Future Financial Forecast An update on the big economic picture for credit, interest rates and inflation. Paul Cahill Chief Executive Officer

Discussion Items 1.The Global Financial Crisis – What Actually Happened? 2. Where Are We Now? 3.What Is It Looking Like Going Forward? 4.BRICS and PIGS. 5.Close and Questions. 2

Item 1. The Global Financial Crisis – What Actually Happened? 1.1 Global GDP Growth 1.2 Unemployment Rates 1.3 Government Debt 1.4 Corporate Australia Re-Capitalised 1.5 Exchange Rates 1.6 Consumer Confidence 3

1.1 – Global GDP Growth Challenging financial and economic conditions. First negative growth year for 75 years. 4

1.1 – Global GDP Growth Australia maintained positive growth through the crisis – better than any other advanced economy. 5

1.1 – Global GDP Growth Australia has continued to recover toward trend levels. Only Asia has rebounded stronger. 6

1.1 – Global GDP Growth RBA’s GDP forecast revisions. Dramatic and ongoing revisions as conditions improved. Expectations 7

1.2 – Unemployment Rates Unemployment is lower than nearly all the majors and peaked well below market expectations. 8

1.2 – Unemployment Rates Employment actually rose during the crisis, reflecting the resilience of the economy and usage of part-time staff. 9

1.3 – Government Debt Government debt is particularly low compared to other major economies. 10

1.4 – Corporate Australia Re-Capitalised Corporate Australia re-capitalises, with A$120 billion since January

1.4 – Corporate Australia Re-Capitalised Australian Major Banks’ Net Profit (yearly). 12 $b $b

1.5 – Exchange Rates Historic exchange rates – The Australian dollar versus the USD and Euro. 13

1.6 – Consumer Confidence Leading indicators point to an ongoing recovery. PMIs in strongly expansionary territory; confidence also recovering. 14

Item 2. Where Are We Now? 2.1 Consumer Price Inflation 2.2 Interest Rates 2.3 Consumer Spending Patterns 2.4 Wages 2.5 Credit Growth 15

2.1 – Consumer Price Inflation Consumer Price Inflation 16 % % % Year-ended Quarterly

2.2 – Interest Rates The RBA is one of the few to raise rates. Policy elsewhere remains highly accommodative. 17

2.3 – Consumer Spending Patterns Household Consumption and Income Growth (Year-ended). 18 % % Real household disposable income Real household consumption

2.3 – Consumer Spending Patterns Retail sales by Industry (March quarter). 19 Index Clothing, footwear & accessories Total motor vehicles Household goods Index Department stores Food Other Cafes, restaurants and takeaway services

2.4 – Wages Percentage Change. 20 % % Wage price index quarterly Year-ended Wage price index Average earnings Year-ended Average earnings quarterly

2.5 – Credit Growth Credit by Sector (Year-ended percentage change) % % Housing Business Personal

Item 3. What Is It Looking Like Going Forward? 22

3 – Going Forward Strong fundamentals boosted consumer confidence, recovering back to pre- crisis levels. 23

3 – Going Forward It’s a similar picture for business confidence, which is back above pre-crisis levels. 24

3 – Going Forward Recovery is now fuelled by business investment, whereas initially driven by the building construction. 25

3 – Going Forward The global outlook is a positive backdrop, but not without risks. Global growth recovery forecasts remain robust – Despite market nervousness over tightening liquidity and sovereign credit – Pattern remains Asia leading and Europe lagging – UK PMI at 15 year high, Euro area at 3.5 year high, Germany at 10 year high Global trade recovered 65% of volumes lost during GFC (emerging markets ~90%) Australia and China are intertwined – Current spot prices for iron ore and coal could boost GDP by 1% Interest rates and GDP growth should surprise on the upside AUD to weaken in 2H 2010; range trade US cents 26

Item 4. BRICs and PIGs 27

4 – BRICs 28

4 – Economic Activity in the BRICs Industrial production accelerated in China in Jan-Feb to the highest level since the start of the data series in In India, WPI inflation was 9.9%yoy in February, higher than expected. In China, inflation also picked up to 2.7%yoy in February. 29

4 – BRICs The Iron Ore outlook. Australia can expect significant upside to its trade accounts. 30

4 – PIGs Relative size of the different Euro Area countries. 31

4 – PIGs Sovereign Debt Crisis 32

Item 5. Close and Questions 33