Investor Presentaiton

GLOSSARY Assets 90+ days past due Australian Banking Average assets Banking Business lending Capital ratios Cash Earnings CET1 Common Equity Tier 1 Capital Assets 90+ days past due consist of well-secured assets that are more than 90 days past due and portfolio-managed facilities that are not well secured and between 90 and 180 days past due. Australia Banking offers a range of banking products and services to retail and business customers ranging from small and medium enterprises through to some of Australia's largest institutions. Australia Banking comprises the Personal Banking and Business Banking franchises, Fixed Income, Currencies and Commodities (FICC), Capital Financing, Asset Servicing and Treasury. Represents the average of assets over the period adjusted for disposed operations. Disposed operations include any operations that will not form part of the continuing Group. These include operations sold and those which have been announced to the market that have yet to reach completion. Banking operations include the Group's: - Retail and Non-Retail deposits, lending and other banking services in Australian Banking, NZ Banking and NAB Wealth - Wholesale operations comprising Global Capital Markets and Treasury, Specialised Finance and Financial Institutions business within Australian Banking, and - NAB UK CRE operations and Group Funding within Corporate Functions and Other. Lending to non-retail customers including overdrafts, asset and lease financing, term lending, bill acceptances, foreign currency loans, international and trade finance, securitisation and specialised finance. As defined by APRA under APS111 - Capital Adequacy: Measurement of Capital (unless stated otherwise). Refer to page 2, Section 1 - Profit Reconciliation of 2016 Full Year Results Announcement for information about, and the definition of cash earnings. Common Equity Tier 1 (CET1) capital is recognised as the highest quality component of capital. It is subordinated to all other elements of funding, absorbs losses as and when they occur, has full flexibility of dividend payments and has no maturity date. It is predominately comprised of common shares; retained earnings; undistributed current year earnings; as well as other elements as defined under APS111 Capital Adequacy: Measurement of Capital. CLF Committed Liquidity Facility Continuing operations Core assets Corporate Functions and Other CPS CTI Banking cost to income ratio Customer deposits Customer risk management Discontinued Operations Distributions Dividend payout ratio CFI Customer Funding Index Customer deposits (excluding certain short dated institutional deposits used to fund liquid assets) divided by core assets. DRP Dividend Reinvestment Plan Made available by the RBA for qualifying ADIs to access in order to meet LCR requirements under APS 210 - Liquidity. Continuing operations are the components of the Group which are not discontinued operations. Represents gross loans and advances including acceptances, financial assets at fair value, and other debt instruments at amortised cost (classified in comparative periods as investments held to maturity). The Group's 'Corporate Functions' business includes functions that support all businesses including Group Funding, Other Corporate Functions activities and the results of NAB UK CRE and Specialised Group Assets (SGA) (closed as at 31 March 2015). Group Funding acts as the central vehicle for movements of capital and structural funding to support the Group's operations, together with capital and balance sheet management. Other Corporate Functions activities include Enterprise Services and Transformation, and Support Units (which includes Office of the CEO, Risk, Finance, Strategy, People and Governance & Reputation). Cents Per Share Represents banking operating expenses )before inter-segment eliminations) as a percentage of banking operating revenue (before inter-segment eliminations). Interest bearing, non-interest bearing and term deposits (including retail and corporate deposits). Activities to assist customers to manage their financial risks (predominantly foreign exchange and interest rate risks). Discontinued operations are a component of the Group that either has been disposed of, or is classified as held for sale, and represents a separate major line of business or geographical area of operations, which is part of a single co-ordinated plan for disposal. Payments to holders of other equity instrument issues such as National Income Securities, Trust Preferred Securities, Trust Preferred Securities II and National Capital Instruments. Dividends paid on ordinary shares divided by cash earnings per share. Instead of receiving cash dividends, shareholders can elect to reinvest dividends to buy more shares without paying brokerage and other administration costs. 126 GLOSSARY DVA Derivative Valuation Adjustment EAD Exposure at Default EPS Cash earnings per share- diluted FTE Full-time Equivalent Employees FUM/A Consist of Credit Valuation Adjustment (CVA), Funding Valuation Adjustment (FVA) and Overnight Index Swap (OIS) adjustment. CVA adjusts the fair value of over-the-counter derivatives and credit risk. FVA reflects the estimated present value of future market funding costs or benefits associated with funding uncollateralised derivatives. EAD is an estimate of the total committed credit exposure expected to be drawn at the time of default for a customer or facility that the NAB Group would incur in the event of a default. It is used in the calculation of RWA. Calculated as cash earnings adjusted for distributions on other equity instruments and interest expense on dilutive potential ordinary shares. This adjusted cash earnings is divided by the weighted average number of ordinary shares, adjusted to include treasury shares held by a controlled entity of the Group employee share scheme trust and dilutive potential ordinary shares. Includes all full-time staff, part-time, temporary, fixed term and casual staff equivalents, as well as agency temps and external contractors either self- employed or employed by a third party agency. Note: This does not include consultants, IT professional services, outsourced service providers and non- executive directors. Funds under Management and Administration Consist of: - Retail loans (excluding unsecured portfolio managed facilities) which are contractually past due 90 days with security insufficient to cover principal and arrears of interest revenue National Australia Bank Internationally comparable IRB Internal Ratings Based approach LCR Liquidity Coverage Ratio Leverage ratio LVR Loan to Value Ratio Markets & Treasury Income NAB Wealth NPS Net Promoter Score Estimate of NAB's CET1 and leverage ratio calculated on rules and those applied to global peers. Methodology aligns with the APRA study entitled "International capital comparison study" released on 13 July 2015. Refers to the processes employed by the Group to estimate credit risk. This is achieved through the use of internally developed models to assess the potential credit losses using the outputs from the probability of default, loss given default and exposure at default models. LCR measures the amount of high quality liquid assets held that can be converted to cash easily and immediately in private markets, to total net cash flows required to meet the Group's liquidity needs for a 30 day calendar liquidity stress scenario. As defined by APRA (unless otherwise stated). A non-risk based supplementary measure to the risk-based capital requirements. Mortgage loan to bank value of property expressed as a percentage. NAB risk management comprises NII and OOI and is defined as management of interest rate risk in the banking book, wholesale funding and liquidity requirements and trading market risk to support the Group's franchises. Customer risk comprises OOI. Includes FX. NAB Wealth provides superannuation, investments and insurances solutions to retail, corporate and institutional clients. NAB Wealth operates one of the largest networks of financial advisers in Australia. Net of revenues generated by interest-bearing assets and the cost of interest- bearing liabilities. NII as a percentage of average interest earning assets. Net Promoter Score measures the net likelihood of recommendation to others. of the customer's main financial institution for retail or business banking. Net PromoterⓇ and NPS® are registered trademarks and Net Promoter Score and Net Promoter System are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld. GIAs Gross Impaired Assets - Non-retail loans which are contractually past due and there is sufficient doubt about the ultimate collectability of principal and interest, and NII Net Interest Income - Impaired off-balance sheet credit exposures where current circumstances indicate that losses may be incurred. NIM - Unsecured portfolio managed facilities are also classified as impaired assets when they become 180 days past due (if not written off). Net Interest Margin GLAS Gross Loans and Acceptances Group Housing lending HQLA NAB and its controlled entities. Mortgages secured by residential properties as collateral. High Quality Liquid Assets Impaired - currently assessed as no loss Eligible assets that include cash, balances held with Central Banks along with securities issued by highly rated Governments and supranationals. NSFR Net Stable Funding Ratio Currently assessed as impaired but no loss due to the value of the security held being sufficient to cover the repayment of principal and interest amounts due. NZ Banking 127 The NSFR is defined as the ratio of the amount of available stable funding to required stable funding. NZ Banking comprises the Retail, Business, Agribusiness, Corporate and Insurances franchises in New Zealand, operating under the 'BNZ' brand. It excludes BNZ's Markets operations. National Australia Bank