Under the challenging economic conditions of the past year, I am pleased to report that NAB has remained safe and secure, producing a solid result based on revenue growth and continued cost control.

At the beginning of the year we set our strategic direction around four priorities: maintaining balance sheet strength; accelerating our efficiency, quality and service agenda; investing in our people, culture and reputation; and improving the position of the Australian business, while maintaining franchise value internationally.

Despite the volatile market, it is this course of action that has helped ensure we remain rated as one of the safest banks in the world. In the past year, Group revenue grew by 9.7% to $16.9 billion, costs increased by only 2.9% (excluding Great Western Bank which was acquired towards the end of the previous year) and our funding target of $19 billion for 2009 was exceeded.

The year certainly had its challenges and we can see this reflected in our cash earnings, which are down 1.9%, due to the increase in charges for bad and doubtful debts and in line with the difficult conditions.

In an economic environment where confidence levels within financial markets were still fragile, it was important to strike a careful balance between the various expectations of our shareholders, customers and the community.

Improving the reputation of the bank, positioning NAB as a leader in the industry and creating strong, sustainable customer relationships are all vital to improving total shareholder returns and creating sustainable business momentum. We have led the industry in addressing issues of interest rate transparency, fee fairness and financial services for the vulnerable in our community, and this puts us in good shape as markets recover.

We have also delivered a number of growth initiatives that are a core part of our strategy and these will position us for the future.

We have:

• Extended our wealth capability and reach with the acquisition of Aviva's wealth management business, and the formation of an alliance with Goldman Sachs JBWere's private wealth management business.
• Launched UBank and announced the acquisition of Challenger's mortgage management business.
• Doubled access to ATMs through a new alliance with rediATM – providing around seven million Australians with greater access to their money.
• Appointed 145 additional frontline bankers to our business bank during the year, with plans to add another 200 during 2010.
• Expanded the branch network of Great Western Bank in the United States in line with our objective of maintaining options internationally.

In this report you will find more detail on the following results:

Australia

Australia Banking delivered a strong performance. Despite a 5.3% fall in cash earnings to $2.8 billion, underlying profit was up 16.1% to $5.5 billion due to both robust revenue growth and continued careful cost control.

MLC

Cash earnings before IoRE fell by 23.8% to $311 million due to volatile global investment markets which affected average funds under management and resulted in a decline in the cash earnings of the Investment business. Despite the difficult market conditions, MLC continues to focus on profitable growth and has maintained investment margins.

United Kingdom

Operating conditions were consistent with the deepest UK recession in the post war period. Domestic property values declined, on average, by 20% from their peak and commercial property fell by 45%. Dislocation in funding markets increased funding costs. In this context, our Clydesdale and Yorkshire Bank operations demonstrated considerable resilience.

New Zealand

Bank of New Zealand (BNZ) continued to perform well, in the face of a domestic recession coupled with ongoing volatility in global credit markets. BNZ delivered cash earnings of NZ$420 million, a 12.9% fall due to a number of factors including an increase in the charge for bad and doubtful debts.

nabCapital

nabCapital achieved a strong result with cash earnings reaching $634 million and underlying profit rising by 43.9%. Strong revenue growth was seen in most product areas, particularly in Global Markets and Treasury.

Great Western Bank

2009 was the first full year of trading results for Great Western Bank. Cash earnings for the year were US$53 million and underlying profit was US$94 million.

I am confident we are laying solid foundations for our future. We have a strong and energised leadership team in place, an organisation aligned to deliver, and we are meeting our responsibilities to our shareholders and the broader community to lift our performance and our reputation.

While much has been achieved this year, our executive team recognises that more work is required to generate the returns our shareholders expect, and this remains our key objective.

The global economy has further to go before we can all breathe more easily. However we end the year with a cautiously optimistic perspective and poised to realise the opportunities ahead.

Cameron Clyne
GROUP CEO