1、A Banking HeritageNational Australia Bank Limited has a long and proudheritage.Established in Melbourne in 1858 as The NationalBank of Australasia,the National has successfully expandedits banking activities and absorbed other banking institutions.Banks acquired by the National Australia Bank Groupi
2、nclude TheColonial Bank ofAustralasia(established in 1855)in 1918,The Bank of Queensland(1886)in 1922,TheQueensland National Bank(1872)in 1948 and The BallaratBanking Company(1865)in 1955.In 1981 The NationalBank of Australasia merged with The Commercial BankingCompany of Sydney(1834)to form what is
3、 now NationalAustralia Bank.Earlier,in 1927,The Commercial BankingCompany of Sydneyacquired the Bank of Victoria(1853).As National Australia Bank,the National made its firstoverseas acquisitions in 1987 when it bought Clydesdale Bank(1838)in Scotland,Northern Bank(1824)in Northern Irelandand Nationa
4、l Irish Bank(1986)in the Republic of Ireland.Yorkshire Bank(1859)was added to the Group in 1990.Overseas expansion continued in 1992 with the acquisitionof Bank of New Zealand(1861).In 1995 the Group established a significant presence in the United States withthe acquisition of Michigan National Cor
5、poration(1941).Today,National Australia Bank Group is ranked as one ofthe worlds largest and most successful banking and financialservices organisations.Group MissionTo provide core banking and selected financial services professionally,efficiently and competitively to achieve apre-eminent position
6、in chosen markets.Values Service to our customers Quality in everything we do Professionalism and ethics in all our actions Competitiveness and a will to win Growth and development of our people Continuous productivity improvement Growing profit for our shareholdersFinancial calendar Full year resul
7、ts announced21 November 1996.Record date(books closingdate)for final dividend is27 December 1996 for shareholders on theAustralian register.Shares quoted ex-dividend onthe Australian Stock Exchangeon 17 December 1996.Final dividend payable on22January 1997(44c per share).Interim results for the 1996
8、-97financial year to beannounced on 15 May 1997.Full year results for the 1996-97financial year to be announcedon 6 November 1997.Interim dividend for the1996-97 financial year payableJuly 1997,and final dividendpayable December 1997.Annual GeneralMeetingThe Annual General Meetingof the members of N
9、ationalAustralia Bank Limited willbe held at 10.00am(Melbourne time)onThursday 23 January 1997in the John Batman Theatre,Level 3,World Congress Centre,corner Spencer and FlindersStreets,Melbourne,Victoria,Australia.Shareholders gatheringsGatherings of members ofNational Australia Bank Limitedwill be
10、 held at 9.45am(Sydneytime)on Thursday 23 January1997 in the Grand Ballroomat the Sheraton Wentworth,61 Philip Street,Sydney;andat 8.45am(Brisbane time)onThursday 23 January 1997 inthe Grand Ballroom at theBrisbane Hilton,190 ElizabethStreet,Brisbane.Group debt ratingsThe Groups debt is rated by anu
11、mber of rating agencies.Atthe date of this Annual Report,the following ratings wereapplicable to the Group.ShortLongtermtermS&P/Australian RatingsA1+AAIBCAA1+AAMoodys Investor ServicesP1AA3Annual report pg0&151 10/1/97 4:18 PM Page 1Summaryof Key Business Units2National Australia Bank Group is ageog
12、raphically diverse banking and financialservices group.At September 30,1996,overseas assets accounted for 45.9%of theGroups assets.A strategy of overseas expansion has beenpursued over the past decade to increase theGroups potential market and diversify itssources of income.Under this strategy,theGr
13、oup has identified the United Kingdom,Ireland,New Zealand and the United States aspreferred overseas markets.The Group ownsfull service banks in all of these markets,andis actively developing the banking andfinancial service activities of each bankwithin its region.Asia is also a preferred market.Th
14、e Group hasbranches or representative offices in ten majorbusiness capitals in the Asian region,whichhave provided trade finance and treasuryservices for many years.The Groups presencein the region is being expanded through thedevelopment of markets in wholesale andconsumer banking.Australian BankEs
15、tablished 1858Bank of NewZealandEstablished 1861Clydesdale BankEstablished 1838Yorkshire BankEstablished 1859National Irish BankEstablished 1986Northern BankEstablished 1824National AustraliaFinancialManagementEstablished 1985Michigan National CorporationEstablished 1941United States8.3%New Zealand1
16、0.9%UK and Europe22.9%Australia54.1%Geographic distribution of assetsSeptember 1996Asia3.8%4881-01 Text.243.TC.02 9/1/97 8:33 AM Page 23Business Operations 1996 Results OutlookNational Australia Bank is the largest bankin Australia in terms of assets.The Nationaloffers a full range of banking and fi
17、nancialservices across all Australian states andmajor territories.Net operating profit of$1,307 million steady with the previous year.Continued growth in share of housingmarket,strong growth in sales of financialservices.Competition to intensify further,placingcontinued pressure on interest margins.
18、Well positioned in core banking marketsand in financial services.Slowing economic activity will make growthmore difficult.Bank of New Zealand is the second-largestbank in New Zealand.It offers a full range ofbanking services and selected financialservices to personal,business,rural andcorporate cust
19、omers.Net operating profit up 5.7%to a record$279 million.Higher lending volumes in personal andbusiness markets.Cost-to-income ratio reduced sharply from62.3%to 58.0%.Well positioned to capitalise on expectedrebound in credit growth in 1997.Clydesdale Bank is the third-largest bankin Scotland,with
20、a substantial base inconsumer and business banking.Net operating profit down 1.2%to$162 million.In local currency terms,net operatingprofit up 8.0%to 81 million.Strong growth in business markets.Cost-to-income ratio improved to 57.7%.Economic growth in the UK expected toincrease to around 3.5%.Stren
21、gthening position in Scottishbusiness market.Will benefit from economy-of-scaleinitiatives across the UK/Irish Group.Yorkshire Bank is strongly represented inNorthern England and the Midlands region.Renowned for its strength in consumerbanking,and has established strongbusiness banking capability.Ne
22、t operating profit 16.3%lower at$159 million.Underlying performance sound,but netprofit affected by large increase in charges toprovide for doubtful debts.Good growth in lending volumes,despiteflat economic conditions.Earnings assisted by recent efficiencyimprovements.Sales of National Australia Lif
23、e productsprovide significant new earnings stream.Economic growth in UK expected toincrease to around 3.5%.National Irish Bank provides banking andfinancial services to individuals,farms andbusinesses in the Republic of Ireland.It isexpanding rapidly in the business bankingmarket.Net operating profi
24、t up 8.0%to$27 million.Earnings boosted by successful expansion inbusiness banking.Strong economic growth in Ireland setto continue,at around 5.0%.Will continue to expand network.Well positioned to capitalise on businesslending opportunities.Northern Bank is the largest bank inNorthern Ireland.It of
25、fers a full bankingservice to personal,business and ruralcustomers,and a growing range offinancial services.Net operating profit up 21.3%to arecord$97 million.Record lending for housing.Costs significantly reduced.Northern Ireland economy should continueto provide solid growth opportunities.Initiati
26、ves in business banking and financialservices expected to assist growth.National Australia Financial Managementmanufactures financial services productssuch as life insurance,superannuation,rollovers and investment funds.Investmentactivities are conducted through aspecialised subsidiary,National Aust
27、raliaAsset Management Ltd.Net operating profit up 38.9%to$25million.Record sales of$1 billion,reflecting launchof popular new products and strong salesperformance by financial planners.Funds under management increased by 30%to almost$5 billion.Closer integration of financial serviceswithin National
28、Australia Bank fromOctober 1996 will support further boostin sales.New asset management opportunities tobe developed in 1997.Michigan National Corporations principalsubsidiary,Michigan National Bank,is thefifth-largest bank in Michigan and the58th-largest in the United States.Offerscommercial and co
29、nsumer banking services.Contribution to Group result of$158million(before amortisation of goodwill)in the 11 months to September 30,1996.Costs reduced.US economic growth expected to remainat around 2.5%.Foundations set for higher growth inconsumer and small business markets.4881-01 Text.243.TC.02 9/
30、1/97 4:23 PM Page 3StructureGroup 4Group General ManagerGroup Risk ManagementLR RyanGroup General ManagerInformation TechnologyMB CoomerGroup General ManagerGroup Marketing,DistributionandPaymentsDS KellyGroup General ManagerGroup Human ResourcesEG SteelGroup General ManagerGroup Strategic Developme
31、ntRF MatrenzaChief Financial OfficerBS McComishGroup General ManagerCorporate CentreCW BreezeManaging DirectorUK/EuropeGLL BarnesGroup General ManagerUSA and AsiaRMC ProwseManaging DirectorBank of New ZealandGJ WheatonChief General ManagerAustralian Financial ServicesFJ CicuttoManaging Director andC
32、hief Executive OfficerDR ArgusBoard of DirectorsAssisting the Managing DirectorGroup LegalGroup SecretariatGroup Analysis and ReportingGroup Accounting PolicyGroup Taxation PolicyGroup Financial ReportingGroup TreasuryInvestments and AdvisoryEconomicsGroup Corporate RelationsCorporate StrategyProjec
33、t ManagementGroup Sales and Service CultureRemuneration and BenefitsOrganisation and Succession PlanningExecutive DevelopmentExecutive Offices OperationsPerformance ManagementMichigan National CorporationAmericasAsiaAustralian BankNational AustraliaFinancial Management LtdNational Australia AssetMan
34、agement LtdNational Australia Trustees LtdNational Custodian ServicesNational Australia Group(UK)LimitedYorkshire Bank PLCClydesdale Bank PLCNorthern Bank LimitedNational Irish Bank LimitedNational Australia LifeNational AustraliaGroup Services(UK)Treasury and Wholesale Banking EuropeElectronic Bank
35、ing StrategyGroup Payments StrategyRetail StrategyGroup TechnologyGroup Credit BureauGroup Insurance and Operational RiskGroup AuditIndependent Risk Oversight andPrudential ControlGroup General ManagerBusiness Re-EngineeringRI FyfeBusiness Re-Engineering4881-01 Text.243.TC.02 9/1/97 4:23 PM Page 4Pr
36、ofitGroup operating profit increased by6.8%to a record$2,102 million the fourth consecutive year of recordearnings.Underlying profit(before tax andcharges to provide for doubtful debts)was up 14.5%to$3,392 million.Earnings per share increased from141.0 cents to 144.8 cents.Return on average sharehol
37、dersfunds eased from 17.8%to 17.0%.Geographic resultsNet operating profit of Australianbanking and financial servicesactivities was steady at$1,307 million.UK/Irish Group lifted operatingprofit in local currency terms by 2.6%to 202 million.Reported profit inAustralian dollars decreased by 4.0%to$403
38、 million as a result of thestronger Australian dollar.Bank of New Zealand lifted netoperating profit by 5.7%to$279 million.Michigan National Corporationcontributed$158 million(beforeamortisation of goodwill)to theGroup result in the 11 monthsto September 30,1996.DividendDirectors increased the annua
39、ldividend from 83 cents to 87 cents ashare.Dividends continue to be fullyfranked.IncomeGroup net interest income rose by11.9%to$5,059 million,reflectingsolid growth in core businessactivities.Non-interest income increased by19.3%to$2,920 million.ExpensesNon-interest expenses rose by14.4%to$4,587 mil
40、lion.Non-interest expenses as aproportion of income declinedfrom 56.2%to 55.8%.AssetsGrowth in lending and theacquisition of Michigan NationalCorporation lifted Group assets by17.3%to$173.7 billion.Capital resourcesAverage shareholdersequity grewby 13.0%to$12.3 billion.Capitalrisk asset ratio remain
41、s sound at 9.3%.Credit qualityCredit quality continued to improve,with gross impaired assets decliningfrom$1,869 million to$1,517 million.Non-accrualloans(net of specific provisions)decreased by 26.7%to$803 million.5Financial Highlights Group Group Operating Profit19921993199419951996675112917081969
42、2102$m2000150010005000Average Shareholders Equity199219931994199519968.08.59.510.912.3$b121086420Total Assets19921993199419951996104118130148174$b200150100500Dividend199219931994199519964550748387Cents1008060402004881-01 Text.243.TC.02 10/1/97 1:11 PM Page 5DirectorsBoard of 6CM DeeleyDAT DickinsTP
43、ParkMR RaynerA TurnbullCM WalterSir Bruce WatsonBT Loton(Vice-Chairman)DK Macfarlane(Vice-Chairman)DCK AllenPJW CottrellWRM Irvine(Chairman)DR Argus(Managing Director and Chief Executive Officer)4881-01 Text.243.TC.02 9/1/97 5:49 PM Page 6Year in Reviewby the Chairman and the Managing DirectorWe are
44、 pleased to report anotheryear of growth and recordearnings for the NationalAustralia Bank Group in 1996.Group net operating profitafter taxrose by 6.8%to$2,102millionintheyear toSeptember 30,1996 our fourthconsecutive year of record profit.Our underlying profit increasedby 14.5%to$3,392 million.Und
45、erlying profit representsearnings before tax and chargesto provide for doubtful debts.It is the measure of our corebusiness results,and it showsthat we continue to performstrongly in the fundamentalareas of winning customers andrunning our business efficiently.Total dividend to shareholdersincreased
46、 from 83 cents to87 cents a share.Our dividendscontinue to be fully franked,providing a tax benefit for manyof our 235,000 shareholders.It is particularly satisfying toreport continued growth whenmany financial servicesorganisations and otherenterprises are showing theeffects of years of low economi
47、cgrowth,intensified competitionand fundamental changes inmarkets.Our ability to consistentlyimprove financial results,despitechanging business conditions,highlights the value of ourinternational growth strategiesoforganic growth and acquisitions.Over the past decade,the Grouphas diversified the geog
48、raphicrange of its activities byacquiring soundly basedregional banks in the UnitedKingdom,the Republic ofIreland,New Zealand and theUnited States.Overseas activitiesnow comprise almost half of theGroups assets.Our international spread ofactivities reduces ourdependence on any singleeconomy and has
49、ensured adiversified earnings stream.The year under review was animportant one in ourinternational development.Michigan National Corporationbecame part of the Groupin November 1995,amidconsiderable scepticism aboutthe ability of an Australian-based organisation to succeedin the US banking market.How
50、ever,Michigan NationalCorporation has proved avaluable addition to the Group,contributing$158 million toGroup profit(beforeamortisation of goodwill)in the11 months to September 30,1996.New products and services weredeveloped,which promise tobroaden Michigans customerbase and generate substantialnew
51、revenues in the coming year.In Michigan we applied thesame operating formula thatdrives all of our business unitsaround the Group closeattention to customer needs,successful marketing,soundmanagement of risks,and costcontrol.Ultimately,it is our workforce ofalmost 53,000 people whichmakes this formu
52、la work.OurGroup result is the sum of many7Wealth Index700060005000400030002000100009/869/879/889/899/909/919/929/939/949/959/96National Australia BankBanking IndexAll Ordinaries IndexCreating wealth for shareholders isa primary objective of the Group.The graph shows how an investmentof$1,000 in Nat
53、ional AustraliaBank shares in 1986 has increasedin value to more than$6,000.Cumulative returns from Nationalshares have exceeded returns froman equivalent investment in thebanking sector generally,and theAustralian share market.4881-01 Text.243.TC.02 9/1/97 4:20 PM Page 7fine efforts by individuals
54、andteams.It was particularlypleasing to see staff around theGroup embracing the sales andservice practices that havefeatured in our traininginitiatives over the past two years.Across the Group there weresome common themes of change.Getting closer to ourcustomersWe are a customer-drivenorganisation.O
55、ur success owesmuch to listening closely tocustomer needs and developinginnovative solutions that set usapart from our competitors.This customer-first approach isnow being built into theorganisational structures of ourbusiness units.In Australia we have organisedourselves around our majorcustomer se
56、gments retail,premium retail,agricultural,business and wholesale.Thischange recognises that differenttypes of customers havedifferent needs.By focusing our attention andresources directly on marketsegments,we can improve ourtailoring of services and respondmore quickly to changes incustomer needs an
57、d marketconditions.Managing our business units inthis way is a logical extension ofthe specialised customer servicenetworks we have created forpersonal,business and ruralcustomers.These networkshave been highly successful inimproving service andstrengthening customerrelationships.Financial servicesT
58、he importance of offeringfinancial services that arecomplementary to our corebanking products has beenrecognised in our missionstatement for a number of years.We are upgrading our financialservice capabilities in all of ourbusiness units.Australia andNew Zealand are leading the waywith some bold org
59、anisationalchanges which integrate thedelivery of banking and financialservices.These activities aredescribed more fully later in thisreport.Managing technologyNew technology is revolutionisingthe way businesses and peoplecommunicate,particularly acrossnational boundaries.This hasprofound implicatio
60、ns for ourindustry.Devices such as smartcards,theInternet and personal bankingsoftware give us the potential toprovide faster and moreconvenient customer service,withgreater efficiency for the Group.Group Marketing,Distributionand Payments is researching anddeveloping new technologies,with a firm fo
61、cus on how theycan improve the way we serveour customers.Key initiatives in the year underreview included:Investment by MichiganNational Bank in the IntegrionFinancial Network,a jointventure with 18 other NorthAmerican banks and IBM.Integrion will provide theGroup with a secure networkfor electronic
62、 banking acrossNorth America.Services willinclude home banking,financial management andon-line bill payments forconsumers and smallbusinesses.Investment in joint venturesto develop Mondex smartcardtechnology in Australia,NewZealand and the United States.Webelieve Mondex technologyis a key component
63、in thedevelopment of a relationshipcard,which will be the meansby which we offer most of ourelectronic banking services.8Year in ReviewHuman Resources(full-time equivalents)As atAs atChangeSeptember 1996September 1995%Australia22,62223,525(3.8)UK/Irish Group15,07815,851(4.9)New Zealand Group5,5345,8
64、57(5.5)US Group3,717119largeAsia227233(2.6)Total47,17845,5853.54881-01 Text.243.TC.02 10/1/97 9:11 AM Page 8As an equity holder inMondex,the Group will alsodevelop non-interest revenuestreams.Participation in the trial ofVisa smartcards on the GoldCoast,Australia.Development of a multimediaterminal,
65、for trial in Australiain early 1997.The newterminal combines telephone,fax and video links withpersonal banking staff andtelephone service centres.Pilot of Internet home loanapplications.Our home pagewas redesigned to providecustomers with easy access toinformation about buying ahome,including relev
66、antNational products andservices.It also enablescustomers to initiate a homeloan application.Participation throughMichigan National Bank intrials of Microsoft Moneyand Quicken.In data processing operations,the Groups productivityperformance ranked amongworld best practice.We achieveddramatic decline
67、s in unit cost ofinformation technology servicesin the United Kingdom andIreland,which demonstratedthe success of our strategy toconsolidate data centres.This strategy has been extendedto Australia,New Zealand andAsia with the formation of aspecialised technology servicesorganisation to serve this l
68、argeregion.This will drive furtherimprovements in productivityand business capability duringthe coming years.Similarly,we have begun to builda global services organisation tosupport the current treasurybusiness units as they becomeintegrated under a globalstructure.Building a commoncultureThe Group
69、has grown intoa geographically diverseorganisation of almost 53,000staff.A major challenge for the Groupis creating a commonunderstanding of our values asan organisation.This is importantin binding us together,and inensuring consistency in thebehaviour and decision makingof our people,wherever they
70、arearound the world.To this end,we continued a majorValues program in 1996.Thisinitially involved a two-day coursefor each of our top 1,000managers and will involve allstaff by the end of 1997.Supporting this program was theintroduction ofa method to assessthe leadership behaviour ofmanagers,particu
71、larly theirperformance at livingthe valuesof the Group in their dailyactivities.The second Group-wideemployee opinion survey wasconducted.This yielded extensivefeedback,which will again beused to improve staff relations,levels of job satisfaction and staffdevelopment programs for ourpeople.The numbe
72、r ofstaffwho own partof the Group continued to risefollowing a further staff shareissue in 1996.At balance date,more than 13,000 staff ownedshares in National AustraliaBank Limited.Industry changesThe Australian financial servicesindustry and its users have beenwell served by the variousregulatory a
73、nd supervisoryprocesses that have evolved sincederegulation of the Australianbanking industry in the 1980s.However,the industry ischanging rapidly.Advances incommunications technology andthe globalisation of financialmarkets are creating fundamentalchange in the marketplace inAustralia and abroad.Ag
74、ainst this background ofchange,there is a need to ensurethat our regulatory structuresand supervisory practices reflectcontemporary industry trends inAustralia and overseas.These issues will become morepressing as banks,life insurancecompanies and other financialservice providers converge in thetype
75、s of products and servicesthey offer.This is part of a widertrend in which the special role ofbanks as financial intermediariesis diminishing.Recognising these trends,theFederal Treasurer of Australialaunched an inquiry during theyear under review into theAustralian financial system.The inquiry,due
76、to report inMarch 1997,is an importantopportunity to complete theprocess of deregulation.In our submission to the inquiry,the Group has called for a rangeof measures to boost competition.We believe Australias financialsystem could be significantlyimproved through changes inthe function,structure and
77、supervision of banks and otherinstitutions.In essence,we areproposing a more competitive,open system.BoardDuring the year we welcomedMr Thomas P Park as a Director.Mr Park is the Area Director ofAustralia and New Zealand forKraft Foods Inc.and has beenManaging Director of KraftFoodsLimited since 198
78、7.He hasalreadyproved a valuableaddition to the Board.In other changes,The LordNickson and Mr CharlesTrethowan retired as Directorsduring the year.Mr David Dickinsalso retired from the Board,effective October,1996.The Lord Nickson joinedthe Board in 1991.With morethan 30 yearsexperience as adirector
79、 of public companiesand government bodies inthe United Kingdom,The LordNickson made an importantcontribution as the Groupdeveloped its activities in theUKand Irish market.He remainsChairman of Clydesdale Bank.Mr Trethowan joined the Boardof National Australia Bank in1984.He is a former Chairmanand G
80、eneral Manager of theState Electricity Commission ofVictoria.Mr Dickins joined theBoard in 1981.He was a Directorof The Commercial Banking94881-01 Text.243.TC.02 10/1/97 9:11 AM Page 9Company of Sydney for the 14years prior to the merger thatcreated National Australia Bank.We benefited greatly from
81、theexperience and good judgementof both men during a period ofmajor growth for the Group.On behalf of the Board andshareholders,we extend ourthanks and good wishes toMrTrethowan,The Lord Nicksonand Mr Dickins.A number of executiveappointments were made.Ata Group level,these includedMr EG(Grant)Steel
82、 as GroupGeneral Manager,Group HumanResources and Mr RI(Rob)Fyfeas Group General Manager,Business Re-Engineering.Bothmen were former executives ofBank of New Zealand.Mr GJ(Gordon)Wheatonsucceeded Mr RMC(Robert)Prowse as Managing Director ofBank of New Zealand.MrProwsereturned to Melbourne to takeup
83、the new role of GroupGeneral Manager,USA and Asia.After balance date,Mr DM(David)Krasnostein wasappointed Group GeneralCounsel,while Mr MD(Michael)Soden was appointed GroupGeneral Manager,GlobalWholesale Banking.In Australia,Mr FJ(Frank)Cicutto returned fromClydesdale Bank to succeedMrAW(Allan)Diplo
84、ck asChief General Manager,Australian Financial Services.Mr TJ(Trevor)Matthews,theformer Managing Director ofLegal and General,wasappointed General Manager,Personal Financial Services.Other appointments includedMr JR(John)Spence,alsoformerly of Legal and General,as Managing Director ofNational Austr
85、alia FinancialManagement and GeneralManager,Premium FinancialServices.Mr GP(Grahame)Savage,former State Manager,SA and NT,was appointedGeneral Manager,Retail FinancialServices.In other moves,Mr D(Denis)Mead was appointed ManagingDirector of National AustraliaTrustees Ltd,and Mr AJ(Tony)OGrady was ap
86、pointed GeneralManager,National AustraliaCustodian Services.Financial overviewThe Group achieved a 6.8%increase in operating profit aftertax and outside equity intereststo a record$2,102 million in theyear to September 30,1996.The improved result was drivenby a combination ofgrowthininterest income
87、and fees.Group net interest income roseby 11.9%to$5,059 million withhigher volumes of lending tobusiness and personal customersin all our major geographicmarkets.We were also successful atbuilding non-interest income,which increased by 19.3%to$2,920 million.Asset quality continued toimprove,with gro
88、ss impairedassets of the Group decliningfrom$1,869 million to$1,517million.However,charges to provide fordoubtful debts increased from$116 million to$333 million.This followed continued slowingof economic activity in someof our major markets,includingAustralia and New Zealand.We expect it will be so
89、me timebefore the cycle of economicactivity turns,and felt it prudentto provision accordingly.The profit contribution of ourAustralian banking and financialservices activities was steady at$1,307 million in the year toSeptember 30,1996.Thisrepresented a creditableperformance in a difficultoperating
90、environment.Overseas activities contributed$654 million to Group net profit,an increase of 21.1%on theprevious year.The UK/Irish Grouplifted earnings in local currencyterms,but reported earnings forthe year were slightly lowerbecause of a stronger Australiandollar.Continued growth inearnings by Bank
91、 of New Zealandand a solid contribution byMichigan National Corporationin its first year helped to boostoverseas earnings as a proportionof the Group net result from27.4%to 31.1%.10Year in Review4881-01 Text.243.TC.02 10/1/97 9:12 AM Page 10Growth in lending liftedGroup assets by 17.3%to$173.7billio
92、n at year end.The$2.1billion acquisition of MichiganNational Corporation inNovember 1995 also boostedassets.The acquisition wasfunded from internal sourcesand accounted for a decreasein the Groups capital risk assetratio from 11.6%to 9.3%.CommunityinvolvementAs a major employer,the Groupis a large s
93、upporter of thecommunities in which it operates.The Group also recognises thatit has a responsibility to take adirect rolein supporting thecommunity.For example,Bank of NewZealand is a major sponsor ofthe Kiwi Recovery Program,which is leading efforts to saveNew Zealands national bird fromextinction
94、.It also funds BNZHeart House,which providesaccommodation for families ofchildren undergoing heart surgeryat Aucklands Greenlane Hospital.In the United States,MichiganNational Bank has committed toa US$785 million lendingprogram to improve the socialand business character of theCity of Detroit.This
95、involveslending to consumer andcommercial customers,including businesses owned bymembers of minority groups.In Australia,the NationalCommunityLink program waslaunched during the year.National CommunityLinkinvolves sponsorship ofcommunity groups,focusing onissues such as youth support,education,physi
96、cal and mentalhealth,community leadership,rural support and culturaldiversity.The program alsoinvolves close consultation withcommunity groups and will beexpanded to boost the role ofNational staff in the community.In other initiatives,the Nationalhas continued to improve theconservation of its arch
97、ives andartefacts,which form a richrecord of colonial banking inAustralia.Artefacts previously inlong-term storage,includingrare colonial banknotes,arebeing made more accessible tothe community and carefullypreserved for future generations.The year aheadEconomic growth in Australia isexpected to mod
98、erate to around2.5%in 1996-97,compared to 4%in 1995-96.After balance date,the Reserve Bank announced a0.5%cut in the official cash rateto 6.5%pa the second easingof monetary policy in thecalendar year 1996.However,there remains uncertainty aboutwhether this will be sufficient toslow the rate of redu
99、ction inbusiness and economic activity.In the UK and Ireland,the Groupwill be assisted by increasedgrowth of about 3.5%ineconomic activity in 1996-97.The US economy is expected tomaintain growth of about 2.5%in the year ahead.New Zealands economy isexpected to slow to around 2.0%growth as tight mone
100、tary policycontinues to take effect.The Group will continue topursue its strategies of organicgrowth and carefully selectedacquisitions.These strategies haveserved the Group well for the pastdecade and remain appropriate tomarket and economic conditions.The Asian region will be an areaof renewed foc
101、us for the Group.Opportunities in consumer andwholesale banking will bedeveloped in 1996-97 as part ofa carefully considered strategyto increase the Groups role inthis important region.We continue to have clear sightof the fundamentals of ourbusiness meeting customerneeds,managing risks effectivelya
102、nd containing costs.We alsohave a vast potential marketthrough our internationalspread of business units.We are in a strong position tomeet the challenges of changingmarkets,and to deliverconsistently high performancefor the benefit of our customers,shareholders and staff.WRM IrvineChairmanDR ArgusM
103、anaging Director andChief Executive Officer11Distribution Network as at September 30,1996MichiganBNZNorthernNational IrishYorkshireClydesdaleBranches20322610760270268Business Centres5333734Service Centres2065141Eftpos Terminals8796,7591050851,4502,700ATMs29515515129356331Outlets closed3912Outlets es
104、tablished1031114881-01 Text.243.TC.02 10/1/97 9:13 AM Page 11124881-01 Text.243.TC.02 10/1/97 9:16 AM Page 12AustraliaThe Australian operations experienceddifficult conditions in the year underreview.Economic growth in Australiaslowed significantly from the previousyear,and interest margins came und
105、ermore pressure from intensifiedcompetition.However,net operating profit of theAustralian operations was steady at$1,307million in the year toSeptember 30,1996.This includedthe results of National AustraliaFinancial Management and NationalAustralia Trustees.The result was supported by continuedsucce
106、ss in the housing finance marketand in lending to small and mediumsized businesses.Growth in lendingvolumes lifted net interest income by3.9%to$2,590 million,and more thanoffset a reduction in the net interestmargin from 4.3%to 3.7%.The Australian banking activities alsoachieved growth in other oper
107、atingincome,which rose by 7.6%to$1,580 million.Total loans and acceptancesoutstanding increased by 11.8%to$75.8 million,while total depositsrose by 8.8%to$49.6 billion.The steady profit result was achieveddespite an increase in the charge toprovide fordoubtful debts from a lowlevel of$78 million in
108、the previous yearto$185 million.Provisions wereliftedto take account of the adverse effecton some customers of slowingeconomicgrowth.Importantly,assetquality improved,with grossimpaired assets as a proportion of allloans decreasing from 1.8%to 1.0%.Non-interest expenses grew by 6.4%,primarily the ef
109、fect ofwage rises whichwere negotiated under a new enterprisebargaining agreement early in the yearand the end of a contribution holidayto staffsuperannuation.However,thecost-to-income ratio improvedslightly to 52.3%for the year toSeptember 30,1996 easily thelowest of any major Australian bank.A com
110、bination of factors contributedto our solid performance,includingclose attention to customer needs,andsuccessful marketing.An intensivetraining effort over the past two yearsto create a culture of sales and serviceis also flowing through in the formof higher sales activity in traditionalproducts and
111、 financial services suchas life insurance and managed funds.Total financial services sales increasedby 38%to a record$2.6 billion duringthe year.This can be attributedlargelyto the successful move of financialplanners from National AustraliaFinancial Management to the branchnetwork.Financial service
112、s sales are expectedto grow even more strongly in thecurrent year,following a completerestructure of our Australian activitiesfrom October 1996.The new structurewelds together financial services andbanking as core activitiesacrosspersonal,business and wholesalemarkets.This move is vital to our abili
113、ty to meetcustomer needs,and more specifically,deliver on our promise of helpingcustomers fulfil their bigger picture.13Photographs from top:Upskilling of people and programs to encourage and assistleadership are fundamental to the Nationals success.Deborah Batten of Personal Financial Services is p
114、icturedleading a team meeting.Business Banker,Paul Martyn,with Glen Cross ofbiomedical equipment designer,manufacturer and exporter,Vision Systems.The National and Cabcharge Australia have trialled Eftpos intaxis.The launch of Eftpos in all taxis in Australia in 1997 willbe the worlds largest applic
115、ation of mobile Eftpos technology.The Nationals refurbished branch at Oberon,NSW.Main photograph:The Nationals Rural Finance Managerin Roma,Barry Lewis,with customer Keith Cameron on theCameron family property,Ardno.Mr FJ CicuttoChief General ManagerAustralian Financial ServicesFinancial Highlights1
116、996Change$%Operating Profit(before goodwill)1277m(0.5)Underlying Profit1965m4.1Net Lending Assets and Acceptances75.8b11.8Risk Weighted Assets74.1b15.2Net Non-Accrual Loans336m(31.9)Key Ratios19961995%Cost/Income Ratios52.352.4Return on Average Assets1.41.5Net Non-Accrual Loans/Risk Weighted Assets0
117、.40.84881-01 Text.243.TC.02 10/1/97 9:17 AM Page 13A key feature of the new structureis the way management of ourbusiness is reorganised on thebasis of customer segments,rather than geographic location ofbusiness activity.This will help usget even closer to our customers.Retail FinancialServicesThe
118、National was again the mostsuccessful bank in Australiasfiercely competitive home loanmarket,writing more new loansthan any other bank in the year toSeptember 30,1996.The totalhome loan portfolio grew by17.0%to$27.5 billion.The Banks ability to win businessat the expense of competitors wasreflected
119、in the growth in share oftheowner-occupied home loanmarketfrom 15.9%to 17.0%(ofallbanks).During the year under review,theNational:dropped its standard variablehome loan rate to 9.25%pa,establishing a new industrybenchmark(this has reducedby a further 0.5%pa sincebalance date)aligned investment andow
120、ner-occupied home loanrates,which contributed to astrong lift in sales of residentialinvestment home loans widened the range of loansavailable under our Choicebanking packages forprofessionals and executives,and introduced a similarbanking package for residentialproperty investors.Credit card balanc
121、es increased by18.2%,and market share ofoutstandings was maintained.This performance was achieveddespite strong competition fromnew card programs and loyaltyschemes.The FLYBUYSprogram in which the Nationalparticipates remains Australiasmost popular loyalty scheme,withmore than two million Australian
122、households in the program.From November 1996,lending topersonal customers is regulatedby a Uniform Consumer CreditCode.The introduction of theCode required substantial stafftraining and extensive reviews ofthe Banks systems,proceduresand documentation.Business FinancialServicesWe consolidated our po
123、sition asthe leading banker to Australianbusiness.Total business credit forthe year increased by 12.6%,consistent with overall growthinbusiness credit.Growth was supported by theNational Business InvestmentLoan,which generated$1.3billionin new lending tosmall andmedium sized businesses.Leasingfinanc
124、e also showed continuedstrong growth.International trade financecommitmentsincreasedby 19.0%and international fee income grewby 26.0%.This continued thegood results since 1994,whentheNationalimproved access toits trade finance specialists and itsstrong networks of overseasrepresentation and correspo
125、ndentbanks.Important additions were made tothe Nationals range of paymentservices,including the launch ofthe National Purchasing System an electronic,credit card-basedsystem for controlling low-value,high-volume purchases.This is anexpanding area of activity,withpotential for new fee-basedbusiness.T
126、he success of National BusinessFinance was one of the yearshighlights.Established in March1995,National Business Financeprovides simple,low-cost finance,secured by the value of invoicesissued by a business to itscustomers.This form of cashflow lending,known as invoice discounting,isprovided by our b
127、usiness bankersand relationship managers as anintegrated service.In the year toSeptember 1996,$1 billion ofinvoices were purchased,makingNational Business Finance theleader in its industry.Wholly owned subsidiary,CustomFleet,continued to performstrongly.The company owns andmanages 40,000 vehicles,ma
128、kingit the largest funded fleetmanagement company inAustralia.A new computer systeminstalled in 1995 has improved thecompanys ability to tailor fleetmanagement services to the needsof individual clients,and helpedto secure several large corporatecustomers in the year toSeptember 1996.The National ad
129、ded equity financeto its range of business financialservices with the establishment ofNational Australia InvestmentCapital Ltd.An investmentmanagement team was appointed,whichhas already reviewed alarge number of equity financeproposals.In rural banking,the Nationalcontinued to increase lending tofa
130、rmers and rural industries.Ruraladvances increased by 12.2%to$5,661 million.Credit qualitycontinued to improve,with non-accrual rural loans declining byalmost 20%to$44 million.Wholesale FinancialServicesServices to corporate customerswere amalgamated as part of therestructure ofAustralian activities
131、.The new Wholesale FinancialServices unit is comprised ofCorporate Banking,Treasury,International Banking Relations,Corporate Finance and CapitalMarkets(including Project andStructured Finance)and NationalCustodian Services.The integration of wholesalefinancial services enables thecoordinated delive
132、ry of complexfinancial services to corporateand institutional clients.14Australia4881-01 Text.243.TC.02 10/1/97 9:17 AM Page 14Corporate banking activitiesachieved growth in earnings,despite a difficult businessclimate in which fees andmargins were squeezed byincreased competition.The Project and St
133、ructuredFinance team had a particularlysuccessful year.Highlightsincluded:co-lead arranger of a syndicatedbank loan of$865million tofinance the acquisition ofUnited Energy Ltd co-lead arranger of a syndicatedbank loan of$1,480 milliontofinance the acquisition ofYallourn Energy Pty Ltd the arrangemen
134、t mandate of$600 million of debt financefor the Eastern Distributor tollway for Leighton Holdings Ltd.The Capital Markets Groupbroadened its product rangeduring the year.Highlightsincluded increased syndicateloan arrangements andappointments to a further eightcommercial paper programs.Treasury lifte
135、d its contributiontoNational Australia Banksprofit.The Nationals Treasuryunit was named in a Euromoneysurvey asone of the worlds top20 participants in foreign exchangemarkets.Growth in profits reflectedhigher volumes of business percustomer and improvements inrisk management methods.National Custodi
136、an Services,which provides a full range ofcustody and related services fordomestic and offshore institutions,achieved a 27.7%increase inassets under custody in the yearto September 1996.A number ofmajor new customerswere acquired,including theVictorian Funds ManagementCorporation.During the yearNati
137、onal Custodian Services wasjudged by Global Custodianmagazine as the best custodian inAustralia and New Zealand.NetworkFor increasing numbers ofcustomers,the local branch nolonger features in their regularcontact with the National.ATMs,Eftpos and telephone bankinggive them access to their accountswi
138、thout stepping into a branch.Customers can even obtain manyof the Nationals key productsand services over the phone.The shift towards new distributionchannels is highlighted by growthin the number of transactionsconducted outside our branches.In the year to September 1996,almost 70%of all transactio
139、ns fellinto this category.This comparesto 46.0%only five years ago.Given this trend,we reviewed theway we distribute our productsand services with the goal ofensuring that services are deliveredcost-effectively,and at times andlocations that customers demand.A number of strategies flowedfrom the rev
140、iew.In the yearsahead,these will lead to fewertraditional full-service branches,more specialised banking outletsand the introduction of partlyand fully automated branches.Greater use of telephone bankingand more mobile bankers canalso be expected.Branches will remain a keycomponent of our distributi
141、onnetwork.In fact,the Nationalinvested$51.6 million during theyear to upgrade premises,with afurther$2.6 million spentestablishing two new branchesand seven business bankingcentres.Many of the changes flowing fromour network review are alreadyunderway.In the year toSeptember 30,1996 we:reduced the n
142、umber of outlets(branches,service centres andagencies)from 1,307 to 1,234 signed up more than 200,000new customers to our NationalFlexiphone service for payingbills,transferring funds andobtaining account information extended our range oftelephone banking services toinclude sales over the phone ofcr
143、edit cards,personal loans,home loans,term deposits andcash management accounts boosted our Eftpos terminalnumbers by 55.0%to 45,624andinstalled another 50National FlexiTeller ATMs,lifting the total ATM numberto 979.The National connects morecustomers with retailers via Eftposthan any other bank.We a
144、re setto strengthen our position in theEftpos payments system in 1997through a$25 million programto install Eftpos in Australiasfleet of 12,000 taxis.Thisfollowsa successful trial with Cabchargeover the past year.The installationof Eftpos inAustralian taxis isthe worlds largest application ofmobile
145、Eftpostechnology,andhighlights the Nationals positionas a leading Eftpos provider.15Distribution Network as at September 30,1996Australian BankNSW/ACTQLDVIC/TASSA/NTWATotalBranches*34022430273941,033Business Centres*42233947115Agencies193497886Eftpos terminals15,15312,4349,6383,9074,49245,624ATMs285
146、21930768100979Outlets closed25231712582Outlets established530109Notes*Including service centres*Including District Commercial Branches and stand-alone Business Banking Centres4881-01 Text.243.TC.02 10/1/97 9:17 AM Page 15PeopleThe number of staff(full-timeequivalent)in Australia decreasedby 3.8%to 2
147、2,622.This stemmedfrom ongoing efforts to re-engineermajor processes and improveproductivity.Reductions in staffnumbers were achieved largelythrough normal retirements andresignations.The National successfullyconcluded its 1996 EnterpriseBargaining Agreement withoutdisruption,reflecting a solid andc
148、ooperative relationship betweenthe National and the FinanceSector Union.The new agreementstrengthens links betweenremuneration and employeeperformance,and provides greaterflexibility in the use of temporarystaff.An Employee Care Package wasintroduced to provide employeeswith access to free professio
149、nalcounselling,as well as discountedprivate health insurance.Servicesto help families were launched,including a child care referralservice,concessional creditfacilities for workers on maternityleave,an improved Career Breakscheme and special payments tohelp workers return frommaternity leave.Nationa
150、l AustraliaFinancialManagementContribution to Group profit byNational Australia FinancialManagement increased by 38.9%to$25 million in the year toSeptember 30,1996.Sales improved in life insurance,superannuation and managedinvestment products,as reflectedby a 44.0%increase in total salesto a record$
151、1 billion during theyear.A number of factors contributedto the improved performance.These included the successfulintegration of financial plannerswithin the branch network andthe introduction of popular newproducts such as the NationalAustralia Mortgage Fund andfixed term annuities.A better investme
152、nt performancealso figured strongly in theimproved result.Fundmanagement skills were upgradedin 1995 withthe establishmentof National Australia AssetManagement as a specialist assetmanagement subsidiary.Totalfunds under managementincreased by 30.0%to almost$5billion.Retail funds inflow inthe year to
153、 September 1996 wasthe second-highest of the majorbanks and fourth-highest in theindustry.With the introduction of a neworganisational structure for theAustralian activities in October1996,National AustraliaFinancial Managements role isfocused on the manufacture ofproducts for distributionthrough th
154、e Nationals retail andwholesale networks,as well asthrough independent financialadvisers and other groups.National AustraliaTrusteesNational Australia Trusteesachieved a 94.6%gain in netoperating profit to$3 million.Earnings benefited from a strongperformance by the CommonFund A1,which consistentlyr
155、anked in the top quartile ofinvestment performance.Deposits in the CommonFundA1 rose by 119.0%to$252.9 million during the year.National Australia Trustees alsoachieved substantial growth incorporate trust business andsuccessfully launched the NationalPrivate SuperFund forindividuals wishing to takem
156、orecontrol of their retirementsavings.Assets under trusteeship andmanagement were more than$10 billion at the end ofthe year.16Australia4881-01 Text.243.TC.02 10/1/97 9:17 AM Page 1617The Groups operations in theUnited Kingdom and Irelandcomprise four regional banks,a lifeinsurance company,a develop
157、ingwholesale banking operation and aservice company which providestechnology support to the regionalbanks.Regional banks in the UnitedKingdom are Clydesdale Bank inScotland,Yorkshire Bank inNorthern England and NorthernBank in Northern Ireland.TheGroup also owns National IrishBank in the Republic of
158、 Ireland.Economic growth was subdued inthe United Kingdom in 1996,particularly in the business sector.There was also greater competitionin the financial services sector,andmany building societies reducedlending margins.Against this background,the Groupsoperations in the UK and theRepublic of Ireland
159、 made goodprogress.In local currency terms,operatingprofit(before amortisation ofgoodwill)was 2.6%highercompared to the previous year.Significant growth in lending wasachieved in personal and businessmarkets.The improved result was achieveddespite an increase in charges toprovide fordoubtful debts f
160、romA$129 millionto A$223 million.Provisions were increased as a resultof further weakening of economicactivity during the year,and theNorth of Englands slow recoveryfrom recession.Some additionalspecific provisions were raisedbecause of the beef export crisis.Asset quality improved,with grossimpaire
161、d assets declining fromA$545 million to A$533 million.Reported operating profit(beforeamortisation of goodwill)of theUK/Irish banking and financialservices group decreased by 4.0%toA$403 million as a result of astronger Australian dollar.The cost-to-income ratio of theUK/Irish Group reduced from61.7
162、%to 59.0%.A furtherimprovement is expected in 1997following initiatives to unlock thebenefits of economies of scaleacross the major business units inthe region.In October 1995,National AustraliaLife launched a range of lifeinsurance and investment products,marketed through Clydesdale Bank,Northern B
163、ank and Yorkshire Bank.Sales activity in early months wasslower than anticipated,but haslifted in recent months followingimprovements to the effectivenessof the sales force of 430 personalbankers.The decision to establish a new lifeinsurance business is providing theUK/Irish Group with significantad
164、vantages over establishedcompetitors,who are finding itdifficult to lower their relatively highcost structures.The manufacturingand service support functions ofNational Australia Life haveperformed well.National Australia Life recordeda small loss in its first year ofoperations,which was in linewith
165、 expectations.Other highlights included thestart-up of a new mainframeoperating system at Yorkshire Bankin November 1995.The system willbe installed in phases at otherbusiness units in the region,starting with mortgage andpersonal loan products.A number of initiatives were takento upgrade our wholes
166、ale bankingcapability.New dealing rooms wereestablished at Clydesdale Bank andNational Irish Bank,and furtherinvestment in dealing room facilitiesis planned in 1997 at Yorkshire Bankand Northern Bank.Skills wereboosted by selective recruitment ofa highly regarded capital marketsteam in London and ne
167、w headsof treasury at Clydesdale andYorkshire Bank.Skills within theCorporate and Structured Financeunit in London were also upgraded.The outlook for the UK/Irish Groupis broadly positive in 1997.TheUK/Irish Group will continue todevelop its business banking service,which has been the source of acon
168、siderable proportion of lendinggrowth in recent years.Personalbanking activity is expected to growthrough offers of tailored servicesto carefully selected segments ofour customer base.EuropeMr GLL BarnesManaging Director UK/Europe4881-01 Text.243.TC.02 10/1/97 9:17 AM Page 17184881-01 Text.243.TC.02
169、 10/1/97 9:20 AM Page 18ClydesdaleBankClydesdale Bank is the third-largestbank in Scotland.Net operating profit in localcurrency terms increased by 8.0%toa record 81 million in the year toSeptember 30,1996.However,theappreciation of the Australian dollarcontributed to a reduction inClydesdale Banks
170、reported netoperating profit from A$164 millionto A$162 million.Tight cost control was a feature ofthe latest result,as reflected by alowering of Clydesdales cost-to-income ratio from 60.0%to 57.7%.Net interest income in local currencyincreased during the year with higherlending volumes in personal
171、andbusiness markets.Another 19 Business Banking Centreswere opened,lifting to 34 the numberof specialised business banking outlets.This network has substantiallyimproved the quality of service tobusinesses and has helped to generatesolid growth in Clydesdale Banksshare of the business banking market
172、.New business lending increasedsignificantly during the year andexceeded the rate of growth in thebusiness lending market in Scotland.This performance was driven bycarefully targeted business lendinginitiatives such as the BusinessInvestment Loan.Business deposits increased with theintroduction of t
173、he Business TermDeposit.Customers also welcomedthe launch of TeleBank Business an electronic banking service thatenables customers to access accountinformation from their own computer.In personal markets,customerscontinued to respond well toClydesdale Banks offer of flexibleproducts,tailored to indi
174、vidualneeds.The Tailored MortgagePackage helped to increase the shareof the home lending market,andgrowth continued in personallending following the launch in1995 of the Tailored Personal Loan.At the start of the year,ClydesdaleBank trained 152 personal bankersto market National Australia Lifeproduc
175、ts through its branch network.More personal bankers will be addedto meet growing customer demandin 1997.The year ended with Clydesdale Bankbeing voted the best-perceivedScottish bank in a UK-wide surveyby the independent Forum ofPrivate Business.Mr Fred Goodwin was appointedChief Executive Officer i
176、n March1996.He replaced Mr Frank Cicutto,who returned to Australia to take upthe role of Chief General Manager,Australian Financial Services.19Photographs from top:The new data processing centre at Clydebank,Glasgow,with Paul Browning,the Groups Services OperationsManager.Waste recycler,Malcolm Snow
177、ie,pictured with Clydesdalemanagers John Scott and Gordon Gray,is typical of theinnovative and successful business people withwhom theGrouphasestablishedstrong relationships.Main photograph:Clydesdale Banks Henry Grahamwith customer Bobbie Lennox on his Luss property,overlooking Loch Lomond.The Lord
178、 NicksonChairmanMr FA GoodwinChief Executive Financial Highlights1996ChangeA$%Operating Profit(before goodwill)162m(1.2)Underlying Profit297m6.5Net Lending Assets and Acceptances11.6b9.3Risk Weighted Assets10.6b3.9Net Non-Accrual Loans173m(8.0)Key Ratios19961995%Cost/Income Ratios57.760.0Return on A
179、verage Assets1.11.1Net Non-Accrual Loans/Risk Weighted Assets1.61.84881-01 Text.243.TC.02 10/1/97 9:21 AM Page 19204881-01 Text.243.TC.02 10/1/97 9:24 AM Page 20Yorkshire BankYorkshire Bank is based in Leeds inNorthern England and operates anetwork of 270 branches.Underlying performance was sound,bu
180、t net operating profit was adverselyaffected by a doubling of charges fordoubtful debts from A$77 million toA$158 million.However,there wasno change in the level of grossimpaired assets.Net operating profit decreased by16.3%from A$190 million toA$159 million.Net interest incomeincreased in local cur
181、rency terms,but was down by 2.6%in Australiandollar terms because of theappreciation of the Australian dollar.Other operating income rose by7.9%to A$313 million.Non-interest expenses reducedfollowing a restructure of YorkshireBanks head office to improveefficiency,and strong cost containmentin all a
182、reas.Joint processing ofmortgage and personal loans withClydesdale Bank also contributed toa reduction in costs.Yorkshire Bankscost-to-income ratio declined from54.5%to 53.3%.A new computer operating systemwas commissioned,which hasimproved the quality of customerinformation and will support thedeli
183、very of new products.Mortgage outstandings grew by14.0%,with a continued strongresponse by home buyers toYorkshire Banks innovative FlexiblePayment Mortgage.Personal lending,a traditionalstrength of Yorkshire Banks activity,rose by 9.0%,despite an increasinglycompetitive market.Sales of personalloan
184、s over the phone began and apilot study of a telephone bankingservice was initiated.Retail deposits also grew followingthe launch of Premium Plus,whichattracted more than A$200 millionin deposits in less than six months.Yorkshire Bank continued to investin the development of its businessbanking capa
185、bility.New businessbanking units were opened inManchester and Doncaster,liftingthe total number of specialisedbanking outlets to 37.The accessibility of business serviceswas further improved with the launchof an online service known asTeleBank Business.Business lending increased by 8.4%.Asset Financ
186、e continued to be amajor force in the growth ofYorkshire Banks business bankingactivity.New business increased by40%to A$460 million,following49.0%growth in the previous year.Growth in business lending wasassisted by theintroduction ofinvoice discounting.Yorkshire Banks initiatives for businesscusto
187、mers were recognised duringthe year by the independent Forumof Private Business,which votedYorkshire Bank as the best businessbank in the UK for accessibility,value for money and price.The launch of National Australia Lifeprovided a welcome addition toYorkshire Banks financial servicescapability.Mor
188、e than 100 personalbankers joined the branch networkat the start of the year,and numbershad doubled by years end.YorkshireBank also introduced two highlycompetitive insurance products annual travel insurance and carinsurance.21Photographs from top:Agricultural manager David Lee(second from left)and
189、local manager Colin Gladwin(second from right)with Ian,Mick and Howard Pattison on the Pattisonproperty at Little Langton,Northallerton,NorthYorkshire.Business banker,David Clarke,with Brian Taylorof Persimmon PLC,on the site of a residentialdevelopment at Strensall.Main photograph and lower inset:Y
190、orkshire Bankdeveloped relationships in the business marketduring the year.One such relationship was withthe University of Surrey in south-east England.The University wholly owns Englands only companybuilding and launching microsatellites.Pictured areTeresa Lowe,Vice-Chancellor Professor PatrickDowl
191、ing and Yorkshire Banks Simon Learoyd.Lord ClitheroeChairmanMr DT GallagherChief ExecutiveFinancial Highlights1996ChangeA$%Operating Profit(before goodwill)159m(16.3)Underlying Profit394m5.6Net Lending Assets and Acceptances8.0b2.4Risk Weighted Assets8.1bNet Non-Accrual Loans129m(24.1)Key Ratios1996
192、1995%Cost/Income Ratios53.354.5Return on Average Assets1.71.9Net Non-Accrual Loans/Risk Weighted Assets1.62.14881-01 Text.243.TC.02 10/1/97 9:39 AM Page 21224881-01 Text.243.TC.02 10/1/97 9:42 AM Page 22NorthernBankNorthern Bank is the largest bank inNorthern Ireland,with 107 branches.Net operating
193、profit rose by 21.3%to a record A$97 million in the yearto September 30,1996.Lending for housing grew by 15.0%to record levels as more homebuyers recognised the benefits ofNorthern Banks tailored homeloan.Personal lending grew at asimilar rate.Business lending grewby 6.0%.Good lending volumes transl
194、atedinto an increase in net interest incomein local currency terms,despite areduction in Northern Banks netinterest margin from 4.9%to 4.6%.However,reported net interest incomedeclined marginally as a result of thestrengthening Australian dollar.A key factor in the higher profit resultwas an 11.7%re
195、duction in non-interestexpenses from A$213million to A$188 million.Thedecrease reflected exchange ratemovements,a writeback of excessprovisions for restructuring costs,and lower staff costs.A number of initiatives wereundertaken to improve the accessibilityof our services and support thedevelopment
196、of stronger customerrelationships.These includedextending the opening hours of23 key branches to include Saturdaymornings,and longer weekdayhours at 14 other branches.Mobile sales teams were expandedto include business,personal andrural markets,and more businesscentres were opened.Electronic banking
197、 services weremade even more widely availablewith a 66.0%increase in thenumber of Eftpos terminals andthe launch of Switch debit cardsthroughout Northern Ireland.In other developments,telephonesales of travel funds,home loansand credit cards were added to thetelephone banking service launchedin 1995
198、,and Internet home pagesfor Northern Bank and NorthernOffshore Financial Services wereestablished.Northern Bank caters for the broaderfinancial service needs of customersby offering home and car insurance.Sales of home insurance continuedat high levels,while the number ofcar insurance policies issue
199、dincreased by 130.0%.Life insurance services were addedduring the year with the launch ofNational Australia Life.Pleasingsales results were achieved throughNorthern Banks branch network.The number of personal bankerswho can sell National Australia Lifeproducts will be doubled in theyear ahead.The No
200、rthern Ireland economycontinues to outperform manyregions in the United Kingdom,which will support continuedgrowth by Northern Bank in thecurrent year.23Photographs from top:Local manager,Cynthia Cherry,with Gill Jefferson atOld Bushmills Distillery,the oldest whiskey distilleryin the world.Northern
201、 Banks modern branch at Donegall SquareNorth.Vehicle leasing is an important component of NorthernBanks business.Ken Knox of Component Distributorsis pictured with Northern Bank Leasings BarryMcConkey and a range of new vans and cars leasedby Northern.Main photograph:Belfast,with City Hall in thefor
202、eground and Harland and Wolff Shipyard inthe background.Sir Desmond LorimerChairmanMr JR WrightChief ExecutiveNorthern Bank andNational Irish Bank Financial Highlights1996ChangeA$%Operating Profit(before goodwill)97m21.3Underlying Profit160m21.2Net Lending Assets and Acceptances3.9bRisk Weighted Ass
203、ets4.1bNet Non-Accrual Loans28m21.7Key Ratios19961995%Cost/Income Ratios54.859.8Return on Average Assets1.51.3Net Non-Accrual Loans/Risk Weighted Assets0.70.64881-01 Text.243.TC.02 10/1/97 9:43 AM Page 23244881-01 Text.243.TC.02 10/1/97 9:46 AM Page 24National Irish BankNational Irish Bank serves pe
204、rsonaland business customers in theRepublic of Ireland through 60branches and an expandingelectronic network of ATMs andelectronic funds transfer.The Bank achieved another year ofgrowth,with particular success inthe business banking market.Net operating profit increased by8.0%to A$27 million in the
205、year toSeptember 30,1996.This followed adoubling of net operating profit inthe previous year.Earnings in the year under reviewwere buoyed by good growth inlending and higher net interestincome.National Irish Banks move into thebusiness banking market in 1995was well received,with businesslending in
206、the year under reviewgrowing by 34.2%.New businesscentreswere opened in Tallaght,Cork and College Green.The addition of invoice discountingto National Irish Banks businessfinance range has also proved popular.Personal banking services wereexpanded,with the opening of asecond branch in Limerick and t
207、heinstallation of several off-siteATMsin shopping centres and otherlocations.More new branches areplanned in 1997.An exciting addition was made to thedistribution network with the launchin May 1996 of a Phone-a-Loanunit,which provides personal loansover the telephone.More serviceswill become availab
208、le over thetelephone in 1997.Trials of Irelands debit card(Laser)began during the year.A reduction in non-interest expenses,combined with growth in revenue,led to a reduction in the cost-to-income ratio from 64.9%to 63.4%.In July 1996,Mr Barry Seymourreturned to the National AustraliaBank Group UK o
209、ffice in Londonafter a successful term as ManagingDirector of National Irish Bank.Concurrently,Mr Phillip Halpin wasappointed to the new role of ChiefOperating Officer and ExecutiveDirector.Mr John Wright,ChiefExecutive Officer of Northern Bank,was also appointed Chief ExecutiveOfficer at National I
210、rish Bank.Inthis broader role,Mr Wright willbe looking to expand the Groupspresence in Ireland and maximiseeconomies of scale which areavailable within the UK/Irish Group.25National Irish Banks expansion of services inthe business banking market in 1995-96 hasbeen particularly successful.Photographs
211、 from top:Alan Edgerton-Smith of Independent News.Telephone Banking Centre,Dublin.Main photograph:Glenpatrick Spring WatersKieran Hynes with relationship managerMichelle Reynolds.Lower inset:Dara O Broin of Dawn Fresh Foodswith relationship manager Jim Donagh.Mr AJ SpainChairmanMr JR WrightChief Exe
212、cutiveNorthern Bank andNational Irish BankMr P HalpinChief OperatingOfficerFinancial Highlights1996ChangeA$%Operating Profit(before goodwill)27m8.0Underlying Profit49m8.9Net Lending Assets and Acceptances1.9b12.5Risk Weighted Assets1.8b12.5Net Non-Accrual Loans30m7.1Key Ratios19961995%Cost/Income Ra
213、tios63.464.9Return on Average Assets1.11.0Net Non-Accrual Loans/Risk Weighted Assets1.71.84881-01 Text.243.TC.02 10/1/97 9:48 AM Page 25264881-01 Text.243.TC.02 10/1/97 9:51 AM Page 26Bank of New Zealand enjoyedanother year of consistent growth.Net operating profit in the year toSeptember 30,1996 ro
214、se by 5.7%toa record A$279 million.These results were achieved eventhough business was harder to obtainthan in the previous year.The NewZealand economy grew by 1.7%inthe year to September 30,1996 less than half the growth rate of theprevious year and borrowers of allkinds were deterred by higherinte
215、rest rates and political uncertainty.However,BNZ achieved 10.8%growth in total loan outstandingsduring the year,with higher volumesin personal and business markets.The improved earnings weresupported by continued reductionin costs.Progress with cost reductionwas highlighted by an improvementin BNZs
216、cost-to-income ratio from62.3%to 58.0%.BNZs ability to report consistentgrowth,even in an environment ofvery low growth and strongcompetition,says much about thevalue of the Banks customer-firstapproach to banking and financialservices.In recent years Bank of NewZealand has overhauled its productran
217、ge,introducing new types ofloans and savings accounts that canbe tailored to customersindividualneeds.Having improved what BNZdelivers to customers,majorimprovements are being made towhere and how customers are served.These changes include intensivesales and service training for staff,supported by a
218、n overhaul of thebranch network.The new networkallows branch staff more time to getacquainted with customers and theirbanking and financial service needs.Improvements to BNZs distributionnetwork include innovations such as24-hour drive-through bankingoutlets.BNZ is also at the forefrontof payment te
219、chnologies throughits investment in the Mondexsmartcard joint venture inNew Zealand.Growth in financial servicescontinued.Bank of New ZealandFinancial Services Group endedthe year under review as the largestretail fund manager in New Zealand,with NZ$446.7 million in grossfunds under management.Thera
220、nge of financial services wasbroadened with the introduction ofLoanCare Insurance cover.BNZ is in a strong position tocapitalise on an anticipated recoveryin credit growth in 1996-97.27New ZealandPhotographs from top:BNZ relationship manager,Rob Nicholson,withHong Joe at Hong and Nam Market Garden,P
221、almerston North.Robert Connors of BNZ and David Blue of BMWAuckland,pictured at the modern drive-throughbranch in the suburb of Penrose,Auckland.Regional sales manager,John Smith,withGraham Dawson of PEC,which produces point-of-saleterminals,card access security systems and petrol pumps.Main photogr
222、aph:Ski area manager,Peter Thomson,with Jeff Kerkhofs of BNZ,at Treble Cone ski field,near Queenstown.Mr TK McDonaldChairmanMr GJ WheatonManaging DirectorFinancial Highlights1996ChangeA$%Operating Profit(before goodwill)279m5.7Underlying Profit341m11.1Net Lending Assets and Acceptances16.4b12.5Risk
223、Weighted Assets15.2b11.8Net Non-Accrual Loans89m(26.4)Key Ratios19961995%Cost/Income Ratios58.062.3Return on Average Assets1.41.4Net Non-Accrual Loans/Risk Weighted Assets0.60.94881-01 Text.243.TC.02 10/1/97 9:51 AM Page 27284881-01 Text.243.TC.02 10/1/97 9:54 AM Page 28AmericasThe Group operates a
224、branch inNew York,with a staff of 117 andassets of A$2.6 billion.The New York branch providestreasury and trade finance servicesto Group customers doing businessin the US.Services are also marketedto US companies with operations inAustralia,New Zealand,Asia,Irelandand the United Kingdom.A New York t
225、reasury unit raisesUnited States dollar funding for theGroup and serves the global treasuryneeds of Group customers.Newheads of treasury and corporatebanking were recruited during theyear as part of moves to upgradethe National Australia Bank Groupsglobal wholesale banking capability.Net operating p
226、rofit increasedtoA$17 million in the year toSeptember30,1996.Theimprovementin the resultfrom aA$3 million profit in theprevious year largely reflectedwritebacks of provisions fordoubtful debts.Michigan NationalCorporationMichigan National Corporationbecame part of the Group inNovember 1995.The princ
227、ipal subsidiary is MichiganNational Bank,which is ranked as thefifth-largest bank in Michigan and58th-largest in the US.At September 30,1996,MichiganNational Bank had total assets ofA$11.8 billion and 4,187 employees(or 3,596 full-time equivalentpositions).Following the acquisition,MrDouglas E Ebert
228、 was promotedtoChief Executive Officer.A number of executives fromthe Group moved to Michigan,including MrAlan Frankenburgtothe new role of Chief OperatingOfficer.These appointmentscontributed to Michigan NationalBanks rapid integration with theGroup.At the same time,a number ofexecutives from Michi
229、gan NationalBank transferred to head office inMelbourne,highlighting the two-waytransfer of knowledge and expertisewithin the Group.In the 11 months to September 30,1996,a net operating profit ofA$158 million(before amortisationof goodwill)was achieved,in linewith expectations.During the year,Michig
230、an NationalBank focused on setting thefoundations for future growth andimplementing the best practicesof the Group.Like other members of the Group,Michigan National Bank made someUSA andAsiaMichigan National CorporationFinancial Highlights1996A$Operating Profit(before goodwill)158mUnderlying Profit2
231、57mNet Lending Assets and Acceptances8.0bRisk Weighted Assets10.8bKey Ratios1996%Cost/Income Ratios56.3Return on Average Assets1.3Photographs from top:Paul Clark of Archways Ashland,Ohio Bakery andMichigan Nationals Joseph McCorkle examine oneof the companys products.Archway is the third-largestcook
232、ie company in the United States.One of Michigan National Banks 21 supermarketbranches,which offer full service over convenienthours throughout Michigan.Relationship manager Ed Lewan(centre)withMike Savoie Chevrolets Carol Shepherd and dealerprincipal Mike Savoie Jr,at the dealership in Troy.Main pho
233、tograph:The Renaissance Centre indowntown Detroit,Michigan,photographed fromthe air.Mr JA WilliamsChairmanMichigan NationalCorporationMr DE EbertPresident and ChiefExecutive OfficerMichigan NationalCorporation29Mr R M C ProwseGroup General ManagerUSA and Asia4881-01 Text.243.TC.02 10/1/97 9:56 AM Pa
234、ge 2930USA and Asia30fundamental changes to align itsorganisational structure withkeysegments of the customer base.The new structure focuses onthree key customer segments consumer,business(with lendingof less than US$500,000),andcommercial.Michigan National Bank alsoestablished a more aggressivesale
235、s and leadership culture andcentralised its marketingfunction to drive new productdevelopment,assessperformance gaps and developstrategies to gain market share.In addition,a new business unitwas formed to develop newdistribution channels.Many initiatives have alreadybeen undertaken to buildMichigan
236、National Banksbusiness,particularly throughexpansion in consumer and smallbusiness markets.New productsand services were developed forrelease in 1997.Good progress hasalready been achieved inthe smallbusiness market,with lending tothis categoryincreasingby 23.0%compared with the previous year.Seven
237、supermarket financialservice centres were openedduring the year,lifting to 21 thetotal number of such outlets.These have been developed inresponse to customer demandfor more convenient ways ofbanking.Michigan NationalBank also expanded its telephonebanking service,which enablescustomers to open acco
238、unts,apply for loans and conducttransactions over the phone.Michigan National Bank madeinvestments on behalf of theGroup in two joint ventures todevelop future distributionchannels for financial services.More informationabout theseinitiatives(Mondex and theIntegrion Financial Network)ison page 8.Loo
239、king ahead,MichiganNational Bank can expect tobenefit from continuedmoderatelevels of economic growth.National AustraliaBank AsiaFrom its regional headquarters inHong Kong,National AustraliaBank Asia operates five branchesand five representative offices inAsias major business capitals.More than 230
240、staff are employedin the Groups Asian businessactivities.Net operating profit of theGroupsAsian banking andfinancial service activitiesdoubled to A$10 million in theyear to September 30,1996.The Groups outlets in Asiahave traditionally providedtrade finance and treasuryservices to Australian-basedcu
241、stomers who trade with Asia.These services are beingupgraded to support the activitiesof the Groups vast customerbase in Australia,the UnitedKingdom,Ireland,New Zealandand the United States.The Groups strategy for theAsian region will see abroadeningof services forbusiness and corporatecustomers in
242、1997.Capitalmarkets,corporate banking andstructured finance services willbe introduced to create a fullservice wholesale banking unitin Asia.The Group is also developingconsumer banking services inAsias maturing economies.TheAsian region providesopportunities for the Groupto develop consumer banking
243、markets by capitalising onproduct offerings and expertisethat are proven in othermarkets.In this regard,theTailored Home Loan,whichhas been highly successful inAustralia,the United Kingdomand New Zealand,was launchedin the Hong Kong market inNovember 1996.National Australia Bank GroupsR Adams Perry
244、III in Wall Street4881-01 Text.243.TC.02 10/1/97 9:58 AM Page 30IntroductionNational Australia Bank Limited(the Group)ranks among the worlds50 largest banks in terms of shareholdersequity.At September 30,1996 the Group had total assets of$173.7 billion.The Group began in Melbourne in 1858 as The Nat
245、ional Bank ofAustralasia.In its current form,the Group is the result of a mergerin 1981 of The National Bank of Australasia Limited andThe Commercial Banking Company of Sydney Limited(establishedin Sydney in 1834).From its Australian base,the Group has expanded overseas duringthe past decade and it
246、now conducts full banking and financialservice operations in six countries.These acquisitions have diversifiedthe Groups income streams and asset base.At September 30,1996 54.1%of the Groups total assets weredomiciled in Australia.The balance was located in the UK andIreland(22.9%),New Zealand(10.9%
247、),United States(8.3%)and Rest of the World(3.8%).At September 30,1996 the Group had 52,912 full-time and part-timeemployees worldwide(equivalent to 47,178 full-time positions).Regulation of the Banking SystemSupervision and regulation of the Australian banking system is theresponsibility of the Rese
248、rve Bank of Australia(the Reserve Bank)asempowered by the Banking Act 1959(the Banking Act).Amendments to the Banking Act,which became effective inDecember 1989,give formal recognition to the Reserve Banksresponsibilities for the prudential supervision of banks.The Reserve Bank discharges its respon
249、sibilities by requesting regularinformation from,and setting prudential controls for institutionssubject to the Banking Act.The information reported to theReserve Bank forms the basis of supervisory assessment of banks.These reports are supplemented by meetings between seniorexecutives of the Reserv
250、e Bank and the banks it regulates.Closeattention is paid to capital adequacy,liquidity,sustainability ofearnings,loan loss experience,concentration of risks,the maturitystructure of assets and liabilities,potential exposures through equityassociation and international banking operations.The Reserve
251、Bank has the power to appoint any person(for example,an auditor)to investigate and report on prudential matters relatingto a bank.This power provides a statutory fallback to the existingcooperative arrangements between the Reserve Bank and banksunder which the latters external auditors review and re
252、port on certainprudential aspects of their operations.This review involves providingthe Reserve Bank with additional assurance that prudential standardsagreed with banks are being observed,that statutory data provided tothe Reserve Bank is reliable,and that statutory and other bankingrequirements ar
253、e being met.Effective September 30,1996 the Chief Executive Officer of the Groupis required to make an annual declaration to the Reserve Bank thatthe Groups management systems limiting risks to prudent levels areoperating effectively.The Reserve Bank has the authority,with the approval of theTreasur
254、er of the Commonwealth of Australia,to fix interest ratespaid or charged by banks and institutions undertaking bankingoperations.This authority is currently not being exercised andAustralian banks are free to determine their own rates based onmarket conditions.However,at the direction of the Federal
255、Government,housing loans under A$100,000 entered into priortoApril 1986 are still subject to an interest rate ceiling of 13.5%,although actual rates are currently below this ceiling level.There are no formal restraints on the diversification by banksthrough equity involvements or investments in subs
256、idiaries.Currently,the controls recommended and supervised by the ReserveBank are of a consensual nature.However,without the consent ofthe Treasurer of the Commonwealth of Australia,no bank may enterinto any agreement or arrangement for the sale or disposal of itsAustralian banking business.Prudenti
257、al requirements currently applying to Australian banksinclude the following:The Reserve Banks risk-based capital adequacy guidelines whichare generally consistent with the approach agreed upon by theBasle Committee on Banking Regulation and SupervisoryPractices.Refer to Capital Adequacy on page 47.T
258、he Prime Assets Ratio(PAR)arrangements,in which banks arerequired to hold a proportion of their domestic assets in specified,high quality liquefiable assets,(eg.cash,balances with the ReserveBank and Commonwealth Government paper).The minimumPAR ratio is now 6.0%of total liabilities(other than share
259、holdersequity)invested in Australian dollar assets within Australia.At September 30,1996 the Groups PAR ratio was 6.6%.Banks are required to lodge in a special Non-Callable Deposit(NCD)account with the Reserve Bank an amount equivalent to1.0%of total liabilities(other than shareholdersequity)funding
260、Australian dollar assets in Australia.The interest rate paid on NCDaccounts is set at a rate equal to the average yield at tender in theprevious month on 13-week Treasury Notes less 500 basis points.The Reserve Bank also maintains an active interest in overseeing theoperations of the Group,including
261、 its offshore branches andsubsidiaries.The Commonwealth of Australia announced on May 30,1996 thatit was establishing an inquiry into the Australian financial system.The purpose of the inquiry is to review a wide range of issues arisingfrom financial deregulation in Australia since the early 1980s a
262、nd theforces driving future change.The inquiry is expected to report to theAustralian Treasurer by March 31,1997 and make recommendationson the nature of the regulatory arrangements governing theAustralian financial system.The inquiry is expected to address suchmatters as whether foreign ownership r
263、estrictions should be relaxedand whether the Commonwealth government should permit mergersbetween the four major banks and between banks and insurancecompanies.The Groups banking subsidiaries in the United Kingdom,theRepublic of Ireland,New Zealand and the United States are subjectto supervision by
264、the Bank of England,the Central Bank of Ireland,the Reserve Bank of New Zealand,and the US Federal Reserve Boardand the Office of the Comptroller of Currency,respectively,andassociated banking legislation.In the United Kingdom,Ireland and the United States,the localregulatory frameworks are broadly
265、similar to that in force in Australia.Each of the banking regulatory authorities in these countries hasintroduced risk based capital guidelines in accordance with theconvergence framework developed by the Bank for InternationalSettlements.Additionally,the regulators monitor the adequacy ofliquidity
266、and portfolio concentrations,including lending to individuals,economic or business sector exposures and cross border risk.In addition,the Federal Reserve Board(FRB)and the Office of theComptroller of the Currency in the United States(OCC)have takena number of steps to enhance the effectiveness of th
267、eir examinationsand inspections by sharpening their focus on the areas of greatest riskto the soundness of banking organisations.These efforts have beendirected at adapting examination and inspection processes so thatthey remain responsive to changing market realities,while retainingthose practices
268、that have proven most successful in supervisinginstitutions under a variety of economic circumstances and industryconditions.The FRB and OCC have introduced a new supervision-by-risk program which considers the new risks and differentcombinations of risks that banks will undertake in the changingban
269、king environment.With effect from January 1,1996 a new regulatory framework wasimplemented by the Reserve Bank of New Zealand.The emphasis isprimarily on capital adequacy and systematic risk management.National Australia Bank Limited and Controlled Entities32Description of Business4881-05 Fin.166.TC
270、.02 8/1/97 9:45 AM Page 32It represents a move from detailed rules and private monitoring bythe supervisor,in favour of enhanced public disclosure of financialinformation,a relaxation of supervisory regulation and increasedemphasis on the role of bank directors.In other offshore areas of activity,th
271、e Group currently is in fullcompliance with the operating requirements of local regulatoryauthorities.Australian OperationsThe Australian financial system principally consists of four majorbanks,each with national operations and large branch networks.A number of smaller regional banks also operate i
272、n Australia whichare primarily focused on State markets.Most Australian banks,including the regional banks,are publicly listed and owned by largenumbers of private shareholders.Mutual societies are also a major force in the financial system,whichhave recently begun to demutualise and have widened th
273、eir range ofproducts and services from insurance,investments and superannuationto compete in the banking industrys traditional markets.Competition also comes from numerous other non-bank financialintermediaries,including investment/merchant banks,specialist retailfund managers,building societies,cre
274、dit unions,mortgage originatorsand finance companies.In recent years the Groups performance in Australia has seen it emergeas Australias largest bank in terms of assets.At September 30,1996it held 19.3%of all commercial banking assets in Australia accordingto the Reserve Bank of Australia Bulletin.T
275、he Groups Australian business(the National)offers a full bankingservice and selected financial services across personal,business,ruraland wholesale markets.It provides service through 1,234 outlets with a staff of 25,137(or 22,622 full-time equivalent positions).The National is activelyreducing the
276、number of outlets as part of a steady shift in transactionalactivity from branches to alternative distribution channels.Customerdemand for these alternatives has led to growth in the number ofAutomatic Teller Machines(ATMs)and terminals providing electronicfunds transfer at point of sale(Eftpos).The
277、 supply of informationand services over the telephone has also grown dramatically in thepast three years.The National has a large retail customer base,with around 3 millioncustomers.It has direct access to the Australian payments system,allowing it to clear cheques and other instruments for its cust
278、omers.The National also acts as an agent for other licensed banks and non-bank financial institutions.Core retail banking services include cheque accounts,passbookaccounts,term deposits,credit cards,personal loans,housing loans(for owner-occupiers and investors)and lines of credit.Competition betwee
279、n banks and non-banks is strong,particularly inthe housing finance market.There has been a trend towards costidentification in product pricing and a reduction in the crosssubsidisation of services.Competition from non-banks is also increasing in the credit cardsmarket.The National issues MasterCard
280、and Visa card.It also issuesBankcard in conjunction with other major Australian banks for usein Australia and New Zealand.All credit cards can be used to accessthe Nationals electronic banking network.Financial services have become an integral feature of the Nationalsretail market activity.The shift
281、 towards financial services began adecade ago with the establishment of wholly owned subsidiary,National Australia Financial Management Limited(NAFM),toprovide personal financial planning,life and disability insurance,superannuation and a range of managed investment funds.The rangeof financial servi
282、ces was widened in 1989 with the establishment ofNational Australia Trustees Limited to provide personal trusteeservices,including wills,power of attorney,and personal asset careand management services.The sale and distribution of financial services has been progressivelyintegrated with the National
283、s major distribution networks.Thisprocess was completed in 1996 with the introduction of a neworganisational structure that fully integrates the management ofbanking and financial services.A key feature of the restructure is the organisation of managementon the basis of customer segments,rather than
284、 the geographiclocation of business activity.As part of this change,NAFM has become a supporting business unitwith a specialised focus on the manufacture and service of financialproducts.It functions alongside National Australia Asset ManagementLimited(NAAM),which is a wholly owned funds managements
285、ubsidiary.At September 30,1996 NAAMs funds under managementtotalled$4.9 billion.The National is a substantial provider of business banking in Australiaand a large banker to Australias rural enterprises.The Nationalsstrong position in business markets is the result of carefully targetedinitiatives ov
286、er a number of years.These have included thedevelopment of a specialised network of more than 70 businessbanking outlets known as District Commercial Branches andBusiness Banking Centres.Services to business customers include interest-bearing chequeaccounts,deposit accounts for individuals and entit
287、ies,paymentfacilities and the provision of finance in the form of loans,advances,bill facilities,invoice discounting and leasing.Business bankingcustomers can also select from treasury services,such as foreignexchange and interest rate risk management products.Other business banking facilities inclu
288、de fleet vehicle leasing,equityfinance,nominee and custodian services,corporate trustee services(through National Australia Trustees Limited),life insurance andinvestment products.International banking services have been a core part of the Nationalsservice to business customers for many decades.The
289、National has aninternational presence through offshore branches and representativeoffices in London,New York and ten major cities in Asia.The primaryfunction of these offices is to provide trade finance and treasuryservices to the Groups customers.The National also maintains correspondent banking re
290、lationshipswith approximately 3,000 banks.International services includelending,trade finance,foreign exchange dealing,the provision ofcredit and liquidity enhancement facilities to bond issuers and otherthird-party borrowers,acceptance of foreign currency deposits,andguarantee and documentary credi
291、t business.Domestic and international money market and foreign exchangeoperations are conducted through Treasury Divisions,which alsomanage the Nationals day-to-day funding.A global,24-hour-a-daydealing capability is maintained through dealing centres inMelbourne,Sydney,Wellington,Tokyo,Hong Kong,Si
292、ngapore,London and New York.In Australia,the National is a market makerin all major currencies.The National trades Eurocurrency securities,underwrites and arrangesfacilities for major corporate clients,and engages in interest rate andcross currency swap transactions.In the Australian money market,th
293、e National is a major trader of bill acceptances.It also operates inthe financial futures market as a principal and trader.Merchant and investment banking is provided as an integrated partof the Nationals wholesale banking service.Prior to June 1994,theseservices were provided by National Australia
294、Limited and certainsubsidiaries,First National Limited and First National FinanceLimited.These companies were placed into members voluntaryliquidation in June,1994 following the integration of their activitieswith the National.National Australia Bank Limited and Controlled Entities33Description of B
295、usiness(continued)4881-05 Fin.166.TC.02 8/1/97 9:45 AM Page 33The National undertakes a number of specialised business activitiesthrough other subsidiaries and business units.These include aproperty company(NBA Properties Limited)which,with itsproperty-owning subsidiary companies,is primarily an own
296、er ofthe Nationals business-related properties and custodian services.United Kingdom and Ireland OperationsThe Groups operations in the United Kingdom and Ireland arecomprised of four regional banks,a life insurance company and adeveloping wholesale banking operation.The Group also operates aservice
297、 company which primarily provides technology support tothe regional banks.These investments make the Group the second largest,foreignowned banking and financial services group in the region in termsof assets,with more than 750 outlets and four million customers.The Group is increasingly active in wh
298、olesale financial markets,withinvestments in technology and personnel.A wholesale banking unitprovides services in treasury,capital markets and corporate finance.The Groups regional banks in the United Kingdom are ClydesdaleBank PLC of Scotland(Clydesdale Bank),Yorkshire Bank PLC inNorthern England(
299、Yorkshire Bank)and Northern Bank Limited inNorthern Ireland(Northern Bank).The Group also owns NationalIrish Bank Limited in the Republic of Ireland(National Irish Bank).All four banks offer a full range of banking services in their ownmarkets.Clydesdale Bank is the third largest bank in Scotland in
300、 terms ofassets,with total assets of$14.6 billion at September 30,1996.It has339 outlets and 5,405 staff(or 4,920 full-time equivalent positions).Yorkshire Bank operates through 271 outlets in the north of Englandand the Midlands with a staff of 7,026(or 6,057 full-time equivalentpositions).At Septe
301、mber 30,1996 it had total assets of$9.5 billion.Northern Bank is the largest bank in Northern Ireland,in terms ofassets,with total assets of$6.4 billion at September 30,1996.It has116 outlets throughout the Province and a staff of 2,618(or 2,377full-time equivalent positions).National Irish Bank has
302、 68 outlets in the Republic of Ireland,a staffof 873(or 846 full-time equivalent positions)and assets of$2.5billion at September 30,1996.In 1995,the Group established National Australia Life Limited toprovide a selected range of life insurance and investment products.These are marketed through Clyde
303、sdale Bank,Yorkshire Bank andNorthern Bank as an integrated part of each banks product andservice range.The Groups United Kingdom banking subsidiaries also operate anumber of finance and leasing businesses,including:Clyde GeneralFinance Limited(Clydesdale Bank);Northern Bank Factors Limitedand North
304、ern Bank Leasing Limited(Northern Bank);and YorkshireBank Finance Limited and a number of leasing entities(YorkshireBank).Other specialised service entities include Northern BankExecutor and Trustee Company Limited.New Zealand OperationsBank of New Zealand(BNZ)was acquired by the Group in 1992.Itis
305、the second largest financial institution in New Zealand in terms ofassets,with a staff of 6,541(or 5,534 full-time equivalent positions)atSeptember 30,1996 and 251 outlets on the North and South Islands.BNZ offers a full range of banking services to personal,business andcorporate customers.BNZs tota
306、l assets were$20.6 billion atSeptember 30,1996.On May 17,1996 BNZ completed the acquisition of the minorityinterests in the merchant banking subsidiary BNZ Finance Limited.BNZs distribution network is being reconfigured resulting in areduction in the number of traditional branches,the establishmento
307、f specialised branches for business customers and the introductionof other initiatives such as 24-hour drive-through outlets.United States OperationsThe Group increased its presence in the United States followingthe acquisition in November,1995 of Michigan NationalCorporation(MNC).MNCs principal sub
308、sidiary is MichiganNational Bank(MNB),which is ranked as the fifth largest bankin Michigan and 58th largest in the US in terms of total assets.At September 30,1996 MNB had total assets of$11.8 billion and4,187 employees(or 3,596 full-time equivalent positions).It operates through 203 financial servi
309、ce centres(including 18supermarket financial services centres)and 295 Automatic TellerMachines(ATMs)across the State.MNB also provides a telephonebanking service that enables customers to open accounts,apply forloans and conduct transactions over the phone.Commercial business represents approximatel
310、y 72%of MNBs loanportfolio,with the balance in consumer business.MNB has targetedgrowth in banking and financial services in the small business andconsumer markets.This is expected to be achieved by combining theMNBs local market knowledge and the Groups resources intechnology,marketing and employee
311、 development.Elsewhere in the United States,the Group has a branch in New Yorkwhich supports Group customers doing business in the US andmarkets its services to US companies with operations in Australia,New Zealand and the United Kingdom and Ireland.A New Yorktreasury unit raises United States dolla
312、r funding for the Group andserves the global treasury needs of the Groups customers.Asian OperationsFrom its regional headquarters in Hong Kong,National AustraliaBankAsia operates five branches and five representative offices inAsias major business capitals.More than 230 staff are employed inthe Gro
313、ups Asian business activities.The Groups outlets in Asia provide international trade finance andtreasury services,primarily to companies which participate in tradeflows between Asia and the Groups key markets of Australia,New Zealand,the United Kingdom/Ireland,and the United States.National Australi
314、a Bank Limited and Controlled Entities34Description of Business(continued)4881-05 Fin.166.TC.02 8/1/97 9:45 AM Page 34OverviewThe Financial Review on pages 35 to 63 is prepared in accordance with Generally Accepted Accounting Principles applicable in Australia(Australian GAAP).ConsolidatedFor years
315、ended September 3019961996(1)1995199419931992Dollars in Millions unless otherwise statedAUDUSDAUDAUDAUDAUDSummary of Consolidated Statements of IncomeAustralian GAAPInterest income12,0179,50810,1697,9138,3958,447Interest expense6,9585,5055,6463,7164,2924,877Net interest income5,0594,0034,5234,1974,1
316、033,570Charge to provide for doubtful debts333263116179604908Net interest income after provision fordoubtful debts4,7263,7404,4074,0183,4992,662Other operating income2,9202,3102,4472,3582,0511,728Other operating expenses4,5873,6294,0083,7573,6593,088Operating profit before abnormal item3,0592,4212,8
317、462,6191,8911,302Abnormal gain(loss)32335059(127)Operating profit3,0622,4232,8792,6691,9501,175Income tax expense attributable to operating profit959759906953811500Operating profit after income tax2,1031,6641,9731,7161,139675Outside equity interests in operating profit(loss)after tax114810Operating
318、profit after income tax attributable tomembers of the Company2,1021,6631,9691,7081,129675(1)Translated at the Noon Buying Rate on September 30,1996 of US$0.7912=A$1.00.See Selected Financial Data for Five Years Ended September 30,1996 Exchange Rateson page 37.Net interest income in 1996 increased by
319、 11.9%to$5,059 million after increases of 7.8%and 2.3%in 1995 and 1994 respectively.Charge to provide for doubtful debts increased to$333 million from the charge in 1995 of$116 million which had decreased 35.2%from 1994.Other operating income in 1996 increased by 19.3%to$2,920 million after increase
320、s of 3.8%and 15.0%in 1995 and 1994 respectively.Other operating expenses in 1996 increased by 14.4%to$4,587 million after increases of 6.7%and 2.7%in 1995 and 1994 respectively.Operating profit before abnormal item and income tax increased by 7.5%to$3,059 million in 1996 after increasing by 8.7%to$2
321、,846million in 1995 and 38.5%to$2,619 million in 1994.Operating profit after income tax and before abnormal item increased by 8.4%to$2,099 million in 1996 after increasing 16.8%to$1,936million in 1995 from$1,658 million in 1994.An abnormal gain of$3 million(no tax applicable)was recorded in 1996 com
322、pared to an abnormal gain of$33 million in 1995 and anabnormal gain of$50 million in 1994.After abnormal item,profit increased 6.8%to$2,102 million.Total provisions for doubtful debts increased 20.8%in 1996 to$1,312 million from$1,086 million in 1995 and$1,302 million in 1994.Grossnon-accrual loans
323、of$1,444 million in 1996 decreased by 11.1%from$1,625 million in 1995.The Groups Tier 1 capital ratios as at September 30,1996,1995 and 1994 were 7.6%,9.2%and 8.5%respectively.The total risk weightedcapital ratios at September 30,1996,1995 and 1994 were 9.3%,11.6%and 11.5%respectively.Following stro
324、ng growth of around 4.0%in 1995/96,economic activity in Australia appears set to moderate in 1996/97 as a result of relativeweakness in domestic demand and the tighter fiscal stance adopted in the 1996/97 Federal Budget which is expected to contribute to slowergrowth in the near term.Underlying infl
325、ation is expected to remain relatively consistent with the Reserve Bank of Australias target band of23%,reflecting a sluggish labour market and the recent strength of the Australian dollar.Consistent with moderate activity levels and lowerinflationary expectations,interest rates have fallen in the l
326、atter part of 1996.Economic activity in the UK is expected to pick up in 1996/97,buoyed by consumer confidence and spending.With inflation above theBank of Englands target,monetary policy began to tighten in the latter part of 1996.Irish growth is expected to improve in 1996/97 albeit at aslower pac
327、e than the very strong performance of the past year.While inflation remains relatively subdued,current price pressures are likely tolead to further rises in short-term interest rates,especially with Irelands entry to the European Monetary Union pending.New Zealand growth is expected to slow in 1996/
328、97 as tight monetary policy takes effect on activity.Inflation is currently higher than theReserve Bank of New Zealands 0.0%to 2.0%target range,but is relatively low.While there remains some policy uncertainty surrounding theformation and workings of a coalition government following from the first M
329、ixed Member Proportional election held in October 1996,monetary policy has shown signs of easing in 1997.The United States economy is expected to record another moderate growth performance in 1996/1997,following an outcome of around 2.0%in 1995/96.Domestic activity however is not anticipated to cont
330、ribute strongly to inflation,with moderate growth being accommodated withincurrent capacity constraints in the economy.Only small upward adjustments in monetary policy are anticipated in 1997.Despite some recent moderation,growth prospects in non-Japan Asia are fundamentally sound and the region is
331、expected to remain one of thefastest growing in the world.The Japanese economy is experiencing a gradual recovery in activity,but business and consumer confidence remainsfragile and there is widespread concern that the upturn could lose momentum.Without fiscal stimulus,the Japanese economyis expecte
332、d torecord sluggish growth in 1996/1997.However,with Japanese interest rates very low,some upward pressure is likely in 1997.National Australia Bank Limited and Controlled Entities35Financial Review4881-05 Fin.166.TC.02 8/1/97 9:45 AM Page 35Selected Financial Data for Five Years Ended September 30,
333、1996The Economic Entitys financial statements are prepared in accordance with accounting principles generally accepted in Australia,which differin certain material respects from accounting principles generally accepted in the United States(see Note 47 to the Financial StatementsReconciliation with US GAAP).The information hereunder has been derived from the audited Financial Statements of the Econ
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