Australia Bank 2021 full year results presentation. Please go ahead. Thank you operator. Good morning, everyone, and thank you for joining us today for NAB's full year 2021 results. I'm Sally Mihell, the head of investor relations at NAB. Before beginning today, I would like to acknowledge the traditional owners of the land I'm calling in from, the Wurundjeri peoples of the Kulin Nation. I'd like to pay respects to the elders past, present, and emerging, and to the elders of the traditional lands in which you are also calling in from. Presenting today will be Ross McEwan, our Group CEO, and Gary Lennon, our Group CFO. We are also joined by members of NAB's executive team. At the end of the presentation, which will take about 35 minutes, we'll open up to the Q&A. Just a reminder, you need to be on the phone line to ask a question. I'll now hand to Ross. Thanks very much, Sally, and welcome to NAB's full year 2021 results announcement. We have delivered a solid financial performance driven by improved momentum across our bank and strong asset quality. This has been achieved during what has again been a challenging year economically and socially in Australia and New Zealand. The increase in returns to shareholders while retaining a strong balance sheet is a highlight of our results. There's only been 18 months since we launched our refresh strategy. While there is still much to do, we're ahead of where I expected us to be. Our investments in customers and colleagues are delivering better service outcomes and growth across our businesses. Discipline, focus, and execution have been key to this. We're optimistic about the future opportunities to grow our businesses. While we remain committed to maintaining our cost discipline, we will continue to invest to support this growth. Overall, the decisions we are making and the progress we have made position us well for the future. Our financial results this year reflected a 39% improvement in cash earnings, driven by momentum across our business and strong asset quality. You will see there are no large notable items reported again this half as we focus on just getting the basics right. Underlying profit, which declined 6.8% over the year, was impacted by the challenging trading environment for markets and treasury. Our operating costs increased by 1.8%, which is in line with our guidance of 0%-2% for the year. Excluding markets and treasury, our total income was stable over the year and pleasingly 2% higher in the second half of 2021 due to asset growth. Gary will spend more time discussing the key drivers of group performance. We have delivered improved returns to shareholders while retaining a very strong balance sheet. Our strong balance sheet enables us to keep the bank safe and support customers who want to grow and those who need our help. At our first half results, we provided revised capital and dividend target settings reflective of a more normalized operating environment. Our AUD 2.5 billion buyback, which commenced in August, is a step towards achieving our target CET1 range of 10.75%-11.25% over time. We have completed about 20% of this buyback. Our bias is to continue to reduce our share count to deliver long-term ROE benefits to shareholders. Our improved financial returns deliver the cash ROE for the full year 2021 of 10.7%. That's 2.4% higher than the FY 2020 ROE of 8.3%, although still behind our 2019 level when we held less capital. The final dividend of AUD 0.67 per share represents 69% of second-half cash earnings, which is within the target dividend range of 65%-75%. Together with the interim dividend of AUD 0.60, this brings the total dividend for the full year to AUD 1.27 per share. As of September 2021, capital and provisioning levels remain very strong. While we are anticipating a strong economic rebound in 2022, some customers may continue to encounter difficulties as support programs put in place during lockdown are withdrawn. Given this ongoing uncertainty for some customers, we have retained strong provisioning levels with a collective provisioning to credit risk-weighted assets of 1.35%. The CET1 ratio of 13% reflects 43 basis points of organic capital generation this half. Our pro forma CET1 ratio of 12.25%, which is adjusted for the Citi acquisition and the remainder of our buyback, remains well above APRA's unquestionably strong benchmark. Eighteen months ago, we announced our refreshed group strategy, which remains unchanged. Customers and colleagues are the twin peaks of our strategy. There are four key areas we will be known for: relationship led, easy to do business with, safe, and finally, thinking long term. We're also clear about where we will grow. That is through building on our clear market leadership in business and private banking, disciplined growth in our corporate and institutional business, becoming a simpler and more digital business in our personal bank, continuing the strong momentum in BNZ, and acquiring more customers through our digital bank, UBank. We are making good progress on our key measures of success, but continued execution is critical. Our colleague engagement score is now in the top quartile of global organizations. Customer strategic Net Promoter Score is equal first of the major banks. However, our ambition is to achieve a positive score. In terms of shareholder returns, these targets need to be delivered on a sustainable basis. This year, we have delivered double-digit return on equity, and our costs were kept in line with the guidance this year of 0%-2%. We are getting results by delivering better outcomes for customers and colleagues. We have the number one net promoter score for consumer in Australia and New Zealand. In business, NAB's scores were consistently high through the year, finishing in September, ranked second overall and number one for medium business segment. Corporate and institutional banking has achieved record high customer scores across a number of products in the annual Peter Lee survey of large corporate customers. This includes transaction banking, which has been an area of focus for our institutional business. We're continuing to invest in our colleagues to make it easier for them to do their jobs well and to drive the cultural change required for the successful execution of our long-term strategy. We have embedded a customer-centric operating model with clear accountabilities, and leadership and training programs are being rolled out. Over 7,000 of our colleagues have enrolled in our career qualified and banking program in the last year. We continue to invest in qualified cloud engineers to support our technology transformation, and our distinctive leadership program is building our leadership capability across the organization. This time last year, I said we wanted to grow safely. In full year 2021, we have seen consistent growth across every one of our businesses. Importantly, this growth is not sacrificing returns. Six months ago, I was confident we could return to system growth and housing, and over the second half of 2021, we achieved 1.1 times system growth. Given the significant volumes which have been processed, I'm proud of the teams which have worked together to deliver this. I'll talk a little bit more about our progress in home lending shortly. In NAB's largest division, Business and Private Banking, we have further extended our SME market leadership. Over the second half of 2021, business lending in this division increased AUD 6.7 billion, representing about 12% annualized growth, and we increased our market share by 20 basis points. Our focus on growth in the important transaction banking segment has also delivered an 18% increase in business transaction account sales over the year. Corporate and Institutional Banking had a strong momentum aligned with its disciplined growth strategy. Over the year, total GLAs increased 11%, with strong growth of 22% in our higher returning target segments of infrastructure and investor. In transactional banking, we added 63 basis points market share in the full year. BNZ has again achieved a very strong result in a competitive market. BNZ's strategic focus on home lending and SME has delivered above system growth in both these sectors in the second half. A continued emphasis on simplification and improving digital banking has also helped BNZ grow share in retail deposits. In business and private banking, we've been investing to grow and have extended our market leadership. This is evident in the results across the portfolio. Over the last six months, small business market share increased by 40 basis points. Our agri-market share increased by 160 basis points, and private banking achieved 2.3 times system growth in home lending. It has been a good year. Key to this has been simplifying the business and getting the basics right, including adding another 550 new customer-facing roles and simplifying our policies and processes to deliver efficiencies equivalent to approximately 200 FTE. We are delivering differentiated and better banking experience for customers and colleagues. An example of this is the relaunch of our QuickBiz digital small business lending platform, offering applications through to cash disbursement for existing customers within 20 minutes. Opening a business transaction account is also becoming much quicker and easier via our new digital platform with real-time customer onboarding, automated KYC checks, and multi-product origination. The rollout of new facility renewal and annual review processes are allowing bankers to make much faster assessments using data and analytics. We are better leveraging our high net worth proposition as well. Our new integrated offering of NAB Private Wealth brings together Private Bank, JBWere, and nabtrade. Over the last 12 months, this has delivered a 12-point increase in net promoter score, above-system growth in home lending, and a 28% increase in funds under management. In home lending, we're putting our energies into delivering a simpler, faster service. Our Simple Home Loans origination platform can now originate 80% of home loans through our retail proprietary channels and will be rolling out through our broker and business and private bank networks in 2022. The ongoing simplification of our policies and processes, more automated approvals, and the rollout of new credit decisioning model in our broker channel have helped deliver better outcomes for customers and colleagues. We've seen a 50% reduction in banker time to submit a home loan application. Our time to yes improved by 30% this year, despite a 60% increase in application volumes. We are now recognized by PEXA as equal first of the major banks for settlement performance, a significant improvement from fourth just six months ago. Over the past six months, we've taken action to reshape our portfolio. This includes the completion of the sale of the MLC Wealth in May, which has allowed management to dedicate all of our time to growing our core business. The combined business of 86 400 UBank provides an opportunity to deliver a market-leading digital bank experience with access to NAB's balance sheet to support growth. In August, we announced the proposed acquisition of Citigroup's Australian consumer business to accelerate our personal banking strategy. Subject to regulatory approvals, we expect to complete this transaction by the middle of next calendar year. Our investment spend in 2022 will be approximately AUD 1.3 billion, which is broadly in line with the same spend this last year. In prior years, the focus of our investment has been on building our technology foundations and responding to regulatory and compliance requirements. This mix is changing, and we expect to increase the allocation to discretionary investment from 39% in 2021 to approximately 50% in 2022. This means that more of our investment dollars can be focused on accelerating simplification and automation in our core products. We will also continue to invest in improvement and automating our control environment. This includes the investment we're making to help keep the bank and customers safe from growing threats of fraud, cybercrime, and other criminal activity. The investments in our technology platforms and capability over the past 4 years enables us to increasingly leverage digital data and analytics to achieve our ambitions. The past 12 months have been a busy time as we substantially progressed a number of our digital initiatives. This includes payment innovation, improvements in digital engagement for everyday banking, becoming the accredited data recipient, leveraging data and analytics, and simplifying our lending processes. The appointment of Angie Mentis to our new group executive role for data, digital, and analytics will help to accelerate our progress further. Climate action is everybody's job. We are very aware of the role we play and the opportunity for our bank and our customers. NAB has a long history of taking climate action on climate through our own lending and operations, as well as through the partnership and initiatives we've led or been involved in. Our corporate and institutional bank has been at the forefront of development of sustainable and social bonds, ESG-linked derivatives, sustainability-linked loans, and asset-backed securities. We're already the leading Australian bank for lending to renewables, having lent over AUD 6.5 billion in the past 5 years. We're improving our banker capabilities so we can have the right conversations with our customers. With Melbourne Business School, we have designed a climate training course for our corporate institutional bankers. This will be extended more broadly across the bank, including with our agri bankers. Our relationships with customers, product expertise, and investment in building our bankers' capability position us well for this long-term opportunity. Our goal is to achieve a net zero emission lending portfolio by 2050. That's why we're working with 100 of our largest emitting customers to support them as they transition to a net zero economy. We were the first Australian bank to have made the commitment to net zero under the collective commitment to climate action. Today, we have released our plans for the oil and gas sector. This re-review set out how we will cap exposures to oil and gas lending until 2026, and after 2026, we will reduce exposures over time in accordance with the IEA net zero emissions 2050 pathway. We are the first of the major banks to release our plans under this pathway. We know there is much more to do and that we can do, and at NAB, we will play our part. I'll now pass to Gary, who will take you through the results in more detail. Great. Thank you, Ross. Let's start with our usual high-level overview of the financials. As Ross mentioned previously, there's been no notable items again this year, and all comparisons with FY 2020 are on an ex-notables basis. Underlying profit is lower over both the year and the half, and half-on-half, with revenue impacted by a weaker period for markets and treasury combined with cost growth. Cash earnings over the year rose 39%, reflecting significantly improved credit impairment charges. Half-on-half, the decline was consistent with underlying profit at 4%, with CICs relatively stable. Cash ROE increased 240 basis points over the year to 10.7%, reflecting the improvement in cash earnings, but was lower half-on-half, consistent with the cash earnings decline. At a divisional level, underlying profit performances for second half 2021 have been solid and reflect the execution of our strategy, which is driving growth while managing returns. Business and Private Banking grew underlying profit 2%, with stronger volume and revenue more than offsetting higher costs and investment spend. Personal Banking underlying profit declined 2%. Good volume growth in housing, along with disciplined cost management, partly offset lower margins, reflecting housing competition and mix impacts. Corporate and Institutional Banking underlying profit declined 14%, reflecting a difficult period for markets income, but excluding markets, was up 5%. New Zealand Banking posted a strong performance with underlying profit up 3%, with strong volume growth and stable margins. Before getting into the detail of the results, I want to update you on our remediation programs. Customer-related remediation charges for second half 2021 were AUD 137 million pre-tax, of which AUD 117 million is in discontinued operations and wealth-related. In second half 2021, there's been no significant new remediation issues identified. Our focus has been on remediating customers who are part of our existing major programs as quickly as possible. I'm pleased to say we are progressing well. Customer payments have increased 80% over the year. In terms of advisor service fees, we have completed the process for salaried advisors. For advice partnerships, expect to be around 80% complete by the end of calendar year 2021. Based on this progress, we now expect to have all of our major customer remediation programs essentially completed in calendar year 2022. We have also included here an update on our AUSTRAC investigation. AUSTRAC commenced an investigation in June. At that time, AUSTRAC commented it was not considering civil penalty proceedings, and NAB has not been notified of any change to this view to date. However, the investigation is ongoing and outcomes, including the potential impact on costs, remain uncertain at this stage, whether that be ongoing cost uplifts or any one-off remediation. Turning now to revenue, which declined 1% over the half. The impact of weaker markets and treasury performance this period is clear from the chart, representing a drag on revenue of AUD 228 million, which I'll discuss in more detail shortly. Excluding markets and treasury, revenue grew 2% half-on-half. Ross talked about the volume momentum in our business. This has translated into an increase in revenue of AUD 180 million over the half. Fees and commissions declined AUD 64 million. Approximately half of the decline relates to customer remediation and lower cards income due to COVID-related restrictions. The rest of the decline relates to the sale of our broker aggregation business and higher scheme charges impacting merchant acquiring fees, partially offset by higher home lending fees relating to volume growth. The next slide provides more details on markets and treasury. Second half 2021 was a weak period for markets and treasury, with revenue of AUD 580 million, down 28% half-on-half and well below a typical half-yearly run rate. The key driver of the decline is NAB risk management income, reflecting the limited trading opportunities in an environment of low volatility and increased liquidity impacting repo margins. Customer risk income was relatively stable in the half. While the outlook for markets and treasury income is difficult to predict, in more recent times, volatility has increased, which does provide greater opportunities going forward. Turning now to margins. Net interest margin declined 5 basis points over the half. Markets and treasury was a drag of 5 basis points, of which 3 basis points come from holding higher liquids. Excluding these items, NIM was flat. The impact of the low rate environment on deposits and capital in the second half of 2021 have been more than offset by lower funding and deposit costs, which have added 6 basis points to NIM. Lending margin declined 5 basis points this period, reflecting competitive pressures and mixed impacts in home lending. Looking forward to FY 2022, we do expect that the low rate environment to have a minimal impact on NIM as returns from our replicating portfolios start to stabilize and increase thereafter. Home lending competition and mix are expected to remain headwinds, including the full period impact of increased fixed rate lending in FY 2021. We expect higher liquids to also be a NIM headwind in FY 2022. This mainly relates to the significant liquids build in the fourth quarter of FY 2021, and to a lesser extent, a further gradual build in liquids in FY 2022 as the CLF is phased out. However, at a revenue level, we expect the impact of higher liquids to be broadly neutral. Against these headwinds, we again expect some offset from lower funding costs and deposit mix, but these benefits are moderating, and we see this as a reducing tailwind for FY 2022. Costs rose 1.8% over the year and 2.4% half-on-half. At 1.8%, annual growth is within our targeted range of 0%-2% for FY 2021 and reflects a balanced approach to investing in growth and digitizing our business while maintaining cost discipline. This investment is reflected in the AUD 141 million uplift in technology and investment and D&A, as well as the AUD 113 million of additional hires to support growth. This investment has helped drive a strong productivity outcome for FY 2021, with savings of AUD 411 million. Main drivers relate to the uplift in digitization and automation, policy and process simplification, and lower third-party spend. Remuneration and inflation was an increase of AUD 138 million, reflecting salary increases, including some emerging inflationary impacts, especially in respect of technology and data resources. Our costs this year have also absorbed a meaningful uplift in performance-based compensation of AUD 364 million from a low base in FY 2020. Partly offsetting these increases is a decline of AUD 207 million in other. This mainly reflects the non-repeat of restructuring costs in FY 2020 of AUD 142 million and lower consulting spend. Looking forward to FY 2022, we expect costs to be broadly flat, broadly stable with FY 2021 levels, with a focus on productivity to offset our investment in growth initiatives, inflationary pressures, and further technology related costs. We continue to target lower absolute costs over the FY 2023 to 2025 period, relative to our FY 2020 base of AUD 7.7 billion. At this stage, both these targets exclude the impact of the Citigroup transaction, as well as any costs associated with the AUSTRAC investigation, including fines or any non-recurring remediation. Shifting now to credit impairment charges and provisions. In second half 2021, we booked a credit impairment write-back of AUD 89 million. This comprises of an underlying CIC write-back of AUD 113 million, and a small increase in forward-looking related charges. The underlying write-back of AUD 113 million is broadly in line with first half 2021, and reflects continued low specific charges and improved asset quality. Net forward-looking charges of AUD 24 million are also fairly consistent with half one 2021. The EA has been topped up by AUD 180 million, AUD 181 million to reflect uncertainty over the impact of recent lockdowns and the reopening phase, largely offset by a write-back in target sector FLAs, mainly reflecting an improved outlook for agri. CP coverage as a ratio of credit risk-weighted assets remains strong at 1.35%, down 15 basis points from March, but with eight basis points of the decline relating to the parcel sale of the aviation portfolio. Asset quality outcomes in second half have improved across every measure. The ratio of 90 days past due and impaired assets to GLAs has declined 29 basis points. Arrears are lower, reflecting a broad-based improvement across the Australian mortgage portfolio, including for those customers previously part of our COVID-19 deferral program. Impaired assets also reduced, mainly driven by work-outs in the business lending portfolio. Watch loans stepped down, mainly reflecting the aviation sale, and new impaired assets remain at very low levels. These outcomes are encouraging and highlight the resilience of our customers during lockdowns, and the benefits of our broad package of support measures in place. However, at this early stage of the reopening, it is uncertain how asset quality will perform as businesses emerge from a period of hibernation and support is tapered. It's worth noting that over 70% of our categorized non-retail assets relate to those sectors most heavily impacted by COVID-19, including retail trade, tourism, hospitality, aviation, and parts of the CRE book. This slide gives a bit more insight into the performance of those sectors which are most exposed to COVID-19. While asset quality for these sectors improved over second half 2021, it remains materially worse than our overall book, with the ratio of 90 days past due and GLAs more than double that of the total non-retail book. Post the release of our agri FLA, 100% of our non-retail targeted sector FLAs now relate to these COVID-19 sectors. Turning now to capital, which has again been very strong over half. Our CET1 ratio at September stands at 13%, up 63 basis points from March. Continued strong organic capital generation has been a key driver, reflecting improved asset quality and CIC write-backs over the second half 2021. M&A was also an important driver, contributing 29 basis points, mostly relating to the finalization of the MLC Wealth sale. Partially offsetting these impacts is completion of approximately 20% of our on-market share buyback this period. Risk-weighted assets have been stable. This includes flat credit risk-weighted assets reflecting volume growth, largely offset by asset quality improvements. Higher IRRBB risk weights mostly relate to higher interest rates, offset by model-driven reductions in market risk. On a pro forma basis, CET1 is 12.25, taking into account announced acquisitions and divestments, and the AUD 2 billion balance of our share buyback yet to be completed. This compares with our target range of 10.75%-11.25% and sees us well-placed to continue to grow and support customers while considering options to further improve shareholder returns with an ongoing bias to reducing share count. Finalization of APRA's unquestionably strong standard is due shortly. While this is expected to result in a resetting of capital ratios, it is not expected to have a significant impact on our required capital. Liquidity and funding have remained strong, supported by continued deposit inflows and ongoing central bank and government stimulus. The decline in LCR to 128% from 136% at March mainly reflects the reduction in the CLF. NSFR has remained broadly stable at 123% over the half. TFF allowances totaling AUD 17.6 billion were fully drawn down in the June quarter, with proceeds used to support lending growth, wholesale debt refinancing, and an increase in liquid assets in the fourth quarter of 2021. We expect to increase our term wholesale funding issuance to more normal levels in FY 2022 to support growth and refinancing requirements and to position the balance sheet for the phasing out of the CLF and for TFF maturities in the coming year. With that, Ross, I will hand back to you for some closing comments. Thanks, Gary. In closing, I'd like to outline my key priorities for 2022. We remain focused on executing our long-term strategy. By doing what we said we would with discipline and focus, we have built momentum across every one of our businesses. There is more to do, but we have the foundations in place, and I'm confident we will continue to grow. Our latest business survey, released today, shows business confidence and conditions are improving. NAB is the largest business bank in Australia and New Zealand, and we will play a key role in the expected economic rebound. However, as we transition to COVID normal, we know some customers may face difficulties and require ongoing support. Many of our colleagues will also be transitioning to a hybrid way of working, which will include 2-3 days a week at the office while offering the benefits of flexible workplace. As Gary has outlined, we will continue to balance investment and growth with capital and cost discipline. We remain committed to our 23-25 cost targets while continuing to support the momentum across our businesses. Gary has also provided a brief update on the AUSTRAC investigation. Resolution of this investigation is a key priority. Finally, we will focus on progressing the integration of 86 400 and UBank and the proposed acquisition of Citigroup's Australian consumer business to ensure we deliver the expected benefits of these transactions. Thanks for being with us today. I'll now hand back to Sally for a Q&A. Thanks, Ross. I'll just hand to the operator. If I could just remind you to please limit your questions to two. Thank you. If you wish to ask a question, please press * 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Triggs with J.P. Morgan. Please go ahead. Thanks. Good morning. Ross, just interested in, given the commentary of the third quarter trading update, it suggests that NIM did deteriorate meaningfully in Q4. Perhaps Ross or Gary, to what extent was liquidity a driver of this falling NIM, and what were the other underlying factors that you saw during the Q4 that drove the margin pressure, please? Well, the margin pressure, as you see, wasn't from the core businesses of personal and business banking. It came out of our markets and treasury operation, otherwise it was flat. There is pressure coming across from the competition, particularly in the home lending market. There's only so much we'll be able to offset of that over the next year, I think from you know, pricing changes to saving deposit products. We do believe there'll be some pressure going forward, but it probably hasn't been as much as some others have experienced. Gary, do you want to make any other comments on that? Yeah, that's right. It's essentially markets and treasury, Andrew. As I called out, we did have a quite significant uptick in our liquids book right at the start of the fourth quarter, so that AUD 24 billion. That did again impact NIM optically, you know, for that last period. As Ross mentioned, home loan competition, you know, was ongoing and continued. They're the main drivers. Thanks, Gary. Just to follow up on that, is your observation that competition in mortgage actually getting worse since the TFF ended rather than better? In that context, fixed rate mortgages were 57% of drawdowns for the second half, which is, you know, around the top of the peer range. You know, how much of this growth that you've seen in your book therefore is just lower margin as UBank or white label mortgage product that you're seeing and do you expect that 6%-8% to change next year? Yeah, look, we do expect to see the change in the construct of new business. You know, it's been a very strong push towards fixed because of the pricing. But now you're seeing a bigger swing across into the variable product set. We can expect that to continue over the next year. I mean, you look at the players in this marketplace, everybody's in mortgages and, you know, it's still profitable, but the competition is there, and we do expect to have more pressure coming through on that book, and we're very cognizant of that. We've got to be very careful we just don't end up in that price war. Our delivery is gonna be around service delivery as much as it is around pricing value. You've seen that coming through very strongly in our mortgage business this year. I think we've moved from being one of the probably slowest to deliver to one of the fastest in the marketplace. That's important for customers and also for the broker community, certainty of getting the deal through. We're certainly playing it on the service delivery as much as anything else, and we'll continue to do so. I think we've got a good proposition in this marketplace, and we'll stay in it very strongly. Thanks, Ross. Did UBank and White Label have an outsized share of new business this half? White Label is across a number of the broker operations through Advantedge. I haven't got the exact number of the percentage. It's not large. What you're seeing with 86 400 and UBank, very strong growth in that business, and we expect that to continue on into 2022. It's a very good operation. As we bring those businesses together, again, the platform will be helpful to us. But it's around, as much around the service and price proposition there. That'll be a digital activity. Andrew, the pleasing area was particularly business and private. That had a Yeah. Had a very good second half. Yeah. We also saw the NIM in our business bank slightly up over the year. I think, you know, given the intense competition in that marketplace, I think Andrew and his team did an incredibly good job. It's worth noting, you know, the performance there on NIM, great growth, good NIM management. We've added more costs as we put 550 more people into that business, and it's going very, very well. Great. Thank you. Thank you. Your next question comes from Andrew Lyons with Goldman Sachs. Please go ahead. Hi, Andrew. Thanks and good morning. Hi, Ross. Just a question on your ROE. You've delivered 10.7% in FY 2021, which is consistent with your double-digit ROE ambition. Obviously FY 2021 had some tailwinds and headwinds, including, you know, firstly, you know, a much lower than 25 basis point normal bad debt charge that you disclose on slide 70. Secondly, slightly higher expense base than your sub AUD 7.7 billion ambition. Thirdly, a capital position that's at least 1% higher on a pro forma basis than the top end of your range. If you adjust for all of that, you get an ROE of about 9.5%. I'm just keen to sort of understand some of the other levers you think you can pull to get your ROE over 10% over the next two to three years, and maybe particularly focusing on revenues. You know, certainly focus on growth and ensuring revenue. You don't want to take on business that's not profitable for the bank. We are carrying a significant increase in capital that we'll bring down over the next 3-4 years. That will certainly help ROE. You know, I stay firm on the view that this is a double-digit ROE bank. To those factors that you raised, we've got to get more productive, carry less capital, and do more good solid business, which we're proving we can do. I think it's on a good path. If you'd normalized out today even the capital, you know, it's still significantly higher than 10.7%, which would take up the slack from low CICs. Okay. Thanks, Ross. Just a second question, just on markets and treasury. Slide 22, you highlight your FY 2021 markets and treasury revenues were somewhat below the average of recent years, but you do note some recent reemergence of volatility, which might help in 2022. Do you still think recent year average is the best guide as to sort of, I guess, sustainable or normal revenues in that business, which is sort of around AUD 1.7 billion-AUD 1.8 billion? Or are there some structural issues which may impede, you know, that line item reverting to that average? Yeah, well, first off, you know, our markets treasury business was pretty much online with everybody else in the marketplace. It wasn't, the result wasn't better or worse. I think it was there or thereabouts. It certainly has been impacted by massive amounts of liquidity in the market and, you know, just very little volatility. We've already started to see more volatility coming through. Now, whether it gets back up to the average, certainly, you know, I'm not gonna predict that. I think we are seeing already a bit more volatility, this business getting back to an average performance across the timeframe. Time will tell. You know, there's a lot of liquidity out in this marketplace at the moment. I, you know, we're comfortable with the way it's performing. We believe it's the business to be in and supplements a lot of other activities going on across our corporate, institutional, and business and personal bank. Let's see how it goes this year, next year, but I wouldn't. You tell me what's gonna happen with liquidity and volatility, I could probably give you an indication. I think the trend, it's a trend, Andrew, isn't it? You've got to look at the direction of travel now is it's likely there's gonna be more volatility going forward. There's going to be a trend, at least at the longer end anyway, of more normalization of interest rates. All that adds as a positive and as progressively, which we do expect will continue from here on in, that liquidity is withdrawn from the system. The operation of the market will be tending to normalize over that period. It's more a timeframe for all those activities to occur. What happens in FY 2022, 'cause they've still got excess liquidity, is hopefully there'll be still more volatility and interest rate movements there to work on, which drives hedging activity as well as trading opportunities. You know, we do hope with that volatility that we either get back to normalized levels or start to trend towards more normalized levels. Then each and every year after that, I think that would start to trend back to some of the levels we've previously seen. That's helpful. Thanks very much, Gary. Thank you. Your next question comes from Brian Johnson with Jefferies. Please go ahead. Good morning. I'd just like to congratulate you on the fantastic slide deck and what looks like a pretty good result, despite the market's reaction. Just when we have a look at it, I suppose the first thing is that when we have a look at NAB, historically, you've had much bigger volatility through your P&L from your financial markets business. When we have a look at it, you seem to hold more assets available for sale. Gary, could you talk us through basically, is there an opportunity to change around that structure and what impact that might have on both the earnings and the interest rate risk in the banking book, if in fact there was a change that could be done to reduce this earnings volatility that we get? So it's. There's lots of things to consider there. You're right, Brian, that all markets and treasury businesses, or particularly treasury, while at times it's difficult to work it out 'cause there's varying levels of disclosures, as you know, across the different banks, where we think we like to be fully disclosed, but maybe others aren't as disclosing as much as ourselves. But you do know, particularly for treasury, there are different accounting practices and setups around the treasury book. To your point about a balance between how many of the books are mark to market in the P&L and how many of the books are essentially fair valued through other comprehensive income, where what goes through the P&L is accrual income or any realized gains that come out of those reserves. The point there is to really look at a comparison that we've done this now and gathered all those different components across the bank, where you can step back and look at on a like for like basis what actually appears in cash earnings and what revenue gains appear as unrealized gains in other comprehensive income. Once you put it all together, as you'd expect and as Ross said, the returns of and the trends are pretty similar. You'd expect that given that the liquid books that we've all got tend to have the same sort of liquid assets. There might be slight differences in provisioning. But the fundamental part of your question is that there are timing differences and different volatility. We've always, as you've said, Brian, we've always had more of a philosophical bias towards mark to market, really off the back of execution discipline that that derives. The more, the more that you can go to accrue, you do run the risk that you're not taking those signals the market is demonstrating straightaway, and it does impose, I think, a greater trading discipline and a better trading discipline. The downside is what you say. It can introduce greater volatility. It is something we'll look at and I'll discuss with our treasury team, and we'll compare with how that lays out versus peers, and we'll see whether there's an opportunity to maybe change up in future if volatility, you know, is the most important thing to look at. Gary, I'm correct in thinking that you are reviewing it and it does create more earnings volatility than your peers. That's correct? Yeah. You'd have to go peer by peer, but we tend to mark to market more of our portfolio through cash earnings than others. That's right. Gary, the next one is, or actually it's probably more for Ross. Ross, AUSTRAC, slide 20. It's good to see a little bit more disclosure, but it's pretty two questions. First one, what specifically is the AUSTRAC issue? Can you just give us a quick summary of what is AUSTRAC actually investigating? Just a very layman's explanation. The second thing is, I was wondering if you could provide us some kind of feeling for the uplift in the operational cost you're running basically through the cash earnings with regards to basically this issue. Yeah. Both good questions, Brian. The first one is, look, we have got an investigation as to whether we're just meeting our obligations under AML/CTF. I mean, that's the basis of it. That's been the question and reason for the enforcement team asking for information from us. We've submitted all that information. We're working well with them. We've got a program of work that probably goes for at least another 18 months anyway. They're seeing whether, you know, we're honoring that program of work and doing what we should be doing. It's as basic as that. It's no different to any other bank around the world that has the same issues as to complexity of the legislation that we have been involved in another one with similar difficulties. You know, it's across the world. Look, we're in the middle of the investigation at the moment, cooperating well. We'll just see whether what AUSTRAC come back with. It's the middle right there. Ross, the uplift in the operating expenses that we see as a result of it, that you're expensing through cash earnings? There is cost. I'll get Gary to take you through, but it comes at multiple levels. You know, manual work at the sort of front end as it flows through into making sure you're looking at the money laundering plus KYC from a more manual perspective rather than from a very technology-driven perspective. Secondly, there's a fair bit of remediation work going on. I'll get Gary just take you through both of those, Brian. Yeah. Brian, the guidance that we gave is flat costs and excluding Citi, but excluding this point as well. This is really just 'cause we're still partway through the process, and we're uncertain as to exactly the scope of the activity we're gonna be required to do, as well as just the cost associated with the interactions with AUSTRAC. We have to prepare lots of documents, lots of legal reviews, et cetera. What we've said there is for those upfront costs and for what we described as non-recurring costs, where we just have to go and remediate X amount of customers for these items. We have to find certain documents or whatever it turns out to be. You know, whatever that scope of that turns out to be post our AUSTRAC review, that is the portion that we're uncertain as to what that's gonna involve to date. We've carved that out. Our expectation is, if the costs relate to ongoing BAU expenses, you've got to upgrade this control, or you need additional things to do ongoing work that will be more structural, then that is included in our cost guidance. We're just trying to carve out more of those costs of a one-off nature, and ongoing costs is included within our guidance. Ross, look, I'd really just like to push the point because it is a big issue out there. It sounds today as though this is a procedural problem as opposed to any specific breach. We're not gonna pick up the newspaper and read about child exploitation or a problem at the back of the ATMs, which has facilitated terrorism financing. This seems as though it's more mechanism about the procedures as opposed to any specific breaches. Is that correct? Well, it's reasonably broad-ranging. They're looking at our program of work, more than anything else, Brian. It is around, you know, the obligations we have under AML and the program of work that we've articulated to them. Are we still working through that program and getting the results? It's as broad as that. I would like to say, you know, what do they find or we find because these are pretty complex measures. At this stage, it's really around how are we living with our obligations and a review of the program that we've committed to. Just on your cost piece, you know, even if we got this reasonably well automated, we're talking AUD tens of millions. We're not talking hundreds of millions of AUD of reduction in cost base here, you know, 'cause we do have front-end and back-end processes associated with anti-money laundering and KYC. We've been getting a lot better at it and more streamlined at it. There's still a long way to go, but we're not talking hundreds of millions of AUD of reduction in costs once we automate. Fantastic. Neither an uplift. I'll point you to where we have laid out in our contingency note answers to some of the questions you've made about a bit more detail of what's involved. That's just to assist you. That's on page 170 of our annual financial accounts. Thank you very much, and thank you. Great result back. Thank you. Thanks, Brian. Thank you. Your next question comes from Victor German with Macquarie. Please go ahead. Hi, Victor. Hi, Victor. Hi. Thank you. Two questions from me. I'll ask a question on markets income first and then on an investment spend as well. With respect to markets income, I mean, we've talked about it already earlier, but are there any sort of things that you could perhaps point us to as to why you might be more impacted than your peers with a slow interest rate environment? I know that you've talked about repo business being more impacted, which makes sense, and presumably you are more exposed than peers. Maybe if you could give us a sense for how much that business contributes and yeah and why you are more impacted than peers to this environment. Thank you. Well, first of all, on our analysis, we are not more impacted. Our businesses versus some of the other equivalent businesses here. You know, we've pulled apart everybody else's businesses and related to the types of business we're involved in. We think we've got a similar result here, but there are some different ways of accounting for it. You know, as Gary said, we've probably got more mark-to-market and holding the assets for longer. I think it's, you know, it's performed in line with the rest of the market, is what our analysis showed. Victor, yeah, to add to that, if you break it out between how we disclose it between markets and treasury, where it can be a timing period, half on half. If we look at our markets business in isolation over the course of the year, it's down in around about 24%, I think. Is the revenue down. When we look across our peers, very similar to what we see across our peer group. Again, it goes to Ross, your point that it's, I think, the experience, which is what you expect. The experience is pretty similar, and we've, you know, found challenges with it. We do have a larger repo business, so that does tend to get a bit more impacted. Spreads have come in. Probably the big difference is on treasury. In my earlier point around, you really need to look at movements in OCI in addition to cash earnings, because the unrealized gains go into OCI. This is a normal thing that everyone does. For this period, it is creating quite a few distortions in what revenue turns up in cash earnings versus elsewhere. If you're rebalancing your liquids portfolio, which all treasury functions do, as you sell bonds, that moves some OCI into cash earnings. You can get some differences. We've sort of looked through those, and some of our peers have a very different experience, where looks like they've been rebalancing their portfolio a lot more than we have, which has the effect that more income flows through into cash earnings than sits in reserves. That's my point. You have to sit back and have a look. Once you adjust for all that, we step back and go, well, as we would have expected, the overall economic performance is pretty similar. Okay. No, that's very helpful. That makes sense. It presumably means that as we go into next period, you know, those balance sheet activities normalize, you shouldn't be significantly different to peers as I guess Ross is suggesting. That's an important point, Victor, that while the transfers in and out of OCI can vary, that does tend to have an impact on returns going forward that you see in cash earnings. You know, one accruing will accrue through over time, the other is realized straight away. That sort of goes to this point of different practices around rebalancing portfolios and the different timing and recognition aspects that creates. That's very helpful. Secondly, I was just hoping to, I know I ask you this pretty much every half, but I'll do it again. If we look at investment spend, you're looking to hold it broadly flat. If we look across the peer group, everyone has lifted that number quite substantially. I appreciate that the number is not perfectly comparable across the banks, but just maybe if you can give us, or remind us why you're comfortable with what you're spending now, why that AUD 1.3 billion is an appropriate number, particularly in the context of what you described earlier or discussed earlier with respect to, you know, AUSTRAC potentially needing a little bit of additional investment. I mean, why hasn't that investment, I guess, been done before? Why do you think 1.3 is the right number? Thank you. Yeah, no, thanks. I'll pick that one up. The 1.3. This year we're now in will be, as I said, consistent with what we spent last year, which actually was less than the money we were spending the two years prior, where we had major programs to change a lot of our technology systems, processes, and I think fix up a number of regulatory type issues. You know, AUD 1.3 billion is one hell of a lot of money, and you put it across a very focused set of priorities that we have as a bank, you can get a good return out of it. What we're seeing is a better return for dollar spent out of our portfolio now than probably we've ever had. We're comfortable with that. We sit every fortnight with the executive team and go through the programs of work. You can do that when you're spending it on sort of 20 major programs, not 400 other things, and that's what we're doing. We're getting a better return out of the spend. We think AUD 1.3 million's plenty for a bank of this size to stay and lead the market. You got to be very careful. If you spend a lot more money, you don't actually know where it's gone to. I think that's the danger that we were in. We were spending a lot, and a lot of it was, you know, some of it, I suspect we didn't know there whether we were getting a return to how we do. So, we're very focused and disciplined on that AUD 1.3 billion spend. As you're seeing, it's flowing through into our results. We're getting much better processes in our business bank and our personal business. We're spending it on, in areas such as merchant. We're spending it across our payments business, all the core parts of the bank. It's, remember, it's only spend on a bank. I don't have a wealth business or any other subsidiary operations that I have to worry about today. It's a bank, and that's where we're spending the money. Pretty comfortable with AUD 1.3 billion. Everybody would love to spend more, but where do you get the return? I think we've optimized it. This year we're spending less on the issues that we've had to fix and more on the go forward. You're starting to see much more positive impact on the areas of customer and colleague, which is what you want. Over time, we'll see even more of it being spent on discretionary. Ross, just a couple of ones to add. Well, Victor, you called this out. You do need to be cautious in the comparisons about what's included versus peers, so that we all know they're not like for like. Probably two points more importantly, you know, we did, if you go back a number of years, and I think we were at the time, in some circles anyway, criticized for this, we had quite a significant uplift in spend in investment, and that was really focused on some of our technology underlying foundations, et cetera, that we wanted to get in place, where we did spend that. Potentially earlier than peers, and we're feeling pretty happy about that spend's been done. A lot of work is being done in more recent times around the effectiveness of that AUD 1.3 billion spend, where, you know, we have less overhead, less governance, more agile processes. The equivalent of that AUD 1.3 billion now, difficult to put a number on it, but, you know, we think 10%-20% more productive spend than it previously was. You know, we had a big component of outsource in that, which was more expensive and probably less effective. We're getting a lot more bang for our buck for the AUD 1.3 billion spend, and we're pretty confident this is the right level for us for now. Kim. Okay. Thank you. It sounds like it's highly unlikely for us to wake up one day in the next three years and we see that number at AUD 1.6 billion-AUD 1.7 billion, at least the way you're seeing it currently. I'm very much hoping you or I won't wake up and have to spend that sort of money on the bank. Remember, you know, we are a very focused operation, and we're just spending it on a bank. It's a lot of money, AUD 1.3 billion. Thank you, Ross. Thank you, Gary. Thank you. Your next question comes from Matt Wilson with E&P. Please go ahead. Hi, Matthew. Good morning, Ross. Good morning, team. Echo Brian's comments. Two clean results out of NAB consecutively is a great outcome, given the last 25 years. Just when we look at the Citi acquisition, can you give us some feel for how much uplift that should provide to the margin? Secondly, you're clearly the best business bank in Australia, but your NPS is number 2. Can you walk us through the road to being number 1 from an NPS perspective in the business bank? Yeah, we'll start with the latter one first, and we do bounce between, you know, one and two, backwards and forwards, pretty much every month. My concern with all of it is we're still very negative, and we need to be very positive. I think the task is to get ourselves into absolute positive business banking territory on a consistent basis, Matthew, as opposed to- Yeah. Jockeying around for first and second against negative. Mm-hmm. That's our target, and the team are very focused on. A lot of it, remember, it comes back from the small business market that make up the bulk of the numbers on the survey. They're the ones usually with probably the least relationship-led service. They are more, you know, digital, and we will get a lot better in that digital space. We've got a very clear focus on getting better in that customer space. A lot of it will come through automation. It'll come through digitization, which is where we're focusing small and medium-sized businesses. All parts of our business have been using a lot more digital activity to look after customers here. On the Citi acquisition, can we just go back to why we were very interested in this? Mm-hmm. It's two major parts, although there's three or four parts to that business. The two major parts are obviously the credit card business that our people are focused on. If the acquisition goes through, which we're hoping it will, you know, it does put us in a position of being clearly number two in the marketplace with scale. In this business, you do need scale. We will replace our systems. We're in the market now with vendors, talking to them about replacing current systems to look at new go-forward systems, not just for the credit card business, but the personal unsecured business, which I think will be important going forward for NIM. I haven't got a NIM number for you in mind, but you know- Yeah. With a bigger book of unsecured, you do get an uplift, but it'll still be dwarfed by the mortgage business. You get a different set of customers to talk to and do things with. Mm-hmm. You need capability, good systems. We are also looking forward to the white label business here. Some very good partners in this business that we've had the opportunity to have conversations with. We think we can help them with their business as well and expand their businesses and create a really good white label business. There's many parts to it. Don't forget, there's AUD 7 billion of mortgages Yep. That'll throw off a good, reasonably good return that will integrate into our business as well. Yes, there'll be an uplift in NIM. I wouldn't say it's significant at all. It's capability, it's systems, and it's scale that's very important in that market. The white label business is vital, I think, for us. Lots of things to like, but it's a big integration. We'll be focused on it for two or three years. We'll try to make the most of it and get the returns out of it that we believe we should. No worries. Thanks, team. Cheers. Thank you. Your next question comes from Brendan Sproules with Citi. Please go ahead. Good morning, team. I have a couple of questions. Firstly, just on your net interest margin, a couple of your peers have called out that net interest margin in the month of September was sort of materially below the average for the second half and, you know, driven by the higher liquids, which you've mentioned here, the competitive pressures, particularly in fixed rate lending, which I know you had around 56% of your flow in the second half into fixed rate products, and then also the declining benefit from deposits. I was wondering if you can give us an indication as to how that shape looks for your business. I have a second question on business bank. Well, Gary, sounds like the NIM one's a great one for you. Yes. I don't think you're gonna be giving this excess NIM, though, but you can give an indication of what's starting to happen in that marketplace. Yeah. on NIM. It's probably going back Don't forget to talk about the discipline of our business bank on NIM. As well. Plus a couple of points in the half. We like that. The outlook for NIM, yeah, we don't disclose an exit NIM per se, but we're happy to run through the components that you've talked about. Probably the first one, the liquids one, which, you know, clearly with our increase in liquids in fourth quarter, and then we will have a gradual further increase in liquids throughout the year as CLF is phased out. That is something that will impact our NIM. You know, that's essentially an optical impact that we're expecting the revenue portion of that to be pretty neutral. It's, you know, it's not capital consuming, but it is a factor when you go to forecasting where NIM is gonna go. After this first point, the second point where we get into the more substantive drivers of NIM, you know, we do see housing pressure and competition in housing. Some of the things that I've called out, you've called out the shift of fixed that will flow through for the full year. So it's definite that there will be ongoing housing NIM pressures as we go into 2022. Albeit, I read and listened to some of the commentary coming out of some of our peers, which I thought was pretty pessimistic on what that might look like. So we're not seeing those degrees of exit NIM to what some of our peers have been disclosing, but the issue is real, just to a lesser extent. Then, you know, while we're saying funding and deposit costs will decrease as a tailwind, it'll still exist. You know, we are still seeing good deposit inflows. We're still seeing the mix of those inflows is still of good quality. As Ross talked about a lot, we've been doing a lot of work on transactional, looking for more deposits. That funding and deposit offset should continue through. We also, despite increases in long-term rates, you know, what we're able to issue at now versus what we're refinancing, there's still a carry benefit there as well. A number of benefits on the funding and deposit side. Then you're sort of on the business, underlying business side to date. Not, you know, there's slight emergence of pressures, but the nature of our SME business is, it has been for a long time, you don't really see that acute margin pressure appearing unless there's other issues with the relationship, because price is just one component and a lesser component of that relationship. You lay that out net-net. I would say, look, there's net headwinds for next year. There's still a lot to play out to the actual scope of those headwinds. This year, we managed to essentially net them off to get the flat NIM. I think that will be difficult for 2022, but I also don't think it'll be a disaster scenario either. Hopefully that gives you a bit of sense how we're thinking anyway about the direction of NIM for 2022. Yeah, that's very helpful. Thanks, Gary. Actually, there was a final point I was remiss in not mentioning. In 2021, it was hopefully now the final year where NIM is being impacted by the low rate environment. With the movement in rates and 3-5-year swap curve, how we're now investing our capital and NBIs, you know, that should really neutralize for 2022. That's a big headwind we've had in 2021 that will disappear in 2022, and then hopefully by 2023, that actually and beyond starts to turn into a tailwind. Thank you. Just my question on the business bank. I mean, there's been a terrific turnaround in the revenue growth profile in the last six months. To what extent has your use of brokers helped you gain market share? Secondly, how do we think about the lending spreads that you're making in this business, say relative to pre-COVID? Are they higher and more profitable? I don't think the spreads have moved much at all, Gary. I'll let you give some contemplation to that. No, they're pretty consistent actually, that we've some of the components moved around, but the spreads overall are reasonably consistent. Broker is playing an increasing role. As we know, we've been underweight in that space, starting to build more. In terms of materiality to the growth this half, still only about 30%. It's an increasing proportion, but it's nowhere near the proportion on the mortgages side. You know, that will be a feature that's a trend, I suppose, that will continue in future periods. The BNPL business has been very good. You know, to reinforce, the key to this is strong relationships, strong interactions with customers, strong advice, and that puts you in a position where price is one of the lower discussions that get had. That helps you in this sort of scenario where we're not finding ourselves in a constant pricing battle all the time, as long as you do have a happy customer. They tend to really come up when, you know, there's been issues or whatever. Thankfully, I think the team's been doing a pretty good job on that and minimizing the issues and maximizing the discipline around pricing. I think the competition here has been our friend. It's awakened, I think, a very good business bank. All parts of it are working well and growing. Small business, which was flat or losing for a few years, is now growing well. It's exiting 2022 very strongly. Our metro business is stable and starting to grow. Our rural agricultural book is growing, as we said, flat out 14% growth in the year. Our private banking operation had well over 2 times system growth in mortgages. Every part is growing. We just make it easier for our colleagues and our customers to do some business with us. It's a relationship business, and a lot of people forget that. Price is important, but it's not just the only thing. Some of... I think others have forgotten how to do business banking well. Where I think we're on the march, and I think you'll see, continue to see this business grow. There aren't too many businesses in Australia that grew AUD 30 billion in the last six months. You know, it shows how powerful this franchise is turning out to be. Thank you. AUD 6 billion of that in business banking. Fantastic. Thank you. Your next question comes from Richard Wiles with Morgan Stanley. Please go ahead. Richard. Good morning, Ross. Good morning, Gary. I've got a couple of questions. One's on margins and one is on New Zealand. Firstly, on the margin, can you provide, Gary, a bit more detail on the five basis point headwind from lending on slide 23? For example, can you give us an indication of what was mortgage competition, what was mortgage mix, and was there anything from business lending or New Zealand in that five basis points? I think the bulk of that was housing, and I haven't got the exact split between. But definitely there was, you know, a reasonable contribution from both those factors in terms of, you know, just general competition versus change in mix. It's a bit of a guess, let's say it's 3 to 2, but, you know, something like that. Okay. Then, in New Zealand, Ross, you've obviously got two big issues occurring there at the moment. One is the tighter macroprudential measures, and the other is the moves from the RBNZ. Do you think the strong performance in New Zealand can continue? Do you think the positive impact on revenue from rate rises will be enough to, you know, more than offset a sort of slowdown in mortgage growth from very high levels? Yeah, look, it's hard to know where the market in New Zealand go. It's obvious that interest rates are on the march, which do help a bank. I think it's important to understand the strategy for our business in New Zealand, and there is a clear tilting. This is part of our plan, is a tilting more towards the consumer end and the SME end than where we've been stronger traditionally, which is at the sort of a more corporate end of this marketplace. That's as much because capital levels are increasing in the New Zealand marketplace quite dramatically over the next five years. We believe we can serve the customers best and get a good return out of those parts of the market. You know, New Zealand is. You've seen the house prices go up, what, 25%-27% in the last 12 months. That just can't continue. They've got to take some action to slow it down. I think interest rates are on the march. That in itself will slow that market down for a period. You know, there's a complete lack of supply in that marketplace, just as the problem in the Australian marketplace. BNZ is well positioned. It's not the biggest bank, but it's certainly, I think, well positioned in that marketplace. We've had very good leadership of it and consistent leadership of it as well. Got a new leader in with it, Dan Huggins, who's a New Zealander, so back home, and I think he'll do a very good job with that business. It's hard to know where it'll go, but interest rates are on the march. You don't think that dynamic is negative for banking revenue growth in New Zealand? No, I don't think so. Should be positive because of the rate rises. It's in pretty good shape, and I think we're in the right parts of the market there. Thank you. Thank you. Your next question comes from Ed Henning with CLSA. Please go ahead. Hi, Ed. Hi. Thanks for taking my questions. Just circling back to the business and private bank, you touched on before the margin was in, you know, improved during the period or half. Was that mix driving the margin? How should we think about the outlook for that? You touched on before, you know, 30% of flows coming through broker as a first one, please. Yeah, first off, the broker flows in themselves don't reduce the margin. It's actually quite interesting that, you know, it's equal to our own distribution, the margin through the broker flow, so it's fine. It's just, you know, starting to be a slightly bigger part of the market. We've been a bit weaker in that. We're getting stronger and better at serving the broker community. I'll leave Gary on the margin makeup itself, but as I say, we've increased, but just sheer discipline in that marketplace has served us pretty well. So Gary, any other comments on the margin? You've done very well on margin today. Most of the questions have been on that. It's really an extension of what you've said. The business continues to be disciplined around margin, and that's been fundamental to our commitment to safe growth, is we just don't wanna be growing and then sacrificing significant margin or having to pay significant amounts in terms of additional operational costs. You know, Andrew's been really focused on how do we get that growth without sacrificing the margin, making sure the returns continue to be solid, and we continue to re-look at any particular pockets, and this has helped where the returns are sub-hurdle rates. We do look at those. We do look at, you know, opportunities for additional businesses, opportunities for repricing. That has all assisted with the margin during this period, discipline around the lending margin. Then we've had some nice tailwinds for the period around funding and deposit costs. All of that together, it's given a pretty good, you know, it's a great outcome when you're growing AUD 10 billion, 5% GLA growth and +2 in margin is a great momentum. Going forward, we'd like that sort of growth, Andrew. You know, as long as we can maintain the discipline on the margin, that'd be great. Says Gary, looking at Andrew in the audience. Just on the margin and the outlook, obviously, you know, great result, you said this period, but, you know, do you see, you know, the benefits from the deposits easing off and more competition come in? Like, should we be thinking this business can hold margin or margin continue going up? Or, you know, should we see a little bit of pressure anticipated to come through? Well, there's definitely pressure, because the balance of deposit pricing, there's only so much left in that end of it. So there will be pressure. But there's been intense pressure in this part of the market for the last two years. You know, we've got a very strong franchise that has weathered that pressure and grown. It's all very well, you know, standing still, but it's actually shown a propensity to grow. We're doing a very good job with customers. We focus on the customers all the time, and it's showing through. It's all very well easy in this business to, you know, come in with really cheap pricing and crash your market's margin on the floor and grow your costs. At the end of the day, it's a balancing act, and I think we're providing that very strongly. Okay. No worries. Just a second one on credit growth. You know, we've just touched on business, which was really strong, but it was strong across the board. You know, can you just go through each segment, you know, on where you expect growth? Do you expect to continue to grow above system across all your divisions? I would like to grow across the board, in each of the areas, in a disciplined way as we have in the second half. I'm not saying it's gonna be as strong as, but we would expect our businesses to grow in the areas that they're in. That's all we're focusing on. It's not as though I've got wealth businesses and all other things I have to worry about. We're a bank with four very strong franchises and a growing part of 86 400 and UBank, which has also showed propensity to grow. You know, we'd expect to see each part of the business, continue to grow going forward. That sounds like growth of at least at system. You'd be disappointed if it went below system in your core market. I would be disappointed with less than system growth from the bank. You know- Okay. Let's see how it plays out. If margins get trashed because of it, I'll be more cautionary. At this stage, we're holding on well with margin and growing. It's the discipline of both. That's, of course, the strategy. For Australian consumer, it'd be great to be growing mortgages above system. Obviously in SME, absolutely above system. New Zealand continuing to grow at system. Then in CIB, it's a bit more optimized, so where we see the opportunities, where we see the returns. That's the area where there's a bit more nuance in CIB. It's just not only growing at system, it's optimizing return. They've shown. Great. the ability to grow very well in that area doing that as well. Okay. Thanks for that. I appreciate the insights. Thank you. Your next question comes from Jonathan Mott with Barrenjoey. Please go ahead. Thank you. Just a couple more questions again on business banking and, again, that outlook. I think Ross said in the first half, you're really optimistic about the pipeline, that came through, and we're seeing that come through now. Agriculture has been very strong. So are there areas across the economy that you think you are starting to see growth come through? But also a question I also asked last year, if I can follow on with that one. On slide 77, you continue to show the business exposure with probability of default greater than 2%, which has hit another record low despite the COVID-exposed segments. Do you actually think that now is an opportunity that you need to take on more risk, that you need to help the Australian economy? There's some good ROE opportunities out there in business banking, and there's a lot of pressure in margins in other parts of the economy. Should you be taking on more risk? Those two questions on the business bank, if I could. Well, Jonathan, I'm not too sure whether I can grow much more than AUD 30 billion in six months across the entire business, of which 6.7 was out of our business bank, which is playing its part in helping this economy recover and get going again. I did say to you last time that I saw momentum continuing, and I'll say to you again this time around. You know, momentum looks like it's continuing. It's doing pretty well. That's across the board. In business banking, it's not just a one-trick pony there in one part of it. It's going across all segments and across many sectors as well. You know, we're a very, very good business bank, and we're just making it easier for our colleagues to deal with customers and our customers to deal with us. It's not that complex, and we're being good for it. You know, we're using data and analytics a lot better than we were two years ago. We're enabling our leaders to get out there. You know, we've got very good bankers. Everybody wants them, I see. You know, we're doing a very good job, and they're doing a great job for us. I'm optimistic about it. We're seeing the growth. I'll predict again that you'll see another six months of growth out of the bank, just as I told you that last time. It's across the board. You know, it's not as though it's in just one area of the business bank. Australia, as you've seen from the latest survey we've put out today, it's optimistic. We've predicted that as we come out of lockdown, as long as we stay out of, you know, the lockdowns that we've been in and let Australia get going again, open it up to the world again, just as many other countries have, we'll be in pretty good shape. We will do our part plus to help it get going, as we have shown this six months. John, I'd really like to refer to that chart. I like it, this chart. I think it tells a good history. A few things it points out is clearly we haven't got this, how much are out in mortgages, Ross? You know, AUD 10 billion growth in business and private by going up the risk curve. We've kept the discipline around risk, and that's demonstrated in this portfolio. You see the amount of work that's been done over the past decade to really reshape the risk across all of our business lending exposures. You're right, that does give us now opportunities to look at areas where we think the risk returns are strong, that we've got some ability if we think that qualifies with, you know, disciplined, safe growth. Mm-hmm. Just a quick one following on from that. The growth that's coming to you, how much of that is coming from existing customers borrowing more versus new customers to the bank? Well, the vast majority would be coming out of existing customers wanting to improve their businesses and grow. You know, it is coming out of the vast majority. I don't know the exact percentage. We can get that for you. But it'd be a fair, you know, percentage coming out of existing customers. That's just been better. John, you'd expect that we would, and we track it every certainly every week I see the numbers, maybe every day, that the win-loss ratios is, has been very positive. We are certainly winning more from our competitors than we're losing, and the ratio, it's been very solid. Like, it's not just a, just above one, it's 1.5, 1.8, 2 on occasion. You know, we are having really good success with our proposition with customers at NAB, but also with customers that are not yet our customers, but have become. Thank you. Thank you. Your next question comes from Azib Khan with Morgans Financial. Please go ahead. Hi, Azib. Hi there. Thank you, Ross and Gary. A couple of questions from me, one on business lending and one on housing lending. On business lending, obviously the growth there was strong at 6%, over the half. To what extent is that being assisted by the government's SME Recovery Loan Scheme? Probably limited. There's been some input earlier on and some impact of just getting some confidence back into it, and I think it was really helpful to have those schemes, particularly around the asset finance pieces was pretty important, as we came to the end of the financial year last year. Limited this year, it is just businesses wanting to get going again and seeing the opportunity and optimism with an economy opening up. That's what's driven it. The impact of those government guaranteed schemes is negligible in this result, Ross? In the latter part of the year, absolutely. They did the job very early on, just as many of the government schemes. You know, we were very positive for those because they just built confidence and momentum back into a market that, you know, over the last 3-6 months, very limited. You know, it's been customers just wanting to get on with business. Those schemes were very important at the time just to give facilities and to give confidence into a marketplace. I think we often forget that. Just in the last couple of months, Ross, the government has yet again revised and expanded that scheme. Do you think the take-up of that scheme will increase? For you as a lender, do those government guaranteed loans come with lower margin? A similar margin because we're holding less capital on them, so they're probably equal to what we'd have in the market on a normal product. Again, can I just say, don't underestimate what the government has done here over the last 18 months right throughout COVID. These schemes are becoming a smaller and smaller part of what customers are looking for at the moment. Okay. Just a second question for me on housing. I know, Ross, that your economists have got a pretty grim systemic home loan growth forecast in FY 2022 of 5.1%, grim relative to some of your peers. 5%, I'd take it all day and every day, but less than, what? 20% house price rises, I'd suspect. Yeah. Yeah. Relatively grim, not in absolute terms, but relatively grim. Ross, in terms of your own view on this front, are you aligned with your economists on this front, or are you expecting better than 5.1%? No. Look, I'm aligned with our economists on this. I think those are sort of numbers over time, about the right numbers. Look, a lot of factors at play here, though. Let's see what happens with immigration, which must start opening up soon to get labor into this marketplace. Every business we talk to is looking for labor. We need to get the borders open again for businesses to really hum along, and that could have an impact. You know, I'm comfortable with the 5%. Conservative assumption is predicated on that if house prices do continue to increase, that APRA will continue to intervene. Yeah. There is some expectations of further interventions built into that number. If that didn't happen, then maybe there is some upside to that 5% number. Okay. Great. Thank you. Thank you. Your next question comes from Carlos Cacho with Jarden. Please go ahead. Hi, Carlos. Hi. Good morning. I just have another question on the business credit side of things. We've seen some headlines recently that supply chain issues, among other things, have seen a pretty significant increase in working capital. How much are you seeing that through the business credit or the business bank versus how much of the growth is driven more by investment and buying property? In the ABS stats, we've seen a pretty significant step up in business lending for property as well. Very much the latter. Yeah. We've seen some increase, but not major increase from the former, but most of the latter. It's where the growth has been. Thank you. The second question is on the bad debt front. There's still it's a fair bit of wiggle room within the economic overlay there. What do you need to see for that to come down? Is it just the continued recovery coming out of lockdown, seeing that we see this increase in spending continue and that we don't see businesses struggle as we come out? Look, I'd certainly like to see a few quarters come through here before we start releasing out. We are being cautionary, and I'll tell you, we're gonna continue to be cautionary. There's still some way to play out here. We're seeing great optimism in the marketplace, but let's see it play out and let's see a lot of these businesses that have basically been in hibernation, start to emerge again. We'll see what the outcome is. We all know you just need to walk down the main streets of most of our big cities, and you're seeing empty leases, you know, places. You're seeing businesses just not open yet. Let's see if they open up and get going again. A lot of that will be to do with getting people back into cities like Melbourne and Sydney, and getting, you know, people back into the office buildings to get the businesses underneath them going. I am still a little bit cautionary. Very optimistic, but cautionary, and we won't be doing any major releases, I think, for a little period of time. Excellent. Thank you very much. Thank you. There are no further questions at this time. I'll now hand back to Mr. McEwan for closing remarks. Look, thanks very much for joining us this morning. As we've said, it's been a good year, and I am pleased with the momentum we have across all of our business. It's also, as some of you pointed out, nice to deliver a clean set of results again. We launched our refreshed strategy 18 months ago, and we're ahead of where I expected us to be at this point in time. It is good to have focus on the bank and fewer distractions that we've certainly had over the last 12 months. This comes back to just focusing on the right things for customers and colleagues, lifting our service levels, and just getting the basics right. I admit there's lots more to do, and we'll keep executing with focus and discipline. Again, many thanks for joining us, on this morning's call, and we do really appreciate your questions. Thank you.