National Australia Bank : HYFR

Half Year Results

2024

Incorporating the requirements of Appendix 4D

This half year results announcement incorporates the half year report given to the Australian Securities Exchange (ASX) under Listing Rule 4.2A.

The half year consolidated report is to be read in conjunction with the 2023 Annual Report.

NationalAustralia Bank Limited ABN 12 004 044 937

Acknowledgement of Country

NAB acknowledges Australia's First Nations people as the Traditional Custodians of the land and their continuing connection to country, sea and water. We pay respect to their Elders past and present.

We make this acknowledgement with the ambition to continue supporting a reconciled Australia through our actions and voice. This is backed by why we are here: to serve customers well and help our communities prosper.

Appendix 4D

Preliminary financial statements for the half year ended 31 March 2024 as required by ASX listing rule 4.2A

Results for announcement to the market

Current period:		1 October 2023 to 31 March 2024
Prior corresponding period:		1 October 2022 to 31 March 2023
			Half Year to
					31 March 2024
					$m
Revenue from ordinary activities(1)	down	3.8%	to		10,170
Net profit after tax from ordinary activities attributable to owners of the Company	down	11.9%	to		3,494
Net profit attributable to owners of the Company	down	11.9%	to		3,494

(1) Reported as the sum of the following from the Group's consolidated income statement: Net interest income $8,398 million and total other income $1,772 million.

		Franked
	Amount	amount per
	per share	share
	cents	%
Dividends and Dividend Reinvestment Plan
Final 2023 dividend	84	100
Interim 2024 dividend	84	100
Interim dividend dates
Ex-dividend date		7 May 2024
Record date		8 May 2024
Payment date		3 July 2024

The dividend is paid in cash or as part of a dividend plan. Cash dividends are paid by way of direct credit or cash equivalents. The dividend plans in operation are the Dividend Reinvestment Plan and the Bonus Share Plan (closed to new participants).

The last date for receipt of election notices for the Dividend Reinvestment Plan and the Bonus Share Plan is 9 May 2024 at 5pm (Australian Eastern Standard time).

	As at
	31 March 2024		31 March 2023
	$		$
Net tangible assets
Net tangible assets per ordinary share	18.16		18.04

A reference to the 'Group' is a reference to NAB and its controlled entities.

The Group has not gained or lost control over any material entities during the half year ended 31 March 2024. The Group held no material investments in associates or joint venture entities as at 31 March 2024.

Additional information supporting the Appendix 4D disclosure requirements can be found in the accompanying 2024 Half Year Results.

This document should be read in conjunction with the 2023 Annual Report and any announcements to the market made by the Group during the period in accordance with the continuous disclosure requirements of the Corporations Act 2001 (Cth) and the ASX Listing Rules.

This report is based on the consolidated financial statements of the Group which have been reviewed by Ernst & Young. This announcement has been authorised for release by the Board.

Appendix 4DHalf YearGroup highlights Group review Divisional review Financial report Supplementary Results Summaryinformation

This page has been left blank intentionally.

Half year results 2024

Half Year Results Summary

Section 1 Group highlights

Information about cash earnings and other non-IFRS measures Group performance results

Shareholder summary

Review of Group performance results Key performance indicators

Section 2 Group review

Net interest income

Net interest margin

Other operating income

Markets and Treasury income

Operating expenses

Investment spend

Taxation

Lending

Goodwill and other intangible assets

Customer deposits

Asset quality

Capital management and funding

Section 3 Divisional review

Business and Private Banking

Personal Banking

Corporate and Institutional Banking

New Zealand Banking

Corporate Functions and Other

Section 4 Financial report

Report of the Directors

Auditor's independence declaration

Consolidated financial statements

Notes to the consolidated financial statements

Directors' declaration

Independent auditor's review report

Section 5 Supplementary information

Glossary

2

10	Appendix
10	4D
11
11
12
HalfYear ResultsSummary
13
16
16
17
18	Group
19
20	highlights
21
22
23
24
25	Group
26
29	review
34
34
Divisional
36
38
40	review
43
46
Financial
46
50
51	report
57
82
83
Supplementary information
86
100

2024 Half Year Results

1

Half Year Results Summary

2024	National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686, 2 May 2024.

(i) Refer cash earnings note and reconciliation on page 7.

"Our 1H24 financial performance has benefited from the disciplined execution of our strategy in a challenging environment. This has helped us manage the impacts of slowing economic growth and competitive pressures while also absorbing a higher effective tax rate. Compared with a very strong 1H23 result, cash earnings were 12.8% lower, but the decline was more modest versus 2H23, down 3.1%.

Consistent investment in our better returning segments is supporting good growth over the 12 months to March 2024. This includes 8.6% growth in Australian SME(1) business lending and 6.4% growth in Personal Banking and Business and Private Banking customer deposits. In other areas where returns are less attractive, a selective approach has resulted in more subdued growth including 3.7% in Australian home lending.

Staying safe and having prudent settings are non-negotiables for us. Our CET1 ratio is above our target range, supporting

a $1.5 billion increase in our on-market share buy-back(2). Liquidity and provisions remain strong and our FY24 term funding task is well progressed with $23 billion raised in 1H24.

Our strategy, in place since April 2020, has positioned us strongly as a simpler bank with a clear focus on driving better outcomes for colleagues and customers and delivering sustainable growth and returns for shareholders. We are proud of our progress but there is more to do. We need

to do better for customers and become even simpler while continuing to remove complexity across our Bank. While our strategic priorities will evolve, customers will remain at the centre of everything we do and there will be no change to our unwavering focus on accountability and execution.

We remain optimistic. Our Bank and most customers are in good shape and the outlook for the Australian economy remains resilient. We are well placed to continue managing our business for the long term."

- Andrew Irvine NAB CEO

Dividends

Supporting our customers and communities

Cents per share (fully franked)

In respect of each financial year / period

• Helping small businesses reduce time spent on administration tasks with the launch of NAB Bookkeeper which leverages AI to provide customers with real- time insights, automated accounting, invoicing, and tax calculations all in the one place via NAB's internet banking.

		78	84
	67
30	60	73	83	84
30
FY20	FY21	FY22	FY23	1H24
Final	Interim

• Supporting commercial real estate (CRE) customers fund investments in eligible green buildings, or eligible retrofit projects intended to reduce greenhouse gas emissions, with the launch of NAB's Green Finance for CRE.
• Continuing to enhance fraud and scam protections
  for customers including the introduction of behavioural biometrics to detect more suspicious and anomalous behaviour on NAB Connect internet banking for business.
• Supporting communities with disaster relief grants to customers impacted by floods, fires and storms across 18 locations in Australia during 1H24, together with loan deferrals, reduced repayment arrangements and hardship support for eligible customers.

1. SME refers to small and medium sized enterprise.
2. On 15 August 2023 the Group announced its intention to acquire up to $1.5 billion ordinary shares via an on-marketbuy-back. NAB commenced the buy-back on
   29 August 2023 and has bought back and cancelled 41,673,065 ordinary shares ($1.3 billion) up to 31 March 2024, including 31,110,882 ordinary shares ($1.0 billion) in the March 2024 half year. NAB has today announced an increase to the on-marketbuy-back by $1.5 billion with this additional buy-back activity expected to be undertaken over approximately 12 months from today.

2 National Australia Bank

The March 2024 half year results are compared with the March 2023 half year results for continuing operations unless otherwise stated. Operating performance and Asset quality are expressed on a cash earnings basis.

Operating performance 1H24 v 1H23

• Revenue decreased by 3.7% mainly reflecting lower margins and lower Markets and Treasury (M&T) income, partially offset by volume growth.
• Gross loans and advances (GLAs) increased by 3.5% and deposits rose 3.8%.
• Net Interest Margin (NIM) decreased by 5 basis points (bps) to 1.72%. Excluding a 5 bps increase from M&T, NIM declined 10 bps. This mainly reflects lending margin competitive pressures primarily relating to housing lending, along with higher term deposit costs and deposit mix impacts, partially offset by higher earnings on deposits and capital as a result of the rising interest rate environment.
• Expenses increased by 5.8% mainly reflecting continued uplift in technology and compliance capabilities including fraud and cyber security with associated higher average FTE and salary-related expenses. These impacts were partially offset by productivity benefits. Compared with 2H23, expense growth moderated to 1.6% or 2.5% excluding the impact of the one-off Compensation Scheme of Last Resort (CSLR) levy provision in 2H23.

1H24 v 1H23 drivers of cash earnings change (%)

			5.8				Revenue has softened from strong 1H23 levels as the
							benefits of a higher interest rate environment have
							been more than offset by competition. At the same
							time, cost pressures remained elevated. Disciplined
							execution of our strategy is helping us manage these
							impacts including continued delivery of productivity
(3.7)
					benefits along with good growth in Business and
							Private Banking while adopting a more selective
							approach to growth in sectors where returns are
				(10.6)
					more challenged.
	Income	Expenses	Underlying profit
Asset quality 1H24 v 1H23
• Credit impairment charge (CIC) was $363 million, versus a 1H23	• The ratio of 90+ days past due and gross impaired assets
	charge of $393 million. The 1H24 charge includes a $40 million	to gross loans and acceptances increased 13 bps to 0.79%.
	release from forward looking provisions. Underlying charges	This mainly reflects higher arrears across the Australian home
	primarily reflect volume growth, higher arrears and a modest	lending and business lending portfolios, partially offset by lower
	increase in specific charges, partially offset by the impact of	impaired assets.
	higher house prices.

• The $40 million release from forward looking provisions includes a net release of $93 million from provisions for target sector forward looking adjustments. This has been partially offset by a $53 million top-up to the economic adjustment.

Appendix 4DHalf Year Group highlights Group review Divisional

Results Summary

Credit impairment charge ($m)

		393	409
			363
	123
2
1H22	2H22	1H23	2H23	1H24

90+ days past due and gross impaired assets / gross loans and acceptances (%)

0.75			0.75	0.79
	0.66	0.66
1H22	2H22	1H23	2H23	1H24

review Financial report

Our collective provisions remain prudently set at 1.47% of credit risk-weighted assets. The Australian economy is proving resilient and most customers are faring well in the current more challenging environment. However, there remains continued uncertainty in the outlook including the impacts of global instability and the ability of customers to manage the full extent of higher interest rates and elevated cost of living pressures.

Supplementary information

2024 Half Year Results

3

Capital, funding and liquidity
Group CET1 ratio(i) (%)
	13.00		12.22	12.15	Key ratios as at 31 March 2024
11.47		11.51	• Group Common Equity Tier 1 (CET1) ratio of 12.15%,
					down 7 bps from September 2023. This includes the
					benefit of lower IRRBB RWA (23 bps) and removal
					of APRA's Operational Risk overlay (17 bps) partially
					offset by $1.0 billion of shares bought back in
					1H24 (23 bps)(1) along with volume growth and asset
					quality deterioration.
					• Leverage ratio of 5.10%.
					• Liquidity coverage ratio (LCR) quarterly average
					of 139%.
FY20	FY21	FY22	FY23	1H24	• Net Stable Funding Ratio (NSFR) of 118%.

1. CET1 capital ratio on a Level 2 basis. From 1 January 2023 ratios are reported under APRA's revised capital framework.

Key divisional performance - Cash earnings

	1H24 ($m)	% change
	1H24 v 1H23
Business and	1,673	(2.4)
Private Banking

Key drivers 1H24 v 1H23

Modestly lower earnings with a decline in underlying profit partially offset by a reduction in credit impairment charges. Revenue decreased from strong 1H23 levels with strong volume growth but lower margins including the impact of competitive lending pressures, primarily relating to home lending. Expenses were higher including continued planned investment in the franchise.

			Lower earnings reflecting a decline in underlying profit. Revenue
			was weaker compared with strong 1H23 levels as competitive
Personal Banking	553	(29.6)	pressures more than offset disciplined volume growth and
			benefits from the higher interest rate environment. Cost growth
			was well managed.
			Modestly lower earnings reflecting a decrease in underlying profit
			and a higher effective tax rate due to the repeal of the offshore
Corporate and	899	(2.8)	banking unit tax concession. This was partially offset by a write-
Institutional Banking	back in credit impairment charges compared with a charge in the
			prior period. Revenue declined slightly as a result of lower Markets
			income partially offset by stronger margins.
			Lower underlying profit as a result of increased expenses
New Zealand Banking			including higher salary and technology related costs and
750	(7.7)	compliance obligations. Revenue was slightly lower with growth in
(NZ $m)
		volumes offset by a decline in margins. Credit impairment charges

were broadly stable.

1. On 15 August 2023 the Group announced its intention to acquire up to $1.5 billion ordinary shares via an on-marketbuy-back. NAB commenced the buy-back on
   29 August 2023 and has bought back and cancelled 41,673,065 ordinary shares ($1.3 billion) up to 31 March 2024, including 31,110,882 ordinary shares ($1.0 billion) in the March 2024 half year.

4 National Australia Bank

Economic outlook(1)

In Australia, household consumption growth slowed sharply in the second half of 2023, impacted by interest rates and cost of living pressures. This is weighing on real GDP growth which is expected to remain below-trend over the near term. However, some relief is anticipated later this year with expected tax cuts and a forecast easing in monetary policy from November should inflation continue to moderate. Following 1.5% GDP growth over 2023, growth of 1.7% is forecast over 2024, before improving to around 2.25 % in 2025. Pressure has eased in the labour market and wage growth is expected to slow from elevated rates in 2023. The unemployment rate is expected to continue to drift higher, peaking at around 4.5% by end 2024, but most indicators of labour demand remain healthy suggesting employment will continue to grow.

In New Zealand, the impacts of significant monetary policy tightening and slower global economic growth are continuing to weigh on economic activity. Real GDP growth has contracted, falling 0.3% over 2023, and there is a risk of a further decline in the first half of 2024. Strong population growth is contributing to an easing in supply side and inflationary pressures and a softening in the labour market, with the unemployment rate forecast to peak near 5.5% in 2025. If sustained, this provides scope for monetary policy easing - currently expected towards the end of 2024 - and improved economic growth in 2025.

(1) References to years relate to calendar years. References to growth over a year relate to Dec quarter versus Dec quarter of previous year.

Appendix 4DHalf Year Group highlights Group review Divisional review Financial report Supplementary

Results Summaryinformation

2024 Half Year Results

5

Strategic overview

While 1H24 has been a challenging time with significant competitive pressures and slowing growth, it is pleasing that all our divisions are continuing to execute well and in line with their strategic focus. This has delivered good balance sheet momentum in our targeted, higher returning sectors.

In Business and Private Banking (B&PB), our relationship-based approach increasingly enabled by digital, data and analytics continues to support good growth across our franchise. Despite a softer economic environment, business lending remained strong, up 8.6% over the year to March 2024, aided by increasing simplification and digitisation of our lending process. Deposit growth was also strong, up 6.4% over the year to March 2024, with continued focus on new transaction account openings. The rollout of innovative and enhanced solutions to help customers manage payments and cashflows remained a priority in 1H24 with key initiatives including enhancements to our ecommerce offering NAB Gateway and the launch of NAB Bookkeeper to reduce administration time for small business customers.

In Personal Banking we remained focused on providing simpler, more digital banking experiences. Simple everyday banking products opened digitally increased to 75% in 1H24, well up from 62% in FY20. This has supported good deposit growth of 6.4% over the year to March 2024. Our digital home lending platform continues to deliver faster turnaround times and better banker productivity. Rollout is progressing well across the broker channel with almost a quarter of broker home loans now submitted via the platform (up from 15% in 2H23). However, competitive dynamics in the Australian home lending market have been challenging. This has seen us adopt a selective approach to growth over the 12 months to March 2024 with balances rising 3.7% (representing 0.8x system growth levels(1)) and a deliberate skew to our B&PB channel where returns are stronger.

We are leveraging capability from recent acquisitions to drive growth in unsecured lending and ubank through better, more targeted customer propositions. Over 1H24, our credit card balances and market share increased and ubank recorded continued customer acquisition weighted towards its target segment of under 35-year-olds.

Corporate and Institutional Banking (C&IB) has maintained its returns-focused strategy. A disciplined approach to growth, combined with a focus on simplification and leveraging transactional banking capability has driven a 520 bps improvement in C&IB's returns over the three years to March 2024 despite only modest growth in lending balances.

New Zealand Banking (NZB) is making good progress against its strategic priorities of becoming a simpler, more digital bank and tilting to less capital intensive sectors over time. This is helping support returns in continued challenging economic conditions. Over the year to March 2024 NZB achieved good growth in the household sector, which remains a focus.

Having a healthy customer franchise and engaged colleagues are key to our ability to grow sustainably. This is supported by our consistent focus on improving customer and colleague experiences. Our most recent colleague engagement score of 77 is stable over 12 months and in line with the top quartile global benchmark(2). Customer NPS(3) outcomes have been mixed over the 12 months to March 2024. Business NPS declined 8 points to +2 with NAB's ranking slipping from second to fourth of major banks. Over the same period, Mass Consumer NPS improved 1 point with NAB continuing to rank second of major banks, and High Net Worth and Mass Affluent NPS improved 6 points with NAB continuing to rank first of major banks. Delivering more consistent service experiences to all NAB customers is a priority and we clearly have work to do to achieve this.

Our investment to simplify and digitise our business is allowing our bankers to spend more time with customers and provide quicker responses, while letting customers increasingly self-serve when they want to. This is also making us more efficient, supporting productivity benefits of $189 million in 1H24, and helping us manage costs while continuing to invest. In FY24 we continue to target productivity benefits of approximately $400 million(4).

Constant and evolving threats from financial crime require ongoing vigilance. Since September 2021 we have prevented or recovered more than $260 million in scam losses for customers. We will continue to enhance our defences to keep our Bank and customers safe. Staying safe also requires that we maintain prudent balance sheet settings and consistently manage risk with discipline. As at 31 March 2024, collective provisions as a ratio of credit risk-weighted assets were 1.47% and the share of lending funded by customer deposits is 82% - both well above pre-COVID 19 levels. The removal of APRA's $500 million Operational Risk capital add-on, reflecting improvements to our governance, risk and culture since 2019, has been an important milestone this period adding to our strong capital position. Our CET1 ratio of 12.15% compares with a target range of 11.0-11.5%, supporting a $1.5 billion increase in our on-market share buy-back(5).

Our strategy, in place since April 2020, has served us well over four years. Despite significant shifts in our operating environment during this period, we have maintained a clear focus on delivering better outcomes for customers and colleagues while keeping our bank safe. This has been supported by disciplined execution and persistent investment, and seen our return on equity improve from 9.0% in 1H20 to 11.7% in 1H24. With our new Executive Leadership Team in place, we are considering how we evolve our strategic priorities. We start in a great place with strong, safe balance sheet settings and attractive growth options. While no major strategic pivots are needed, we are excited about opportunities to leverage the good work of the past several years to allow us to become even simpler and drive better outcomes for customers and colleagues while maintaining a disciplined approach. This will remain at the core of everything we do and underpin our ability to deliver sustainable growth and returns.

1. APRA Monthly Authorised Deposit-taking Institution statistics. Latest data as at March 2024.
2. Engagement scores refer to Glint 'Heartbeat' outcomes. Top quartile comparison is based on Glint's client group (domestic and global, from all industries).
3. Net Promoter® and NPS® are registered trademarks and Net Promoter Score and Net Promoter System are trademarks of Bain & Company, Inc., NICE Systems, Inc., and Fred Reichheld. Sourced from DBM Business and Consumer Atlas (part of RFI Global), measured on 6 month rolling average. A number of changes have been made to our Strategic NPS measure to align more closely to the Group Strategy. Business NPS is now based on (25:25:50) combined weighting of NAB turnover segments: Nano/Micro (Up to $1m turnover OR $1m to $5m turnover with no relationship management), Small ($1m-$5m turnover with relationship management), Medium & Large ($5m -$200m turnover). Mass Consumer NPS now excludes HNW&MA (consumers with Personal income of $260k+ and/or investible assets $2.5m+ and/or footings of over $850k). Ranking based on absolute scores, not statistically significant differences.
4. Refer to key risks, qualifications and assumptions in relation to forward looking statements on page 8.
5. On 15 August 2023 the Group announced its intention to acquire up to $1.5 billion ordinary shares via an on-marketbuy-back. NAB commenced the buy-back on
   29 August 2023 and has bought back and cancelled 41,673,065 ordinary shares ($1.3 billion) up to 31 March 2024, including 31,110,882 ordinary shares ($1.0 billion) in the March 2024 half year. NAB has today announced an increase to the on-marketbuy-back by $1.5 billion with this additional buy-back activity expected to be undertaken over approximately 12 months from today.

6 National Australia Bank