National Australia Bank

1
National Australia Bank
Focused on Agribusiness
2
Australian Banking System

• The Banking Industry in Australia.
• Deposit Products and Services.
• Lending Products and Services.
• Non-Traditional Banking Products offered by the
  National.
• Assessing Agribusiness Viability.

3
The Banking Industry in Australia

• 4 Major Trading Banks and numerous smaller banks
  and other financial institutions.
• Highly competitive since Deregulation of the
  Banking Industry.
• Trend towards Specialist Banks. ( eg RaboBank )

4
Deposit Products and Services

• Savings Accounts.
• Trading Banking Accounts.
• Fixed Term Deposits.
• Farm Management Deposits.

5
Lending Products and Services

• Short Term Finance
• Overdrafts.
• Bank Bill Finance.
• Long Term Finance
• Interest Only Loans.
• Principal and Interest Reducing Loans.
• Generally 1-15 years.
• Equipment Finance. (Leasing, Hire Purchase and
  Equipment Loan)

6
Non-Traditional Banking Products offered by the
National

• Insurance Products.
• Managed Investment Funds.
• National Wheat Advance.
• Commodities and Futures Derivatives. (Cotton,
  Wheat, Sugar, Base and Precious Metals)

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Assessing Agribusiness Viability

• An agribusiness operation must provide
  sufficient capital to
• Maintain the familys standard of living.
• Pay tax.
• Repay debt
• Maintain capital items.

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Assessing Agribusiness Viability

• 2 main areas of Farm Viability
• . Probability of Default.
• . Expected Loss in Event of Default.

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Assessing Agribusiness Viability

• Probability of Default
• The Farm Viability Ratio (FVR) is a measure of
  the cashflow strength of the operation.
• It is determined by
• Total Farm Income - ( Operating expenses
  Finance Costs Tax Capital Reinvestment
  Partners Drawings )
• A FVR greater than 1.00 is required.

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Assessing Agribusiness Viability

• Expected Loss in Event of Default. (LIED)
• Measures the equity in a farming operation.
• Total secured assets less total debts equity.

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Building a stronger understanding of our
customers needs

• Nationals Agribusiness team only look after
  primary producers, service providers to
  agriculture and processors of agricultural
  produce
• This focus is building a stronger and more
  consistent understanding of the financial needs
  of agricultural businesses
• A key reason for an increasing number of farmers
  choosing to bank with the National.
• In the late 1980s the National had around a 22
  market share its is now around 30 with close to
  one out of three farmers choosing to bank with
  the National.

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The confidence to support our customers through
the peaks and troughs

• With over 150 years of experience in financing
  agriculture there are few situations we havent
  experienced
• This experience has shaped our lending policy to
  look through the peaks and troughs that
  characterise agriculture to identify sustainable
  production levels and produce prices
• We are conscious of the need to both
• Protect those who find it difficult to service
  their current debt levels, and
• To be flexible in supporting those who can
  increase their wealth through higher gearing
  levels