Australia Banks. A little ray of sunshine AUSTRALIA. Event. Impact. Outlook. 16 April 2013 Macquarie Securities (Australia) Limited

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1 AUSTRALIA Loan growth driven out of WA & VIC with NSW & QLD growing below system % 2.5% 25% 20% 1.5% 15% 10% 0.5% 5% 0% -0.5% -5% - -10% -1.5% -15% - -20% -2.5% -25% (Ann.) Source: ABS, APRA, RBA, Macquarie Research, April 2013 FHB contribution to loan growth at the lowest in at least 20 years 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% NSW QLD WA System growth (RHS) -ve loan growth FHB Paydown/Refi Min +ve loan growth Source: ABS, APRA, RBA, Macquarie Research, April 2013 VIC SA Other Lowest FHB contribution in 20 years Non FHB (Ann.) Applications/paydown ratio Max 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x A little ray of sunshine Event There are some signs of life in the mortgage market with a second strong month of mortgage applications growth, possibly signalling an inflection point. Strength appears to be centred on investor housing, VIC/WA and non First home buyer segments. As a result we have take the initial step of small (<1%) upgrades to our earnings forecasts. Impact Our lead indicator model suggests that system mortgage growth may have turned a corner up from 4% to 5% Our lead indicator model uses the ABS loan application data to provide a view of the trajectory for mortgage growth. Since our last update, mortgage growth appears to have turned a corner, with lead indicators suggesting growth of 2.5% HOH (c5.0% p.a.) up from 2% HOH (c4.0% p.a.) six months ago. If these conditions continue to persist, then mortgage lending growth is likely to strengthen over the coming months as applications convert in to book growth for the banks. Investor housing and VIC/WA stronger Investors appear to returning to the market with growth coming in at 1.8% MoM (20%+ annualised) no doubt driven by the yield motive to some degree. Somewhat surprisingly Victoria, along with WA, appears to be the strongest states, with WA helped by the last throws of the mining boom. NSW and QLD continued to be soft with growth of -0.2% and -0.4% MoM. First Home Buyer (FHB) still weak The FHB pull forward of demand driven by various incentives ( boosts, bonuses, regional bonuses, etc) continue to materially impact demand in this segment, with growth still weak at 0.2% MoM. In fact FHB volumes reached a 20-year low in terms of contribution to growth. This of course has been offset by strength in the non first home buyer segment with growth of 3.5% MoM. Outlook On revisiting our lead indicator mortgage application model, we have upgraded our FY13 earnings estimates for all the majors slightly (CBA (+0.5%), NAB (+0.4%), WBC (0.2%) and ANZ (0.1%)). These revisions have no material impact on our target prices. While an improving outlook for mortgage growth is positive, it is unlikely to turn with the same aggression as business lending. As highlighted in our note The Next Leg of Growth, on 21 March 2013 we believe that improving business borrowing intentions are likely to be a larger swing factor over the coming 12 months, hence our preference is for the business banks. 16 April 2013 Macquarie Securities (Australia) Limited Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website

2 Macquarie Research A little ray of sunshine. There are some signs of life in the mortgage market with a second strong month of mortgage applications growth, possibly signalling an inflection point. Strength appears to be centred on investor housing, VIC/WA and non First home buyer segments. Our lead indicator model suggests that system mortgage growth may have turned a corner up from 4% to 5% Since our last update, mortgage growth appears to have turned a corner, with lead indicators suggesting growth of 2.5% HOH (c5.0% p.a.) up from 2% HOH (c4.0% p.a.) 6 months ago. If these conditions continue to persist, then mortgage lending growth is likely to strengthen over the coming months as applications convert in to book growth for the banks. Fig 1 Macquarie Mortgage Growth model pointing to 5.0% mortgage growth 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 System - Spot Growth HOH - OO and IH 5.1% 4.5% 3.4% 4.2% 4.4% 3.4% 3.2% 2.2% 2.4% 2.5% System - Average Growth HOH - OO and IH 5.5% 4.8% 3.9% 3.8% 4.3% 3.9% 3.3% 2.6% 2.1% 2.1% 2.2% 2.5% CBA - Spot Growth HOH - OO and IH 6.8% 9.3% 7.3% 13.1% 7.5% 4.6% 2.2% -0.3% 2.4% 2.2% 1.5% 2.3% CBA - Average Growth HOH - OO and IH 7.2% 8.1% 8.3% 10.3% 10.2% 6.0% 3.4% 0.9% 2.3% 1.8% 1.9% ANZ - Spot Growth HOH - OO and IH 6.2% 6.8% 6.5% 3.4% 5.4% 6.8% 3.8% 3.0% 5.0% 2.1% 2.1% 2.2% ANZ - Average Growth HOH - OO and IH 6.5% 6.5% 6.6% 4.9% 4.4% 6.1% 5.3% 3.4% 4.1% 3.5% 2.1% 2.2% NAB - Spot Growth HOH - OO and IH 4.7% 3.4% 2.1% 3.0% 4.3% 7.2% 7.2% 7.1% 3.6% 4.2% 3.5% 3.5% NAB - Average Growth HOH - OO and IH 4.5% 4.0% 2.7% 2.5% 3.6% 5.8% 7.2% 7.1% 5.3% 3.9% 3.8% 3.5% WBC - Spot Growth HOH - OO and IH 5.8% 7.6% 4.5% 10.1% 7.9% 3.7% 2.8% 3.0% 0.2% 1.9% 2.2% 2.4% WBC - Average Growth HOH - OO and IH 6.3% 6.7% 6.0% 7.4% 9.0% 5.7% 3.2% 2.9% 1.6% 1.1% 2.1% 2.3% Source: ABS, APRA, RBA, Macquarie Research, April 2013 Comparing the current forecasts included in our models to the Macquarie Mortgage growth model points to a slight uptick in mortgage loan growth for the Majors. On revisiting our lead indicator mortgage application model, we have upgraded our FY13 earnings estimates for all the majors slightly. These revisions have no material impact on our target prices Fig 2 Earnings changes due to mortgage growth changes Source: Macquarie Research, April 2013 FY13E ANZ 0.1% CBA 0.5% NAB 0.4% WBC 0.2% Key drivers of mortgage loan growth are pointing to a mild recovery Key drivers of mortgage loan growth appear to be coming out of investor housing with the owner occupier loan growth being driven by WA and VIC. Holding back an uptick in loan growth is the lack of interest from FHB, now sitting at 20-year lows. We explore these in further details below. Investor housing leading loan growth higher Investors appear to returning to the market with growth coming in at 1.8% MoM (20%+ annualised) no doubt driven by the yield motive to some degree. As interest rates remain at low levels, investors continue to search for higher yielding assets with property re-gaining popularity with the additional benefit of being a hedge against rising inflation. As seen below, investor loan growth has rebounded and based on the current run rate is pointing to ~10% growth whereas owner occupier loan growth remains subdued at levels approximating GDP growth. 15 April

3 Macquarie Research Fig 3 Investor housing leading loan growth higher with the current run rate pointing to ~10% loan growth 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% -20% -20% -30% -30% (Ann.) Investors Owner occupiers Paydown/Refi IH loan growth OO loan growth Source: ABS, APRA, RBA, Macquarie Research, April 2013 Owner Occupier loan growth driven out of WA, VIC with NSW & QLD growing below system Coming out of the ABS monthly data, somewhat surprisingly Victoria, along with WA, appear to be the strongest states, with WA helped by the last throws of the mining boom. NSW and QLD continued to be soft with growth of -0.2% and -0.4% MoM. On a State basis, we see the trend over the past couple of years continues with WA and VIC contributing positively to the current level of subdued loan growth with NSW and QLD dragging the average down. The interesting points to note are: The sharp correction in commodity prices and subsequent rebound seems to have had little impact on the appetite for loans in WA; VIC continues to contribute positively despite having a larger correction than average in house prices over the past couple of years; and NSW s negative contribution to the growth appears to be increasing, although we note this is based on 2 data points (annualised year to February data); and Whilst little surprise, QLD continues to struggle negatively contributing to growth over the past 4 years driven largely by a large build up in debt during the middle of the 2000 s and subsequent house price falls. Fig 4 Loan growth driven out of WA & VIC with NSW & QLD growing below system % 2.5% 1.5% 0.5% -0.5% % % 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% (Ann.) NSW VIC QLD SA WA Other System growth (RHS) Source: ABS, APRA, RBA, Macquarie Research, April April

4 Macquarie Research First Home Buyers (FHB) holding back loan growth The FHB pull forward of demand driven by various incentives ( boosts, bonuses, regional bonuses, etc) continue to materially impact demand in this segment, with growth still weak at 0.2% MoM. In fact FHB volumes reached a 20 year low in terms of contribution to growth as seen below. This of course has been offset by strength in the non first home buyer segment with growth of 3.5% MoM. Fig 5 FHB contribution to loan growth at the lowest in at least 20 years 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% ve loan growth -ve loan growth Source: ABS, APRA, RBA, Macquarie Research, April 2013 Mortgage growth MQG Forecasts vs current run rate growth Lowest FHB contribution in 20 years (Ann.) FHB Non FHB Paydown/Refi Applications/paydown ratio Min Max Comparing the current forecasts included in our models to the Macquarie Mortgage growth model points to a slight uptick in mortgage loan growth for the Majors with NAB currently most below where our model currently forecasts. 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x Fig 6 Mortgage growth MQG Forecast vs. current run rate growth rates HOH growth 4.0% 3.5% 3.5% 3.0% 2.5% 1.5% 0.5% 1.8% 2.2% 2.3% 1.6% 1.6% 2.4% ANZ CBA NAB WBC 2H13 - MQG forecast 1H13 - HOH - Loan App Model Source: Macquarie Research, April 2013 Investment thesis While an improving outlook for mortgage growth is positive, it is unlikely to turn with the same aggression as business lending. As highlighted in our note The Next Leg of Growth, 21 March we believe that improving business borrowing intentions are likely to be a larger swing factor over the coming 12 months, hence our preference for the business banks. 15 April

5 Macquarie Research Macquarie Mortgage Growth model methodology Below we set out the Macquarie Mortgage Growth model methodology followed by tables outlining the housing loan growth between 2H08 through to 2H13 on both a system level and on a bank by bank basis. We divide our analysis on a June year-end and September year-end basis to coincide with the relevant banking reporting periods. The following points can be made about our methodology: We start with the outstanding stock of loans. Application flows (established, new and construction applications and refi), then provide a base for potential growth in loan stock. Application flows (in A$ terms) are assumed to drive loan stock on a two-month-lagged basis. Reducing this potential growth in loan stock is capital paydown of loans. To estimate loan paydown in the near term, we examine the seasonality of previous paydown as a % of beginning period loan stock. While this assumes that past paydown rates are similar to future paydown rates, near term this is probably a relatively safe assumption. These assumptions coupled with (where necessary) extrapolation of current run rate applications volumes for the full period provides a forecast for ending loan balances and hence system loan growth. In order to extrapolate this growth to individual banks, we incorporate current run rate mortgage growth (as reported by APRA) as a % of the system run rate and assume that this applies to our estimated future system growth. Fig 7 Methodology for mortgage growth forecasts Source: Macquarie Research, April 2013 The table below details the June year-end analysis for both owner-occupier and investor mortgage growth. Broadly speaking a number of general observations can be made about trends in the data to date, namely: While the overall stock of loans on the owner-occupied side is continuing to grow, it s growing at a slower pace; this is primarily driven by loans on established dwellings remaining below $70bn and therefore continue to decline in relative terms (i.e. as a % of outstanding stock). While a lack of construction and new dwellings are often focused on by the media, in reality bank loan growth is much more a function of trade in established dwellings including households willingness to lever up, movements in house prices and the volume of applications at any one point in time. Similarly, investor housing appears to be reaching a tipping point, where flow of new applications are starting to tick-up, demonstrating an improving outlook for that market with interest rates at low levels. 15 April

6 Macquarie Private Wealth 16 April Fig 8 Mortgage growth slight pick up expected June YE Analysis 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 Owner Occupier Stock of Owner Occupier Loans Established Loans New Dwellings Construction Refi Paydown Ending Supply of Owner Occupier Loans System - Spot Growth HOH 5.7% 4.8% 1.1% 5.3% 4.8% 3.5% 3.4% 2.5% 2.5% 2.1% 1.9% 2.2% System - Spot Growth PCP 12.1% 10.8% 6.0% 6.5% 10.4% 8.5% 7.0% 5.9% 5.1% 4.7% 4.1% 4.2% System - Average Growth HOH 5.9% 5.2% 2.9% 3.2% 5.1% 4.1% 3.4% 2.9% 2.5% 2.3% 2.1% System - Average Growth YOY 13.8% 12.5% 8.9% 8.5% 8.2% 7.5% 8.6% 7.1% 6.0% 5.3% 4.5% 4.4% CBA - Spot Balances - Period Start CBA - Spot Balances - Period End CBA - Spot Growth HOH 4.5% 9.4% 7.2% 15.5% 7.4% 4.1% 1.5% 0.7% 1.7% 1.7% 0.8% 1.3% CBA - Spot Growth PCP 15.6% 14.3% 17.3% 23.9% 24.1% 11.8% 5.7% 2.3% 2.5% 3.4% 2.5% 2.2% CBA - Average Growth HOH 7.4% 7.0% 8.2% 11.5% 11.2% 5.7% 2.8% 1.1% 1.2% 1.7% 1.3% 1.1% CBA - Average Growth YOY 14.8% 16.5% 19.4% % 13.9% 6.8% 4.0% 2.9% 2.5% 2.8% 2.6% Investor Stock of Investor Loans Construction of dwellings for rent and resale Purchase for rent/resale by individuals Purchase for rent/resale by others Refi/Paydown Ending Supply of Investor Loans System - Spot Growth HOH 4.7% 4.4% 8.6% 1.8% 3.5% 4.9% 3.6% 2.1% 2.8% 2.6% 3.6% System - Spot Growth PCP 11.4% 9.3% 13.4% 10.5% 5.3% 8.6% 8.6% 4.5% 3.0% 5.0% 5.5% 6.3% System - Average Growth HOH 5.5% 4.6% 6.5% 5.0% 2.6% 4.2% 4.2% 2.2% 1.5% 2.5% 2.7% 3.1% System - Average Growth YOY 1 8.9% 12.5% 9.9% 9.1% 9.5% 7.0% 6.5% 5.7% 4.8% 4.3% 5.6% CBA - Spot Balances - Period Start CBA - Spot Balances - Period End CBA - Spot Growth HOH 12.7% 9.3% 7.5% 7.5% 7.9% 6.1% 3.9% -2.9% 4.0% 3.3% 3.2% 4.5% CBA - Spot Growth PCP 13.7% 23.2% 17.5% 15.6% 16.0% 14.4% 10.2% 0.9% 7.4% 6.6% 7.8% CBA - Average Growth HOH 6.8% 10.9% 8.4% 7.5% 7.7% 6.9% 4.9% 0.4% 0.5% 3.6% 3.2% 3.8% CBA - Average Growth YOY 15.7% 15.7% 19.0% 16.7% 14.9% 12.9% 7.2% 5.3% 4.2% 3.8% 7.6% 7.9% System - Spot Growth HOH - Owner Occupier and Investor Housing 5.4% 4.7% 3.5% 4.1% 4.4% 3.9% 3.4% 2.4% 2.3% 2.1% 2.7% System - Average Growth HOH - Owner Occupier and Investor Housing 5.8% 5.0% 4.1% 3.8% 4.3% 4.2% 3.7% 2.7% 2.2% 2.4% 2.2% 2.4% CBA - Spot Growth HOH - Owner Occupier and Investor Housing 6.8% 9.3% 7.3% 13.1% 7.5% 4.6% 2.2% -0.3% 2.4% 2.2% 1.5% 2.3% CBA - Average Growth HOH - Owner Occupier and Investor Housing 7.2% 8.1% 8.3% 10.3% 10.2% 6.0% 3.4% 0.9% 2.3% 1.8% 1.9% Source: ABS, APRA, RBA, Macquarie Research, April 2013

7 Macquarie Research The June year-end analysis is relevant for CBA. The following specific points can be made about the June year-end analysis: Based on our analysis we expect 2H13 owner occupier spot growth of 2.2% p.a., increasing from the previous half of 1.9%. This increase has been driven by higher flows across the board i.e. loans for established dwellings, new dwellings, constructions and refi (which is included in the flows for established dwellings but does not add to loan stock). In addition we estimate that paydown is likely to be slightly higher, which is a drag on loan growth. As a result of this outlook, we expect CBA s 2H13 mortgage growth figure to print at around 1.3% for owner-occupier lending growth, which is c0.6x system. This is higher than 1H13, where CBA owner-occupier lending growth was around 0.8%. Based on our analysis, we expect 2H13 investor spot growth of 3.6% p.a., increasing from the previous half of 2.6%. This increase has been driven again across the board by higher loans for construction of investment properties, purchases by individuals and others. In addition, similar to owner-occupier lending paydown are broadly in line with the past two years. As a result of this outlook, we expect CBA s 2H13 mortgage growth figure to print at around 4.5% for investor lending growth, which is c1.2x system. This is higher than 1H13, where CBA investor lending growth was around 3.2%. Combining both owner-occupier and investor lending, we anticipate that CBA will deliver mortgage growth of 2.3% HOH. The September year-end analysis is relevant for ANZ, NAB and WBC. The following specific points can be made about the September year-end analysis: Based on our analysis, we expect 2H13 owner-occupier spot growth of p.a., broadly in-line with the previous half of. Similar to the June year-end analysis, this has been driven by higher flows of loans for established dwellings with new dwellings and construction showing slight decreases. In addition we estimate that paydown is likely to increase slightly, which is a drag on loan growth. As a result of this outlook, we expect ANZ, NAB and WBC s 2H13 growth figure to print at around 1.7%, 4.7% and 0.9% respectively for owner-occupier lending. These estimates are equivalent to c0.9x, 2.4x and 0.5x system respectively. These estimates all represent broadly flat owneroccupier lending growth HOH. Based on our analysis, we expect 2H13 investor spot growth of 3.6% p.a., increasing from the previous half of 3.4%. This increase has been driven primarily by higher flows of purchase for rent/resale by individuals and others. In addition, we estimate that paydown is likely to be maintained at current high levels which, similar to owner occupied growth, will be a drag. As a result of this outlook we expect ANZ, NAB and WBC s 2H13 investor mortgage growth figure to print at around 3.5%, 0.5% and 4.5% respectively. These estimates are equivalent to c1.0x, 0.1x and 1.2x system respectively. These estimates all represent either a flat to increase in investor lending growth HOH. 15 April

8 Macquarie Private Wealth 16 April Fig 9 Owner Occupier mortgage growth - slight uptick expected September YE Analysis 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 Owner Occupier Stock of Owner Occupier Loans Established Loans New Dwellings Construction Refi Paydown Ending Supply of Owner Occupier Loans System - Spot Growth HOH 5.3% 4.7% 1.5% 5.1% 4.3% 3.1% 3.3% 2.4% 2.3% 1.7% System - Spot Growth PCP 11.6% 10.2% 6.3% 6.7% 9.6% 7.5% 6.5% 5.8% 4.8% 4.1% 3.7% 4.0% System - Average Growth HOH 5.6% 5.0% 3.1% 3.3% 4.7% 3.7% 3.2% 2.8% 2.4% 1.9% System - Average Growth YOY 13.3% 11.7% 8.8% 8.4% 8.0% 7.1% 7.9% 6.6% 5.6% 4.9% 4.3% 4.1% ANZ - Spot Balances - Period Start ANZ - Spot Balances - Period End NAB - Spot Balances - Period Start NAB - Spot Balances - Period End WBC - Spot Balances - Period Start WBC - Spot Balances - Period End ANZ - Spot Growth HOH 6.9% 6.5% 7.6% 4.2% 5.6% 6.5% 3.8% 3.2% 5.2% 1.8% 1.7% 1.7% ANZ - Spot Growth PCP 14.5% 13.8% 14.5% 12.1% 10.1% 12.5% 10.6% 7.2% 8.6% 7.1% 3.5% 3.5% ANZ - Average Growth HOH 7.0% 6.7% 7.0% 5.8% 4.9% 6.1% 5.2% 3.5% 4.2% 3.5% 1.7% 1.7% ANZ - Average Growth YOY 13.2% 14.5% 12.9% 12.2% 12.3% 10.4% 9.7% 9.6% 7.1% 5.9% 5.2% 3.5% NAB - Spot Growth HOH 5.2% 3.7% 1.9% 4.0% 5.2% 8.8% 9.5% 9.5% 4.5% 5.1% 4.7% 4.7% NAB - Spot Growth PCP 10.2% 9.0% 5.6% 5.9% 9.4% 14.4% 19.0% 19.8% 14.4% 9.9% 1 9.6% NAB - Average Growth HOH 5.0% 4.4% 2.8% 2.9% 4.6% 7.0% 9.1% 9.5% 6.9% 4.8% 4.9% 4.7% NAB - Average Growth YOY 9.4% 7.8% 7.4% 7.6% 10.3% 14.4% 17.3% 16.5% 14.4% 12.1% 9.7% 9.8% WBC - Spot Growth HOH 4.7% 6.5% -5.3% 1 4.3% 2.3% 1.8% 1.8% -0.1% 0.7% 0.9% 0.9% WBC - Spot Growth PCP 12.4% 11.5% 0.9% 4.2% 14.8% 6.8% 4.2% 3.6% 1.7% 0.6% 1.7% 1.9% WBC - Average Growth HOH 6.0% 5.6% 0.4% 2.1% 7.1% 3.3% 2.1% 1.8% 0.8% 0.3% 0.8% 0.9% WBC - Average Growth YOY 12.7% 6.3% 7.6% 7.9% 5.5% 9.1% 5.1% 2.9% 2.1% 1.7% 1.3% 1.8% Source: ABS, APRA, RBA, Macquarie Research, April 2013

9 Macquarie Private Wealth 16 April Fig 10 Investor Housing mortgage growth - uptick expected September YE Analysis 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 Investor Stock of Investor Loans Construction of dwellings for rent and resale Purchase for rent/resale by individuals Purchase for rent/resale by others Refi/Paydown Ending Supply of Investor Loans System - Spot Growth HOH 4.8% 4.1% 7.5% 2.5% 4.7% 4.1% 3.0% 1.3% 1.8% 2.7% 3.4% 3.6% System - Spot Growth PCP 10.8% 9.0% 11.8% 10.2% 7.3% 9.0% 7.3% 4.3% 3.1% 4.5% 6.1% 7.1% System - Average Growth HOH 5.2% 4.4% 5.8% 4.9% 3.6% 4.4% 3.6% 2.1% 1.5% 2.2% 3.0% 3.5% System - Average Growth YOY 9.8% 8.8% 11.3% 9.6% 9.4% 9.5% 7.3% 6.6% 5.1% 4.4% 4.6% 5.9% ANZ - Spot Balances - Period Start ANZ - Spot Balances - Period End NAB - Spot Balances - Period Start NAB - Spot Balances - Period End WBC - Spot Balances - Period Start WBC - Spot Balances - Period End ANZ - Spot Growth HOH 4.3% 7.5% 3.9% 1.1% 4.8% 7.7% 3.6% 2.6% 4.6% 2.8% 3.3% 3.5% ANZ - Spot Growth PCP 11.1% 12.1% 11.7% 5.1% 6.0% 12.9% 11.5% 6.3% 7.3% 7.5% 6.2% 6.9% ANZ - Average Growth HOH 5.4% 5.9% 5.6% 2.5% 3.0% 6.3% 5.6% 3.1% 3.6% 3.7% 3.0% 3.4% ANZ - Average Growth YOY 11.3% 11.4% 8.4% 8.7% 9.1% 8.9% 9.4% 9.3% 6.9% 6.7% 7.2% 6.7% NAB - Spot Growth HOH 3.8% 2.8% 2.4% 2.6% 4.1% 2.4% 1.9% 1.4% 1.8% 0.4% 0.5% NAB - Spot Growth PCP 7.2% 6.6% 5.2% 3.4% 3.6% 6.7% 6.6% 4.3% 3.3% 3.3% 2.3% 0.9% NAB - Average Growth HOH 3.5% 3.2% 2.6% 1.7% 1.8% 3.3% 3.2% 2.1% 1.6% 1.6% 1.1% 0.4% NAB - Average Growth YOY 5.9% 6.2% 5.0% 4.4% 5.1% 5.1% 5.5% 4.9% 3.8% 2.8% 2.1% 1.6% WBC - Spot Growth HOH 8.8% 10.3% 28.4% 10.4% 14.2% 5.9% 4.4% 4.9% 0.7% 3.6% 4.1% 4.5% WBC - Spot Growth PCP 14.6% % 41.6% 26.0% 20.8% 10.5% 9.5% 5.6% 4.3% 7.8% 8.8% WBC - Average Growth HOH 7.1% 9.6% 19.8% 18.2% 12.3% 9.7% 5.1% 4.7% 2.7% 2.1% 3.9% 4.3% WBC - Average Growth YOY 14.9% 29.0% 31.8% 32.4% 29.4% 17.4% 14.6% 7.9% 6.8% 6.8% 6.6% 8.5% Source: ABS, APRA, RBA, Macquarie Research, April 2013

10 Macquarie Private Wealth Our analysis broadly shows that mortgage growth will pick up slightly, although each of the major banks appears to be travelling at different speeds. In terms of our synthesised estimates across both owner-occupier and investor lending, we believe that ANZ, NAB and WBC will deliver 2H13 spot asset growth of 2.2%, 3.5% and 2.4% respectively. Fig 11 Synthesis of Owner-Occupier and Investor Housing September YE Analysis 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 System - Spot Growth HOH - Owner Occupier and Investor Housing 5.1% 4.5% 3.4% 4.2% 4.4% 3.4% 3.2% 2.2% 2.4% 2.5% System - Average Growth HOH - Owner Occupier and Investor Housing 5.5% 4.8% 3.9% 3.8% 4.3% 3.9% 3.3% 2.6% 2.1% 2.1% 2.2% 2.5% ANZ - Spot Growth HOH - Owner Occupier and Investor Housing 6.2% 6.8% 6.5% 3.4% 5.4% 6.8% 3.8% 3.0% 5.0% 2.1% 2.1% 2.2% ANZ - Average Growth HOH - Owner Occupier and Investor Housing 6.5% 6.5% 6.6% 4.9% 4.4% 6.1% 5.3% 3.4% 4.1% 3.5% 2.1% 2.2% NAB - Spot Growth HOH - Owner Occupier and Investor Housing 4.7% 3.4% 2.1% 3.0% 4.3% 7.2% 7.2% 7.1% 3.6% 4.2% 3.5% 3.5% NAB - Average Growth HOH - Owner Occupier and Investor Housing 4.5% 4.0% 2.7% 2.5% 3.6% 5.8% 7.2% 7.1% 5.3% 3.9% 3.8% 3.5% WBC - Spot Growth HOH - Owner Occupier and Investor Housing 5.8% 7.6% 4.5% 10.1% 7.9% 3.7% 2.8% 3.0% 0.2% 1.9% 2.2% 2.4% WBC - Average Growth HOH - Owner Occupier and Investor Housing 6.3% 6.7% 6.0% 7.4% 9.0% 5.7% 3.2% 2.9% 1.6% 1.1% 2.1% 2.3% Source: ABS, APRA, RBA, Macquarie Research, April April

11 Macquarie Private Wealth Fig 12 ANZ Financial summary ANZ Bank Year Ending 30 September 1H12 2H H13 2H Outperform PER SHARE DATA Cash EPS (AUD) - Macquarie Basis Current Price Target Price Cash EPS Growth (%) 4% 1% 3% 3% 3% 5% 8% 8% $28.86 $31.00 DPS (AUD) Total Shareholder Return 12.4% BVPS (AUD) NTA PS (AUD) Bloomberg: ANZ AU Shares on issue (m) 2,680 2,717 2,717 2,735 2,754 2,754 2,785 2,811 Reuters: ANZ.AX VALUATION METRICS Macquarie Equities Australian Banks P/E (Cash) Analyst(s) Contact(s) P/B (Stated) Michael Wiblin P/NTA Stephen Wood RoE (%) 15.5% 14.9% 15.2% 15.0% 14.8% 14.9% 15.1% 15.2% Elisa Di Marco RoA (%) 0.9% 1.1% Dividend Yield (%) 4.6% 5.5% 5.0% 4.7% 5.6% 5.2% 5.3% 5.6% Margins & Volumes Dividend Payout (%) % 66.8% 60.4% 69.9% 65.2% 61.8% 60.7% Net Interest Margin (RHS) GLAA Growth (LHS) Sustainable RoE used in Valuation (%) 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 9.0% 2.75% Cost of Equity (%) 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 5.0% 4.0% 3.0% % 2.25% 2.00% 1H12 2H H13 2H Efficiency Cost/Income Ratio (RHS) Cost Growth (LHS) 48.0% 46.0% 44.0% % 1H12 2H H13 2H PROFIT & LOSS (AUDm) Net Interest Income 5,984 6,127 12,111 6,237 6,434 12,671 13,262 14,058 Non-Interest Income 2,720 2,748 5,468 2,872 2,999 5,872 6,228 6,559 Fees & Commissions 1,218 1,193 2,411 1,240 1,288 2,528 2,704 2,888 Financial Markets , ,346 1,418 1,475 Life and Funds , ,275 1,337 1,380 Other Revenue Total Operating Income 8,704 8,875 17,579 9,110 9,433 18,543 19,490 20,616 Total Operating Costs 4,020 4,002 8,022 4,012 4,058 8,071 8,289 8,642 Employee Costs 2,489 2,355 4,844 2,343 2,332 4,675 4,648 4,784 Other Costs 1,531 1,647 3,178 1,669 1,726 3,396 3,641 3,858 Pre-Provision Operating Profit 4,684 4,873 9,557 5,097 5,375 10,472 11,201 11,974 Impairment Charge , ,512 1,361 1,167 Pre-Tax Profit 4,119 4,192 8,311 4,400 4,560 8,960 9,839 10,807 Tax Expense 1,142 1,152 2,294 1,209 1,249 2,458 2,691 2,955 Minority Shareholders Other Post Tax Items Stated Net Profit 2,919 2,742 5,661 3,189 3,309 6,498 7,144 7,848 Extraordinary & Other Items Hybrid Distributions Derivatives & Hedging Revaluation Macquarie Cash Profit 2,973 3,038 6,011 3,189 3,309 6,498 7,144 7, % 90% 80% 70% 60% 50% 40% 30% Asset Quality Impairment Charge (RHS) Coverage (LHS) BALANCE SHEET & CAP AD (AUDm) Risk Weighted Assets 284, , , , , , , ,129 Interest Earning Assets 508, , , , , , , ,877 Gross Loans, Advances & Acceptances 418, , , , , , , ,285 Total Deposits 456, , , , , , , ,413 Total Assets 603, , , , , , , ,170 Shareholders Equity 39,443 41,220 41,220 43,864 45,462 45,462 49,350 53,681 Tier 1 Capital 32,088 32,501 32,501 34,262 35,848 35,848 39,711 44,019 Tier 1 Ratio (%) 11.3% 10.8% 10.8% % 11.1% 11.4% 11.8% Core Tier 1 Ratio (%) - Basel II 8.9% 8.8% 8.8% 9.1% 9.3% 9.3% 9.7% 10.2% Core Tier 1 Ratio (%) - Basel III 7.8% 8.0% 8.0% 8.3% 8.5% 8.5% 9.0% 9.5% 20% 10% 0% 1H12 2H H13 2H ASSET QUALITY Impairment Charge / GLAA (bp) Coverage (%) 88% 87% 87% 83% 81% 81% 71% 60% DDM Valuation KEY RATIOS & GROWTH Net Interest Income growth (%) 2.5% 2.4% 5.5% 1.8% 3.2% 4.6% 4.7% 6.0% Non-Interest Income growth (%) 7.0% 2.6% 4.5% 4.4% 7.4% 6.1% 5.3% Total Revenue growth (%) 3.8% 4.6% 2.6% 3.6% 5.5% 5.1% 5.8% Cost growth (%) 3.2% -0.4% 3.9% 0.3% 1.1% 0.6% 2.7% 4.3% Pre-Provision Profit growth (%) 4.4% 4.0% 5.1% 4.6% 5.4% 9.6% 7.0% 6.9% RWA growth (%) 1.7% 5.4% 7.2% 3.5% 3.6% 7.2% 8.2% 7.4% GLAA growth (%) 3.8% 3.6% 7.4% 3.1% 3.2% 6.4% 7.8% 7.2% Deposit growth (%) 3.9% 4.6% 8.7% 3.1% 3.2% 6.4% 7.8% 7.2% Net Interest Margin (%) 2.35% 2.28% 2.31% 2.25% 2.25% 2.25% 2.19% 2.16% Cost / Income Ratio (%) 46.2% 45.1% 45.6% 44.0% 43.0% 43.5% 42.5% 41.9% Total Stage 1 Total Fade Period Total Perpetuity Total Surplus Capital Per Share Source: Company data, Macquarie Research, April April

12 Macquarie Private Wealth Fig 13 CBA Financial summary Commonwealth Bank of Australia Year Ending 30 June 1H12 2H H13 2H Neutral PER SHARE DATA Cash EPS (AUD) - Macquarie Basis Current Price Target Price Cash EPS Growth (%) 2% -2% 3% 7% -1% 5% -1% 7% A$68.14 $66.07 DPS (AUD) Total Shareholder Return 2.2% BVPS (AUD) NTA PS (AUD) Bloomberg: CBA AU Shares on issue (m) 1,581 1,592 1,592 1,609 1,610 1,610 1,626 1,642 Reuters: CBA.AX VALUATION METRICS Macquarie Equities Australian Banks P/E (Cash) Analyst(s) Contact(s) P/B (Stated) Michael Wiblin P/NTA Stephen Wood RoE (%) - Cash 19.5% 17.5% 18.5% 17.8% 17.5% 17.6% 16.9% 17.4% Elisa Di Marco RoA (%) Dividend Yield (%) 4.0% 5.8% 4.9% 4.8% 5.8% 5.3% 5.3% 5.6% Dividend Payout (%) 62.6% % 71.9% 88.0% 79.9% % Margins & Volumes Cost of Equity (%) 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% Net Interest Margin (RHS) GLAA Growth (LHS) 6.0% 2.63% 5.0% 4.0% 3.0% 5.0% 4.0% 3.0% - 120% 100% 80% 60% 40% 20% 0% 1.63% 0.63% -0.37% 1H12 2H H13 2H Efficiency Cost/Income Ratio (RHS) Cost Growth (LHS) 46.0% 44.0% 1H12 2H H13 2H Asset Quality Impairment Charge (RHS) Coverage (LHS) H12 2H H13 2H PROFIT & LOSS (AUDm) Net Interest Income 6,551 6,513 13,064 6,862 7,054 13,916 14,486 15,156 Non-Interest Income 3,554 3,532 7,086 3,757 3,716 7,473 7,800 8,185 Fees & Commissions 1,744 1,524 3,268 1,502 1,446 2,948 2,991 3,116 Financial Markets Life and Funds 1,478 1,439 2,917 1,538 1,642 3,180 3,509 3,712 Other Revenue Total Operating Income 10,105 10,045 20,150 10,619 10,770 21,389 22,286 23,341 Total Operating Costs 4,602 4,594 9,196 4,755 4,855 9,610 10,052 10,455 Employee Costs 2,478 2,469 4,947 2,564 2,590 5,154 5,336 5,551 Other Costs 2,124 2,125 4,249 2,191 2,265 4,456 4,716 4,904 Pre-Provision Operating Profit 5,503 5,451 10,954 5,864 5,915 11,779 12,234 12,886 Impairment Charge , ,296 1,755 1,515 Pre-Tax Profit 4,958 4,907 9,865 5,248 5,235 10,483 10,480 11,371 Tax Expense 1,373 1,363 2,736 1,460 1,471 2,931 2,951 3,205 Minority Shareholders Other Post Tax Items Stated Net Profit 3,624 3,466 7,090 3,661 3,755 7,416 7,513 8,150 Extraordinary & Other Items Hybrid Distributions Derivatives & Hedging Revaluation Macquarie Cash Profit 3,576 3,537 7,113 3,780 3,755 7,535 7,513 8,150 BALANCE SHEET & CAP AD (AUDm) Risk Weighted Assets 297, , , , , , , ,353 Interest Earning Assets 612, , , , , , , ,275 Gross Loans, Advances & Acceptances 530, , , , , , , ,004 Total Deposits 561, , , , , , , ,061 Total Assets 701, , , , , , , ,786 Shareholders Equity 38,875 41,572 41,572 43,299 42,754 42,754 45,222 47,891 Tier 1 Capital 29,473 30,299 30,299 31,780 32,487 32,487 34,781 37,274 Tier 1 Ratio (%) 9.9% % 10.6% 10.6% % Core Tier 1 Ratio (%) - Basel II 7.7% 7.8% 7.8% 8.3% 8.4% 8.4% 8.8% 9.3% Core Tier 1 Ratio (%) - Basel III 7.1% 7.5% 7.5% 8.1% 8.2% 8.2% 8.7% 9.2% ASSET QUALITY Impairment Charge / GLAA (bp) Coverage (%) 108% 107% 107% 109% 88% 88% 67% 50% KEY RATIOS & GROWTH Net Interest Income growth (%) -0.6% 3.2% 5.4% 2.8% 6.5% 4.1% 4.6% Non-Interest Income growth (%) 3.6% -0.6% 1.2% 6.4% -1.1% 5.5% 4.4% 4.9% Total Revenue growth (%) 1.9% -0.6% 2.5% 5.7% 1.4% 6.1% 4.2% 4.7% Cost growth (%) 2.7% -0.2% 3.4% 3.5% 2.1% 4.5% 4.6% 4.0% Pre-Provision Profit growth (%) 1.2% -0.9% 1.7% 7.6% 0.9% 7.5% 3.9% 5.3% RWA growth (%) 5.7% 1.7% 7.5% -0.4% 1.8% 1.4% 3.4% 3.1% GLAA growth (%) 2.5% 2.1% 4.6% 1.3% 2.8% 4.2% 4.6% 5.3% Deposit growth (%) 7.6% 1.3% 9.1% 2.5% 2.8% 5.4% 4.6% 5.3% Net Interest Margin (%) 2.14% 2.05% 2.09% 2.11% 2.11% 2.11% 2.09% 2.09% Cost / Income Ratio (%) 45.5% 45.7% 45.6% 44.8% 45.1% 44.9% 45.1% 44.8% Source: Company data, Macquarie Research, April April

13 Macquarie Private Wealth Fig 14 NAB Financial summary National Australia Bank Year Ending 30 September 1H12 2H H13 2H Outperform PER SHARE DATA Cash EPS (AUD) - Macquarie Basis Current Price Target Price Cash EPS Growth (%) 0% -9% -4% 5% 4% 2% 13% 7% A$31.83 $32.71 DPS (AUD) Total Shareholder Return 8.8% BVPS (AUD) NTA PS (AUD) Bloomberg: NAB AU Shares on issue (m) 2,239 2,297 2,297 2,321 2,345 2,345 2,395 2,446 Reuters: NAB.AX VALUATION METRICS Macquarie Equities Australian Banks P/E (Cash) Analyst(s) Contact(s) P/B (Stated) Michael Wiblin P/NTA Stephen Wood RoE (%) 12.4% 11.2% 11.8% 12.7% 13.0% 12.9% 14.0% 14.3% Elisa Di Marco RoA (%) 0.8% 0.7% 0.7% 0.7% 0.7% 0.7% 0.8% 0.8% Dividend Yield (%) 2.8% 2.8% 5.7% 3.0% 3.0% 6.0% 6.3% 6.5% Margins & Volumes Dividend Payout (%) % 75.4% 79.4% 78.1% 78.8% 72.7% 70.8% Net Interest Margin (RHS) 8.0% GLAA Growth (LHS) Sustainable RoE used in Valuation (%) 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 2.8% Cost of Equity (%) 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 6.0% 4.0% % 1.5% 0.5% -0.5% % % 1H12 2H H13 2H Cost/Income Ratio (RHS) Efficiency Cost Growth (LHS) 1H12 2H H13 2H % 1.8% 1.3% 0.8% 0.3% -0.2% -0.7% -1.2% PROFIT & LOSS (AUDm) Net Interest Income 6,708 6,589 13,297 6,788 7,015 13,803 14,601 15,216 Non-Interest Income 2,400 2,527 4,927 2,444 2,561 5,005 5,275 5,439 Fees & Commissions 1,626 1,638 3,264 1,677 1,738 3,415 3,604 3,718 Financial Markets Life and Funds , ,645 1,705 1,716 Other Revenue Total Operating Income 9,108 9,116 18,224 9,232 9,575 18,808 19,876 20,655 Total Operating Costs 3,952 3,876 7,828 3,939 3,990 7,929 8,110 8,221 Employee Costs 2,265 2,261 4,526 2,306 2,352 4,659 4,847 5,043 Other Costs 1,687 1,615 3,302 1,633 1,638 3,271 3,263 3,178 Pre-Provision Operating Profit 5,156 5,240 10,396 5,293 5,585 10,878 11,766 12,434 Impairment Charge 1,131 1,484 2,615 1,221 1,322 2,543 2,215 2,048 Pre-Tax Profit 4,025 3,756 7,781 4,072 4,263 8,335 9,551 10,387 Tax Expense 1,121 1,057 2,178 1,178 1,233 2,411 2,763 3,005 Minority Shareholders Other Post Tax Items , Stated Net Profit 2,052 2,030 4,082 2,895 3,031 5,927 6,790 7,383 Extraordinary & Other Items , Hybrid Distributions IoRE/Non Controlling Interest Derivatives & Hedging Revaluation Macquarie Cash Profit 2,828 2,605 5,433 2,798 2,938 5,736 6,601 7,194 78% 76% 74% 72% 70% 68% 66% 64% 62% 60% Asset Quality Impairment Charge (RHS) Coverage (LHS) BALANCE SHEET & CAP AD (AUDm) Risk Weighted Assets 335, , , , , , , ,289 Interest Earning Assets 618, , , , , , , ,580 Gross Loans, Advances & Acceptances 490, , , , , , , ,543 Total Deposits 517, , , , , , , ,292 Total Assets 756, , , , , , , ,231 Shareholders Equity 42,555 43,803 43,803 44,370 45,746 45,746 48,602 52,350 Tier 1 Capital 34,113 34,020 34,020 34,454 35,694 35,694 38,270 41,728 Tier 1 Ratio (%) 10.2% 10.3% 10.3% 10.2% 10.2% 10.2% 10.4% 10.8% Core Tier 1 Ratio (%) - Basel II 8.0% 8.3% 8.3% 8.2% 8.3% 8.3% 8.6% 9.1% Core Tier 1 Ratio (%) - Basel III 7.6% 7.9% 7.8% 7.9% 8.0% 7.8% 8.1% 8.6% 58% 56% 1H12 2H H13 2H ASSET QUALITY Impairment Charge / GLAA (bp) Coverage (%) 64% 65% 65% 68% 76% 76% 87% 101% Total Stage 1 DDM Valuation 6.93 Total Fade Period Total Perpetuity 1.65 Total Surplus Capital Per Share KEY RATIOS & GROWTH Net Interest Income growth (%) -1.2% -1.8% 1.6% 3.0% 3.3% 3.8% 5.8% 4.2% Non-Interest Income growth (%) 19.6% 5.3% 9.4% -3.3% 4.7% 1.6% 5.4% 3.1% Total Revenue growth (%) 3.6% 0.1% 3.6% 1.3% 3.7% 3.2% 5.7% 3.9% Cost growth (%) -0.8% -1.9% -1.8% 1.6% 1.3% 1.3% 2.3% 1.4% Pre-Provision Profit growth (%) 7.1% 1.6% 8.1% 5.5% 4.6% 8.2% 5.7% RWA growth (%) -1.6% -1.3% -2.9% 2.4% 3.0% 5.5% 5.5% 4.8% GLAA growth (%) 1.7% 2.1% 3.9% 2.3% 3.5% 5.9% 6.2% 5.5% Deposit growth (%) 3.2% 1.9% 5.1% 2.3% 3.5% 5.9% 6.2% 5.5% Net Interest Margin (%) 2.17% 2.06% 2.11% 2.07% 2.07% 2.07% 2.05% 2.03% Cost / Income Ratio (%) 43.4% 42.5% 43.0% 42.7% 41.7% 42.2% 40.8% 39.8% Source: Company data, Macquarie Research, April April

14 Macquarie Private Wealth Fig 15 WBC Financial summary Westpac Bank Year Ending 30 September 1H12 2H H13 2H Neutral PER SHARE DATA Cash EPS (AUD) - Macquarie Basis (diluted) Current Price Target Price Cash EPS Growth (%) 1% 6% 3% 3% 0% 6% 4% 6% A$31.50 $31.29 DPS (AUD) Total Shareholder Return 4.6% BVPS (AUD) NTA PS (AUD) Bloomberg: WBC AU Shares on issue (m) 3,043 3,069 3,069 3,069 3,069 3,069 3,122 3,179 Reuters: WBC.AX VALUATION METRICS Macquarie Equities Australian Banks P/E (Cash) Analyst(s) Contact(s) P/B (Stated) Michael Wiblin P/NTA Stephen Wood RoE (%) 14.4% 15.2% 14.8% 15.0% 14.8% 14.9% 14.9% 15.1% Elisa Di Marco RoA (%) Dividend Yield (%) 2.6% 2.7% 5.3% 2.8% 2.9% 5.7% 5.8% 6.2% Margins & Volumes Net Interest Margin (RHS) GLAA (LHS) Dividend Payout (%) 80.7% 77.8% 79.2% 79.5% % 79.0% 79.8% Growth Sustainable RoE used in Valuation (%) 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 7.0% 2.20% Cost of Equity (%) 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 6.0% 5.0% 4.0% 3.0% 41.5% % % 39.0% 38.5% 2.18% 2.16% 2.14% 1H12 2H H13 2H Efficiency Cost/Income Ratio (RHS) Cost Growth (LHS) 4.5% 4.0% 3.5% 3.0% 2.5% 1.5% 0.5% 1H12 2H H13 2H PROFIT & LOSS (AUDm) 1.9% Net Interest Income 6,223 6,340 12,563 6,580 6,680 13,259 13,766 14,514 Non-Interest Income 2,663 2,850 5,513 2,818 2,936 5,754 6,088 6,485 Fees & Commissions 1,309 1,321 2,630 1,400 1,468 2,868 3,043 3,246 Financial Markets Life and Funds , ,881 1,926 1,996 Other Revenue Total Operating Income 8,886 9,190 18,076 9,397 9,616 19,013 19,854 21,000 Total Operating Costs 3,655 3,724 7,379 3,812 3,859 7,671 7,878 8,254 Employee Costs 2,171 2,050 4,221 2,071 2,091 4,162 4,309 4,483 Other Costs 1,484 1,674 3,158 1,742 1,768 3,509 3,569 3,771 Pre-Provision Operating Profit 5,231 5,466 10,697 5,585 5,757 11,342 11,976 12,746 Impairment Charge , ,278 1,436 1,437 Pre-Tax Profit 4,623 4,862 9,485 5,025 5,039 10,064 10,541 11,309 Tax Expense 1,393 1,425 2,818 1,482 1,486 2,968 3,105 3,325 Minority Shareholders Other Post Tax Items Stated Net Profit 2,967 3,003 5,970 3,511 3,521 7,032 7,372 7,919 Extraordinary & Other Items Hybrid Distributions Derivatives & Hedging Revaluation Macquarie Cash Profit 3,195 3,403 6,598 3,511 3,521 7,032 7,372 7, % 100% 95% 90% 85% Asset Quality Impairment Charge (RHS) Coverage (LHS) BALANCE SHEET & CAP AD (AUDm) Risk Weighted Assets 300, , , , , , , ,647 Interest Earning Assets 573, , , , , , , ,439 Gross Loans, Advances & Acceptances 510, , , , , , , ,741 Total Deposits 543, , , , , , , ,722 Total Assets 653, , , , , , , ,107 Shareholders Equity 44,875 46,219 46,219 47,185 47,945 47,945 50,828 53,880 Tier 1 Capital 29,448 30,542 30,542 31,566 32,316 32,316 35,413 38,444 Tier 1 Ratio (%) 9.8% 10.3% 10.3% 10.3% 10.3% 10.3% 10.9% 11.2% Core Tier 1 Ratio (%) -Basel 2 8.0% 8.4% 8.4% 8.5% 8.5% 8.5% 9.14% 9.6% Core Tier 1 Ratio (%) -Basel 3 7.7% 8.2% 8.2% 8.3% 8.3% 8.3% 8.9% 9.3% 80% 75% 1H12 2H H13 2H ASSET QUALITY Impairment Charge / GLAA (bp) Coverage (%) 90% 87% 87% 88% 94% 94% 103% 109% Total Stage 1 DDM Valuation 6.37 Total Fade Period Total Perpetuity 0.59 Total Surplus Capital Per Share KEY RATIOS & GROWTH Net Interest Income growth (%) 0.3% 1.9% 3.2% 3.8% 1.5% 5.5% 3.8% 5.4% Non-Interest Income growth (%) 10.2% 7.0% 11.3% -1.1% 4.2% 4.4% 5.8% 6.5% Total Revenue growth (%) 3.1% 3.4% 5.6% 2.3% 2.3% 5.2% 4.4% 5.8% Cost growth (%) 1.4% 1.9% 3.8% 2.4% 1.2% 4.0% 2.7% 4.8% Pre-Provision Profit growth (%) 4.3% 4.5% 6.8% 2.2% 3.1% 6.0% 5.6% 6.4% RWA growth (%) 7.2% -0.7% 6.4% 2.7% 2.5% 5.2% 4.1% 5.3% GLAA growth (%) 1.9% 1.6% 3.5% 2.9% 2.8% 5.8% 4.5% 6.1% Deposit growth (%) 1.9% 4.6% 6.7% 2.9% 2.8% 5.8% 4.5% 6.1% Net Interest Margin (%) 2.17% 2.18% 2.17% 2.20% 2.17% 2.18% 2.17% 2.16% Cost / Income Ratio (%) 41.1% 40.5% 40.8% 40.6% 40.1% 40.3% 39.7% 39.3% Source: Company data, Macquarie Research, April April

15 Macquarie Private Wealth Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down % in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 March 2013 AU/NZ Asia RSA USA CA EUR Outperform 45.12% 53.24% 50.00% 40.70% 62.98% 43.30% (for US coverage by MCUSA, 10.55% of stocks followed are investment banking clients) Neutral 41.52% 28.01% 41.43% 55.01% 32.60% 34.10% (for US coverage by MCUSA, 9.05% of stocks followed are investment banking clients) Underperform 13.36% 18.74% 8.57% 4.29% 4.42% 22.60% (for US coverage by MCUSA, 0.00% of stocks followed are investment banking clients) Company Specific Disclosures: Important disclosure information regarding the subject companies covered in this report is available at Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. 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