Chairman's Message

Enhancing our performance "Your Board has worked hard to ensure the Group continues to observe the highest possible corporate governance standards." Charles Allen, Chairman

Sound corporate governance standards and diversity in our business portfolio have helped the Group grow core businesses despite the volatility of world equity markets during the year.  This produced a solid result.

The Group was able to build on its strengths in banking and wealth management businesses and report a year of solid growth in cash earnings, despite the challenging world economic environment.

Our portfolio of businesses experienced varying degrees of success and were not completely insulated from the volatility in world equity markets, but the combination of retail banking, wealth management and wholesale financial services provides a sound platform for growth into the future.

The Positioning for Growth program that we announced last year was designed to simplify the way our business works and remove barriers that restrict an innovative team environment. It also generates cost savings to fund reinvestment in banking and wealth management.

There has been a greater focus on the responsibilities of Directors and corporate governance as a result of corporate collapses in Australia and overseas. Your Board has worked hard to ensure the Group continues to observe the highest possible corporate governance standards.

It was therefore gratifying that the National was recognised by the independent research undertaken by the University of Newcastle for accounting company Horwarth (NSW) Pty Ltd*, as one of nine companies with the highest corporate governance rating when compared with Australia's top 250 listed companies.

To deal with extremely difficult issues such as HomeSide in the US, sound corporate governance structures are a vital framework for the Group, demonstrating to all stakeholders that appropriate independence and review processes have guided our decision-making.

The conclusions of the independent legal review undertaken into the reasons for the HomeSide US write-downs were circulated to shareholders during the year. We took a range of actions to address those conclusions, with the sale of the US operations of HomeSide completed on October 1, 2002. The HomeSide write-downs are a matter of regret but it is now appropriate, and necessary, to put this behind us and focus on strategies for the future.

Another important strategic issue is corporate citizenship, and the Board has provided encouragement for a range of programs throughout the Group to enhance our relationships with stakeholders.

As part of that process, we became a signatory to the United Nations Environment Program Financial Institutions Initiative, which will provide valuable guidance and insight into sustainable ways to grow our business.

I would like to thank my fellow Directors, management and staff throughout the Group who have contributed to a good result for the year and laid sound foundations for the year ahead.

Your Board is maintaining its focus on growing returns and building sound stakeholder relationships in the future.