Positioning for Growth - 8 April 2002

National Australia Bank Managing Director and Chief Executive Officer, Frank Cicutto today released the outcomes of the Positioning for Growth program.

"Following the recent appointment of a new senior management team, the changes announced today allow us to make the investments to capture growth opportunities whilst maintaining our earnings momentum," he said.

"When I launched Positioning for Growth we were clear about what it was to achieve - a lift in performance and the revitalisation of our organisation.

"It was the most comprehensive review of our business we have undertaken and I am convinced the National will be an even better organisation as a result," he said.

The Positioning for Growth initiatives underpin the National's growth forecast of better than 12 per cent cash earnings per share growth in 2003 and 2004, he said.

"Our businesses generate significant free cash flow which supports our ability to maintain our ongoing share buy-back policy," Mr Cicutto said.

Several hundred million dollars of new investment will be made in growth areas of the National.

"Targets have been set for each of our businesses. For example, the cost to income ratio of the Australian retail banking operations is planned to be mid 40 per cent by September 2004.

"All other businesses are set to improve their key measures," he said.

Cost savings of $370 million are expected by September 2004.

Significant investment initiatives include:

• $200 million to be invested over three years within Wealth Management to create the market leading adviser system in Australia.
• $90 million to further develop the Wealth Management operation in the United Kingdom.
• $95m to upgrade IT systems for customer-facing staff in Clydesdale and Yorkshire banks.

Process re-engineering and streamlining throughout the group as a result of investment in new technology will reduce employment, particularly in administration and back office areas.

In Australia, during the next 18 months there is expected to be 1500 redundancies as a result of Positioning for Growth initiatives. On a Group basis, including the Australian redundancies, the redundancy figure is expected to be 2050.

Overall there will a reduction of 3400 positions but this will be offset by the creation of 1400 new positions and natural attrition and redeployment.

A provision of between $175 million and $225 million to cover redundancies will be made in the full year accounts.

In Australia, personal transaction account fees were reviewed last year and no further changes are being made as a result of Positioning for Growth.

As announced last week, as part of the normal review of distribution channels, 56 limited service agencies are to close in coming months. In each affected town the Australia Post alternative facility offers customers greater access to transaction banking services through longer opening hours.

There are no further major changes planned for the branch network over the next 12 months.

"Our Australia Post arrangement and the National Concession Card Account show we can address stakeholder issues of access and service while adapting our business to meet new competition," Mr Cicutto said.

View the Positioning for Growth Media Presentation.