Financial Services Europe

John Stewart Managing Director National Australia Group Europe

One bank, one team, one focus: the customer
The focus of all our efforts in Europe is to provide integrated financial services to our customers delivered through excellent relationships.

The new agenda for Europe includes investment, primarily in the retail banks. We are planning to upgrade the teller, sales and service platform with a phased deployment beginning next year. Alongside streamlined back office functions, this will deliver a faster and more efficient service to our customers.

This year has been a transitional one for Financial Services Europe. We have achieved a satisfactory performance, posting an $866 million net profit.

Mortgage lending volumes increased 9.0% during the year and retail deposits grew with higher levels of liquidity in the banking system.

An important development during the year was the appointment of John Stewart as Managing Director of National Australia Group Europe and as an executive director of the National.

Our priorities this year have been the pursuit of growth, efficiency and quality. These will continue to be our focus in 2004.

Growth
We began to expand Clydesdale and Yorkshire Banks' networks by opening four new Integrated Financial Services Centres located in Liverpool, Bristol, Reading and Southampton. This expansion, which is creating 60 new jobs, is the latest evidence of the Group's commitment to grow its business in the United Kingdom and Ireland. The new centres will focus on relationship management, with integrated financial services available from the specialist areas of Wealth Management and risk management services.

Additional investment in Ireland saw the opening of Ballymena Business Centre, which is our biggest stand-alone business centre in Ireland.

Other growth initiatives have focused on increasing the number of premium and private banking customers and growth in mortgage lending.

Yorkshire Bank posted an all-time record in mortgage sales at GBP1.25 billion (up 30% on the previous year). Particularly strong sales were achieved as a result of the summer mortgage initiative at Clydesdale Bank with a GBP113 million increase in sales of fixed rate mortgages. Mortgage volumes for National Irish Bank grew by over 10% (in local currency terms).

Investment in Internet banking continued with the extension of the service to Northern and National Irish Banks.

Efficiency
We are committed to removing duplication of effort and maximising the efficiency of our current business model.

We are now working towards delivering one product, one process and one system through four regional retail brands. It will allow us to operate as one bank in Europe and deliver new solutions across the four brands through a single operating system and platform.

The modernised Queen Street branch of Clydesdale Bank in Glasgow.

A further 14 branches of Northern Bank have implemented our latest customer experience program, which is part of a multi-million pound investment in the Bank's busiest branches across Northern Ireland. It includes improvements to service areas, electronic banking channels and customer training for all staff.

Quality
The key to success is our people. They will deliver the new agenda of transformation and growth agreed at our Senior Leaders Forum, a major event in June that brought together the top 170 leaders across Europe.

We continue to invest heavily in the development of our people at all levels. Our aim is to create a culture in which staff can help customers to the best of their ability and take part in resolving challenges in the workplace.

Initiatives during the year included the Managing People Better program, which provides front-line managers with coaching in leadership skills as well as a number of programs designed to stimulate and support cultural change. We are seeing results from our quality initiatives.

In the 2002 Forum for Private Business survey, Yorkshire Bank was ranked ahead of the UK's big four banks for customer service. Clydesdale Bank was named the "UK's Most Improved Business Bank". The Forum represents more than 25,000 businesses, which collectively employ 600,000 people.

Yorkshire Bank also won the 2002†2003 Your Mortgage award for Best Regional Lender for the fifth consecutive year.

Northern and National Irish Banks recorded their best ever scores in independent customer satisfaction surveys, reflecting the significant investment in staff training in recent years.

Showing "Leeds Cares", a community centre gets a makeover thanks to Yorkshire Bank employees.

Counting on success  - National Irish Bank employee, Ruth Cooney, takes part in the Time 2 Count numeracy project with pupils at St Thomas Senior Primary School, Dublin.

Yorkshire Bank supports the Leeds Cares program, run by Business in the Community, which focuses on promoting volunteering activity. This year, our staff helped make improvements at a community centre in Leeds.

Northern Bank won the special award for "Developing Entrepreneurs Today for Business Tomorrow" as a result of its successful relationship with Young Enterprise.

In March 2003, National Irish Bank began a pilot version of Time 2 Count at St Thomas Senior Primary School in Dublin with the assistance of Business in the Community (Ireland) and the government-supported Staying in School Retention Initiative.

National Irish Bank won the Business 2 Arts 2003 Judges Special Recognition Award for its support of the Galway and Kilkenny Arts Festivals and the Baboro International Arts Festival for Children.