1、Annual Report 1999 National Australia Bank Limited ACN004044937An international financial services groupAn international financial services groupContents1999 a Glance2Financial Highlights4Corporate Highlights6The Board of Directors8Group Leadership Team10Year in Review by the Chairman and the Managi
2、ng Director11Business and PersonalFinancial Services16Products and Services18Global WholesaleFinancial Services 20National Services InformationTechnology Enterprises22Community Relations24Key Business Units26Financial Information and AnalysisDescription of Business30Financial Review36Report of the D
3、irectors75Financial ReportFinancial Statements80Notes to the Financial Statements84Directors Declaration165Auditors Report165Form 20-F Cross Reference Index 166Shareholder Information167Registered Office andContact Details174Principal Establishments177AustraliaNew ZealandUnited StatesNational Austra
4、lia Bank 1999 Annual Report 15 December 1999 Final dividend payable16 December 1999 Annual General Meeting27 January 2000 19992000 Q1 Results4 May 2000 19992000 Q2 ResultsJuly 2000 Interim 19992000 dividend paid27 July 2000 19992000 Q3 Results2 November 2000 19992000 Full Year ResultsDecember 2000 F
5、inal dividend for 19992000 paidOur VisionTo be the worlds leading financialservices company.Our MissionWe tailor financial services to helpindividuals,families,businesses andcommunities to achieve their goals.Our ValuesService to our customersQuality in everything we do Professionalism and ethics in
6、 all ouractionsCompetitiveness and a will to winGrowth and development of ourpeopleContinuous productivity improvementGrowing profit for our stakeholdersFinancial CalendarUnited KingdomIrelandAsiaDates may be subject to changeThe Nationals International Franchise31999 a Glance Profit after tax and b
7、efore abnormalsincreased 12.3%to$2.82 billion Earnings per share(before abnormals)increased 6.9%Dividends per share up 9.8%or 10 cents to 112 cents per share Increased contribution from overseasand greater revenue diversity Strong growth in financial servicesand e-commerce Capital position strengthe
8、nedAn international financial services group5An international financial services group5Profitability International activities contributed50%of profit after tax Other operating income increased15.4%and represents 42.9%oftotal income Cost to income ratio reducedto 54.0%Operating profit(before abnormal
9、items)per employee increased11.2%Shareholder Value Cash earnings per share(beforegoodwill amortisation)of 201 cents Dividends per share increased 9.8%Economic profit*up 16.2%Return on equity of 17.3%*Economic profit represents the excess of cash earnings(earnings adjusted for goodwill amortisation)o
10、ver the costof capital employed plus the value of franking creditsgenerated.Growth Movements in exchange ratesreduced total assets by$15 billion Underlying growth of 6.7%in totalassets in local currency terms Loans and advances increased9.2%in local currency terms National Income Securities raised$2
11、 billion1481742022522543002502001501005019951996199719981999Total assets$b1995199619971998199983879410211212010080604020Dividends per shareCents2,2232,5112,8213,0002,5002,0001,5001,000500199719981999Operating profit(before abnormals)$mNational Australia Bank 1999 Annual Report 4 4National Australia
12、Bank 1999 Annual Report Wealth Index*Total shareholder returns haveincreased on average by 22.7%per annum over the last 10years.The wealth index measuresshareholders total accumulatedvalue including share priceappreciation and dividends.The chart shows that$1,000invested in National AustraliaBank 10
13、 years ago would nowbe worth over$7,700.800070006000500040003000200010009/899/909/919/929/939/949/959/969/979/989/99*Data has been indexed to a common base of 1000Financial HighlightsBernard Ronchi,Assistant Manager,Investor Relations,talks to an investorabout the financial performance of the Nation
14、al and its international strategy.National Australia Bank Accumulation IndexBanking and Finance Accumulation IndexAll Ordinaries Accumulation IndexAsiaUnited StatesNew ZealandEuropeAustraliaAn international financial services group7National Australia Bank 1999 Annual Report 6Corporate HighlightsThe
15、financial services industry isnow a 24 hour global business.The National is well placedgeographically,and through ourmanagement structure and ourproducts and services,to takeadvantage of this.International GrowthThe geographic diversity of theNationals operations does morethan reduce the risk of bei
16、ngdependent on one market.Ourinternational operations createeconomies of scale and acustomer base that,in aggregate,are well above the ability of anyone bank to achieve in a marketthe size of Australia.In 1999,half of the Groups profitcame from our internationaloperations.The key internationalregion
17、s,Europe,New Zealand andthe United States all increasedtheir profit contribution.The benefits of recentinternational acquisitions,suchas the United States basedHomeSide International,Inc.,amortgage origination and serviceoperation,go beyond the additionof revenues and profits in thenear term.These b
18、usinesses fitwithin the Nationals overallgrowth strategy and provide keybenefits in sustaining shareholdervalue.Tailored FinancialSolutionsAs well as robust and diversifiedgrowth across geographic regions,core product lines showedimpressive growth.This wasespecially so in the credit card andleasing
19、sectors of the market.One of our strategic objectives isto ensure all product lines meetvolume and profit targets.Another strategic objective is toachieve at least 50%of our profitfrom non interest incomesources.Further progress wasmade toward this goal during theyear.Other operating incomerose from
20、 40%to 43%of totalincome.Financial services suchas investments,insurance andcustody increased theircontribution by 19.4%.As part of our global businesswe are developing the ability tomarket common products andservices to our estimated ninemillion customers throughoutthe Group network.E-CommerceInves
21、tment in web-basedtechnologies and e-commerceinitiatives enhanced theopportunities within theNationals operations.Our electronic distributionchannels embrace both business-to-business and retail consumermarket segments.Significantadvances have been made on theInternet over the last year.All National
22、 operations have anInternet presence and we haveover 100,000 Internet and PCbanking customers globally.Strong Capital BaseThe National Income Securitiespublic offer in Australia was anenormous success.Investorstook up$2 billion of the publiclylisted securities,which offer afloating rate set at 1.25%
23、abovethe 90 day bank bill rate.TheNational Income Securitiesprovided an innovative way toraise additional tier one capital,and reduce the average cost ofcapital.Year 2000 ReadinessThe Nationals systems andpeople are prepared for the datechange to 2000.The Groupsobjective of business as usualremains
24、unchanged.In August1999,as demonstration of itsconfidence in its preparations,theNational published its CustomerCommitments to its Australianbanking customers,coveringsafety of deposits and termdeposits and security of records.In September 1999,the Groupsubmitted an update on itsprogress to the Aust
25、ralian StockExchange.Since that date,preparations have continuedbroadly in line with the plan.As atSeptember 1999,the cost of theGroup Year 2000 Program isexpected to be$296 million ofwhich$254 million has beenspent.Corporate GovernanceThe Board of Directors isresponsible for the CorporateGovernance
26、 of National AustraliaBank Limited and its controlledentities.The Directors of theCompany have a duty to acthonestly,transparently,diligently,independently and in the bestinterests of all shareholders,inorder to increase shareholdervalue.The major processes bywhich the Directors meet theirduties are
27、 described in theCorporate Governance Statementset out on pages 72 to 74 of thefull Annual Report.Lisa Thomson,Mobile Mortgage Manager,(far right)provides advice to first home buyers at their convenience.Group Credit RatingsShort term Long term Standard&PoorsA1+AAFitch IBCAF1+AAMoodys Investor Servi
28、cesP-1Aa3BankWatchTBW-1AAAn international financial services group9CM Walter(Catherine)LLB(Hons)LLM MBAFAICDIndependent Non-Executive DirectorAge 47Appointed 1995Experience20 years as a solicitor,8years as a partner in thefirm Clayton Utz,until1994,including a periodas Managing Partner ofthe Melbour
29、ne office.Member of PrincipalBoard AuditCommittee.Member NationalAustralia FinancialManagement LimitedAudit Committee.Directorships Director NationalAustralia FinancialManagement Limited.Director of theAustralian StockExchange Limited,Melbourne BusinessSchool Limited,Transport AccidentCommission,Ori
30、caLimited,VictorianWorkCover Authorityand Vodafone PacificPty Limited and acouncil member of theUniversity ofMelbourne.TP Park(Tom)BSc MBAIndependent Non-Executive DirectorAge 52Appointed 1996Experience25 years in the foodindustry,12 years asManaging Director ofKraft Foods Limited.Currently Executiv
31、eVice President NorthAsia,South-East Asia,Australia and NewZealand.GJ Kraehe(Graham)BEcIndependent Non-Executive DirectorAge 57Appointed 1997Experience34 years in the wine,automotive anddiversifiedmanufacturingindustries.AppointedManaging Director andChief Executive Officerof Southcorp Limited in199
32、4.ED Tweddell(Ed)BSc MBBS(Hons)FRACGP FAICDIndependent Non-Executive DirectorAge 58Appointed 1998Experience23 years in thepharmaceutical andhealth care fields.Appointed GroupManaging Director andChief Executive Officerof FH Faulding&CoLimited in 1993.DirectorshipsChairman of FauldingInc.in the Unite
33、dStates of America.Chairman,AdelaideFestival.Director of subsidiariesin the Faulding Group inAustralia/New Zealand,Asia,Europe and NorthAmerica.WF Blount AM(Frank)BS(Elect.Eng)MBA(Mgmt)MS(Mgmt)Independent Non-Executive DirectorAge 61Appointed 1999 ExperienceExtensive experience inthe telecommunicati
34、onsindustry.AppointedChief Executive Officerof Telstra in 1992,aposition he held untilMarch 1999.Prior to hisappointment he wasGroup President AT&T.DirectorshipsDirector of Broken HillProprietary CompanyLimited(BHP)andPioneer International.Director EntergyCorporation,First UnionNational Bank ofGeorg
35、ia,Caterpillar Incand Adtran Corp in theUnited States andAlcatel in France.9National Australia Bank 1999 Annual Report 8MR Rayner(Mark)BSc(Hons)Chem EngFTSE FAusIMM FAICDFIE Aust ChairmanandIndependent Non-Executive DirectorAge 61Appointed 1985Elected ChairmanSeptember 1997Experience35 years with Co
36、malcoLimited including11 years as ChiefExecutive,20 years asa Director and 6 yearsas Deputy Chairmanuntil June 1997.A Group Executiveand Director of CRALimited until 1995.Member of PrincipalBoard AuditCommittee.DirectorshipsChairman of PasmincoLimited and MayneNickless Limited.Director of BoralLimit
37、ed.DK Macfarlane(David)Vice Chairman andIndependent Non-Executive DirectorAge 69Appointed 1985Elected Vice Chairman1992Experience33 years with JamesHardie IndustriesLimited,12 years asManaging Director until1990.Chairman of PrincipalBoard AuditCommittee.DirectorshipsChairman of NationalAustralia Ass
38、etManagement Limited.Chairman of SpicersPaper Limited and DEMLimited.Director of SchrodersAustralia Limited,Pasminco Limited andAustralian FoundationInvestment CompanyLimited.FJ Cicutto(Frank)BCom FAIBF FCIBSManaging Director andChief Executive OfficerAge 48Appointed 1998Experience31 years in bankin
39、g andfinance both in Australiaand internationally.Previous executivepositions include Headof Credit Bureau,StateManager New SouthWales,Chief ExecutiveClydesdale Bank andChief General Manager,Australian FinancialServices.AppointedExecutive Director andChief Operating Officerin July 1998.AppointedMana
40、ging Director andChief Executive Officerin June 1999.DirectorshipsChairman of NationalAustralia Group EuropeLimited.Chairman of AustralianBankers Association.Director Bank of NewZealand,MichiganNational Corporation,Michigan National Bankand HomeSideInternational,Inc.Director MelbourneBusiness School
41、Limited at theUniversity ofMelbourne.CM Deeley(Michael)MA DPhil(Oxon)Independent Non-Executive DirectorAge 69Appointed 1992Experience27 years with ICIAustralia Limited,5 years as ManagingDirector and ChiefExecutive until 1992.Member of PrincipalBoard Audit Committee.Chairman of AustraliaNew Zealand
42、RegionalBoard Audit Committee.DirectorshipsChairman of NorthLimited and of AirLiquide AustraliaLimited.National President ofGreening AustraliaLimited.DCK Allen AO(Charles)MA MSc DIC FAICDIndependent Non-Executive DirectorAge 63Appointed 1992Experience21 years with ShellInternational.AppointedExecuti
43、ve Director ofWoodside PetroleumLimited in 1980 andManaging Director from1982 to 1996.Member of PrincipalBoard AuditCommittee.DirectorshipsChairman of NationalAustralia InvestmentCapital Limited.Chairman ofCommonwealthScientific and IndustrialResearch Organisation(CSIRO).Director of AmcorLimited,The
44、 AustralianGas Light Company andAir Liquide AustraliaLimited.The Board of DirectorsThe past decade has clearly beenone of outstanding success forour Group.It has also preparedus well for the dramatic changesexpected in the next.In the pastyear profit after tax beforeabnormal items increased 12.3%to$
45、2,821 million.This was ourseventh successive record profit.During the past decade our netprofit has increased by anaverage of 16%per annum.Consistent earnings,a strongcredit culture,a healthy return onequity and prudent investment tounderpin future growth havealways been the hallmarks of theNational
46、.More recently,we haveadded to this the rapidglobalisation of our operations,a sustained focus on efficiencyin all our operations and theacceleration of our e-commerceinvolvement.The pace of changehas increased dramatically.The changes we are making inthe way we deliver banking andfinancial services
47、 whether inAustralia,Europe,the UnitedStates,New Zealand or Asia arewelcomed enthusiastically by themajority in the communities weserve,for the enhanced service,convenience and value theyprovide.Conversely,however,some are discomforted,eventhreatened,by the pace ofchange.Understandably,thesechanges
48、are attracting increasedpublic scrutiny and oftencriticism.The challenge for industry leaderssuch as the National is to ensurethat the nature and impact of thechanges it is implementing,andthe reasons for them,are bothunderstood and valued by its keystakeholders.The National is operating in oneof th
49、e worlds most competitiveand rapidly transforming industrysectors.Few industries matchbanking and financial services interms of the pace and extent ofchange in their structure,participants,technology andvariety of products and services.To consistently deliver recordprofits in such an environmentrefl
50、ects well on the corestrategies,operating skills andmanagement depth of theNational.Against this background,it isreassuring that the fundamentalstrategy of the National is largelyunchanged since it was firstarticulated in the second half ofthe 1980s.The National seeks to be a pre-eminent global prov
51、ider ofbanking and financial servicesunder strong brands ingeographically diverse,developedeconomies which have generallysimilar cultures,language,andlegal and political systems.It endeavours to generatestrongly growing,diversifiedearnings streams by providinga wide range of products andservices in
52、each of the regions inwhich it operates,to realise theeconomies of scale offered by itscombined customer base.At thesame time it seeks to achieve thescale which will make it a leadingparticipant in each of the regionsit serves.This scale will be achieved bothby organic growth of its existingoperatio
53、ns in each region and byacquisition.Acquisitions will beundertaken to expand thecustomer base or to introduceinto the Group new capabilities,skills and products whichcomplement and strengthen itsexisting activities and services.Frequently,an acquisition canfulfil both objectives.However,acquisitions
54、 will only beundertaken when they can beanticipated confidently to createvalue for our shareholders.Over the past decade theNationals approaches to theimplementation of this strategyhave been progressively refined.Perhaps the most significantrefinement has been the recentdevelopment and deployment o
55、fthe National Business Model,which has reorganised the Groupon a global line of business,An international financial services group11Year in Review by the Chairman and the Managing DirectorGroup Leadership TeamNational Australia Bank 1999 Annual Report 10Chief InformationOfficerMichael CoomerExecutiv
56、e GeneralManager Global WholesaleFinancial ServicesMichael SodenExecutive GeneralManager Business andPersonalFinancial ServicesGlenn BarnesManagingDirector and ChiefExecutive OfficerFrank CicuttoExecutive GeneralManager Products andServicesRoss PinneyManagingDirectorNational Australia Group EuropeGr
57、ahame SavageChief ExecutiveOfficerAustralianFinancial ServicesGordon WheatonChief ExecutiveOfficerMichigan National CorporationDoug EbertExecutive GeneralManager Group StrategicDevelopmentRoland Matrenza Executive GeneralManager Group RiskManagementBob MillerChief FinancialOfficerBob ProwseExecutive
58、 GeneralManager Group HumanResourcesPeter McKinnonChairman andChief ExecutiveOfficerHomeSideInternational,Inc.Joe PickettThe benefits of the Groupsinternational acquisitions are notsimply the quantitative addition torevenues and profits from thecurrent operations of the acquiredbusinesses impressive
59、 as thesehave been.The Nationals overallgrowth strategy also seekssignificant synergy benefits fromits various acquisitions.During the past year theglobalisation of banking andfinancial services has continuedunabated.Major bank mergerswere announced in the UnitedStates,Europe and Asia.Therepeal of t
60、he Glass-Steagalllegislation in the United States isexpected to set off a new roundof consolidation in the financesector.Australia will not remain insulatedfrom these forces.For the size ofits economy and population it isheavily overbanked.This curtailsefficiency and imposessubstantial but unnecessa
61、ryextra costs,which ultimately flowto the consumer.It is unfortunate that the FederalGovernment maintains its banon mergers between Australiasmajor banks.This seemsinconsistent with worldwidetrends and runs the risk that noAustralian-based bank will be ableAn international financial services group13
62、The Nationals Financial Solutions Kiosk at Coles Southland,Melbourne,Australiais a National initiative that provides convenient financial services.rather than a regional basis.The deployment of the modelis progressing on schedule.Within this Business Modelbest practices are beingtransferred between
63、regions,and global product specialistshave been established or,where appropriate,acquiredas going concerns.The latest phase in this processof strategy implementationinvolves the transformation of theNational to a digital,web-basedenvironment.An important element of theGroups strategy and a keyfeatur
64、e of the Nationals successin recent years has been its abilityto reduce its dependency oninterest income.The combinationof lower interest rates andintense competition in theGroups markets has resultedin reduced interest margins.The Group has long anticipatedthis trend and has moved toreduce the impa
65、ct on its profitsby aggressively developingdiversified streams of non-interest income.It has steadilyincreased its involvement inbusinesses that have substantialfee income potential.In the pastyear the National earned nearly43%of its income from non-interest sources such as feesfrom mortgage servici
66、ng in theUnited States,treasury incomeand fees from the marketing ofa variety of innovative financialservices products.It has anobjective of achieving at least50%of its income from non-interest sources.Two examples illustrate thispoint.The acquisition ofHomeSide International,Inc.one of the largest
67、mortgageservicers in the United States provided$536 million inmortgage origination andservicing fees for the Groupduring the past year.Similarly,the Group increased its financialservices income last year frombusinesses such as custodialservices,funds managementand superannuation,by 19.4%.The Nationa
68、l recognised someyears ago that banking andfinancial services would becomeglobal markets with littledifference between the typesof products and servicesdemanded throughout theworlds developed economies.The Group also believed thattechnology would enableglobal production and marketingof its products
69、and services.It realised these trends wouldencourage the formation of largebanking and financial servicesconglomerates competingthroughout the world.The National has demonstratedan unusual capacity tosuccessfully acquire and manageoperations in a variety ofcountries.This will be a keycapability in t
70、he years aheadas the industry continues toglobalise and competitionintensifies.Importantly,theNational is developing the abilityto market common products andservices to its estimated ninemillion customers throughout itsworldwide Group network.This ability is being enhancedby the Nationals growinginv
71、estment in web-basedtechnologies and e-commerceand its own informationtechnology expertise.Thiscombination of a multinationalcustomer base,growinge-commerce capability andincreasing globalisation of itsoperations will be one of the keysto the Nationals future growth.The security of earnings flowingf
72、rom its geographic diversificationis emphasised by the fact thatthe National now earns 50%ofits income outside Australia.Itsability to rapidly integrateacquisitions and gain revenuebenefits from them is evidentfrom the first full yearscontribution of HomeSide.In itsdebut year with the Group,HomeSide
73、 contributed$153million to consolidated profits.National Australia Bank 1999 Annual Report 12Year in ReviewThis broad area will continue tobe a major focus of the Group inthe coming year.The pace of change in itsoperating environment andorganisation structure hasinevitably placed great pressureon th
74、e people of the Nationaleverywhere.Directors recognisethe remarkable contribution ofall its staff members throughoutthis diverse Group.The workloadrequired to successfully managethe transition to a globalorganisation in one of the worldsmost competitive industriesis immense.It requires greatcommitme
75、nt and skill bothof which have been displayedin outstanding measure by thepeople of the National.During the year Mr Frank Cicuttowas appointed Managing Directorand Chief Executive Officer of theNational Australia Bank Group.Hesucceeded Mr Don Argus whocompleted a remarkable 44 yearcareer with the Na
76、tional.Directors,his senior managementcolleagues and the staff of theNational Australia Bank Groupsincerely thank Don Argus for hisservice and for hisaccomplishments,particularlyduring his term as CEO.We wishhim every success in the future.In accordance with theCompanys Constitution,in May1999 Mr Br
77、ian Loton retired fromthe Board on attaining the age of70.Mr Loton joined the Board in1988 and became a ViceChairman in1992.His significantcontribution is greatlyappreciated.Mr Frank Blount was appointedas a Director during the year.Mr Blount was Group Presidentof AT&T prior to his appointmentas Chi
78、ef Executive Officer ofTelstra Corporation Limited in1992.The Year AheadIn Australia,economic activityappears to have strengthenedsince mid 1999 with few signs ofwage and price pressures.GrossDomestic Product growth isexpected to be around 3%forthe next 12 to 18 months withunderlying inflation,exclu
79、ding theonce-off impact of the newtaxation system,to show only amodest increase.The Groups strategic focus willcontinue to be on leveragingshareholder value from its uniqueinternational business portfolio.Value will be generated throughthe growth of current marketshare and thus revenue in theexistin
80、g business;the expansionof the Groups global productionand marketing capability throughthe National Business Model;andappropriate acquisition of newbusinesses,where this createsadequate value for shareholders.There will also be increasedattention to the value of alliancesin furthering the Groupsdeve
81、lopment.The National has ensured thatits balance sheet providesmaximum flexibility forexpansion,through acquisitionor organic growth.Shouldworthwhile acquisitionopportunities in Australiaor overseas not presentthemselves in the shorter term,the alternative avenues of activecapital management will be
82、pursued.The Group is well placed to graspa range of opportunities and hasa mix of capital,revenue,marketshare,people and geographicspread of assets that is unique.This gives your Board confidencein the continued success of theNational in the year ahead.MR RaynerChairmanFJ CicuttoManaging DirectorAn
83、international financial services group15to achieve the domestic scalerequired to build a truly globalbusiness.It also appears to beinconsistent with Australiasambition to be a regional bankingand financial services centre.Indeed,it is likely over time tolead to a loss of talent andexpertise from Aus
84、tralia as itsdomestic banks become lessrelevant and less competitive inthe world industry.While international banks andfinancial services groups havebeen growing in size,they havealso been turning increasingly tonew forms of electronic productand service distribution,andparticularly to the use of we
85、b-based technologies.Whilst the National is investingheavily in these new distributionchannels to remain competitive,itmust still maintain its traditionalbranch network,particularly inAustralia.However,it is criticallysignificant that in the past year,less than 20%of its totaltransactions occurred i
86、n itsbranches,which only a decadeor so ago handled virtually 100%of its business.The emergence of very large,globally focused institutions isliterally redefining the waybanking and financial servicesare being developed andmarketed across the world.The National has estimated thatnon traditional sourc
87、es of bankrevenue such as assetmanagement,risk protectionand insurance products willaccount for about 50%of ourindustrys profitability within thecoming decade.These trends underlie andreinforce the concentration ofthe National on building aninternational portfolio of bankingand financial services as
88、sets thatcan be managed to generate highreturns individually,organised toprovide a collective customerbase for economies of scale inglobal marketing efforts,orleveraged for the building ofa larger global presence.During the past year,the Nationalran all of its key businesses andservices on a global
89、basis forthe first time.This was a mostsignificant achievement and wasa further demonstration of theGroups ability to garner benefitsfrom globalisation.As an important illustration of thissuccess,all of the Nationalsinformation technologyoperations are now managed bya single global unit,NationalServ
90、ices Information TechnologyEnterprises.During the year,thisunit used the global operatingmodel to substantially improve itsefficiency.The National isnow recognised as being inthe top 10%of all companiesworldwide for the efficiency of itsmainframe informationtechnology operations.The National gains s
91、ignificantbenefits from this leadershipin information technologyefficiency,not the least beingits ability to successfully developand manage the e-commercestrategy of the Group.The Group has developed andbegun to implement an electroniccommerce strategy that hasthree key elements Intranet,Internet an
92、d business-to-business.During the past yeareach of these was progressed aspart of an overall strategy toensure the Group is fullyequipped to utilise the operationaland marketing benefits offered bymajor technology advances.While attention is usually focusedon the extent to which theInternet is emplo
93、yed as a productand service distribution channelto individual consumers,theNational believes acomprehensive e-commercestrategy requires at least equalattention to other areas,particularly the use of electronicdistribution to service businessclients and to reduce internalcosts.The National now has ov
94、er100,000 Internet and PC bankingcustomers globally.National Australia Bank 1999 Annual Report 14Year in Reviewmarkets.Leveraging theexperience in the Asia Pacificregion,it is our intention toaggressively develop capabilitiesin these regions,looking toidentify and strengthenrelationships with existi
95、ng highnet worth customers and acquirenew Private Banking customers.Retail Financial Servicesand Channel ManagementRetail Financial Services providesfor the core financial servicesneeds of 6.8 million customersand provides transactionalsupport to all segments.TheChannel Management functionis respons
96、ible for integrateddistribution of financial servicesacross channels,includingcustomer response centres,ATMs and the development ofonline Internet services.Across the National,the focusof distribution has shifted fromtraditional branches todifferentiated outlets focusingon the individual needs ofcus
97、tomers and the convenienceof 2,703 ATMs,six major callcentres and leading transactionalInternet capabilities.An international financial services group17Personal Investment Consultant,Penny Carroll(left),discusses investment options,including NationalIncome Securities,with retirees at the Nationals n
98、ew Financial Services Centre in Hawthorn,Australia.16National Australia Bank 1999 Annual Report Business and Personal Financial ServicesThe National combines globalknowledge with local experienceGlobal Premium andPrivate Financial ServicesGlobal Premium and PrivateFinancial Services is focused onbui
99、lding relationships with highnet worth individuals throughteams of specialist financialprofessionals such as PrivateBankers,Personal and ExecutiveThe Package Business FinancialServices segment is beingcreated to focus on the financialneeds and business solutions ofsmall businesses and soletraders.Th
100、e aim is to integrateinteractive financial solutions,advice management andinformation across multiplechannel access points for ourbusiness customers majorpersonal and business life cycleevents.We are committed to theagribusiness sector and byestablishing and implementing atruly global Agribusiness F
101、inancialServices division we are aimingto further strengthen and deepenour relationship with this keyindustry sector and customerbase.Bankers,Financial Plannersand Mobile MortgageManagers.We want all of our premiumand private customers wherever they are around theworld to find us convenientand enjoy
102、able to deal with andto experience a seamlessdelivery of the best and mostappropriate financial solutions.In Australia we havesuccessfully introduced theArea Integrated Marketinitiative over the past 18months.As an example of the successof the premium platform inAustralia,we have achievedover$2.5 bi
103、llion of totalfinancial services sales in thepast financial year through ournetwork of over 200 financialplanners.The development and rollout ofPrivate Banking throughoutAsia Pacific,covering Australia,New Zealand and the maincommercial centres of Asia,isin a rapid growth phase witharound 30 Private
104、 Bankingsuites and a number ofsatellite offices in placethroughout the region.Europe and the United States,in particular,offer excitingprospects for Private Bankinggiven the potential of theseand consistent approach to thiskey customer base.Custom Business FinancialServices is our largest revenueand
105、 profit contributor,and isfocused on providing tailoredsolutions to meet the financialneeds of our sophisticatedmedium to large businesscustomers.Business and Personal FinancialServices is the Nationalsintegrated retailing functiondedicated to providing customerswith the optimum combinationof global
106、 knowledge and localexperience in financial services.These retail operations aremanaged in several globalbusiness portfolios.Theseinclude:Global BusinessFinancial ServicesGlobal Business FinancialServices is comprised of threecustomer segments,namelyCustom,Package andAgribusiness.This structureensur
107、es that there is a globalAn international financial services group1918National Australia Bank 1999 Annual Report HomeSide Internationals online siteallows customers in the US and overseasto obtain information about its mortgageservices from the comfort of their home.Products and ServicesInternationa
108、l transfer of best practicesprovides quality financial solutionsProducts and Services is adiverse global operation.Itconsists of six global productspecialist units,a global productmanagement function and arange of shared servicesincluding operations,collections,corporate real estate,strategicsourcin
109、g and re-engineering.By combining product specialists,product management and sharedservices,Products and Servicesis able to drive end to endperformance utilising a valuechain approach.A single manufacturing platformlowers the cost to servecustomers.It also provides forthe delivery of quality solutio
110、nsand transference of bestpractices,satisfied customersand increased shareholder value.The past 12 months have seenProducts and Services makeglobalisation a reality at theNational.The National BusinessModel has been substantiallyimplemented with global lines ofbusiness managing productdevelopment an
111、d processing on aglobal basis.During the year,twonew lines of business wereestablished Global Collectionsand Global Investment andInsurance(which includesNational Australia FinancialManagement,County InvestmentManagement,National AustraliaAsset Management and NationalAustralia Life businessoperation
112、s).The key for Products and Servicesis to build once globally;to utiliseour scale,functional expertise andglobal customer base to driveefficiencies,convergence andlower unit costs.This process is already deliveringreal benefits.Our GroupCollection Centre in Leeds is nowexporting its best practice de
113、btcollection processes throughoutthe Group.This expertise iscurrently being leveraged inAustralia and New Zealand aswe restructure our operations inthese areas.Similar best practice transfers areoccurring throughout Productsand Services.The highlysuccessful New Zealand GoldCard upgrade strategy has
114、beensuccessfully exported to Australiaand is now being implemented inEurope.Global SecuritiesServices is also exporting thesuccessful Master Custodycapability to the United Kingdom.The Products and ServicesLeadership Team hassummarised the key financialobjectives ahead in terms of asimple 30/80/100/
115、200framework:30%reduction in unit costs by2001 80%product and processconvergence by 2001 100%achievement of servicestandards doubling profit by 2001.These objectives are alsounderlined by the fundamentalrequirement of Products andServices to assist the retailersachieve their profit objectives.A majo
116、r effort has been made tocommunicate these objectives toProducts and Services employeesaround the globe as well as tofocus on performancemanagement and employeedevelopment programs.An international financial services group2120National Australia Bank 1999 Annual Report The National focuses on strengt
117、heningcorporate and institutional relationshipsGlobal Wholesale Financial ServicesGlobal Wholesale FinancialServices is responsible for theGroups 1,500 major corporateand institutional relationshipsworldwide.Incorporating debtmarkets,corporate finance,foreign exchange,money market,financial risk man
118、agement,andproject and structured financeactivities,Global WholesaleFinancial Services operatesacross four continents and 21financial centres.We expanded our capabilityin interest rate and foreignexchange products andintroduced commodity riskmanagement and creditderivatives to meet customerneeds.Pro
119、ject finance wasestablished in Europe andstructured finance extended inthe United States.Following the successful launchof FX Autodealing in Australia andNew Zealand,this electronicforeign exchange dealing systemwill shortly be introduced intothe United Kingdom to give ourcustomers more efficient ac
120、cessto foreign exchange services andto assist us in acquiring newcustomers.The National achieved a worldfirst by executing the first officialEuro transaction following itslaunch on 1 January 1999.Our continued focus onenhancing return on equity,together with the growingdemand by both borrowers andin
121、vestors for a broader range ofdebt instruments,has seen thefurther development of theGroups debt markets capability.Of particular note was theestablishment of TitanSecuritisation Limited,whichenabled us to securitise assets inAustralia,and our United StatesReg Y capability,which when fullylicensed,w
122、ill enable us to sellsecurities to investors in the US.Global Wholesale FinancialServices continues to pursuea relationship managementstrategy and is currently in theprocess of repositioning theCorporate and InstitutionalServices team along industrysector lines.To ensure that the wholesalebusiness p
123、latform is continuallydeveloped to efficiently meet thechanging needs of our business,the functional responsibilitieswithin Global Wholesale FinancialServices have been formed into adedicated support services group.Over the year,various industrysurveys noted our market leadingcapabilities in:Relatio
124、nship management inAustralia and New Zealand Project finance in Asia Pacific A$cross currency swapsglobally Interest rate and currency riskmanagement products inAustralia.This is an indication of both theNationals success in the past andthe capabilities we have to growour business in the future.Ourf
125、ocus continues to be return onequity,efficiency gains anddeepening relationships withcorporate and institutional clients.At Country Roads Head Office in Melbourne,Australia,Christian Paterson,Jane Merrick andSarah Hill utilise the Nationals online services.An international financial services group23
126、22National Australia Bank 1999 Annual Report National customers in the UK can accessfinancial services electronically throughthe latest information technology.Investment in technology enhancescustomer supportNational Services Information Technology EnterprisesNational Services InformationTechnology
127、Enterprises(formerly Global InformationTechnology)is responsible forthe technology infrastructureand systems that support theGroups business and keepour customer data secure.We create shareholder value byenhancing the return from theGroups information technologyresources.Globalisation has been thefo
128、cus throughout the year andwill continue to be in 2000.As the National strives tobecome a truly global player,technology becomes a criticalcomponent of the deliverychain in an increasinglycomplex and sophisticatedenvironment.Our strengths lie in thecapabilities of our people andour ability to levera
129、ge thisglobally.This was evidenced by thenumber of innovative projectsundertaken throughout theyear,including:The successfulimplementation of a foreignexchange deal capturesystem for our customers inAustralia and New Zealand.This system has given theNational market leadership inthis specialised area
130、 ofe-commerce.The implementation of aworld class stand-by disasterrecovery strategy for theBank of New Zealand.This isa significant achievement forboth the Group and ourcustomers.Over the nextyear we will implement thisstand-by strategy in Australia.A sophisticated,front office,real-time,treasury de
131、alcapture and position keepingsystem has beenimplemented in three majorAsian financial centres.Better use of the existingEuropean ATM and point ofsale platform to create asystem that will be the basisof all future Mondex launchesglobally.The system uses thelatest chip card technologyavailable in the
132、 marketplacetoday.The successfulimplementation of an onlineglobal credit risk exposuresystem for Global WholesaleFinancial Services.Thiscentralised service allows usto manage and monitor creditlimits and exposures aroundthe globe.We have also investedsubstantial resources in theGroup Year 2000 Progr
133、am andthe introduction of the Euro.This year,we have once againproven that our data centresare among the most costeffective in the world,retainingour position in the top decileglobally.An international financial services group2524National Australia Bank 1999 Annual Report Top,Emma Carney,Australian
134、triathlete,is a proud member of Team National.Bottom left,The Nationals CommunityLink Programsupported a local initiative to build the YoganupRegional Playground at Busselton,Western Australia.Bottom right,The Bank of New Zealand isinvolved in the Kiwi Recovery Program.The National is actively invol
135、ved incommunities around the worldCommunity RelationsThe major changes underway inthe global banking and financialservices sector are having asignificant impact on the staff andcustomers of the National,andalso on the Groups other keystakeholders includingshareholders and thecommunities where the Na
136、tionalconducts its various businesses.Understanding and responding tothe various needs and interests ofits stakeholders is what theNational believes constitutes itsCorporate Social Responsibility.A socially responsible company isone that attends not only to theneed to run efficient and profitablebus
137、inesses in a commercialsense.It also endeavours to runits businesses in a mannerconsistent with general publicexpectations of an ethical and fairorganisation and one prepared toassist in addressing communityissues.A key objective of the Nationalis to operate as a sociallyresponsible corporation and
138、toearn community recognition fordoing so.During the year itcompleted a major review ofcommunity relations activitiesthroughout the Group.The resultswere pleasing.The reviewconfirmed that a number of highlyinnovative and importantcommunity relations programs arealready underway,throughout theGroup.Th
139、ese will form the basisof its plans to expand considerablyand enhance its communityrelations effort.The Group intends to focus onfour key community relationsactivities:community consultation;the involvement of employees incommunity projects;communityinvestment;and partnerships withmajor community se
140、rvice andvolunteer organisations.It willintegrate a number of the highlysuccessful community projectscurrently underway in Australia,New Zealand,the United Kingdomand the United States into acommon approach to communityrelations.Some of the key programsforming the basis of the Groupscommunity emphas
141、is include:National CommunityLink,aprogram developed in Australiawhich will be extended to allareas of the Group in thecoming year.CommunityLink isa unique series of projects thatpromotes the value ofcommunity service andvolunteer organisations.It includes the largest volunteerawards program in Aust
142、ralia anda series of partnerships withsome of Australias leadingcommunity organisations suchas the Red Cross,SalvationArmy,City Missions Networkand the Australian ConservationFoundation.Michigan Nationals highlyinnovative Community ActionPlan,which includes theprovision of credit and servicesto low
143、and moderate incomeneighbourhoods.This approachmay well provide a model forother areas of the Group,giventhe fact that access to financialservices is a significant issue inall developed economies.Various programs involvingvolunteers from Group Banks,which highlight the potential ofcommunity outreach
144、 activitiesas key components ofcommunity relations.YorkshireBank is a founding member ofLeeds Cares which providesemployees within the companythe opportunity to supportdisadvantaged communitygroups.In Australia,the Nationaloffers its high potentialmanagers the opportunity toassist 12 leading communi
145、tyorganisations with their strategydevelopment,marketing,financialcontrol and human resourcemanagement.Partnerships with communityorganisations which addressissues as diverse as low costhousing,substance abuse,effective parenting andenvironmental protection.This isanother key aspect of theNationals
146、community relations.InNew Zealand,concern about thepotential extinction of the kiwi ledto a joint program involving theBank of New Zealand,theDepartment of Conservation andthe Royal Forest and BirdProtection Society.In Scotland,Clydesdale Bank has a majorpartnership with Historic Scotland,the Govern
147、ment agencyresponsible for the maintenanceof Scotlands monuments andhistoric buildings.The Group plans to use the learninggained from these various activitiesand combine them into a concertedcommunity relations effort underthe banner of an expanded NationalCommunityLink.This will besupported by dire
148、ct consultationwith community service andvolunteer organisations throughoutthe Groups key operating areas.An international financial services group27Northern BankNorthern Banks profit after taxbefore abnormal items increasedby 1.2%to$171 million.In localcurrency,the result increased1.5%to 67 million
149、.The main thrust of activity duringthe year was a radical restructureof the Bank which has affectedevery area of operation.The branch network has beenreorganised into three segments:business,retail and premium,with dedicated staff able to caterfor the needs of their customers.Branch services are now
150、supplemented by dedicatedbusiness centres to look afterbusiness and agriculturalcustomers.Ten business centresare now in operation and 50additional business andagricultural relationship managerswere appointed.A Premium Financial Servicesunit has been established to caterfor high net worth individual
151、s.Yorkshire BankYorkshire Banks profit after taxbefore abnormal items for 1999was$343 million(135 million),consistent with 1998.Premium Financial Services waslaunched in Yorkshire Bank in April1999 and by the end of the yearhad written 10 million ofmortgage business and opened700 principal accounts.
152、In March 1999,Yorkshire Bankwas re-accredited with theprestigious Investors in Peoplestatus,reflecting the value theBank places on training anddeveloping its people.This is thefirst time that a UK bank has beenre-accredited for the thirdconsecutive year.In addition,theBank also received its third Yo
153、urMortgage Award,this time forbest regional lender.Yorkshire Banks telephonebanking service,launched in 1997,continued to grow,with customerregistrations in excess of 10,000per month.Mortgage outstandings increasedby 30%and retail depositsexperienced solid growth of 3%.Asset Finance delivered 16%gro
154、wth,the fifth successive yearof significant growth,with overallbusiness lending increasing by13%.National Irish BankNational Irish Banks profit aftertax before abnormal itemsdecreased by 6.1%to$31 millionin 1999.In local currency,theresult decreased 6.7%to 14million.During 1999,National Irish Banksu
155、ccessfully implemented keyaspects of the National BusinessModel,launch of the Euro and aBranch Service Centre.Financial performance during theyear was impacted by thesechanges and the continuing costof external investigations arisingfrom various allegations madeagainst certain parts of itsoperations
156、.The traditional branch networkhas been reorganised into threesegments:business,retail andpremium,with dedicated staffable to cater for the specific needsof their individual customers.A Premium Financial Servicesunit has been established to caterfor high net worth individualswhile dedicated business
157、 centrescater for the needs of businessand agricultural customers.National Australia LifeNational Australia Lifes profit aftertax was$10 million(4 million)compared with$5 million(2million)for 1998.New annualisedpremium income was up 7.7%to36 million.In April 1999,National AustraliaLife launched a ne
158、w tax freeIndividual Savings Account(ISA).Investment options available tocustomers now include equity26National Australia Bank 1999 Annual Report Australian Group Profit after tax before abnormalitems for the Australian Groupincreased 7.3%over the previousyear.The major business unit isAustralian Fi
159、nancial Serviceswhich lifted its profit after taxbefore abnormal items by 2.3%to$1,435 million.Total net loans and acceptancesincreased by 6.3%to$105.6billion and home lending rose by11.1%to$42 billion during 1999.The years highlights include:Business Financial Servicescontinued to meet the needs of
160、customers through a strongrelationship managementstrategy that links BusinessBankers with other key productspecialists.Core improvementplans were focused on buildinga better management platformfor the Custom,Agribusinessand Package Businesssegments.As part of this,twocore products were launched the
161、National CommercialMortgage(a lending product forsmall businesses)and the FarmDeposit Management Account(to meet the seasonalrequirements of agribusinesscustomers).The National began trialling anumber of convenience bankinginitiatives in outlets located insouthern metropolitan Melbourne,Australia.Ad
162、ditional staff havebeen hired to demonstrate thebenefits of convenience bankingfacilities.In April 1999,the Nationalbecame the preferred financialservices provider to the Instituteof Chartered Accountants inAustralia,launching an affinitypackage(including a co-brandedVisa Gold Credit Card)to theInst
163、itutes 40,000 members,postgraduates and students.Over the past 12 months,theNational has expanded itsPrivate Banking network,establishing seven new PrivateBanking suites,satellite officesand specialist and investmentservices units.The National nowhas 16 Private Banking unitsthroughout Australia,ands
164、ignificant specialist serviceshave been added in the areas ofestate and tax planning andspecialised financial planning.The Nationals wealth creationentities in Australia comprisingNational Australia FinancialManagement,National AustraliaAsset Management and CountyInvestment Management had asuccessfu
165、l year.Operating profitfor 1999 increased by 11.1%to$65.5 million.As at 30 September 1999,totalfunds under management were$20.7 billion.Clydesdale BankClydesdale Banks profit after taxbefore abnormal items decreasedby 8.4%to$262 million this year.The current year profit includes acharge(after tax)of
166、$55 million(22 million)in respect of arealignment of the statisticallydetermined general provisionacross the European entities.Excluding this amount,Clydesdales profit was 125million,an increase of 11.6%on the previous year.Clydesdale performed stronglyunder increasingly competitivemarket conditions
167、.Retail Financial Servicescontributed the major proportionof profits.Low UK interest rates,combined with an upsurge in thehousing market,saw a record350 million of new mortgageswritten during the year.Business Financial Services alsoperformed strongly despitedifficult conditions in Scottishagricultu
168、re,in which Clydesdalehas a significant interest.Increased emphasis on themanagement of farm accounts,together with the provision offlexible repayment loans geared tocashflow,were among measurestaken in support of agribusinesscustomers.Key Business Unitsfunds geared to growth or income,a high income
169、 bond fund,asheltered growth equity fund andcash deposits.Michigan NationalMichigan Nationals profit after taxbefore abnormal items increased12.4%to$254 million for thecurrent year.In local currency,theresult increased 11.6%to US$163million.Solid loan growth in the CustomBusiness segment,combined wi
170、than increase in fee income fromnon-traditional banking sources,have contributed to the upwardtrend in profits.Michigan National mutual fundsunder management grew 17%during 1999 and now ranksseventh in the state of Michiganwith US$1.5 billion assets undermanagement.HomeSideInternational,Inc.HomeSide
171、s profit after taxincreased 66.3%to$153 millionduring 1999.In local currency,theresult increased 69%to US$98million.The 1999 result reflectsHomeSides first full year with theGroup and strong volume growth.HomeSides mortgage servicingportfolio grew 26%to US$146billion at 30 September 1999.This growth
172、 was fuelled by bulkservicing acquisitions and flow frompreferred partners of US$43 billionand production from wholesalechannels of US$22 billion.Internet based business-to-business linkages are fundamentalto HomeSides operating strategy.During the year,HomeSideextended this technology toinclude Int
173、ernet access for ourborrowers and expanded its brokerand correspondent originationwebsites.HomeSide now services themortgages of approximately1.7 million households.HomeSide is poised to extend itsmortgage expertise to Australiaand is assessing opportunities inEurope.Bank of New ZealandIn a difficul
174、t environment Bank ofNew Zealand achieved a profitafter tax of$302 million,an increaseof 7.9%from 1998(beforeabnormal items).In local currency,the result increased 12%toNZ$363 million.The Banks Financial ServicesGroup continued to grow with asignificant increase in funds undermanagement.Credit Cards
175、continue to perform strongly one of every two Gold cardsissued in New Zealand nowcomes from Bank of New Zealand.The wholesale division was astrong performer and was ratedas Relationship Bank of the Year.The division led three majorsyndications including the largestever New Zealand dollarsyndicated f
176、acility.The Business Bank confirmed itspre-eminent position in the marketwith interest bearing assetsincreasing by nearly 10%toNZ$6.7 billion and interest bearingliabilities up 15%to NZ$3.2 billion.Bank of New Zealand furthermodified its distribution networkto ensure it is aligned to customerneeds.K
177、ey initiatives were theestablishment of the Private Bank,to service high net worthcustomers,and the launch ofInternet Banking.National Australia BankAsiaThe Asian operations achievedimpressive growth during 1999.However,a significant rise in profitfrom wholesale activities andincreased business conf
178、idencewas offset by unfavourableexchange rate movements ontranslation of the Groupsoperations in Asia.Profit after taxfor 1999 was$32 million.The Asian Group continues to focuson developing lasting customerrelationships,diversifying incomestreams and prudent credit qualitymanagement.National Austral
179、ia Bank 1999 Annual Report 28Key Business UnitsNational Australia Bank Limited and Controlled Entities29Table of ContentsPageDescription of Business.30Financial ReviewOverview .36Selected Financial Data for Five Years.37Net Interest Income.40Bad and Doubtful Debts .42Other Operating Income.44Other O
180、perating Expenses(Excluding Goodwill Amortisation and Abnormal Items).45Abnormal Items.47Operating Profit After Income Tax .47Operating Profit By Segments.48Assets and Shareholders Equity .52Return on Average Shareholders Equity.52Shareholder Value .53Dividends and Earnings per Share .53Liquidity an
181、d Capital Resources .53Changes in Financial Condition .54Capital Adequacy.54Gross Loans and Advances .57Impaired Assets,Provisions and Allowance for Loan Losses .58Deposits and Other Borrowings .61Risk Elements .61Human Resources .62Risk Management .63European Economic Monetary Union(EMU).66Year 200
182、0 Readiness Disclosures.66Goods and Services Tax.69Accounting Developments .69Corporate Governance .72Report of the Directors.75Financial Report.79Statements of Profit and Loss .80Balance Sheets .81Statements of Cash Flows .82Notes to the Financial StatementsPrincipal Accounting Policies .84Profit a
183、nd Loss Notes .89Asset Notes.94Liability Notes .108Capital Notes .115Other Notes .123DirectorsDeclaration.165AuditorsReport.165Form 20-F Cross Reference Index.166Shareholder Information.167Financial Information and AnalysisFor the Year Ended September 30,1999IntroductionNational Australia Bank Limit
184、ed(hereinafter referred to as theNationalor the Company)is an international financial servicesgroup providing a comprehensive and integrated range of financialservices across four continents and 15 countries.Globally,atSeptember 30,1999 the National had:Total assets of over$250 billion Over$400 bill
185、ion in assets under administration More than 9 million customersToday,the National is the largest financial services institution listedon the Australian Stock Exchange and ranks among the worlds 40largest banks in terms of shareholdersequity.The Company began in Melbourne in 1858 as The National Ban
186、k ofAustralasia.In its current form,the National is the result of a mergerin 1981 of The National Bank of Australasia Limited and TheCommercial Banking Company of Sydney Limited.From its Australian base,the National has expanded throughacquisition overseas into those markets where it believes it can
187、implement its successful financial services strategies.Thisdiversification has reduced the Nationals reliance on any one marketand improved the quality of its income streams.At September 30,1999,49.7%of the Nationals total assets were domiciled inAustralia,the balance were located in Europe(United K
188、ingdom andRepublic of Ireland,23.1%),United States(12.9%),New Zealand(9.5%)and Asia(4.8%).Vision and StrategyThe National is focused on building a leading international financialservices group.With the assistance of a global business model,thisvision is being pursued through a strategy of controlled
189、 growth anddiversification of income streams.The Groups growth strategy is being achieved through a mixture oforganic expansion and acquisition within its core markets ofAustralia,New Zealand,the United Kingdom,Ireland,the UnitedStates and Asia.Organic growth has been achieved through theNationals B
190、usiness,Personal and Wholesale financial servicefranchises supported by a strong customer orientation and brandposition.This growth has been further supported by thedevelopment of the Nationals financial services activities,includinglife and other insurance products,funds management,custodianand tru
191、stee operations.The Nationals acquisition strategy has generally been aimed atenhancing the Groups position within its chosen markets throughthe purchase of retail banks with strong retail customer franchises.More recently the strategy has also focused on building keycapabilities and developing crit
192、ical mass in selected financial servicesactivities through acquisitions and internal growth.The Nationalsability to participate in further rationalisation of the bankingindustry in Australia has been constrained to date by the prohibitionof the merger of major banks in Australia by the CommonwealthG
193、overnment.In the event that such Government policy changed itwould be part of the Nationals strategy to seek to extend its positionin Australia through acquisition or merger at an appropriate time.The Group has also been actively diversifying its income streams toreduce its reliance on interest inco
194、me.Improved cost recovery oftraditional banking services and an expansion of other financialservices activities have been the principal contributors to theincrease in other operating income.As a result of these efforts,forthe twelve months ended September 30,1999,42.9%of operatingincome was derived
195、from non-interest sources.The Nationals Business ModelIn April 1998,the National introduced a new business operatingmodel to accelerate its transition to an international financialservices group and assist in achieving its vision.The key strength ofthis operating model is that it will enable the Nat
196、ional to sharpen itscustomer focus while gaining greater leverage from the Nationalsinternational operations.The Nationals business operating modelhas four key elements:Integrated RetailersThe integrated retailers represent the Nationals customer facingfunctions.This element of the model requires th
197、e Nationalscustomer service activities to operate along customer segment ratherthan geographic lines.Each business segment is then dedicated tomeeting the needs of that customer segment with a range ofproducts sourced from both inside and outside the organisation.The integrated retailers are the res
198、ponsibility of the Business andPersonal Financial Services Division.Product SpecialistsProduct specialists manage the end to end processes of selectedproduct sets on a global basis.Managing independent business unitsfocused on single products is intended to enable the National toimprove efficiency t
199、hough increased specialisation and scale.Ultimately,the Nationals product specialists are aiming to deliverworld class levels of efficiency in product manufacture anddistribution.Shared Customer ServicesShared customer services centralise common business unit functionssuch as technology,operations,p
200、rocessing and telephone banking.Through the specialisation of functions and the removal ofduplication,substantial opportunities exist to improve efficiency.Principal responsibility for developing and managing the NationalsProduct Specialist and Shared Services activities is the responsibilityof the
201、Global Products and Services Division.Corporate CentreA streamlined corporate office focuses on the Nationals strategy,policy and corporate governance.Implementation of the Nationals business model progressed duringthe year.Key organisational changes have been completed and theNational is currently
202、executing the strategies necessary to achieveglobal scale.In April 1998,the National announced a restructuring to prepare theNational for the implementation of the business model.For the yearended September 30,1998 a charge of$380 million after tax wasmade in respect of the restructuring.At Septembe
203、r 30,1999National Australia Bank Limited and Controlled Entities30Description of Businessapproximately 70%of the restructuring charge had been utilised.For a detailed discussion of the restructuring charge and itsutilisation during the past year refer to page 47.Business and Personal Financial Servi
204、cesStructured along global lines,Business and Personal FinancialServices(B&PFS)manages the Nationals integrated retailers whichrepresent the majority of the Nationals revenue generating activities.The B&PFS is structured along four key customer segments withbusiness units aligned to each segment.The
205、se segments comprise:Custom and Rural Business,Packaged Business,Private andPremium Financial Services and Retail Financial Services.Separatebusinesses have also been established for Direct Retailing andChannel Management.A brief discussion of the Nationals retailing activities in each of itsoperati
206、ng regions follows.For a detailed discussion of results bygeographic segment,refer to pages 49 to 51.AustraliaIn Australia,the Nationals retailing activities are principallyconducted through Australian Financial Services which provides afull range of financial services to over 3 million customers ac
207、ross allsegments.Core retail banking services include savings and cheque accounts,passbooks accounts,term deposits,credit cards,personal loans,housing loans and lines of credit.The National is the largest of themajor Australian banks.Within the personal segments,the National is one of the largestpro
208、viders of credit and deposit facilities in Australia.Other financialservices are also provided to these segments through the Companyswholly owned subsidiary National Australia Financial ManagementLimited.Services include personal financial planning,life anddisability insurance,superannuation and a r
209、ange of managedinvestment funds.In addition,personal trustee services,includingwills,power of attorney,and personal asset care and managementservices are provided through the Nationals subsidiary,NationalAustralia Trustees Limited.Importantly,the sale and distribution ofall financial services is int
210、egrated with the Nationals distributionnetwork with customers managed on the basis of segments ratherthan products.The National is also a substantial provider of business and ruralfinancial services in Australia.The Nationals strong position inbusiness markets is the result of carefully targeted ini
211、tiatives over anumber of years.These have included the development of specialistbusiness and rural banking teams with expert business knowledgeand a sound understanding of how to tailor financial solutions tothe needs of customers.Services to business customers comprise a full range of deposit,lendi
212、ng and payments facilities supplemented with a range of otherfinancial services.Some of these services include foreign exchangeand interest rate risk management products,fleet vehicle leasing,equity finance,nominee and custodian services,corporate trusteeservices and life insurance and investment pr
213、oducts.Services are provided through a network of traditional branches andelectronic distribution channels.Financial service centres andfinancial service suites are the primary sales outlets for the personalsegments while transactions are conducted through over 1,100outlets,1,000 Automatic Teller Ma
214、chines(ATMs)and 67,000 pointof sale terminals.Customers are also able to conduct a range oftransactions and other information services over the telephone orvia the Internet.As at September 30,1999 Australia FinancialServices had staff of 24,213(or 21,210 full time equivalentpositions).Business custo
215、mer sales are primarily conducted through a networkof business centres known as Business Banking Centres andBusiness Banking Suites.Businesses also have online access to theiraccounts though a dedicated application called National Online.EuropeThe Groups retailing operations in the United Kingdom an
216、dRepublic of Ireland primarily consist of four regional banks and alife insurance company.These investments make the National thelargest foreign owned banking and financial services group in theUnited Kingdom and Ireland in terms of assets,with more than fourmillion customers.The Nationals regional
217、banks in Europe are Clydesdale Bank PLC ofScotland(Clydesdale Bank),Yorkshire Bank PLC in NorthernEngland(Yorkshire Bank)and Northern Bank Limited in NorthernIreland(Northern Bank).The National also owns National IrishBank Limited in the Republic of Ireland(National Irish Bank).Eachbank offers a bro
218、ad range of financial services.Clydesdale Bank is the third largest bank in Scotland in terms ofassets,with total assets of$19.2 billion at September 30,1999.Clydesdale has a well balanced business and personal portfolio,achieving particular success in the custom and packaged businesssegments.It had
219、 307 outlets and a staff of 4,013(or 3,640 full timeequivalent positions)at September 30,1999.Yorkshire Bank operates through 313 outlets in the north of Englandand the Midlands and at September 30,1999 had an asset base of$14.4 billion.Yorkshire has traditionally focused on the personallending mark
220、et although in recent years it has been activelyexpanding its presence in personal segments,through the provisionof mortgages,and in the business segments by applying theNationals business banking template.At September 30,1999,it hada staff of 5,330(or 4,685 full time equivalent positions).Northern
221、Bank is the largest bank in Northern Ireland with totalassets of$9.2 billion at September 30,1999.Northern has a strongbusiness banking presence and over recent years has expanded itsprofile in the personal segments utilising the Nationals tailoredhome loan product.It had 109 outlets and a staff of
222、2,167(or 1,933full time equivalent positions)at September 30,1999.National Irish Bank had total assets of$3.7 billion at September 30,1999 and operates throughout the Republic of Ireland.It had 68outlets and a staff of 758(or 730 full time equivalent positions)atSeptember 30,1999.In 1995,the Nationa
223、l established National Australia Life Limited inthe UK to provide a selected range of life insurance and investmentNational Australia Bank Limited and Controlled Entities31Description of Business(continued)National Australia Bank Limited and Controlled Entities32Description of Businessproducts.These
224、 are marketed through the UK Banks as anintegrated part of each banks product and service range.The Nationals European banking subsidiaries also operate a numberof finance and leasing businesses to support their operations acrossthe region.Other specialised services entities include Northern BankExe
225、cutor and Trustee Limited.New ZealandBank of New Zealand(BNZ)was acquired by the National in 1992.It has a strong brand name and franchise with comprehensivecoverage of both the North and South Islands of New Zealand,offering a full range of financial services to personal,business andcorporate custo
226、mers.At September 30,1999 BNZ had 197 outlets and 5,458 staff(or4,433 full time equivalent staff positions)and a total asset base ofA$24.6 billion which is well balanced between the business andpersonal segments.The reconfiguration of the distribution network is continuing withthe underlying objecti
227、ve being to provide customers with a variety ofcost efficient delivery mechanisms as a platform to grow the BNZbrand franchise within the banks chosen market segments.Thedistribution network includes,194 branch outlets(including 28business centres),one specialist Financial Storesales outlet and 2pri
228、vate banking suites,220 ATMs,and 16,388 point of sale terminals.In addition,BNZ maintains an advanced telephone banking servicewhich is presently being expanded in capacity and functionality.TheBNZ has developed an Internet banking capability which is currentlybeing trialled and will be launched in
229、the market in the coming year.United StatesThe Nationals retail presence in the United States was established in1995 with the purchase of Michigan National Corporation(MNC).MNCs principal subsidiary is Michigan National Bank(MNB),which is ranked as the sixth largest bank in Michigan and 56thlargest
230、in the US in terms of total assets,as at June 30,1999.As atSeptember 30,1999,total assets were A$15.7 billion.MNB has a strong presence in both business and personal segments.Commercial business represented approximately 76%of MNBsloan portfolio as at September 30,1999,with the balance inconsumer bu
231、siness.At September 30,1999,MNB operated through 188 financial servicecentres(including 33 supermarket financial services centres)and312 ATMs across the State of Michigan.MNB also provides asophisticated telephone and web banking service enabling customersto open accounts,apply for loans and conduct
232、 transactions over thephone.At September 30,1999,it had staff of 3,833(or 3,397 fulltime equivalent positions).During the year,MNB established a joint venture with RockFinancial,a leading provider of retail mortgages that will offer a fullrange of residential mortgage products to Michigan Nationalsc
233、ustomer base.This initiative provides benefits for both partners,improving the penetration of MNBs customer base while providingadditional scale to Rock Financial.Products and ServicesThe Products and Services division is responsible for themanufacture and distribution of the Nationals products andi
234、mproving the efficiency of its supporting infrastructure.Since the creation of this division in 1998,separate productspecialists have been established for credit cards,leasing,payments,international,funds management and insurance.Similarly,sharedservices divisions have been established for strategic
235、 sourcing,properties,accounting,human resources and product management.As an indication of the size of the Groups product businesses,theNational has:over 3.8 million credit cards on issue;$10 billion in leasing receivables;$25 billion in funds under management;$42 billion in trade and related turnov
236、er during the year;and$180 billion of assets under custody.Credit CardsThe National issues MasterCard and Visa.It also issues Bankcard inconjunction with other major Australian banks for use in Australiaand New Zealand.All credit cards can be used to access the Groupselectronic banking network.Leasi
237、ng ReceivablesThe Nationals Leasing business comprises the provision of motorvehicle operating leases under fleet management agreements,taxeffective leasing of business related equipment and purchase financefor funding of motor vehicles and equipment.Predominantly all of the Nationals leasing receiv
238、ables relate to smalland middle ticket transactions.These products are delivered through the National Group businessbanking connections as well as through direct sales force to non-bank customers and via third party referrals.Across the entire portfolio roughly 50%by value are motor vehiclesand the
239、balance are agricultural,manufacturing and otherequipment types.Funds under managementNational Australia Asset Management and County InvestmentManagement,each wholly owned funds management subsidiaries ofthe National,function alongside National Australia FinancialManagement.The investment activities
240、 of National Australia AssetManagement and County Investment Management operateindependently of each other and National Australia FinancialManagement.At September 30,1999,the total funds undermanagement was$20.7 billion.Description of Business(continued)National Australia Bank Limited and Controlled
241、 Entities33Trade FinanceInternational and Business Finance comprises two separate businessunits delivering sales,processing,settlement and finance services forimport and export trade and invoice discounting and factoring.The business provides value added financial services to internal andexternal cu
242、stomers and has significant market share in the areaswhere it operates.National Services Information TechnologyEnterprises(NSITE)The largest of the Nationals shared services activities is theNationals global technology operations.NSITE is responsible for themajority of the Nationals technology infra
243、structure,software,support and technology research and development and employsapproximately 2,373 staff(or 2,256 full time equivalent positions)across all of the Nationals operating regions.As with all of the shared services operations,NSITE is responsiblefor driving greater value and improving the
244、efficiency of what is oneof the largest cost components of any financial service company.For a description of the Nationals Year 2000 Readiness see pages 66to 69 under the Management Discussion and Analysis.Global Wholesale Financial ServicesThe Nationals wholesale activities are conducted through a
245、dedicated division called Global Wholesale Financial Services(GWFS).This division combines the management of the Nationalscapital markets,corporate banking,foreign exchange,money marketand project and structured finance operations into a single strategicbusiness unit.GWFS trades securities,underwrit
246、es and arranges facilities for majorcorporate clients and engages in interest rate and cross currencyswap transactions.In the Australian money market,the National is amajor trader of bill acceptances.It also operates in the financialfutures market as principal and trader.GWFS is focused on managing
247、the Nationals relationships withcorporate and institutional customers in addition to providingmarket-making activities in traditional treasury products.GWFSalso supports the Nationals retailing operations with foreigncurrency and interest rate risk management products designed forthe custom and rura
248、l business segment.GWFS operations are maintained in Australia and New Zealand,with branches in London,New York,Hong Kong,Singapore,Tokyo,Seoul,Labuan,Bangkok,and Taipei and through representativeoffices maintained in Beijing,Kuala Lumpur,Jakarta,New Delhi andMumbai.International Banking Relations i
249、s a division within GWFSmanaging the Nationals banking relationships with approximately3,000 correspondent banks.These relationships enable the Nationalto provide a comprehensive range of services across the globe.GWFS manages the Nationals Asian network providing a range ofinternational trade finan
250、ce and treasury services,primarily tocompanies which participate in trade flows between Asia and theNationals key markets of Australia,New Zealand,United Kingdom,Republic of Ireland and the United States.Asian OperationsFrom its regional headquarters in Hong Kong,National AustraliaBank Asia operates
251、 seven branches and four representative offices inthe major Asian business capitals.A full time equivalent staff of 291is employed in the Asian region.HomeSideOn February 10,1998 the National acquired HomeSideInternational,Inc.(HomeSide),one of the largest originators andservicers of mortgages in th
252、e United States.Based in Jacksonville,Florida,HomeSide was formed from themerger of the mortgage operations of the Bank of Boston andBarnett Banks in a transaction designed to create the necessary scaleto remain competitive in the highly efficient United States mortgageprocessing business.HomeSides
253、strength is its exclusive focus on themortgage process,from originating loans and collecting repaymentsthrough to the creation of mortgage backed securities,which aresold in the secondary market.In collecting mortgages from a variety of sources,HomeSide hasestablished preferred partnership agreement
254、s with Bank of Boston,Bank One and Peoples Bank.HomeSide expanded its relationshipwith Bank One in March 1999 to include the servicing of FirstChicago NBD Mortgage Companys US$18 billion mortgage loanportfolio.These agreements provide HomeSide with a strong sourceof originations without the need to
255、maintain a costly distributionnetwork.In addition,HomeSide has also entered into a strategic alliance withCendant Mortgage in June 1999 which agreed to sell HomeSide upto US$7 billion in mortgages annually.As at June 30,1999 HomeSide was the 8th largest originator and the6th largest servicer of mort
256、gages in the United States and byindustry standards is considered one of the most efficient operatorsin the mortgage market.A program is well progressed to apply HomeSides processingsystems and procedures in Australia and is assessing opportunities inEurope.Other activitiesThe National undertakes a
257、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 owner of theGroups business related properties and custodian services.Description of Busine
258、ss(continued)CompetitionThe National believes that the financial services market is rapidlyevolving into an increasingly competitive and integrated globalmarket.Accordingly,the key forces shaping the future of the financialservices industry cannot be viewed within regional or geographicboundaries.Th
259、e Australian financial system is characterised by a large number oftraditional and new players and well developed equity and,morerecently,corporate bond markets.There are four major nationalbanks(including the National)and many other financialconglomerates with national operations offering a full ra
260、nge offinancial services as well as a number of smaller regional institutionsand niche players.Mutual societies have been a force in theAustralian financial system,although many have demutualisedrelatively recently to capture capital-related and other competitiveadvantages.These institutions have al
261、so widened their range ofproducts and services from insurance,investments andsuperannuation(pensions)to compete in the markets traditionallyserviced by banks.Competition also comes from numerousAustralian and,in many cases,international non-bank financialintermediaries including investment/merchant
262、banks,specialist retailand wholesale fund managers,building societies,credit unions andfinance companies.More recently,product and functional specialistshave also emerged as important players in,for example,householdand business mortgages,credit cards and other payment services.The rapid development
263、 and acceptance of the Internet and othertechnologies has increased competition in the financial servicesmarket and improved choice and convenience for customers.These forces are evident across all of the Nationals businesses in eachof its geographic markets.Within the broader financial servicesindu
264、stry,increased competition has led to a reduction in operatingmargins only partly offset by fees and other non interest income andincreased efficiencies.These trends are likely to continue in thefuture.Regulation of the Financial Services SystemAustraliaEffective from July 1,1998 the Australian Prud
265、ential RegulationAuthority(APRA)assumed responsibility for the prudential andregulatory supervision of Australian banks,insurance companies andsuperannuation funds.Subsequently,on July 1,1999 APRA alsoassumed responsibility for the prudential supervision of buildingsocieties,credit unions and friend
266、ly societies.The Reserve Bank of Australia,the prior supervisor of the Australianbanking system has overall responsibility for monetary policy,financial system stability and,through a Payments System Board,payments system regulation including the operations of Australiasreal time gross settlement sy
267、stem(RTGS).The Australian Securities and Investments Commission(ASIC)hasresponsibility for market integrity,disclosure and other consumerprotection issues.APRA has initially adopted the prudential standards that the ReserveBank had applied to banks.Australia has long been a signatory to theBasle Acc
268、ords and,as a consequence,these standards generallycomply with the various recommendations and principles of theBasle Committee on Banking Supervision.Under the new regulatory framework,banks are now designated asAuthorised Deposit Taking Institutions(ADIs).The term bankwillcapture any ADI permitted
269、 by APRA to use the word bankor likeword.Current policy provides that for an ADI to obtain bank statusit is required to have a minimum equity capitalisation of$50 millionand to also hold an exchange settlement account with the ReserveBank.The Banking Act now permits the use ofnon-operating holdingco
270、mpany(NOHC)structures for the ownership of banks and otherfinancial entities.A NOHC is allowed where a bank or ADI ispresent.In addition,financial groups may hold multiple ADIlicences.APRA carries the responsibility for depositor protection in relationto the ADIs it supervises.To achieve this it has
271、 been given strongerand more defined powers to direct the activities of an ADI in theinterests of depositors or when an ADI has contravened a prudentialstandard or regulation.These direction powersenable theprudential regulator to impose correcting action without assumingcontrol.It also has the powe
272、r to intervene to prevent a crisis fromemerging.APRA requires banks to provide regularly reports covering a broadrange of information,including financial and statistical data relatingto their financial position and prudential matters.APRA gives specialattention to capital adequacy(see pages 54 to 57
273、 for current details),sustainability of earnings,loan loss experience,liquidity(see below),concentration of risks,potential exposures through equityinvestments,funds management and securitisation activities andinternational banking operations.In April 1998,a revised Prudential Statement D1 on Liquid
274、ityManagement foreshadowed the removal of the Prime Assets Ratio(PAR)arrangements(the holding of a proportion of domestic assetsin high quality liquefiable assets)upon the adoption by banks of newliquidity management systems based on cash flow projections.ThePAR arrangements were abolished on August
275、 16,1999.Therequirement for banks to maintain funds in a special Non CallableDeposit account with the Reserve Bank was abolished on July 1,1999.In carrying out its supervisory role,APRA supplements its analysis ofstatistical data collected from banks with selective on sitevisits byspecialist teams t
276、o overview discrete areas of banksoperations.Theseinclude asset qualityand market riskreviews and formal meetingswith bankssenior management and external auditors.APRA hasalso formalised a consultative relationship with each banks externalauditors with the agreement of the banks.The external auditor
277、sprovide additional assurance to APRA that prudential standardsagreed with the banks are being observed,and that statutory andother banking requirements are being met.External auditors alsoundertake targeted reviews of specific risk management areasselected at the annual meeting between the bank,its
278、 externalauditors and APRA.In addition,each banks Chief Executive OfficerNational Australia Bank Limited and Controlled Entities34Description of Business(continued)Description of Business(continued)attests to the adequacy and operating effectiveness of the banksmanagement systems to control exposure
279、s and limit risks to prudentlevels.The Reserve Bank has the authority,with the approval of theTreasurer of the Commonwealth of Australia,to fix interest ratespaid or charged by ADIs and institutions undertaking bankingoperations.This authority is currently not being exercised andAustralian banks are
280、 free to determine their own rates based onmarket conditions.However,at the direction of the FederalGovernment,housing loans under A$100,000 entered into prior toApril 1986 are still subject to an interest rate ceiling of 13.5%,although actual rates are currently well below this level.There are no f
281、ormal prohibitions on the diversification by banksthrough equity involvements or investments in subsidiaries.Currently,the controls recommended and supervised by APRA areof a consensual nature.However,without the consent of theTreasurer of the Commonwealth of Australia,no bank may enterinto any agre
282、ement or arrangement for the sale or disposal of itsAustralian banking business.Non-Australian JurisdictionsAPRA,under the Basle Concordats,now assumes the role ofhomebanking supervisorand maintains an active interest in overseeingthe operations of the Group,including its offshore branches andsubsid
283、iaries.The Nationals banking subsidiaries in the United Kingdom,theRepublic of Ireland,New Zealand and the United States are subjectto supervision by the Financial Services Authority,the Central Bankof Ireland,the Reserve Bank of New Zealand,and the US FederalReserve Board and the Office of the Comp
284、troller of the Currency,respectively.In the United Kingdom,Ireland and the United States,the localregulatory frameworks are broadly similar to that in force inAustralia.Each of the banking regulatory authorities in thesecountries has introduced risk based capital adequacy guidelines inaccordance wit
285、h the convergence framework developed by theNational for International Settlements.Also,the regulators monitorthe adequacy of liquidity and portfolio concentrations,includinglending to individuals,economic or business sector exposures andcross-border risk.In addition,the Financial Services Authority
286、 in the United Kingdom,the Federal Reserve Board and the Office of the Comptroller of theCurrency in the United States have each taken steps to enhance theeffectiveness of their examinations and inspections by sharpeningtheir focus on the areas of greatest risk to the soundness of bankingorganisatio
287、ns.These efforts have been directed at adaptingexamination and inspection processes so that they remain responsiveto changing market realities,while retaining those practices that haveproven most successful in supervising institutions under a variety ofeconomic circumstances and industry conditions.
288、The emphasis of the Reserve Bank of New Zealands regulatoryframework is primarily on capital adequacy and systemic riskmanagement.The framework has moved away from detailed rulesand private monitoring by the supervisor,in favour of enhancedpublic disclosure of financial information,a relaxation ofsu
289、pervisory regulation and increased emphasis on the role of bankdirectors.In other offshore areas of activity,including the overseas branchbanking operations and the various non-bank operating subsidiaries,the National believes it is currently in full compliance with theoperating requirements of loca
290、l regulatory authorities.Description of PropertyThe Group is a substantial property owner due to the scale andnature of its operations.The majority of its operations are inAustralia with the largest proportion of the remainder being in theUnited Kingdom.For further detail on the Groups property hold
291、ing,refer to Note 19 of the financial statements.Certain Legal ProceedingsCompanies within the Group are defendants from time to time inlegal proceedings arising from the conduct of their businesses.Forfurther information on contingent liabilities of the Group,refer toNote 38 of the financial statem
292、ents.National Australia Bank Limited and Controlled Entities35National Australia Bank Limited and Controlled Entities36OverviewThe Financial Review on pages 36 to 74 is prepared in accordance with Generally Accepted Accounting Principles applicable in Australia(Australian GAAP).ConsolidatedFor years
293、 ended September 30199919991998199719961995Dollars in Millions unless otherwise statedAUDUSD(1)AUDAUDAUDAUDSummary of Consolidated Statements of IncomeAustralian GAAPInterest income15,0669,83515,42712,93612,08810,169 Interest expense9,0005,8759,5697,5786,9585,646 Net interest income6,0663,9605,8585,
294、3585,1304,523 Charge to provide for doubtful debts540353572332333116 Net interest income after provision for doubtful debts5,5263,6075,2865,0264,7974,407 Other operating income4,5632,9793,9532,9092,6312,447 Other operating expenses5,9483,8835,5164,6194,3664,008 Operating profit before abnormal items
295、4,1412,7033,7233,3163,0622,846 Abnormal items(749)33 Operating profit4,1412,7032,9743,3163,0622,879 Income tax expense(benefit)attributable to:Operating profit1,3218621,2111,095959906 Abnormal items(252)Total income tax expense1,3218629591,095959906 Operating profit after income tax2,8201,8412,0152,
296、2212,1031,973 Outside equity interests in operating profit(loss)after tax(1)(1)1(2)14 Operating profit after income tax attributable to members ofthe Company 2,8211,8422,0142,2232,1021,969(1)Translated at the Noon Buying Rate on September 30,1999 of US$0.6528=A$1.00.See Selected Financial Data for f
297、ive years ended September 30,1999 Exchange Rateson Page 39.Net interest income in 1999 increased 3.6%to$6,066 million after increases of 9.3%and 4.4%in 1998 and 1997 respectively.Charge to provide for doubtful debts decreased 5.6%to$540 million from$572 million in 1998 after an increase from$332 mil
298、lion in 1997.Other operating income in 1999 increased by 15.4%to$4,563 million after increases of 35.9%and 10.6%in 1998 and 1997 respectively.Other operating expenses in 1999 increased by 7.8%to$5,948 million after increases of 19.4%and 5.8%in 1998 and 1997 respectively.Operating profit before incom
299、e tax and abnormal items in 1999 increased by 11.2%to$4,141 million after increases of 12.3%and 8.3%respectively in 1998 and 1997 respectively.Operating profit after income tax and abnormal items increased 40.1%in 1999 to$2,821 million in 1999 after decreasing by 9.4%to$2,014million in 1998 and incr
300、easing by 5.8%to$2,223 million in 1997.The 1998 result included abnormal items of$497 million after tax.There were no abnormal items in 1999.Excluding the effect of abnormalitems,operating profit after tax grew by 12.3%from$2,511 million in 1998 to$2,821 million.Gross loans and advances grew 3.4%dur
301、ing 1999 from$164.1 billion in 1998 to$169.7 billion.Excluding the effect of exchange ratemovements,the increase in 1999 was 9.2%.Total provision for doubtful debts decreased during 1999 by 1.3%from$2,563 million in 1998 to$2,529 million.Gross non-accrual loansincreased during 1999 by 6.8%from$1,470
302、 million to$1,570 million.Gross non-accrual loans as a percentage of risk weight assets is amodest 0.8%.The$2 billion issue of National Income Securities during 1999 has strengthened the Groups capital ratios.The Tier 1 capital ratio as atSeptember 30,1999 was 7.8%compared with 6.4%in 1998 and 6.8%i
303、n 1997.The total risk weighted capital ratios at September 30,1999,1998 and 1997 were 10.4%,9.2%and 8.7%respectively.In Australia,economic activity appears to have strengthened since mid 1999 with few signs of wage and price pressures.Expenditure on year2000 and GST implementation is expected to con
304、tinue to underpin growth in the latter half of 1999.However,a slowdown in businessinvestment and housing lending and de-stocking after January 1,2000 are all expected to contribute to a general slowdown in the economy.GDP growth is expected to be around 3%for both 1999/2000 and 2000/2001 with underl
305、ying inflation(excluding the one-off impact of thenew taxation system)only showing a modest increase.The Reserve Bank of Australia(RBA)is expected to increase official further in the first half of 2000.However the current tightening phase willbe modest,provided growth slows and the introduction of t
306、he GST does not result in large wage increases being negotiated.Economic activity in the US is expected to moderate during 2000 as domestic demand eases.With the economy operating at very high levelsand continued tightness in the labour market,inflationary risks are now increasing.This is causing up
307、ward pressure on interest rates with amoderate increase in short term US official interest rates anticipated during the first half of 2000.Financial ReviewNational Australia Bank Limited and Controlled Entities37In Europe,the economic recovery currently underway in the UK is expected to continue in
308、2000.Buoyant growth in household spending,continued expansion in the services sector and a moderate recovery in manufacturing activity will support continued growth of around 3%in2000.Although a moderation in activity is forecast for Ireland in 2000,the pace of economic activity should remain well a
309、bove the Euro areaaverage.In New Zealand,economic recovery temporarily slowed in mid 1999,but activity is expected to improve during the latter half of 1999 and into2000.A gradual strengthening of exports over the latter half of 1999 will drive a recovery in business activity,while an improvement in
310、 thelabour market will support moderate growth in consumer spending.Considerable uncertainty regarding the external environment,high levelsof household debt and a high current account deficit,however,is expected to moderate the extent of the recovery.Interest rates are expected toalso increase durin
311、g the next year.Selected Financial Data for Five YearsThe Consolidated Entitys financial report is prepared in accordance with accounting principles generally accepted in Australia,which differ incertain material respects from accounting principles generally accepted in the United States(see Note 49
312、 to the financial statementsReconciliation with US GAAP).The information hereunder has been derived from the audited financial report of the Consolidated Entity orwhere certain items are not shown in the consolidated financial report,has been prepared for the purpose of this Annual Report and should
313、 beread in conjunction with and qualified in its entirety by reference to the financial statements and notes included elsewhere in this financialreport.For details of credit quality data refer to pages 59 to 60.Comparative amounts have been reclassified to accord with changes inpresentation made in
314、1999,except where otherwise stated.ConsolidatedFor years ended September 3019991999(1)1998(2)19971996(3)1995Dollars in Millions unless otherwise statedAUDUSDAUDAUDAUDAUDShare InformationDividends paid/payable(4)(5)1,6551,0801,4671,3671,2761,173Earnings per share(before abnormal items)($)(6)basic1.87
315、1.221.751.521.451.39 diluted1.821.191.711.491.431.38Earnings per share(after abnormal items)($)(6)basic1.871.221.401.521.451.41 diluted1.821.191.381.491.431.40Cash earnings per share(before abnormals)($)(7)basic2.011.311.871.611.541.45 diluted1.951.271.831.581.521.44Dividends per share($)(4)(5)1.120
316、.731.020.940.870.83Dividends per ADS($)(4)(5)5.603.655.104.704.354.15Dividends per ADS(US$)(4)(5)(8)N/AN/A3.173.243.403.02Dividend cover(times)before abnormal items1.701.701.711.631.651.65Dividend cover(times)after abnormal items1.701.701.371.631.651.68Net tangible asset backing per ordinary share($
317、)(9)(10)8.675.668.247.406.977.00Share prices for the year High(11)30.2819.9023.5022.8513.3012.54 Low(11)18.9912.4816.8713.1510.9810.16 End($)22.4314.6420.3921.2213.3011.70Adjusted to Accord with US GAAPNet income2,8621,8702,0992,2892,1472,013Earnings per share(7)basic1.891.231.461.561.481.44 diluted
318、1.841.201.441.531.461.43Cash earnings per share(7)basic2.031.331.591.661.571.51 diluted1.991.301.561.621.551.50Earnings per ADS(6)basic9.456.157.307.807.407.20 diluted9.206.007.207.657.307.15Financial Review(continued)National Australia Bank Limited and Controlled Entities38For years ended September
319、 3019991999(1)1998(2)19971996(3)1995Dollars in Millions unless otherwise statedAUDUSDAUDAUDAUDAUDSummary of Consolidated Balance SheetsAustralian GAAPLoans and advances(after provision for doubtful debts)165,620108,117160,001131,036111,96391,538Total assets254,081165,864251,714201,969173,710148,123R
320、isk weighted assets194,269126,819197,057154,309133,313108,985Deposits and other borrowings162,468106,059158,084128,469109,15888,529Perpetual floating rate notes383250421347424459Exchangeable capital units(12)1,2628241,2621,262Bonds,notes and subordinated debt13,4378,77215,1159,5696,9584,067Ordinary
321、shares6,6114,3165,9421,4131,4771,429Equity instruments2,6751,746733Issued and paid up capital9,2866,0626,6751,4131,4771,429Shareholdersequity(10)18,52012,09015,76112,57912,51911,381Book value per share12.468.1310.878.888.457.94Book value per ADS62.3040.6754.3544.4042.2539.70Adjusted to Accord with U
322、S GAAPShareholdersequity(10)19,22612,55116,35913,15313,01111,761Total assets258,816168,955256,771205,743173,552147,789For years ended September 3019991998199719961995%Selected Financial RatiosAustralian GAAPOperating profit(before abnormal items)as a percentage of:Average total assets1.11.11.21.31.4
323、Average ordinary shareholdersequity17.317.816.717.017.8Year end total assets1.11.01.11.21.3Year end ordinary shareholdersequity17.316.717.716.817.3Operating profit(after abnormal items)as a percentage of:Average total assets1.10.81.21.31.4Average ordinary shareholdersequity17.314.316.717.018.1Year e
324、nd total assets1.10.81.11.21.3Year end ordinary shareholdersequity17.313.417.716.817.3Dividends as a percentage of operating profit(4)(5)60.273.161.560.759.6Average shareholdersequity as a percentageof average total assets6.75.97.17.58.0Cash return before abnormals on averagetangible Shareholdersfun
325、ds(18)22.822.921.221.121.4Capital:risk asset ratios(13)Tier 17.86.46.87.69.2 Tier 22.93.12.21.92.6 deductions(0.3)(0.3)(0.3)(0.2)(0.2)total10.49.28.79.311.6Net average interest margin3.003.173.533.934.21Adjusted to Accord with US GAAPNet income as a percentage of period end:Total assets1.10.81.11.21
326、.4Shareholdersequity14.912.817.416.517.1Dividends as percentage of net income(4)(5)57.869.959.759.458.3Shareholdersequity as percentage of total assets7.46.46.57.57.9Selected Financial Data for Five Years(continued)National Australia Bank Limited and Controlled Entities39For years ended September 30
327、19991998199719961995Exchange Rates(Average and Closing)Average British pound0.39340.39140.47140.50000.4672 Irish punts0.45920.45300.49340.48460.4622 United States dollar0.64040.64680.76950.77100.7424 New Zealand dollar1.20121.15761.12401.14261.1439 Singapore dollar1.08041.07201.10521.08801.0604Closi
328、ng British pound0.36970.34800.44670.50820.4773 Irish punts0.48400.39720.49400.49590.4683 United States dollar0.65280.59340.71970.79350.7550 New Zealand dollar1.25891.18801.12721.13411.1491 Singapore dollar1.11161.00171.10431.11721.0725For each of the National Australia Banks fiscal years indicated,t
329、he high,low,average and year end Noon Buying Rates were as set forthbelow.For years ended September 302000(14)19991998199719961995(US$per A$1.00)High0.66330.67120.73860.81800.80170.7778Low0.64400.58870.55500.74550.73500.7100Average(15)0.65270.64040.65710.76390.75910.7394September 300.65280.59300.725
330、00.79120.7555On October 22,1999 the Noon Buying Rate was US$0.6503 per A$1.00.For years ended September 3019991998199719961995Other Information(Numbers)Consolidated Entity Branches and business outlets2,3392,3492,4212,5132,356Consolidated Entity Staff full time and part time(16)51,56650,97352,22652,
331、91252,567 full time equivalent(17)45,67646,30046,42247,17845,585Notes:(1)Translated at the Noon Buying Rate on September 30,1999 of US$0.6528=A$1.00.(2)Includes the amounts relating to HomeSide from February 10,1998,the date on which the Consolidated Entity acquired this entity.(3)Includes the amoun
332、ts relating to MNC from November 2,1995,the date on which the Consolidated Entity acquired this bank.(4)Dividend amounts are for the year for which they are declared.Dividends and book value per share and per ADS calculations are based on year end fully paid equivalentshares,adjusted for loans and r
333、ights issues as appropriate.Operating profit is based on amounts attributable to ordinary shareholders after deducting distributions to otherequity holders.(5)Includes issues under the Bonus Share Plan in lieu of cash and scrip dividends.(6)See Note 6 and 49 of the financial statements for explanation of earnings per share.(7)Cash earnings are based on earnings attributable to ordinary shareholder
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