Wholesale Banking Performance Analysis

111 Economic outlook Australia ▸ Multi-speed economy expected to continue ▸ High $A affecting tourism/trade and manufacturing ▸ Rate cut expected to help softer sectors given low inflation outlook. Further near term cut possible. ▸ Expect year average GDP growth of 2.5% in CY 2012; 3.5% in CY 2013 ▸ Terms of trade have peaked in Q3 2011 and expected to fall further as global supply/demand imbalances ease ▸ Large mining investment projects (LNG etc) driving much of total capital spending ▸ Unemployment rate low by global standards but the trend in job growth remains sluggish China ▸ Domestic activity slowing (softer property market) ▸ Exports clearly softened ▸ Lower official growth target (cut from 8% to 7.5%) ▸ We still expect a soft landing ~ 8% GDP growth in CY 2012 % represent share of 31 March 2012 GLAs, Australia includes Asia 78% Economic conditions Annual % growth in global trade and GDP 1970 - 2013 1% 12% United Kingdom ▸ GDP growth forecast under 0.5% in 2012 ▸ Output well below its early 2008 level ▸ Credit demand affected by weak property market and de-leveraging in household and business sectors ▸ Credit growth expected to remain soft as income growth remains modest ▸ Sterling depreciation is assisting exports and economic rebalancing ▸ Interest rates at all time lows 9% New Zealand ▸ Recovery under way ▸ Housing market improving ▸ Commodity prices falling but still high ▸ Rebuilding in Christchurch started United States ▸ Modest drawn-out economic recovery ▸ Risk of recession clearly receded ▸ Labour market and credit picking up ▸ Interest rates to stay low National Australia Bank System credit growth % change year-on-year 24 21 18 15 12 9 6 3 0 8 18 (F) 16 Australia World economic growth 14 12 10 8 6 New Zealand 4 2 United Kingdom 0 -6 -9 -12 1970 World trade (LHS axis) -2 -4 Jan 90 Jan 93 Jan 96 1975 1980 1985 1990 1995 2000 2005 2010 IMF, OECD, Datastream, NAB Forecasts Jan 99 Jan 02 Jan 05 Jan 08 Jan 11 RBA, RBNZ, Bank of England, NAB Forecasts Jan 14 Real GDP % change year on year 12 10 8 6 4 2 0 Australia Annual % growth in emerging economies 16 14 New Zealand China - world no 2 (F) -> 12 India - world no 4 10 Brazil 8 -world no 8 6 4 2 0 2006 2007 2008 2009 2010 2011 2012 2013 -2 Mar 94 Mar 99 Mar 04 Mar 09 Mar 14 Datastream -6 -8 Mar 79 United Kingdom Mar 84 Mar 89 ONS, ABS, SNZ, Datastream, NAB Forecasts 112 (F) - Forecast National Australia Bank

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