make growth more difficult. • Bank of New Zealand is the second-largest • Net operating profit up 5.7% to a record • Well positioned to capitalise on expected bank in New Zealand. It offers a full range of $279 million. rebound in credit growth in 1997. banking services and selected financial • Higher lending volumes in personal and services to personal, business, rural and business markets. corporate customers. • Cost-to-income ratio reduced sharply from 62.3% to 58.0%. • Clydesdale Bank is the third-largest bank • Net operating profit down 1.2% to • Economic growth in the UK expected to in Scotland, with a substantial base in $162 million. increase to around 3.5%. consumer and business banking. • In local currency terms, net operating • Strengthening position in Scottish profit up 8.0% to £81 million. business market. • Strong growth in business markets. • Will benefit from economy-of-scale • Cost-to-income ratio improved to 57.7%. initiatives across the UK/Irish Group. • Yorkshire Bank is strongly represented in • Net operating profit 16.3% lower at • Earnings assisted by recent efficiency Northern England and the Midlands region. $159 million. improvements. Renowned for its strength in consumer • Underlying performance sound, but net • Sales of National Australia Life products banking, and has established strong profit affected by large increase in charges to provide significant new earnings stream. business banking capability. provide for doubtful debts. • Economic growth in UK expected to • Good growth in lending volumes, despite increase to around 3.5%. flat economic conditions. • National Irish Bank provides banking and • Net operating profit up 8.0% to $27 million. • Strong economic growth in Ireland set financial services to individuals, farms and • Earnings boosted by successful expansion in to continue, at around 5.0%. businesses in the Republic of Ireland. It is business banking. • Will continue to expand network. expanding rapidly in the business banking • Well positioned to capitalise on business market. lending opportunities. • Northern Bank is the largest bank in • Net operating profit up 21.3% to a • Northern Ireland economy should continue Northern Ireland. It offers a full banking record $97 million. to provide solid growth opportunities. service to personal, business and rural • Record lending for housing. • Initiatives in business banking and financial customers, and a growing range of • Costs significantly reduced. services expected to assist growth. financial services. • Michigan National Corporation’s principal • Contribution to Group result of $158 • US economic growth expected to remain subsidiary, Michigan National Bank, is the million (before amortisation of goodwill) at around 2.5%. fifth-largest bank in Michigan and the in the 11 months to September 30, 1996. • Foundations set for higher growth in 58th-largest in the United States. Offers • Costs reduced. consumer and small business markets. commercial and consumer banking services. • National Australia Financial Management • Net operating profit up 38.9% to $25 million. • Closer integration of financial services manufactures financial services products • Record sales of $1 billion, reflecting launch within National Australia Bank from such as life insurance, superannuation, of popular new products and strong sales October 1996 will support further boost rollovers and investment funds. Investment performance by financial planners. in sales. activities are conducted through a • Funds under management increased by 30% • New asset management opportunities to specialised subsidiary, National Australia to almost $5 billion. be developed in 1997. Asset Management Ltd. 3 4881-01 Text.243.TC.02 9/1/97 4:23 PM Page 4 Group Structure Board of Directors Managing Director and Chief Executive Officer DR Argus Assisting the Managing Director Australian Bank Group General Manager Group Legal Chief General Manager National Australia Corporate Centre Group Secretariat Australian Financial Services Financial Management Ltd National Australia