Interest Rates and Foreign Exchange A general update and what we can offer our clients Interest Rates and Foreign Exchange March 2017

Markets: What We Do Markets: Interest Rates, Foreign Exchange, Commodities Approach: Risk Management Definition of Risk Management: the evaluation of financial risks together with the identification of procedures to avoid or minimise their impact How: we offer a suite of risk management solutions that Provide protection against the direct impact of adverse market movements Facilitate participation in favourable market movements Tailor your facility to match your business requirements and risk profile

Interest Rates: Recap Of 2016 and Looking Forward The cash rate hit an all-time historic low of 1.50%, and has traded sideways since Fixed rates also reached all-time historic lows, but have trended higher What will 2017 and Beyond Bring? NAB sees one more cash rate cut but CBA, ANZ and WBC all say no more cash rate cuts at all. Market pricing also says no more cash rate cuts NAB believes the more than three decade long decline in fixed rates likely ended in 2016

The Cash Rate: What the Market is Currently Pricing

Longer Term Movements Despite the recent moves higher in fixed rates, there’s still considerable value in a historical context.

NAB Business Markets Loan NAB’s main lending product Is a loan with market-linked pricing and embedded interest rate risk management options Once a loan limit and approved term is in place, this loan allows a combination of components: Floating rate Fixed rate(s) Cap rate(s) Any combination of the above three all in the one loan Monthly, quarterly or half-yearly interest cycles to suit your cash flow, interest paid in arrears

Foreign Exchange: Recap Of 2016 and Looking Forward AUD/USD ranged from 0.6824 to 0.7835 It spent most of the time within a 0.7100 and 0.7700 range What will 2017 and Beyond Bring? 2017 so far has seen AUD/USD range from 0.7160 to 0.7741 Currently trading at 0.7557 NAB sees AUD/USD steadily move lower to 0.6900 by March 2018 Main assumption behind the view is US Fed to raise interest rates, 3 hikes forecasted for 2017 Main risk to this is continued commodity strength

NAB Foreign Exchange Personalised service with dedicated FX dealer Wholesale exchange rates Market watch orders FX hedging tools to ensure you receive the AUD you expect when converting your foreign currency income back to AUD: Forward Exchange Contracts Currency Options Any combination the above products to suit your specific business needs and goals Online FX dealing via NAB Connect Quantifying the Risk USD1,000,000 @ 0.7160 = AUD1,396,648 USD1,000,000 @ 0.7741 = AUD1,291,822 Difference of AUD104,826

What Are The Benefits Cash flow certainty Reduced reliance on speculation around economic events or forecasts Allows focus on core business, not interest rate, currency or commodity price movements Reduces the incidence of surprises in company results

For Further Queries or Questions Claudia Campbell Associate Director | Foreign Exchange and Interest Rate Risk Management Business and Corporate Markets | National Australia Bank   Level 7, 100 Creek Street, Brisbane QLD 4000 Mob: 0475 949 280 Email: claudia.campbell@nab.com.au