For personal use only. NAB Subordinated Notes Offer National Australia Bank Limited May 2012

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1 NAB Subordinated Notes Offer National Australia Bank Limited May 2012

Important Notice This document has been prepared by National Australia Bank Limited ABN 12 004 044 937 ( NAB ) in relation to its proposed offer of NAB Subordinated Notes.

An Offer Document containing this information and an Application Form will be lodged with ASX once the Margin is determined (expected to be on or about 21 May 2012) and will be available within

2 Important Notice This document has been prepared by National Australia Bank Limited ABN ( NAB ) in relation to its proposed offer of NAB Subordinated Notes. An Offer Document in respect of the NAB Subordinated Notes was lodged with ASX on 14 May The Offer Document does not contain the Margin or the Application Form. An Offer Document containing this information and an Application Form will be lodged with ASX once the Margin is determined (expected to be on or about 21 May 2012) and will be available within Australia. The Offer Document can be obtained electronically from This document is not a prospectus or other disclosure document under Australian law and does not constitute an invitation to subscribe for or buy any securities or an offer for subscription or purchase of any securities or a solicitation to engage in or refrain from engaging in any transaction. The information provided in this document is not investment advice and has been prepared without taking into account your investment objectives, financial situation or particular needs (including financial and taxation issues). It is important that you read the Offer Document in full before deciding to invest in the NAB Subordinated Notes and consider the risks that could affect the performance of the NAB Subordinated Notes. If you have any questions, you should seek advice from your financial adviser or other professional adviser before deciding to invest in the NAB Subordinated Notes. The NAB Subordinated Notes do not constitute deposit liabilities of NAB, are not protected accounts for the purposes of the Banking Act 1959 (Cth) or any other accounts and are not guaranteed or insured by any government, government agency or compensation scheme of the Commonwealth of Australia or any other jurisdiction, by any member of the Group or by any other party. The NAB Subordinated Notes are subordinated. In a winding up of NAB, if there are insufficient assets to satisfy claims ranking ahead of the NAB Subordinated Notes, you will lose all of the money you invested in the NAB Subordinated Notes as you will not be repaid any of the money you invested in the NAB Subordinated Notes and you will not receive any interest payments that are due and unpaid at that time. So far as laws and regulatory requirements permit, NAB, its related companies, associated entities and any officer, employee, agent, adviser or contractor thereof (the NAB Group ) does not warrant or represent that the information, recommendations, opinions or conclusions contained in this document ( Information ) is accurate, reliable, complete or current. The Information is indicative and prepared for information purposes only and does not purport to contain all matters relevant to the NAB Subordinated Notes. The Information is not intended to be relied upon and in all cases anyone proposing to use the Information should independently verify and check its accuracy, completeness, reliability and suitability and obtain appropriate professional advice. The Information is not intended to create any legal or fiduciary relationship and nothing contained in this document will be considered an invitation to engage in business, a recommendation, guidance, invitation, inducement, proposal, advice or solicitation to provide investment, financial or banking services or an invitation to engage in business or invest, buy, sell or deal in any securities or other financial instruments. The Information is subject to change without notice, but the NAB Group shall not be under any duty to update or correct it. All statements as to future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance. Diagrams used in this document are illustrative only and may not necessarily be shown to scale. Unless otherwise defined, capitalised terms in this document have the meaning given to them in the Offer Document. The distribution of this presentation or the Offer Document in jurisdictions outside Australia may be restricted by law. Any person who comes into possession of this presentation or the Offer Document should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. In particular the NAB Subordinated Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act)) or the securities laws of any state of the United States and may not be offered, sold or resold in the United States or to, or for the account or benefit of, any U.S. Person (as defined in Regulation S of the Securities Act) except pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act. None of this presentation, the Offer Document, or any Application Form or other materials relating to the Offer may be distributed in the United States. Subject to any terms implied by law and which cannot be excluded, the NAB Group shall not be liable for any errors, omissions, defects or misrepresentations in the Information (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the Information. If any law prohibits the exclusion of such liability, the NAB Group limits its liability to the re-supply of the Information, provided that such limitation is permitted by law and is fair and reasonable. 2

3 NAB Subordinated Notes Key Features Simple, subordinated debt issue with a fixed Maturity Date of 18 June 2022 NAB has the option of redeeming the NAB Subordinated Notes on 18 June 2017, subject to prior APRA approval (which may not be provided) Interest is payable quarterly in arrears in cash (gross pay) The interest rate will be the sum of the 90 day Bank Bill Rate plus a Margin The final Margin will be announced once determined, but is expected to be within the range of 2.75% and 2.85% Interest payments cannot be deferred while NAB remains Solvent, and are not discretionary In a winding up of NAB, NAB Subordinated Notes rank: Equally among themselves and equal ranking term subordinated noteholders; Behind all claims of Unsubordinated Creditors (including depositors and senior noteholders); and Ahead of all claims against NAB that rank behind claims for amounts owing in connection with NAB Subordinated Notes, such as holders of hybrid instruments and ordinary shareholders There is no trigger for conversion into Ordinary Shares APRA has confirmed that the NAB Subordinated Notes will be eligible for inclusion as Tier 2 Capital NAB expects that the NAB Subordinated Notes will be quoted on the ASX under code NABHB NAB s first domestic retail offering since

4 Differences from Term Deposits and National Income Securities Term Deposits NAB Subordinated Notes National Income Securities Protection under the Australian Government Financial Claims Scheme 1 Yes No No Term Varies from product to product but is often between 1 month and 5 years 10 years 2 Perpetual 2 Interest rate Fixed Floating Floating Interest payment date Varies from product to product but is often at the end of term or per annum Quarterly Quarterly Transferable No Yes quoted on ASX Yes quoted on ASX Conditions to Payment None, subject to applicable laws and any specific conditions None, except where NAB is not Solvent at the time the payment is due and will not be Solvent immediately after making the payment 3 Distributions are subject to conditions including the availability of distributable profits and other APRA test 4 Issuer s early redemption option Yes, but only in certain circumstances Yes, but only with the prior written approval of APRA 2 With the prior written approval of APRA and the approval of holders of Ordinary Shares, NAB has the right to exchange the National Income Securities for face value at any time Investor s ability to withdraw Yes, subject to conditions No, except if a Winding Up Default occurs, NAB s obligations may be accelerated if directed by an Ordinary Resolution No 4 Ranking Senior to Subordinated Notes Senior to National Income Securities Senior to Ordinary Shareholders The Subordinated Notes are subordinated and rank behind certain obligations including all Unsubordinated Debt (such as NAB s savings accounts and term deposits). This means that in a winding up of NAB, holders of Unsubordinated Debt, including liabilities preferred by law, such as deposits, will receive their money back before the holders of the Subordinated Notes. 1. For deposits made after Feb up to an amount of $250, Subject to early redemption by NAB with the prior written approval of APRA. 3. Any amount not paid under this condition accumulates without compounding and remains a debt owing to the Holder until paid. 4. If the conditions to payment are not met, the distribution is never payable however in certain limited circumstances an optional distribution may be paid.

5 Ranking of NAB Subordinated Notes Higher Ranking Senior obligations Examples Liabilities preferred by law and secured debt Unsubordinated unsecured debt Examples of existing NAB obligations and securities 1 Liabilities in Australia in relation to protected accounts under the Banking Act (generally, savings accounts and term deposits) and other liabilities mandatorily preferred by law including employee entitlements, and liabilities to secured creditors Bonds and notes, trade and general creditors Equal ranking obligations Term subordinated unsecured debt NAB Subordinated Notes and other dated subordinated unsecured debt obligations Junior obligations Perpetual subordinated unsecured debt NAB Undated Subordinated Floating Rate Notes issued in 1986 Preference shares and other equally ranked instruments The preference shares comprised in the National Income Securities, the 2008 Stapled Securities and the 2009 Stapled Securities The preference shares which may be issued under the TPS, TPS II, AUD NCI s and EUR NCI s (if issued) The 2008 Convertible Notes and 2009 Capital Notes Lower Ranking Ordinary shares NAB s Ordinary Shares 5 1. This is a simplified capital structure of NAB and does not include every type of security or other obligation issued by NAB.

6 NAB Subordinated Notes Offer Summary Issuer Offer by National Australia Bank Limited ( NAB ) of NAB Subordinated Notes Offer Size $500 million, with the ability to raise more or less Purpose The net proceeds of the Offer will be used for general corporate purposes Offer Structure The Offer comprises: The Securityholder Offer; The General Offer; The Institutional Offer; and The Broker Firm Offer Minimum application of 50 NAB Subordinated Notes ($5,000) and thereafter in multiples of 10 NAB Subordinated Notes ($1,000) 6

7 NAB Subordinated Notes Summary Terms Issue Price $100 per NAB Subordinated Note Listing Term & Maturity Ranking NAB has applied for quotation of the NAB Subordinated Notes on ASX. It is expected that the NAB Subordinated Notes will be quoted under code NABHB NAB Subordinated Notes have a term of 10 years unless redeemed earlier by NAB NAB has the option of redeeming the NAB Subordinated Notes on 18 June 2017 or on any Interest Payment Date falling after that date, subject to prior APRA approval (which may not be provided) Assuming an Issue Date of 18 June 2012, the Maturity Date will be 18 June 2022 In a winding up of NAB, NAB Subordinated Notes rank: Equally among themselves and equal ranking term subordinated noteholders; Behind all claims of Unsubordinated Creditors (including depositors and senior noteholders); and Ahead of all claims against NAB that rank behind claims for amounts owing in connection with NAB Subordinated Notes, such as holders of hybrid instruments and ordinary shareholders 7

8 NAB Subordinated Notes Summary Terms (Cont.) Interest Payment Floating Interest Rate Gross pay basis Interest will be paid quarterly in arrears on 18 September, 18 December, 18 March and 18 June, as well as on the Maturity Date or any earlier redemption date, unless NAB is not Solvent or cannot make the payment and remain Solvent Interest Rate Conditions to Payment Repayment of Face Value Holder redemption rights Interest Rate = 90 day BBSW + Margin The Margin (to be determined through the Bookbuild) is expected to be in the range of 2.75% to 2.85% per annum. NAB cannot defer interest payments and payments are not discretionary, but interest and other amounts will not be paid where NAB is not Solvent or cannot make the payment and remain Solvent. On the Maturity Date, you will receive: The Face Value; plus Accrued but unpaid interest You will not be paid the Face Value or accrued but unpaid interest where NAB is not Solvent or cannot make the payment and remain Solvent You do not have a right to request that your NAB Subordinated Notes be redeemed. 8

9 NAB Subordinated Notes Summary Terms (Cont.) NAB redemption rights NAB has the following rights to redeem the NAB Subordinated Notes before the Maturity Date: All or some of the NAB Subordinated Notes, on 18 June 2017 or on any Interest Payment Date falling after that date; All (but not some) of the NAB Subordinated Notes for certain taxation reasons; and All (but not some) of the NAB Subordinated Notes if a Regulatory Event occurs subject to obtaining the prior written approval of APRA (which may not be provided) 9

10 Key Dates for the Offer 1 Date Record Date for Securityholder Offer Announcement of the NAB Subordinated Notes Offer Bookbuild Announcement of Margin Offer Opens Securityholder and General Offers Close Broker Firm and Institutional Offers Close Issue of the NAB Subordinated Notes Commencement of deferred settlement trading Despatch of Holding Statements Commencement of trading on normal settlement basis First Interest Payment Date First Optional Redemption Date 2 Maturity Date 3 10 May May pm (AEST) 18 May May May June June June June June June September June June These dates are indicative only and may change without notice. NAB may vary the timetable, including extending the Closing Date, closing the Offer early without notice, or withdrawing the Offer at any time before the NAB Subordinated Notes are issued. 2. Subject to APRA s prior written approval (which may not be provided), NAB has the ability to withdraw the NAB Subordinated Notes early. This assumes the Issue Date will be 18 June This assumes the Issue Date will be 18 June 2012.

11 1H12 Results Summary

12 Group financial result ($m) Half year to Mar 12 Sep 11 Mar 11 Change on Sep 11 Change on Mar 11 Net interest income 6,708 6,788 6,304 (1.2%) 6.4% Other operating income (incl NAB Wealth) 2,400 2,007 2, % (3.8%) Net operating income 9,108 8,795 8, % 3.5% Operating expenses (3,952) (3,983) (3,991) 0.8% 1.0% Underlying profit 5,156 4,812 4, % 7.2% B&DDs (1,131) (834) (988) (35.6%) (14.5%) Cash earnings 2,828 2,792 2, % 6.0% Cash ROE 15.0% 15.2% 15.1% (20bps) (10bps) NIM 2.17% 2.28% 2.23% (11bps) (6bps) Core Tier 1 ratio 8.03% 7.58% 7.12% 45bps 91bps Spot GLAs ($bn) % 6.8% 12

13 Asset quality and coverage ratios Categorised assets by balance ($bn) 28, , , , , ,0004 4, Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Watch Loans Impaired Assets 90+ Days Past Due Categorised Assets as % of GLAs 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 90+ DPD & impaired assets as a % of gross loans and acceptances by product 2.0% 1.5% 1.0% 0.5% 0.0% Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Mortgages Impaired Business Impaired Mortgages 90+ DPD Business 90+ DPD Retail Unsecured 90+ DPD Impaired 90+DPD Collective provision Coverage ratios (including GRCL top-up) ($m) 50% 3, (159) (160) 10 (43) 3, % 1.0% 0.5% 1.45% 1.44% 1.41% 1.32% 0.31% 0.32% 0.31% 0.30% 1.14% 1.12% 1.10% 1.02% 40% 30% 20% 10% Sep 11 Retail Non Retail (including loans at fair value) SCDO overlay utilisation Derivatives at fair value FX Impact/Other Mar % Sep 10 Mar 11 Sep 11 Mar 12 GRCL top-up (pre-tax) as a % of Credit Risk Weighted Assets (LHS) Collective Provisions as a % of Credit Risk Weighted Assets (LHS) Specific Provisions as a % of Gross Impaired Assets (RHS) 0% 13

14 Strong Core Tier 1 (Basel II) capital position (%) Business Capital Generation = 56bps Total Tier (0.35) 0.16 (0.08) 0.06 (0.07) (0.10) 10.17% 9.70% 9.19% Mar 11 $24.6bn Sep 11 $25.8bn Cash Earnings $2.8bn Dividend (net of DRP) ($1.2bn) Net RWA Reduction excl SCDO ($6.9bn) FCTR ($0.26bn) DTA $0.2bn Basel 2.5 ($2.9bn) Non-Cash earnings 1 ($0.34bn) Mar 12 $27.0bn 14 (1) Non-cash earnings impact after adjusting for distributions, treasury shares, UK goodwill, software impairment, and separately disclosed items

15 Estimated impacts of Basel III: March 2012 (%) (0.25) (0.04) (0.30) (0.15) 0.36 (0.07) Basel III Core Tier 1 (Act) Investment in WM NTAs EL>EP Credit Risk RWAs* Deferred Tax Assets Dividend (net of DRP Participation) Other# Basel III Core Tier 1 (APRA proposals) WM NTAs, DTA, Equity Investments & Other RWA Basel III Adjustments Core Tier 1 (BIS)^ Estimated based on APRA response paper on Basel III capital reforms, released 30 March * Counterparty credit risk (CCR) is estimated to add an additional $13 billion of risk weighted assets. APRA intends to release its proposed approaches to the implementation of the Basel III reforms relating to CCR once the Basel Committee has finalised these particular reforms. # Other consists of equity investments (-10bps), 1,250% securitisation risk weighting and other immaterial movements. ^ Assumes no change to the treatment of treasury shares. 15

16 Funding and liquidity Group Stable Funding Index (SFI) Term funding tenor of issuance 72% 78% 16% 19% 84% 85% 85% 20% 20% 20% 56% 59% 64% 65% 65% Sep 08 Sep 09 Sep 10 Sep 11 Mar 12 Customer Funding Index Term Funding Index Sep 10 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) Sep 10 Mar 11 Sep 11 Mar 12 Senior and Sub Debt Secured Funding Sep 10 Mar 11 Sep 11 Mar 12 Government, Cash & Central Bank Bank, Corporate & Other Internal R M B S (c o ntingent liquidity) 16

17 Key Contacts NAB Group Treasury Debt Capital Markets Eric Williamson Group Treasurer Phone: +61 (3) Mobile: +61 (0) Christian Joannidis Head of Group Funding Phone: +61 (3) Mobile: +61 (0) Matt Price Head of Group Capital Management Phone: +61 (3) Mobile: +61 (0) Sarah Korman Debt Investor Relations Phone: +61 (3) Richard Coyne Senior Manager Group Funding Phone: +61 (3) Mobile: +61 (0) Ross Edwards Senior Manager Group Capital Phone: +61 (3) Nick Chaplin Director Phone: +61 (2) Mobile: +61 (0) Anthony Teasdale Director Phone: +61 (2) Mobile: +61 (0) Marshall Denning Associate Phone: +61 (2) Mobile: +61 (0) Sub-Institutional Distribution & Syndicate Institutional Syndicate John McClusky Head of Global Markets Investments Phone: +61 (3) Mobile: +61 (0) Nathan Doake Director, Sub-Institutional Fixed Income Phone: +61 (2) Mobile: +61 (0) Jason Huddy Head of Wealth Distribution Phone: +61 (3) Mobile: +61 (0) Gregory Szwarc Senior Sales Director Phone: +61 (2) Mobile: +61 (0) Joe Azzam Global Head of Debt Syndicate Phone: +61 (2) Mobile: +61 (0) Mark Abrahams Director, Debt Syndicate Phone: +61 (2) Mobile: +61 (0)

NAB SUBORDINATED NOTES 2 INVESTOR PRESENTATION

NAB SUBORDINATED NOTES 2 INVESTOR PRESENTATION February 2017 IMPORTANT NOTICE This document has been prepared by National Australia Bank Limited ABN 12 004 044 937 ( NAB ) in relation to its proposed offer