RNS Number:0679L
National Australia Bank Ld
14 May 2003




                            Media Release




NATIONAL LIFTS HALF YEAR DIVIDEND FOLLOWING STRONG BANKING RESULT 


FINANCIAL HIGHLIGHTS

*          Group cash earnings from ongoing operations of $2,131 million

           -          up 7.4% on March 2002

           -          up 8.9% on September 2002

*          Group cash earnings per share

           -          up 4.0% on March 2002

           -          up 10.6% on September 2002

*          Banking

           -          cash earnings up 11.4%

           -          8.0% growth in underlying profit

           -          cost to income ratio improved to 47.3% from 48.0%

*          Australian and New Zealand retail businesses performed strongly:
           Financial Services Australia

           -         underlying profit up 13.7% on March 2002; up 5.9% on 
                     September 2002

           -         cost to income ratio improved to 45.6% from 48.9%

           Financial Services New Zealand

           -         underlying profit up 32.1% on March 2002; up 19.1% on 
                     September 2002

           -         cost to income ratio improved to 50.8% from 53.2%
*          Group net profit of $1,877 million after a $205 million non-cash 
           reduction in the valuation of our Wealth Management business.

*          Interim dividend of 80 cents up 11%, fully franked

*          Return on equity of 17.1%

*          EVA up 30% to $836 million

*          Asset quality continues to be sound with gross non-accrual loans to 
           total loans lower at 0.59%

* All comparisons relate to the half year ended 31 March 2002 unless otherwise 
stated

MANAGING DIRECTOR'S REVIEW

National Australia Bank Managing Director and Chief Executive Officer, Frank
Cicutto, said today that Group cash earnings from ongoing operations (before
significant items and revaluations) for the six months ended 31 March 2003 was
$2,131 million, up 7.4% on March 2002 and 8.9% higher than September 2002.

Mr Cicutto said: "This is a satisfactory result. The National continues to
improve returns for shareholders. The interim dividend for 2003 is 80 cents
(100% franked), which is 11% higher than March 2002 and 7% higher than the
September 2002 dividend. We also expect the full year dividend to be fully
franked.

"Initiatives undertaken last year to strengthen and focus our businesses have
benefited our first half result.

"We have seen solid growth in our core operations in the first half and remain
well positioned for future challenges.





"The Group's banking operations generated $1,964 million in cash earnings, which
was 11.4% higher than the six months ended March 2002.

"The underlying profitability of our banking business was demonstrated again in
the March half, with an 8.0% increase on the previous corresponding period. In
particular, our retail businesses in Australia and New Zealand saw strong
underlying profitability and significantly improved their cost to income ratios.

"The Group achieved a half year net profit of $1,877 million after a $205
million non-cash reduction in the valuation of our Wealth Management business.

"Uncertain market conditions have affected our business mix with increased flows
into mortgages and retail deposits, slower than expected growth in business
lending and lower equity market returns. This has affected business performance
and Group margins.

Divisional performance

"Financial Services Australia, which contributed 44.6% of the group's cash
earnings during the March half, achieved $904 million in cash earnings: 3.9%
higher on the same period last year. The strength of our Australian operation is
demonstrated by the 13.7% increase in underlying profitability and 330 basis
point improvement in the cost to income ratio to 45.6%. Home lending grew by
21.9% compared with March 2002. As at March 2003, the National has a market
share of 17.8% compared with 17.5% as at 30 September 2002. (Source RBA/
National)

"Financial Services New Zealand posted another record result with a 35.9%
increase in cash earnings at $159 million. Income was up 25.6% compared with the
previous corresponding half due to strong lending activity, deposit growth and
the strong NZ dollar.

"Financial Services Europe achieved $508 million cash earnings, which was up
1.4% on the March 2002 half and 9.2% higher than the September 2002 half.
Continued progress was made in building the European operations and we are
pleased that credit quality remains sound in a difficult operating environment.

"Cash earnings for Corporate & Institutional Banking was $416 million, 10.3%
higher than for the same period last year despite weaker money market
conditions. The improved performance was due to a lower charge for doubtful
debts, attention to cost control and lending growth as a result of an emphasis
on enhancing relationships with core clients.

"Operating conditions for our Wealth Management business proved challenging as
equity markets weakened further. Operating profit was more than double the
September half but significantly down on the March 2002 half. Our Wealth
Management business was impacted by a revaluation of $205 million, which is a
non-cash item.

"The value of Australian total funds under management has declined from $65.6
billion as at September 2002 to $65.1 billion as at March 2003 due to weak
market sentiment.  This impacted retail funds under management market share,
however, Wealth Management has maintained its second place ranking (ASSIRT
Market Share Report, March 2003). Wealth Management currently has the leading
market share in platforms ie. Master Funds and Wraps (ASSIRT Market Share
Report, December 2002).

"The Australian retail risk insurance business continues to maintain its market
leading position, increasing to a 16.8% market share for the 12 months ended 30
September 2002. (Source: DEXX&R as at September 2002 Research Reports.)

"In the United Kingdom, despite lower than anticipated sales in difficult market
conditions, investment funds under management grew by 2% to $1.5 billion at a
time when the market fell by 23%.

"We have continued to invest in wealth management in all regions, because of our
confidence in our differentiated position and the long-term strategic
opportunities in this industry.

Asset quality

"In light of the uncertain global environment, a strong focus on asset quality
and credit risk management has been maintained. The Group's asset quality
remains sound. The ratio of gross non-accrual loans to total loans improved to
0.59% compared with 0.62% as at 30 September 2002.

"Deliquency levels across our consumer lending portfolios' are below long-term
trends and housing loss rates and delinquency rates remain at historical lows.
Housing prices and the economic environment are presently stable, and we are
closely monitoring these areas.

"In relation to our business lending portfolio, fully secured business lending
has increased to 56.3% as at 31 March 2003 compared with 51.7% as at 31 March
2002.

"In relation to Corporate & Institutional Banking, 86% of the portfolio is
investment grade lending.





"Our Agribusiness portfolio continues to be in a satisfactory position with
non-accrual loans relating to agriculture, forestry and fishing unchanged on 30
September 2002.

Productivity initiatives

"We have continued to restructure the business and drive productivity
improvements in line with our Positioning for Growth program. Cost savings
associated with the program are on track with $195 million of annual cost
savings achieved. This is 52.7% of the $370 million target to be achieved by the
end of the 2004 financial year. We are also making progress with the cost to
income targets set under the program. The banking cost to income ratio improved
to 47.3% from 48% as at 31 March 2002.

Investments for future growth

"We have invested to improve productivity and customer service across the Group.
Progress has been made in relation to the introduction of a number of new
technology platforms.

"Financial Services Australia has made a substantial investment in technology,
including Siebel-based sales and service desktop solutions for consumer lending
(eConsumer Lending) and business lending (eBusiness Lending) applications. Our
eConsumer Lending project is complete with this application now operating on
8,100 desktops around Australia. The deployment of the eBusiness Lending
application is also underway and is currently available on more than 700
desktops.

"The ISI program (Integrated Systems Implementation) continues to be on track.
To date it has successfully delivered: the first tranche of modules, covering
human resources, payroll and core finance (general ledger and procurement)
functionality in New Zealand; and, additional human resource functionality in
Europe. Planning for the rollout of this technology in Australia is now well
underway.

"In other areas, our investment in Wealth Management ($200 million over 3 - 4
years) is progressing well and will allow us to provide enhanced services and
business support to financial advisers.

Investments in compliance and quality

"During the last half, the Group moved to review compliance standards and make
associated quality improvements.

"In Australia, there has been a significant program to deal with regulatory
issues. These include the new licensing requirements under the Financial
Services Reform Act (FRSA), Privacy and the verification of identification for
cash management accounts.

"In relation to the FSRA, the National intends to apply for and obtain relevant
Australian financial services licences by 1 October 2003, which will be
approximately six months ahead of the compliance deadline.

"The process to compensate investors for unit price adjustments in some
National Australia Financial Management superannuation, pension and investment
bond products is progressing.  We expect to begin processing compensation for
the bulk of the affected investors by June.

"A non material increase in costs associated with compensation and
administration of $8 million after tax has been provided for in the March half.
(A $45 million after tax compensation plan was expensed in the year ended 30
September 2002.)

"Along with investing to develop our Wealth Management business in the United
Kingdom, we have improved compliance procedures in our existing business as part
of our ongoing commitment to providing quality advice and customer service.

Balanced stakeholder approach

"I am pleased to report a number of initiatives being undertaken by the National
which are in line with a more balanced approach to stakeholders.

"The National has made a significant investment in its Australian rural network,
opening 15 new Integrated Financial Service Centres in regional towns at a cost
of approximately $10 million.  In metropolitan areas, more than 180 branches
were fully or partially upgraded.

"Our banking arrangement with Australia Post, which is available at more than
2,900 locations, was extended to offer business transaction services at a
further 140 locations, 76 in rural areas.









"In February, more than 1,000 Australian farmers participated in our Drought
Forum. Agribusiness experts were brought together to provide farmers with an
insight into the current climate cycle, including when the drought might break
in their region, to assist farmers with their decisions concerning cropping and
stock programs for 2003.

"In the same month, the National presented to the Joint Parliamentary Committee
on Corporations and Financial Services and outlined our strategy for rural and
regional bank services over the next three years.

"In March this year in Scotland, Clydesdale Bank launched "Art for All" in
association with The Glasgow School of Art. The program exposes students to a
range of workshops run by different artists. Its aim is to promote social
inclusion and give students an insight into the wide variety of creative skills
that can lead to career opportunities.

"Northern Bank won the Young Enterprise Special Award in the Northern Ireland
Business Education Awards for its pioneering work promoting entrepreneurial
skills in school children.

Strong capital position

"The National continues to be the only AA rated bank in the Asia pacific region.
We have a strong capital position with a 7.47% risk adjusted Tier 1 capital
ratio and a total capital ratio of 9.16%.

"EVA (which measures the economic value added to the business) grew strongly,
increasing by 30% to $836 million.

"As part of maintaining our commitment to capital management, 32.4 million
shares were purchased during the March half at an average price of $31.59.

 Outlook

"Our half year result reflects strong attention to continued growth in core
markets with a heightened focus on earnings quality. This is reflected in the
underlying profit result by our banking operations and the solid return to
shareholders this half year.

"We continue to expect cash earnings per share at the lower end of the 8%-11%
target range subject to interest rate, currency and market performance.

"We are confident that our ongoing investments and other business initiatives
will continue to allow the National to manage future challenges."





14 May 2003



For media enquiries, please contact



Majella Allen                             Brandon Phillips

Group Corporate Affairs                   Group Corporate Affairs

0410 440 305                              0419 369 058






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