Wholesale Banking Performance Analysis

27 28 Regulatory reform – status update Capital reforms Core Tier 1 8.03% Basel II act. *Includes the capital conservation buffer, to be implemented from 1 January 2016 9.28% Basel III est. (BIS Alignment) - 7.0% Basel III minimum* 7.58% Basel III est. under APRA proposed measures Key impacts to NAB from APRA's March 2012 draft capital standards: - Hybrids will be subject to transitional arrangements (including NIS) Investments into non-consolidated subsidiaries to be fully deducted Requirements for Basel III compliant hybrids ▸ Consultation will continue with APRA throughout 2012 ▸ Implementation phased from January 2013, earlier than Basel requires ▸ Well placed to manage capital impact, with strong core capital generation Funding and Liquidity reforms ▸ APRA proposed Basel III liquidity package delivered in November 2011 ▸ Clarification of various items and some positive developments ▸ Key items remain unresolved, particularly the size and composition of the RBA Committed Liquidity Facility ▸ Industry has reviewed proposed standards and given feedback ▸ Timing for release of final standards by APRA remains uncertain Note: Supervisory confirmation required Funding and liquidity Group Stable Funding Index (SFI) 84% 85% 85% 78% 72% 20% 20% 20% 19% 16% National Australia Bank Term funding - tenor of issuance 56% 59% 64% 65% 65% 4.7 4.8 4.1 4.2 Sep 08 Sep 09 Sep 10 Sep 11 Mar 12 Sep 10 Customer Funding Index Term Funding Index Mar 11 Sep 11 Mar 12 Weighted average maturity (years) of term funding issuance Term funding - volume of new issuance Liquid asset holdings ($bn) ($bn) 16.7 116 106 14.9 1.6 14.5 89 93 21 13.1 16 3.0 0.3 17 21 4.6 40 43 30 35 15.1 12.8 11.9 55 9.9 42 47 37 Sep 10 Mar 11 Sep 11 Mar 12 Sep 10 Mar 11 ■Senior and Sub Debt Sep 11 Mar 12 ■Government, Cash & Central Bank Bank, Corporate & Other Secured Funding Internal RMBS (contingent liquidity) National Australia Bank

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