Thank you for standing by, and welcome to the National Australia Bank 2023 half-year results presentation. I would now like to hand the conference over to Ms. Sally Mihell, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone. Thank you for joining us today for NAB's half- year 2023 results. Before we start, I'd 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 respect 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're also joined in the room by members of NAB's executive team. Ross and Gary will provide an overview of our performance this half. Ross will also provide some comments on the outlook and our priorities for the second half.
Following the presentation, there will be an opportunity to ask questions, and please note you'll need to be on the phone line to ask a question. I'll now hand to Ross.
Thank you, Sally, and welcome to NAB's half- year 2023 results announcement. We have delivered a strong financial performance this half with improved contributions across each of our divisions. This performance reflects a consistent focus on the execution of our long-term strategy, together with the benefits of higher interest rates, which have increased from historic lows over the past 12 months. The impact of higher rates and inflation are expected to increasingly weigh on household budgets and slow the Australian economy. Although the pace and timing of the slowdown remains uncertain. We know this is hurting some customers and businesses, and our message to them is that we are here to help. Balance sheet strength has been a key pillar of our long-term strategy, and this places us in a great position to support customers who need us and to navigate the uncertain environment.
We are making deliberate choices about where we invest. Over the past six months, we have continued to grow our business and private banking franchise and other target segments. As I indicated at our full year 2022 results, we have taken steps to moderate our growth in home lending given the current market dynamics. We remain focused on executing our long-term strategy to deliver sustainable and safe growth for our shareholders. At first half 2023, revenue grew by 11.2% compared with the second half of 2022, benefiting from primarily the higher margins and volume growth together with improved markets and treasury income. Total costs were up 2.6% over the half. Our costs have been impacted by the current high inflation environment, but it's important to continue to invest to deliver better outcomes for our customers and colleagues and drive productivity benefits.
Underlying earnings increased by 18.4%, and cash earnings rose by 12.3% over the half. Compared to the same period last year, cash earnings are up by 17%. The interim dividend of AUD 0.83 is AUD 0.05 increase and represents 64% of cash earnings. This is slightly below the target range for our dividend payout policy, reflecting a prudent approach in the current environment. These results reflect strong contributions by all of our businesses. In particular, the 14.8% increase in underlying profit from our largest division, Business and Private Banking, represents more than 40% of the total growth in the group's underlying profit this period. Personal Banking and New Zealand Banking have delivered good results this half, with both businesses experiencing a challenging environment.
Increased revenue in our markets business has been a key driver of the 20% increase in underlying profit for Corporate and Institutional Banking. Gary will spend time shortly discussing the key drivers of the group's financial performance. Our financial performance this half has delivered a strong increase in cash ROE to 13.7%. We are particularly pleased with the long-term trend evident on this chart, reflects our consistent focus on execution over the past three and a half- years. I've said from day 1 that a bank must have a strong balance sheet. The recent volatility in global markets again highlights the importance of balance sheet strength as part of a sustainable growth strategy. Our funding and liquidity positions remain strong, with more than 80% of the total loans being funded by customer deposits on our balance sheet.
Over the last six months, our CET1 ratio increased by 70 basis points to 12.21% and is now well in excess of the range, our target range of 11%-11.5%. The increase this half includes 33 basis points of organic capital generation. A disciplined approach to risk has been a key strategic focus for this bank over many years. The collective provision balance as of 31st of March represents 1.42% of credit risk-weighted assets. This includes AUD 1.4 billion of forward-looking provisions added since September 2019. Our housing portfolio has an average dynamic LVR of 43% and only 1.1% of loans in negative equity or 0.7% with no LMI.
95% of our Australian SME book is fully or partially secured. While a slowdown in household spending is more likely to impact businesses reliant on discretionary spend, sectors such as tourism, hospitality, entertainment, and retail trade represent less than 20% of the total lending in our SME book. We have significantly reduced our exposure to commercial real estate post the global financial crisis. In recent years, we've maintained this disciplined approach, which has seen a further reduction in CRE lending as a percentage of total GLAs. While our housing and business lending portfolios are in good shape from an overall perspective, there are some high-risk segments which Gary will walk through in more detail shortly. Three years ago, we announced our refresh group strategy.
This is a long-term strategy that is a core to the actions we take every day across our business as we consistently focus on delivering better outcomes for our customers and our colleagues, regardless of the environment. We will do this by being relationship-led and easy to do business with while adopting a safe and long-term sustainable approach to managing our businesses. Investing in our colleagues continues to be a key to delivering a better customer experience and overall performance. We are embedding consistent leadership tools and disciplines across the organization, which is helping to support strong leadership scores. Colleague engagement was broadly stable over the year and is just below our target of top quartile. It's pleasing to see that the actions we've taken in recent years to improve decision-making and accountabilities are being recognized in our colleague surveys.
We continue to work on our enterprise agreement after receiving more detailed feedback from colleagues. We see an opportunity to have a simpler, modern agreement that rewards our colleagues and supports their well-being. This remains key to our ability to continue to attract and retain talented professionals. Over the past 12 months, we've consistently ranked number one or two across the consumer and business customer segments. We are not where we want to be yet, and there is more to do to achieve the more positive scores we aspire to. In consumer, our net promoter scores declined this year but have recently stabilized as we have taken action to address consumer feedback. In business, NAB's score improved by 5 points over 12 months to +5. We continue to be ranked number two overall.
We are the market leader for lending to medium businesses. It's pleasing to see we've retained the number one net promoter score in this segment. Our private wealth business is a key differentiator for us. We rank number one for high net worth customers relative to our major peer banks. I'll talk more about this business shortly. There's rightly a lot of focus on households and businesses feeling the pinch of higher prices for groceries, petrol, insurance, and their mortgage. For those who are struggling, we are there to support them. I also want to spend time discussing another area of significant concern for everyone at this bank and our customers, which is the accelerated frauds and scams activity we've seen over the past 12 months. This has been incredibly stressful for the customers impacted and for our colleagues who have had to support them.
Defending against this activity is a key priority for us. These are increasingly sophisticated criminals who will not stop trying to steal from our customers or our bank. We need to make it as difficult as we can for the criminals. Actions we've taken include additional resourcing together with investment in customer awareness and education, 24 seven account monitoring, security alerts, and proactive payment prompts. We're also working with the telecommunication providers to help limit NAB-related spoofing calls and messages. This is an important ongoing area of focus as we work with others across government, corporates, and the communities to educate customers and implement tools that we can help keep our customers safe. Our core business and private banking franchise is based on a relationship-led business model, which is increasingly being complemented by digital data and analytics capabilities that are adding greater value.
Over 12 months to March 2023, we achieved 10.3% growth in business lending, in business and private banking. While we are the largest lender in the SME business in Australia, we have opportunities to grow. This includes small business lending, where we have increased our market share from 15.4% in September 2022 to 17.3% in February 2023. Our growth strategy is supported by investment in new products. This includes the NAB Agri Green Loan launched last December to support agricultural businesses to invest in eligible practices which aim to reduce greenhouse gas emissions. We've also recently launched NAB FlexiFlow loans for merchants to deliver fast unsecured borrowing and payments that flex with customer revenue. Growing our share of transaction banking is also an ongoing focus for our business bankers.
Over the past two years, we've achieved 33% growth in new transaction account openings, and around 70% of our lending customers now have active transaction accounts with us. Through the execution of our strategy, we are making choices about where we want to invest and grow. High net worth, unsecured lending, and Ubank were all identified as growth opportunities as part of our strategic refresh. Our private wealth business works closely with our business bankers and our business and private banking division to deliver an integrated service model for customers. This is delivering growth through an increase in business referrals across business and private banking, which is driving 3.5x systems growth in deposits and 10% growth in funds under management over the past six months.
We've been working hard on the integration of Citi consumer banking, including the development of a new unsecured lending platform. While the substantive benefits of the transaction will be achieved once this integration is complete in December 2024, we are already seeing the benefits of the combined capabilities with growth and new accounts across NAB, Citi, and white-label platforms. The acquisition of 86 400 in May 2021 was part of a strategy to accelerate the growth of Ubank and to deliver a leading digital bank which would attract and retain customers with a focus on under 35 year olds. Ubank added approximately 95,000 new customers in the first half of this year, which is 66% higher than the previous half.
We have now combined the 86 400 and Ubank businesses under the Ubank brand and are well progressed on the migration of Ubank customer accounts to the 86 400 platform. We expect this to be completed in the next three months. Last November, I noted that the market dynamics and home lending were changing as volumes slowed, interest rates increased, and a substantial volume of fixed rate loans approached their expiry. I also said that we would strike a balance between volume and price while maintaining risk disciplines, and that this would likely result in us growing below system. Over the past six months, we've seen this dynamic play out with returns on home loans falling below the cost of capital. While home lending remains a core market for us, in this environment, we will continue to make choices which seek to balance returns and volumes.
As higher interest rates flow through to higher home loan repayments, we continue to help customers who may be challenged. We also remain focused on enhancing the customer and broker experience through initiatives such as ongoing rollout of Simple Home Loans, simplified products, and improved pricing tools for bankers and brokers. Gary, I'll now pass over to you, to take us through more detail on the results.
Great. Thank you, Ross. Let's start with our usual high-level overview of the financials. This is a strong set of results. Once again, there are no large notable items. Underlying profit rose 18% versus second half 2022, with strong revenue growth outpacing cost growth. This has seen our cost to income ratio reduce from 45.5% to 42%. The increase in cash earnings of 12% over the same period is less than underlying profit growth reflecting CICs, which while remaining at low levels, have increased from second half 2022. Statutory profit growth of 19% is stronger than cash earnings growth over the period. This mainly reflects the non-repeat of customer re-related and payroll remediation included in discontinued operations in the prior period, combined with a lower net impact from hedging and fair value volatility.
A strong revenue performance has been the key driver of growth in underlying profit this period. Revenue rose 11% versus second half 2022 or 9% excluding markets and treasury income. Volumes contributed AUD 148 million, and higher margins, ex markets and treasury, added AUD 587 million. Fees and commissions increased AUD 52 million, mainly relating to lower customer remediation impacts in second half 2022, combined with higher merchant and cards incomes and an additional two months ownership of Citi. Markets and treasury income rose to AUD 189 million. The key driver was trading income, which benefited from improved market conditions this period after challenging trading environment in second half 2022. Turning to margins, which have been the most significant revenue driver in the half. NIM increased 10 basis points over the half.
Markets and treasury was a drag of 3 basis points, primarily related to economically hedged positions offset in other operating income. Excluding markets and treasury, underlying NIM rose 13 basis points. The key driver of this increase has been the rising interest rate environment. Deposits rose 17 basis points, reflecting the benefit of higher interest rates in Australia and offshore, partly offset by a 4 basis points drag from mix impact with faster relative growth in term deposits. The benefit of cash rate increases on the unhedged deposit balance was 12 basis points for Australia and a further 5 basis points for offshore balances, including New Zealand.
As foreshadowed at our full year 2022 result, we are seeing less upside from the more recent cash rate increases in Australia compared to those earlier in the tightening cycle, including a noticeable pickup in competition in February in Australian savings accounts. The overall impact across deposits and capital from the higher Australian replicating portfolio returns has been approximately 5 basis points this half, with a further 2 basis points relating to New Zealand replicating portfolios. Offsetting these positive impacts, lending margin is down 7 basis points, again, primarily reflecting competitive pressures in the Australian home lending. In first half 2023, the key driver is a step up in back book re-pricing. Front book pressures were limited to a fairly small impact by our actions to moderate volume growth.
Funding costs have been a drag of 1 basis points in the half, with higher volumes and spreads from term funding, mostly offset by lower short-term funding costs. I've included a chart here showing quarterly outcomes. This shows that margins peaked in 1Q 2023, with a decline of 3 basis points on an ex markets and treasury basis in 2Q 2023, reflecting my earlier comments about recent competitive trends in deposit pricing, together with elevated levels of back book re-pricing in our home lending book. Looking forward to 2H 2023, we expect some further upside from higher interest rates, mostly from our deposit and capital replicating portfolios.
This benefit is estimated at approximately 4 basis points for our Australian portfolio in second half 2023, based on March 31 swap rates. For our unhedged low rate deposits, first half 2023 looks to have been the peak for NIM benefits from RBA cash rate increases, and any impacts in second half 2023 are likely to be modest. Against these tailwinds, we see the main headwinds being home lending deposit and deposit competition and deposit mix. The impact of funding cost is more uncertain and likely to be very dependent on what short-term rates do. Turning now to cost, which rose 2.6% over the half. This includes AUD 103 million of salary costs, mainly reflecting annual salary increases of 3%-5% from January 1.
Volume-related costs of AUD 25 million mostly relate to the full period impact of FY22 hires in business and private bank to support growth, plus some additional staffing in our call centers and NABAssist. Technology and investment spend increased AUD 92 million and mainly comprises of additional licensing and support costs, along with higher cloud and mainframe usage together with technology resilience spend. Investment spend impacting the P&L was broadly stable over the period, while depreciation and amortization charges rose AUD 19 million. Other costs increased AUD 47 million in the period, which is mostly financial crime-related, consistent with Ross's earlier comments about increased activity, particularly in relation to frauds and scams. Offsetting these headwinds have been productivity savings of AUD 142 million, including benefits from simplification, process improvements, and property savings.
In addition, remediation costs are lower, reflecting the non-repeat of payroll remediation in second half 2023, and lower customer-related remediation charges. Consistent with previous guidance, we continue to expect productivity savings of approximately AUD 400 million, and the cost to income ratio to be lower in FY 23 than FY 22. While our cost base is being impacted by a number of headwinds currently, we expect some of these to ease over the next two to three years. There are encouraging signs of inflation moderating and labor market pressures easing. EU-related costs of AUD 80 million-AUD 120 million per annum are due to end after FY 24, and Citi costs should run right below AUD 300 million post the expiry of our transitional service arrangements in December 2024.
We still see significant opportunities to generate productivity savings over the next three to five years, and we'll continue to invest to achieve these while maintaining our disciplined focus on cost. Turning to CICs and asset quality. Credit impairment charges for first half 2023 of AUD 393 million have increased from second half 2022. This includes underlying charges of AUD 461 million, reflecting the impact of lower house prices, volume growth, and a modest increase in specific charges, although they remain at historical low levels. CICs this half also include a net AUD 68 million release from forward-looking provisions. Asset quality improvements seen over the past several halves now appear to be stabilizing as we would expect. We are now seeing signs of stress emerging, albeit off a low base.
The ratio of 90 days past due in gross impaired assets was flat at 66 basis points, with improvements in Australian mortgage 90 days past due and Australian business lending impaired, offset by the restructure of a number of customers affected by recent severe weather events in New Zealand. This New Zealand situation has impacted the flow of new impaired assets in first half 2023, excluding this, underlying flow has also increased modestly for the first time in several periods. Watch loans are again lower over the first half 2023, driven by continued improvements in the aviation portfolio, which has offset a modest increase in, across a number of other industries during the period. Turning now to provisioning, which has been maintained at strong levels. Collective provisions stand at AUD 5.1 billion, up AUD 230 million from September.
As Ross noted, this includes AUD 1.5 billion of additional forward-looking provisions when compared to September 2019 levels. CP coverage, the credit risk-weighted assets is also well above pre-COVID levels at 1.42% and higher over the half, even after excluding a 7 basis point benefit from the revised capital framework. Provisions for total expected credit losses increased to AUD 20 million from September to AUD 5.6 billion. This incorporates slightly weaker economic assumptions in our base case. Scenario weightings remain unchanged from September levels. We have released AUD 91 million in target sector FLAs this period, primarily due to some easing in the outlook for energy prices since September. This lessens the pressure facing manufacturing and transport subsectors, which are both heavy energy users.
As expected, the Australian home lending environment has become more challenging as households are faced with higher cost of living and higher interest costs. We have provided here some detail on the impact of cash rate increases on average monthly repayments. These are now becoming more meaningful, with some further increases still to flow through to customers over coming months. Fixed rate expiries are also accelerating. Circa AUD 32 billion of fixed rate lending converted to variable rates over the 12 months to March 2023. Pleasingly, early arrears trends for this cohort are consistent with our broader book. A further AUD 31 billion expires in second half 2023 and AUD 26 billion in first half 2024. The current environment is impacting customers in an uneven way.
There are continued signs of strength across our customer base, including strong growth in offset balances, which are up 37% since March 20, including AUD 2 billion of growth in first half 2023. At the same time, we are seeing signs of repayment stress emerging with a slight deterioration in early stage mortgage arrears. We continue to believe that on average, customers should be able to manage their higher repayments, we know some will face difficulties. We see the most at-risk customers are those who borrowed between August 2019 and July 2022, when interest rates were very low and serviceability was tested at less than 6%. These borrowers represent AUD 163 billion of lending as at March 2023.
We have considered the impact of a 3.85% cash rate on repayments for these customers and narrowed down the at-risk population to those with repayment buffers of less than 12 months. Of these balances, between AUD 3.4 billion-AUD 16.7 billion have a dynamic LVR greater than 80% with no LMI or first home buyer guarantee, government guarantee, which gives a view of balances at risk of potential loss should house prices fall a further 20% from March 2023 levels, which already incorporate a 9% reduction from the peak. The highest risk cohort is around AUD 3.4 billion of balances with less than three months worth of repayment buffers and a dynamic LVR of greater than 90%.
These figures compare with the range we provided September 2022 of AUD 1 billion-AUD 9.7 billion, with the increase to March 2023, primarily driven by lower house prices. In the scheme of our total Australian mortgage book of AUD 333 billion, while still large, this represents a manageable exposure and we'll be working hard to ensure that we support these customers who need help. We are also well provided for this risk and have a AUD 1.4 billion of provisions for housing across the group, with Australia accounting for the vast majority of this. Turning to our non-retail lending exposures totaling AUD 615 billion. In an environment of rising interest rates, higher inflation, and slower discretionary consumer spending, we are likely to see more asset quality challenges for businesses.
We expect the sectors most at risk to be retail trade, tourism and hospitality, construction, and certain parts of our CRE portfolio. Exposure to these sectors total AUD 84 billion. Recent asset quality trends for these sectors, while mixed, are starting to show some signs of stress versus fairly stable trends across the rest of our non-retail book. We've been closely monitoring these exposures for several months, several periods, and have taken a disciplined approach to growth, which has seen their weighting of our total book re-reduce since March 20, from 16.7% to 13.7%. The bulk of our target sector FLA provisions are also directed at these sectors.
In the case of our Australian SME business lending book, we are starting to see asset quality stabilizing when looking at exposures with probability default greater than 2%. This is not unexpected in the current environment and follows several periods of improvements despite strong volume growth. We see our higher risk SME balances are those being with our probability default greater than 2% which are not fully secured. This amounts to AUD 8.8 billion of balances with potential loss, or AUD 1.6 billion if we consider just those which are unsecured. The size of these balances is up only marginally since September 2022, and while large, these accounts are also manageable in the context of our AUD 137 billion SME book or our AUD 615 billion in total non-retail book.
Pleasingly, most customers enter this more challenging period in a strong position. Business profitability trends remain above average. Gearing remains low, with loan facility utilization rates below pre-COVID levels, and business and private deposits are up again in the first half 2023 and are 30% higher than September 2020 levels. As Ross mentioned earlier, this book is also highly secured with only 5% of loans unsecured even after applying material discounts to market security valuations. Now turning to capital, which is a strong result this period. Our Group CET1 stands at 12.21% at March, up 70 basis points from September, and well above our target range of 11-11.5%. Included this period is a 47 basis points benefit from the implementation of the revised capital framework from 1 January.
This is in addition to 19 basis points of benefits from NAB's early adoption of APRA's standardized approach for operational risk in 1H 2022, bringing the total benefits from the revised framework to 66 basis points. Most of the benefit this period relates to our non-retail book, particularly undrawn commitments and pre-exposure, exposures. The impact on housing has been broadly neutral. Strong organic capital generation this half has added 33 basis points or 26 basis points if we exclude non-credit related risk-weighted asset movements, driven mainly by IRRBB. Credit risk-weighted asset growth accounted for 9 basis points of capital in the period, excluding the impact of FX and the revised capital framework, reflecting volume growth and a modest deterioration in asset quality off a low base, mainly relating to early stage mortgage delinquencies.
Over the half, we completed our previously announced buyback, buying back AUD 600 million of ordinary shares, equating to 13 basis points of capital. As a result of total buybacks done to date, our ROE is now 75 basis points higher. Liquidity and funding have remained strong. LCR was largely stable over the period at 130%, while NSFR declined 2% to 117%. Both ratios show large buffers to the 100% minimum requirements, ensuring we're able to navigate any ongoing market volatility. NSFR is expected to normalize to pre-COVID levels over the next 12 to 18 months, largely reflecting the removal of the favorable treatment of the TFF collateral. Excluding benefits associated with TFF, our first half 2023 NSFR would have been approximately 113%.
Despite some volatility in funding markets in first half 2023, we issued AUD 23 billion of term wholesale funding during the period. Consistent with our practice in FY 22, this funding was well in excess of maturities for the period totaling AUD 12 billion, positioning us well for the TFF maturities ahead. On that note, Ross, I'll hand back to you.
Thank you, Gary. Against the backdrop of ongoing global uncertainty, the Australian economy looks resilient and there are reasons to be cautiously optimistic. Real GDP growth is forecast to slow but remain positive, with around 1% growth expected for each of the next two years. Our most recent quarterly business survey to March indicates that business conditions remain resilient, with leading indicators also holding up. Business confidence has softened and is now below the long-term average. While there is still uncertainty in the outlook, it now seems increasingly likely that Australia will avoid a pronounced economic correction. Inflationary outcomes, particularly wage growth and global pressures, remain key to this outlook. Our priorities in 2023 are largely unchanged. Supporting our customers and colleagues will continue to be our top priority in 2023.
We know this environment will be challenging for some customers. We are ready to help where needed. We have a strong balance sheet and prudent risk settings which position us well for any future volatility in global financial markets. Although our cost base is being challenged by short-term headwinds, we continue to maintain a disciplined approach to managing our costs with a focus on productivity. We will get right the work we have agreed with AUSTRAC to keep our bank and customers safe. Finally, we continue to progress the integration of previous acquisitions, including the Citi consumer business and 86 400, to ensure we deliver the benefits of these transactions.
In executing our long-term strategy, we will continue to make deliberate choices about where we want to invest, where we want to grow, and where we will pull back because the returns are not as attractive. I remain very confident in the outlook for NAB and the Australian economy. We are well-placed to navigate the challenges and see opportunities ahead. Thanks again for taking the time today. I'll hand now back to you, Sally, for Q&A.
Thank you, Ross. We'll now go to the Q&A. To give others an opportunity, please remember to limit yourselves to no more than two questions. Please go ahead, operator.
Thank you. If you wish to ask a question, please press star one 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 Lyons with Goldman Sachs. Please go ahead.
Thanks. Good morning, team. Gary, just a question on your NIM and focusing in on Slide 20, which highlights that your reported NIM was down 4 basis points in the second quarter. However, I just wanted to ask around the ex markets NIM. The way that I've read your disclosures, your second quarter NIM ex markets was 176. The full half ex markets NIM was 1.8, which for me would imply that the first quarter ex markets NIM was 184, and therefore the quarter-over-quarter movement was down 8 basis points. Now, I'm throwing a lot of numbers at you there, but is that the right way to be sort of thinking about how the ex markets NIM has trended over the quarter?
Thanks, Andrew, for your question. Look, it's probably not as smooth as that per se, but certainly the second or the starting point of your question is correct. The right way to look at the Q2 NIM is the ex-market. The real decline in that second quarter was 3 basis points. Certainly how we feel about the direction in NIM over the half, that it did change substantially in February, March, and that's when 2 things really happened in February, March. There was a big uptick in competitive pressures around savings accounts, where we started to see and we had to meet market expectations with a 25 basis point cash rate increase. We're increasing core savings accounts. In our case, Reward Saver was 75 basis points.
That was a major shift really during the half. The other driver we saw was quite a significant uptick in home mortgage backbook repricing. We've been able to limit some of the frontbook repricing through the measures that we've been taking. You'll see on the slide there as well, where overall for the, a gain, just to give you a bit of a sense of some of the drivers, that we're down 7 basis points on lending margin. The vast majority of that relates to Australian housing, 5 basis points, in fact. If you look at the split of that, which might be interesting for everyone, the majority of that split relates to backbook repricing rather than the impact of frontbook to the extent of 2/3, 1/3.
About 3.5% of that five related to backbook repricing, whereas 1.5% was frontbook. I think that mix really reflects some of the actions we've been taking about the frontbook, and as Ross discussed, we've been making deliberate choices to push back there. you know, I think that probably helped us during this period. It was really those two months where things competitively wise really started to ramp up in, you know, from February onwards, and that really impacted our second quarter NIM.
Thanks. Just a related question, Gary. It would appear as if, like, as you said, a lot of those headwinds and the delta really came through towards not just the back end of the half, but the back end of the quarter. Is it fair to say that that sort of 3 to 4 basis points per quarter trajectory on the NIM appears to have, you know, continued into the second half? I realize you've given some considerations for us to consider, but just sort of stepping back and from a top-down perspective, it would appear as if the trajectory in that second quarter probably would appear to have continued.
Look, I think that's a fair assumption. Whilst there's, as you've stated, there's a whole bunch of factors you've got to take into account. We will continue to see benefits from our replicating portfolio. As I said, that's 4 basis points for the next six months for Australia, another 1 basis point for New Zealand. There could be some modest benefits still from unhedged deposits, again, you know, minimal in the context of what we've been achieving, say, in the latter part of last year and in the first quarter. That will moderate. It's really this home lending pressure that's gonna be the big factor driving second half NIM, and the extent to that continues at its current run rate.
Your next question comes from Andrew Triggs with J.P. Morgan. Please go ahead.
Thank you, and good morning. Gary, just to follow up on that question from Andrew. Just on the retention pricing pressures. BOQ called out only a third of their customers having access to deposit. Sorry, an interest rate or discount that reflects current market pricing on interest rates. Can you talk to, you know, do you have a similar number for your customers? What trajectory do you expect from here in terms of timing on those retention pricing pressures?
Yeah, there's again, a lot of uncertainty in that. A few things to take into account. Even at 385, we think there'll be about 20% of the book that won't be impacted in terms of repricing because they're, you know, well ahead of schedule and have enough capacity. A bit similar to the Bank of Queensland. The Reserve Bank did call out this trend as well and said that looks like some of this back book repricing is about a third of the way through. I think Bank of Queensland just said, suggested something similar. Look, we see something similar around about that. The big question is, you know, how much that continues into the second half. It doesn't necessarily it's gonna go to 70%, 80%.
It's clearly I'd say that will be an additional headwind that we're seeing in the second half. It's not quite a trend. What we're seeing in April is, pleasingly might be a bit strong. We're seeing a drop off in some of that back book repricing in April from what we saw in February, March. An encouraging sort of slowdown in that back book repricing. You know, one month's not really a trend, we'll have to wait and see whether that does continue. There might be early signs of a bit of a slowdown in that trajectory.
Thank you. Just on funding, the net stable funding ratio fell to 117% on a pro forma basis, post TFF, it's more like 113%. How low are you willing to run that ratio? I mean, 100% is the minimum, but most banks would wanna be well above 110%, I would have thought.
Look, we were 113 pre-COVID. How I look at this, that there were some tailwinds in that ratio that came with CLF and TFF, so that was quite handy. They were, in some respects, artificially boosting those ratios for a period and was always going to correct when those initiatives came off. You know, we were very comfortable pre-COVID at a NSFR of 113, and we're very comfortable if it settles back to 113 again. I think that's the right way to think about it. The other important point around NSFR, it's as different from some of the other metrics. It's pretty insensitive to small movements. You need quite significant movement.
Just to give you a sensitivity, to move that ratio, 10 points would be equivalent of doing AUD 50 billion worth of term funding. You know, that just gives. Whilst we're 13 basis points above 100, there's actually quite a lot of headroom in that. We feel very comfortable with where our ratio is currently at.
Your next question comes from Victor German with Macquarie. Please go ahead.
Thank you very much. I appreciate you don't like talking about sort of exit margins and things like that, but share price is down 7.5%. I think it'd be worthwhile just making sure that everyone is on the same page. If I look at your first quarter disclosure, at ex markets, you disclosed the number was 182 for margins. Is that right?
Sorry, for which period, Victor?
First quarter margin in your trading update, it says that your margin ex markets was 182, and now you're saying it's 176. Doesn't it imply 6 basis point decline, or am I getting something wrong?
Yeah, there is a bit of complication when you're comparing ex markets numbers period on period. I think the best way to look at it is, to get everyone on the same page, is that 3 basis points decline that we've called out. That is a good reflection and probably our best reflection of, you know, what's happening as we're exiting the quarter and going into the second half.
Okay.
I'd, you know, you can.
Okay.
A bit of it was towards the end of the month. You know, you could, you know, potentially extrapolate. There could be a little bit of acceleration in that trend. Broadly, I think it's fairly representative.
Right. I think, you know, as people are sort of looking at 182 versus 176, it kind of implies that you're exiting this quarter or exiting the half at a margin which is close to 170, which sort of implies quite a sizable downward to consensus. It sounds like you're saying that that's probably a little bit too aggressive to look at it like that.
I think that's a, yeah, a bit too pessimistic a way to view it.
Okay. No, that's helpful. Thank you.
Clearly, you know, as you look for factors going forward, as we talked about, where warehousing market competition goes is a critical factor, and things can change quickly, as we saw in February. You know, if we were talking in January, we had a very different view of the trajectory, but things really moved in February.
Thank you. Yes, so the question I had was capital position looks very strong. You obviously been talking about, you know, given that you don't have a lot of franking credits to do ongoing buybacks, why not announce the buyback now, given how strong your capital position is looking versus your target?
I just think on that one, we just wanted to pause. We've come out of the last buyback. Our view was pause and just see what the conditions in the market place do. We'll reconsider it over the next quarter. I think it's just a pausing, being pretty prudent in what's happening in the market. No other reason than that.
Thank you.
We are in a very strong capital position, as you've seen, at 12.2%. Quite a way above the range that we'd like to be running in, but, you know, we just thought it was a good time to pause.
Which I think you're getting the message. It is just a, you know, it's a pause and reflect, but we're certainly not ruling out any further potential buybacks.
Your next question comes from Jonathan Mott with Barrenjoey. Please go ahead.
Yeah. I just got a question, Ross. The whole issue around cashbacks is coming through, and I know you've said you don't wanna compete and below the cost of capital, and a few of your peers have said similar comments. How do we wean the market off this? In that, we're now in a situation where the banks have outsourced distribution to third parties. You're involved in that as well. We're now giving cashbacks. Two questions, where do you think this goes to over a period of time? Probably for Gary, how has this impacted the average life of the loan? What's it down to over the last little while? You know, and given we're seeing this continue, why won't we continue to see the churn for the industry continue?
Yeah. Jonathan, I think I've been on record way before we said we were gonna be cautious about what we wrote in the last, you know, the next 12 months, of being not very happy with cashbacks. If you have a look at the core Red Star, we're probably the lowest in the marketplace. I think even little Ubank has pulled back dramatically on that as well. Look, it is a competitive marketplace. Some of the businesses are feeling like they have to have it to get the business. I'd be rather be competing on a service delivery. At the moment it's there. Let's see where the market goes. It's very competitive.
We've made our marks as to, you know, where we wanna put our liquidity and capital more tilted towards other parts of the business. I like the mortgage market. Yeah. I hope you can chat to all the other banks on the same point.
The loan?
Sorry, Gary, you.
I think he's got a question, John.
Oh, on the average life.
Yeah.
Yeah. It's, Look, it had been coming in during the COVID period. We're actually seeing a different trend now, and that's early signs of lengthening again. You know, I think there will be a bit of that's driving some of that is gonna get harder to move, particularly for that cohort I talked about between August 19 and July 22, that, you know, I think there's gonna be more and more customers gonna find it harder to move banks. We are starting to see and expect to continue to see actually a bit of a lengthening of the tenor on our home mortgage book. Which I know is different from.
You've got a cohort.
From what, Bank of Queensland suggested, we're seeing something different.
You're getting a cohort of customers who are mortgage prisoners, and I know, not my concern, but I use it anyway. It's the, t hese people can't move and they've got credit issues or potential credit issues, and then you're getting a cohort of customers who are in good financial position that are financially incentivized, and their broker is also financially incentivized to rotate quickly.
Just be careful with how many customers are having real difficulty. It's a very, very small number in the marketplace. I think we've got to be careful, and that hasn't changed much at all over the last, you know, way before 2019. That's what we're showing in the book here or in the pack today. The profile hasn't changed. What we are just watching is the group that took out a loan in the last two and a half- years. At this stage, saying to the media today, we've rung and made contact with 7,000 of these customers who were in a grouping that we thought would be a little bit more vulnerable than others. I think it was only 17 of them actually wanted some help from us.
Yeah, I think the book's in pretty good shape and customers are doing okay. The length of the loan for us has probably stayed reasonably static. We'll see what happens. It's a very competitive marketplace.
The next question comes from Ed Henning with CLSA. Please go ahead.
Hi. Thanks for taking my questions. The first one, just on the 3% serviceability buffer, would you like to see that removed to, you know, to allow mortgage prisoners to switch banks, and banks make their own credit decisions? If that was removed, is that another headwind for margins because that cohort's likely on a high margin?
Yeah, again, I think we've got to be very careful with this thing called mortgage prisoners. I know it's a term people love chucking around, we've got 1.1% of our entire book that is over 100% LTV, loan-to-value, so it's a pretty small number. You know, the 3% serviceability was put there for a very good reason. I think I will leave it to the regulators to work through whether they want to review it. As we get to the very top, you know, the top of the interest rate increasing cycle, I think it is, it would be a time to do it then to make sure that customers can look around. You know, it's, r emember, it was only been the last 12 months that people have been pushing up against this or finding this a difficulty.
Prior to that, it wasn't a concern. It was pretty flat and didn't make much difference to the churn rates. I think, you know, in the next, probably three, six months, I think the regulators probably have to have a look at it. It was there for a good reason of making sure there was a buffer, and that's certainly been needed over the last 12 months.
No, no, that's interesting. Thank you. In thinking about that, there'd be more than 1.1% of people that can't move. Like, You'll have some people that can't move at 80% LVRs or 90% LVRs because of that 3% buffer.
How big a cohort of that is on your line, Gary?
No, you're spot on. There are a bunch, Ross McEwan was referring to, you know, those ones with negative equity. Particularly for that cohort, August 2019 through to July or June 2022, that's when the assessments, interest rates were at their lowest. For that cohort, we think it is that percentage quite large, could even be circa 40% in that cohort. Across the broader book, it sort of depends on what you include and what you don't include, but it's something in 15%-20% we think could be in that category where they'll find it difficult to move to meet the higher serviceability requirements that would be essential to meet to move banks. Your broad premise is correct along that direction, yeah.
Your next question comes from Richard Wiles with Morgan Stanley. Please go ahead.
Good morning, everyone. Gary, you mentioned the pickup in deposit competition in February, and specifically referred to your Reward Saver. I also note that in March, you increased your three-month term deposit rate by 1 percentage point, and I assume that hasn't hit the margin yet. This deposit competition leads me to a couple of questions relating to Slide 72. It shows that there's about AUD 150 billion in savings accounts, and about AUD 150 billion in term deposits. Could you tell us what proportion of that AUD 150 billion in savings accounts are in the Reward Saver, which pays 4.5%, and how much are in the iSaver, which only pays 1.85%?
Could you also tell us what proportion of the term deposits are in three-month TDs and are therefore likely to move to much higher rates in the next few months?
On the first one, on Reward Saver, I haven't got the exact numbers with me on the split, and we haven't disclosed those. It is a meaningful product, it's one of our flagship products. You can estimate, you know, a reasonably chunky proportion. Again, on the TDs, less than three months. Your point on TDs, your general point on TDs is correct, that as we continue to see some intense competition on TDs and TD pricing increasing, that will continue to have an impact, an increasing impact as it rolls through the book over the next six to 12 months. That, you know, where you're going with the direction of that question is correct.
Okay, thank you. On capital, there's a bit of debate at the moment about what a pause actually means. Can you perhaps give us a bit more, a bit more insight into how you're thinking about the potential for another buyback? Would it be reasonable to assume that you won't do another buyback until you've got, you know, pretty high level of confidence as to how the economy has weathered the higher rates and whether we are gonna see the recession that you think we'll avoid, and whether we're gonna see an increase in a material increase in credit costs? What does a pause actually mean, Ross?
Do you wanna go?
Well, you have a go and then.
Okay. That's yeah, no, good question, Richard. Some of the language you use I think would be too strong. you know, a higher level of confidence. What we're looking for is just some more data as we're now seeing some of those early signs of stress and seeing how that does start to translate through over the next three months. Is the trajectory? We expect it to be manageable. It's really just testing that that's the hypothesis, that's our view of the analysis we've done to date, that whilst stress will increase across the book, it'll be pretty manageable.
We really just wanna wait and see that the data that starts flowing through, say, over the next three months supports that proposition, that it's that it doesn't look like there's a rapid deterioration. I don't think we're waiting for, and obviously in the end of the day, it's Ross and the board will decide this. I don't think we're waiting for a level of conservatism around absolutely we know that there's gonna be pretty minimal credit deterioration. I think we'd just like a bit more information that we've currently got, given the delays in the mechanisms from rate increases to actually hitting consumers. This, whilst it is starting to hit now, there's still quite a number that haven't hit or it's due to hit a bit more in the next few months.
Mm-hmm.
Ross, anything on that?
No.
You just used the term next three months twice. Does that mean we shouldn't rule out the possibility that you'll reassess this at the quarterly trading update in August?
I don't think you should rule that out or rule it in. I think we've just paused and we'll quietly assess. Look, we're also conscious of the fact we're sitting well above our stated range, Richard, and we're building capital every month goes by. As Gary said, he's, you know, it's under review and all we've done is pause.
Your next question comes from John Storey with UBS. Please go ahead.
Yeah, good morning. Thanks very much for the chance to ask a few questions. Just my first question, Ross, is for you. Just on the mortgage market, obviously, there's a lot of headline risk or a lot of headlines around uneconomic pricing of mortgages. Be interested to get your view on how you think the mortgage market eventually recalibrates, and how long is NAB willing to wait and sit it out in mortgages?
Yeah. I've seen a few of these cycles, John, and you know, competition plays its way out over time and people take their position. Look, what's sensible for one may not be sensible for another. Right now, we've sort of stepped back a little bit and put our money somewhere else, and others are in. You know, I've seen a few of these. It will recalibrate, is my view, 'cause a big chunk of capital is tied up in mortgages in Australia. Who knows how long will it take and what other banks are willing to do. We're still in this market. You've seen our book has grown. I think we've grown about AUD 5 billion over the last six months.
We are still in the market, but it's we've indicated we've got other areas that we can certainly make a bit more money in at the moment. I think this is about the third cycle I've seen. We'll see what happens. I'm not gonna tell other people how to, you know, how they run their businesses or whatever. We've got a very clear path for ours. It's an important part of the market. It's important to us serving customers. Right now there's some other areas that we're probably focused more on.
Okay. I've also just got a question. I mean, it certainly feels like the tone of the call this morning, you know, maybe revenue outlook for the banks may be a little bit weaker than the market expected. Just in the context of that, be interested to get a better sense of what the cost flex that NAB has, particularly around some of the investment spend, how quickly could they slow this down, and what does the cost flex for NAB ultimately look like?
Maybe if I pick that one, Gary, first, and then you can have a play with it after. On the cost flex, we've got a number of programs that we want to continue to invest into, that are giving us some pretty good results in our productivity play, but also how we're positioned in the marketplace. We still see some really good opportunities out there. I don't want to hold back our investment spend in the bank. I think that would be a poor decision on a long-term basis. I think we've probably got six odd months of an economy that's, you know, gonna be a bit slower.
After that, I think we are probably in for an economy that's going to do reasonably well, given the indicators we're seeing of immigration. Well over probably now 300,000 people coming into the country. We've got sectors going very well, which are giving good earnings into this economy. You know, it's gonna be a bit more difficult over the next, say, let's say 6 to 12, but we're investing for a hell of a lot longer period than that for this bank.
There'll be some areas that we might back off, but other areas that we're seeing some strong growth. We still need to put a lot of money into our technology, into the digital paths we have, our data, automating processes. I wouldn't w hilst we can flex, it's not something that I'd be recommending to our board that we make massive change, and it's going quite well. Careful with that one. Yes, we could. Right now we're focused on the next two to three years, not the next six months.
Your next question comes from Carlos Cacho with Jarden. Please go ahead.
Thank you. Thanks for the chance to ask a few questions. Firstly, just on the backbook discount that we've been discussing. Can you give us any color around the average size of those discounts? We know at the system level, the spread looks to be about 50 BPS at the moment. Also whether you're offering any cashbacks for retention alongside those?
Shall we throw that one to Rachel? How would that be, Gary?
Unprecedented.
Stages of unprecedented activity. Do you wanna, Rachel, come and have a chat on that one? The question was about cashbacks on holding onto business. What's happening in that part of the market?
Yeah. I think it's a, it's an interesting question, given the dynamic we've talked about in the market. We give our retention bankers. We've got dedicated retention bankers, but all of our lenders, you know, a number of levers at their disposal when they're talking to a customer about their future banking. Sometimes there are cashbacks at play, sometimes it's a reprice. It really depends on the, on the customer. It's certainly not a, you know, an in-market promotion for a cashback, but bankers have that at their discretion on occasion.
In terms of that, the average discount that the, you know, backbook competition is driving, would it be broadly in line with the system figures we get from the RBA around 50 basis points or, larger or smaller?
Yeah. We don't specifically disclose what that is for ourselves, but it's, you know, I wouldn't call out anything that would make us unusually or significantly different from what the RBA was saying.
Your next question comes from Brendan Sproules with Citi. Please go ahead.
Good morning. I just have a couple of questions on the cost side of your business. Firstly, just looking at your productivity benefits at the half of sort of AUD 142, but you're still targeting
AUD 400 million, for the full year. Can you maybe talk to why you've had a slightly slower run rate in the half, and why you're sort of confident that you can catch that up in the next six months?
Yeah. It's, it's quite common, actually. We do have a slightly slower runway. If you look back to last year, I think we're in a very similar situation. There is a bit of a trick in terms of how it works. That, that 142 means, based on what we've done to date, there's already AUD 280 million baked in. We just need to find a gap of AUD 120 additional productivity for the second half. That's the best way to think about it. Yes, there's a bit of a bias towards second half delivery. Again, that's pretty common with a lot of programs sort of kicked off early in the year, and the benefits start to deliver in the second half.
We're, you know, we're feeling confident that we're on track to get that AUD 400.
Brendan, it also relates back to the earlier question on investment. This is why we're reluctant to pull investment lever, you know, reduction heavily, 'cause these investments, there's a portion of them that do give us pretty good returns through the productivity lever.
That's, that's great. Just my second question. Just on the enterprise agreement that you've been obviously trying to negotiate with the union and with your staff. Obviously, you haven't yet found an agreement, but as you show on Slide 11, from January, you did push through pay increases of 3%-5%. My understanding is that the proposal that you put through wasn't, you know, wasn't agreed at those levels. In order for you to find an agreement, is there gonna have to be some kind of catch-up year and a higher level of wage inflation coming for NAB in the future?
Look, we're in the middle of a conversation with the union on our enterprise agreement for this year now. You know, I had committed that we wanted to look after our colleagues, who, like everybody, are struggling with increased costs, that's why we pushed through the increases we'd said we would. We're back into discussions at the moment. My understanding is, you know, they're very constructive on both sides, 'cause we would like to get an agreement, we want something that works for both the organization and our colleagues. You know, the thing for us is the agreement's a pretty old one. It's an old instrument that we'd like to see some refreshed. 30+% of our colleagues are now technology people.
When the agreement was set up 30-odd years ago, didn't look anything like that. Look, it's very constructive and part of that is money, part of that is also things like workload. There's a number of factors in it as we did the review with our colleagues after the last 1 didn't get up. It was actually much, much more complex than just money. That's what we've been working on. Let's see how we go this year.
Your next question comes from Matt Dunger with Bank of America. Please go ahead.
Yeah, thank you for taking my questions. If I could just ask on the housing expected credit loss provisions, rising in the half. Are you able to talk to some of the drivers behind this, given you've called out improvement in Australian home loan arrears?
Yeah, Matt, the key driver and essentially how the collective provisions models work, they are sensitive to what's happening in house prices. The decline in house prices that we've seen as being the primary driver of increases in collective provisions. That's a secondary driver, but also a driver of those early stage arrears I called out as well. They're two of the main factors that have led to the additional CP. Again, even with that, it's still well within expected levels and not something we're particularly concerned about. You know, depending on your view of where house prices are going to go in the medium term, some of that might unwind over the periods ahead.
Great. Thank you very much. Just if I could ask a second question on the contribution from risk management in treasury and markets. How sustainable is treasury and markets income and is the excess liquidity in the system still a drag? How does this unwind?
Yeah, we did, Matt, as you say, we had a good half on markets and treasury this period. As we all would've seen, there was quite a bit of volatility and the treasury and markets guys were on the right side of that more often than not. If you just take the numbers for the half, we are back at levels consistent with pre-COVID. What I've consistently said on this, and fairly obviously, the inherent nature of trading revenue are difficult to predict. We would expect that over time then, the markets and treasury income will start to average back towards the levels, the pre-COVID levels, in line with liquidity getting withdrawn from the system.
Whilst liquidity has been withdrawn from the system, there is still a lot of excess liquidity in the system. I think this has still got a way to go, and we sort of look at this migration back to normalization, will take, you know, a couple of years from here. That's probably the best way to think about it. In any particular half, then it's really just gonna depend on the environment in that half, and it can be a bit volatile from half to half.
Your next question comes from Azib Khan with E&P Capital. Please go ahead.
Thank you very much. Couple of questions. Firstly, on margins, secondly, on New Zealand credit quality. On margins, if I just go back to the NIM waterfall chart and the 12 basis point tailwind from Australian unhedged deposit balances. Gary, can you please tell us how much of that 12 was how much of the breakup of that by savings and term deposits? So how much of the 12 was from savings? How much was from term deposits? Just thinking about that 12 in aggregate, is it fair to expect that tailwind will be close to zero in second half 2023 and likely to become a headwind in first half 2024?
You were sort of talking about the unhedged, or you're talking about the hedged? Because there's different numbers for-
The unhedged.
The unhedged. Yeah. The, the journey on the unhedged is if you go right back when we first put numbers out there, we thought for basis points it'd be about 2%. As we went through the first half and as we flagged, we thought as tightening continues, the benefit from every rate increase will start to decrease. We said it would be below two in the first half 2023. It ended up around about one. As we're now exiting, the first half 2023 and looking out to the second half, that's where my comment about we think the benefits from that Australian portfolio will be pretty modest going forward. You know, there might be some benefit.
I don't think, you know, it's possible to become a headwind, but I think it would still a t this stage, we're still of a view it'll just be a modest tailwind, and potentially disappear over time. That's on the Australian unhedged.
You're on the New Zealand-
What's that?
Oh, savings.
Sorry. That is not TD impact. That's savings. Unhedged deposits is our-
Yeah, that's the savings account. On TDs, a bit like the earlier question that Richard asked, there's a few things on TDs I think are relevant, where we've seen our, the migration to TDs continue during the half. We were at about 26% end of last year. We're up to 30%. Pre-COVID, that number was 35%. We sort of view that as good as any in terms of a bit of a marker that the shape of the book and the proportion of TD should settle around about that 35% level. Based on that, we think. We're seeing signs with savings accounts increasing, that the migration out of savings into TDs is starting to slow.
Somewhere in that region of 35, I think is a decent assumption on the mix side. Off the back of Richard's comment earlier, it does take a while though for the actual margin input, impact of TD increases to flow through as the TDs roll. As we continue to have three, six months rolling in the second half, that will be an expected headwind for the second half.
On New Zealand asset quality, the cohort of New Zealand customers impacted by severe weather events, are they largely agri borrowers? What are you seeing on New Zealand credit quality more broadly?
On the first bit of that question, it was businesses in those regions, and there were a bunch of agri businesses, but not only agri businesses, that's the biggest driver there. We do expect many of them, with the support that BNZ's providing, will be able to get back on their feet. You know, we've restructured those loans. There's interest rate holidays that we've provided them. You know, we'll see whether that, they end up being not only restructured loans but impaired over time. I think they're cautiously optimistic they'll be able to get these communities and these businesses back on their feet. There was a small portion of the New Zealand numbers that related to households in those regions as well.
You look at the broadened New Zealand book, adjusting for those impacted by the weather event, it's still pretty benign. A little bit similar to Australia, but probably earlier in the process. You know, they're seeing early signs of uptick in credit, in credit stress, but probably less, to be honest, than what we thought would be the case at this stage, especially given the number of interest rate increases and the size of the increases in New Zealand. It's been remarkably resilient and robust economy to date in terms of credit stress, but there are definitely signs that of creaking in the New Zealand economy.
That concludes the question and answer session. I'll now hand back to Mr. McEwan for any closing remarks.
Thank you. Thank you very much for coming onto the call team. Also thank you for the questions. We knew there'd be a fair bit about NIM. You haven't disappointed us. It's a big issue. Thank you. Look, before we close today, I think it'd be remiss of me not to acknowledge that this is Gary Lennon's fifteenth and final presentation of NAB results. Gary has been and still is an outstanding CFO. Been that for seven years. He's been very instrumental in the execution of our strategy, which has supported the results that we've delivered today. He's also been a wonderful executive committee member and a constant challenger within the business.
Gary, as we've announced, is working with the incoming CFO, Nathan Goonan, on a very smooth transition, and Gary's agreed to stay on with me until the first of October, which I am personally delighted about. Some of you will know Gary is a cricket tragic. In cricket parlance, he is declaring his innings, and he's had a great innings at it. A big thanks, Gary. We'll certainly miss your wise counsel when you retire. Just thought we should acknowledge that is 15 of these, Gary. I'm sure you'll miss them.
Enjoyed every one of them.
Thank you very much, team. Thank you, Gary. Cheers.
Cheers.