Corporate & Institutional Banking

Ian Scholes EGM, Corporate & Institutional Banking

*Full-time equivalent employees

The business recorded a net profit* of $846 million, up 3.4% on last year.

*Net profit is before the after-tax impact of significant items and after outside equity interest

Brian Smart (right) of PaperlinX, Australian paper manufacturer and international paper distributor, discussing the company's leading Reflex brand with National client directors, Gary Chan (left) and Stephen Graetz (centre).

Corporate Banking Director, John Swift (right), with Andrew Martin (left), Group Finance Director of UK leisure travel company, First Choice Holidays PLC, talk about jet fuel hedging solutions.

Strong performances by our teams in Markets, Corporate Banking, Financial Institutions and Specialised Finance contributed to the growth in client-based income.

Furthermore, in 2003, our European operations started laying the foundations to extend our client focus from FTSE 200 companies to FTSE 500 companies to bridge a previously untapped market segment for the National. We remain committed to growth in all regions where we operate and have seen good performances by our off-shore operations in Asia, the United Kingdom, New Zealand, and the United States.

In June, we were successful in tendering to acquire the client custody contracts of Commonwealth Custodial Services Limited and Commonwealth Bank of Australia, subject to the approval of clients. The acquisition boosts National Custodian Services' presence in the Australian market.

While meeting the needs of our existing clients and marketing to targeted new clients, we have maintained a strong focus on the quality of our loan portfolio. As at September 30, 2003, 91.4% of our portfolio is investment grade or above.

Excellence and innovation
Corporate & Institutional Banking lifted its focus on product innovation this year. A number of external appointments were made to help drive future product innovation in Project Finance, Transactional Banking, Structured Finance and Foreign Exchange.

In the area of risk management, we continued to leverage our strengths for the benefit of clients. We wrote our first precipitation option, in conjunction with the National's Australian Agribusiness division, enabling a client to manage the risk of low rainfall in September 2003.

Tony O'Grady (General Manager, Custodian Services) with team members Anna Morgan (left) and Sally Roberts (centre).

We are now leveraging this competitive strength in other markets, such as the United Kingdom, and during the year arranged GBP359 million in sterling corporate bond issues.

In the securitisation arena, we ranked number two in Australia with $1,522 million in transactions between January 1 and September 30, 2003 (Insto, October 2003).

Ron Erdos (General Manager, Markets) with members of the Securitisation team, Philippe Blin (centre) and Jacqueline Fox (right).

Syndicated loans proved to be another area of competitive strength, especially in Australia and New Zealand. For the period January to September 2003, we ranked number two by value with US$1,777 million in syndicated loans (basis point, October 3, 2003). Transactions contributing to this excellent result included a US$1,000 million syndicated global multi-currency revolving facility for Amcor Limited and a $1,446 million project finance facility for WestLink Motorway Limited.

We continue to develop our distribution strength domestically and internationally. In Japan we have established a new securities company to add to our current trading capability in Hong Kong, Singapore, London, New York, Melbourne and Sydney. Our new Tokyo-based business, in conjunction with our London-based teams, has had success arranging eight bond issues, totalling $516 million, which were privately placed with local securities houses.

As part of operating a more efficient global business, we have established a new 24-hour processing centre in Melbourne, which supports all our trading centres. The centre is a highly automated operational environment, which creates greater business efficiency through scale and an expanded use of technology. It handles foreign exchange and money market transactions, and will be expanded to support a wider range of products over the next 12 to 24 months.

People make the difference
Having motivated and highly skilled people working in Corporate & Institutional Banking is the key to our business success. During the year, we launched a values program to promote a consistent framework for decision making across all areas of our business. This is helping to strengthen the customer ethos of our business and foster greater teamwork.

Training has also been a major focus for us in 2003, with an emphasis on compliance and accreditation.

Legislative reforms for providers of financial services in Australia and the United Kingdom have established new training requirements for advisers concerning financial products. This involves both formal accreditation and ongoing professional development. Our Markets area was well prepared, with over 90% of bankers having already obtained accreditation with the relevant industry bodies.

We also raised awareness of the new International Financial Reporting Standards and the likely impact on clients in those countries where the standards will be adopted over the next few years.

As part of managing the talent of our people, we have continued the employee rotation program launched last year with Credit Risk Management. This initiative, combined with the launch of a two-week residential credit training program, is enhancing skill levels, capabilities, speed of delivery and relationships between Credit Risk Management and Corporate & Institutional Banking. The credit training program focuses on credit analysis and assessment. This year 125 people have participated in the program.