National Australia Bank Limited (NAB) Earnings Call Transcript & Summary

Good morning, and welcome to National Australia Bank's Annual General Meeting. I'm Louise Thomson, Group Company Secretary. Before commencing this virtual annual General Meeting, I'd like to invite my colleague, Eveanne Liddle to acknowledge the traditional owners of the land on which we are hosting today's meeting.

Thank you, Louise, for the introduction. Good morning, shareholders, NAB leadership and NAB people and anyone else joining the AGM today. As a proud and strong Central Arrernte and Luritja Pertame woman from Central Australia and Head of NAB's indigenous affairs, on behalf of the National Australia Bank, I would like to acknowledge the traditional custodians and owners of the lands of Melbourne, the Wurundjeri people of the Kulin Nations. In this acknowledgment, we collectively pay respect to the elders, past and present and the elders of All First Nations peoples of the lands you are joining us from. In undertaking this acknowledgment, we show our respect for First Nations peoples traditional ownership of land, their law and continuing connection to country. Thank you.

Thank you for your acknowledgment, Eveanne. While COVID-19 restrictions have recently eased here in Victoria, the health and well-being of our shareholders, colleagues and communities remains important to us. We felt that a virtual meeting would deliver the best experience for the greatest number of shareholders. Today's meeting is being held virtually through an online platform. This allows our shareholders, proxy holders and guests to attend the meeting virtually. I'll outline the process for voting and submitting questions shortly. Some shareholders have also joined us by telephone. A significant proportion of our shareholders have taken the opportunity to vote, appoint proxies and submit questions in advance of the meeting, and we thank them for doing so. My NAB colleagues, together with our share registry and technology providers have worked hard to ensure we provide you with a seamless experience. Our notice of meeting, which sets out the business of the meeting and explanatory information, the AGM guide and supplementary documents are available on the AGM page on NAB's website. If you require technical assistance at any point during the meeting, the contact details for our technical support team are shown on the screen now. For those joining by telephone, these details are available on the AGM page of our website and in our notice of meeting. In the event that we experience significant technical difficulties or we need to evacuate the building we're broadcasting from, the Chairman may decide to adjourn the meeting to later in the day. We'll notify you of the proposed time to reconvene via AGM page of our website and the Australian Securities Exchange, ASX. If the technical difficulties are minor, the Chairman will have regard to the nature of the difficulty, the number of shareholders impacted and the extent to which shareholders' reasonable participation in the business of the meeting is affected before deciding whether to adjourn the meeting. I'll now explain how the technology for this meeting will operate. As outlined in our notice of meeting, shareholders and proxy holders may vote and submit questions at any time during this meeting using the online platform. We've also provided shareholders who may not be able to participate online with the opportunity to listen to the AGM by telephone. Those joining us by phone will not be able to vote over the phone, but can ask questions. All questions by phone will be subject to the same process as those submitted online, which I'll speak to shortly. All resolutions will be decided on a poll to provide ample opportunity for shareholders and proxy holders to submit their votes, the Chairman will declare the poll open on all resolutions shortly after he formally opens the meeting. The poll on all items will be closed 10 minutes after the meeting finishes to allow time for final votes. A reminder will be given just before the meeting is formally closed. The results of the poll will be available later today on the ASX and on the AGM page of our website. For those of you participating online on a computer today, you'll see a split screen with the webcast and presentation on the right-hand side of the screen and on the left, you can currently see an information page. When voting opens, voting options will appear on the left-hand side where the information page is now. If you wish to see closed captions, they can be accessed by clicking on the captions link on the information page. The closed captions will open in a separate window and can be viewed alongside the webcast. Those participating via a tablet or mobile phone will need to tap the broadcast arrow to view the webcast. Tapping the broadcast arrow again, will minimize the webcast, but you'll still be able to hear the audio of the meeting. Please ensure that you press play on the webcast and that your device is not muted. Shareholders and proxy holders using the online platform are now able to submit questions. If you do wish to submit a question, we encourage you to do so now, and the Chairman will respond to these at the relevant item of business or after the formal part of the meeting, if your question is a general one. I'll now explain how to submit questions. [Operator Instructions] Please also note we may group questions on the same topical theme and answer them together. Out of respect for all attendees at today's meeting, we'll not read out any questions or statements that contain explicit, abusive or threatening language. In addressing questions we will not disclose personal details other than the name of the person who submitted a question. If you submit a question, it is about your or another person's individual circumstances, as a customer or shareholder, your question will not be read out. This is because information discussed at the AGM should be relevant to all shareholders, and it's also not appropriate for us to discuss individual circumstances in a public forum. One of our experienced customer service colleagues will try to contact you after the meeting. If it's relevant for you, you may like to contact either our customer services or shareholder services teams, and the details are shown on the screen now. [Operator Instructions] I'll now explain how to vote. For those eligible to vote at this meeting using the online platform, your votes can be submitted at any time from when the Chairman declares the poll open until 10 minutes after the meeting closes. When the poll is open, voting will be accessible on the left-hand side of your screen if you're on a computer or if you're on a tablet or smartphone by selecting the voting icon at the top of the screen. To vote, simply select one of the voting options for, against or abstain. There's no need to press submit or click the enter button as your vote will be automatically recorded. You may change your vote at any time during the meeting until the poll is declared closed. Scott Hudson from Computershare will act as the returning officer for the purposes of conducting and determining the results of the poll for each resolution, and the results will be announced later today on the ASX and the AGM page of our website. The AGM guide on our website gives the same instructions on how to vote and ask questions during the meeting in case you need to refer back to these. I would now like to introduce our Chairman, Mr. Philip Chronican.

Good morning, ladies and gentlemen, and welcome to this meeting. It's just after 9:30 a.m. This is a properly constituted meeting and a quorum is present. I therefore declare the Annual General Meeting of National Australia Bank open, and welcome, everyone, to our first virtual AGM. Before delivering my address, I'll explain where I a.m. today and make some introductions. In the current COVID-19 environment, the health and safety of our shareholders, our team members, their families and the broader community is our #1 priority. As a result, NAB made the decision to hold its AGM virtually. While the Board and management team will not have the opportunity to meet with you in person this year, all shareholders wherever you are, will have the opportunity to join the meeting. We are very pleased to welcome shareholders who previously may not have had the opportunity to participate in our AGM. One of the many good things about technology is that you are still able to participate from anywhere in Australia and indeed, from anywhere in the world. Thank you for navigating today's format. I know it's unfamiliar for some of you. We've been working very hard to make it accessible and inclusive. I hope you feel that you have every opportunity to participate. This is consistent with the Corporations Act, which states that the chair must allow a reasonable opportunity for the members as a whole at the meeting to ask questions or make comments about the management of the company. I encourage your feedback so that we can keep getting better at serving you as shareholders. I'm joining you today from a studio in Melbourne, together with our Group Chief Executive Officer and Managing Director, Ross McEwan; and Company Secretary, Louise Thomson, who introduced the meeting. I'm really pleased that the easing of restrictions has meant that most of our directors and executives have been able to join us here in the studio today. Present with me in the studio are 5 of my fellow nonexecutive directors, and I will now introduce each of them. They are, David Armstrong, Peeyush Gupta, Ann Sherry, Simon McKeon, and Kathryn Fagg. Joining us by telephone due to travel restrictions, are our other 3 nonexecutive directors and Anne Loveridge.

Good morning.

Geraldine McBride.

Good morning.

And Doug McKay.

Good morning, everyone.

Our executive leadership team is also present, including our group Chief Financial Officer, Gary Lennon. Sarah Lowe, who is the lead engagement partner of our auditor, Ernst & Young, is also with us in Melbourne and available to answer questions related to their audit report. Assisting us today is Virginia Porter, a senior member of the NAB team, who will be reading out the questions submitted during the meeting. Thank you again to those shareholders who submitted questions in advance of the meeting today. We received 84 questions, all of which I have personally read. Many were on similar topics, and I will address the common themes raised in these at the relevant item of business. As the year draws to a close, and we meet today at the first virtual AGM in our company's history, the significant changes and challenges of the last 12 months are foremost in my mind. As a result of the COVID-19 pandemic, this has been a year in which people have lost loved ones, suffered ill health and been separated from family. It's a year that saw businesses upended and economies shattered. In the last 24 hours, we have seen in Sydney how quickly the situation can change. Many communities across the country have felt the additional impact of bushfires, continued drought and flooding just as we have seen in Queensland this week. This has reminded us of our fragile, sometimes harsh environment and the impact of a changing climate. It also reminds us of the importance of being prepared for natural disasters. I'm pleased with how NAB has risen to these challenges. I've appreciated the efforts of NAB's 34,000 people who have continued serving customers well this year, often in trying circumstances of their own. In a very difficult year, our company has supported customers and remained safe and secure. It's also well prepared for 2021 and beyond. Balance sheet strength is a fundamental, and the Board is determined that the stability of our bank should never be in doubt. Earlier in the year, amid a high degree of uncertainty, we made sure we were well capitalized and able to withstand potential shocks to the economy. We took the decision to raise capital levels by way of a fully underwritten institutional share placement of $3 billion and a non-underwritten share purchase plan of $1.25 billion. Due to shareholder demand, the size of the share purchase plan was increased by $750 million over our original target of $500 million. It was important to the Board that individual investors could participate alongside institutional investors. Thanks to your support, we remain a very safe bank and are well positioned to keep lending through the recovery. I know many shareholders and their families rely on our dividends for income, and we appreciate the impact that a reduced dividend has had on people. Our decision to pay a total dividend for the 2020 financial year of $0.60 per share reflects our desire in line with the regulatory guidance to both maintain a strong capital position and continue to provide income to shareholders. It's an investment in the long-term value of our bank. While some of our competitors deferred or decided not to pay an interim dividend, the Board did not feel that option met our responsibilities to you. The Board felt it was appropriate that the experience of customers and shareholders during 2020 should be reflected in remuneration outcomes. That is why none of the executive leadership team received an annual variable reward this year. In addition, the group's CEO offered to take a 20% reduction in his fixed remuneration for the second half of the year as did the Board on their base director fees. The future performance of the NAB share price is an absolute priority. We aim to grow cash earnings per share alongside customer satisfaction and employee engagement to deliver greater value to you as shareholders. Over the past 10 years, our total shareholder return relative to our major bank peers is now second out of 4. Today, our market capitalization puts us at fourth place on the ASX; and second, among the other major banks. This is for the first time in 12 years. While headwinds remain, there is good underlying momentum in the business. We are confident that our shareholders will be rewarded over time as the experience of our customers continues to improve. Our ambition is centered on the core notion of being a good bank. In turn, being a good bank will deliver long-term value to shareholders. Ross has proven that he is the right leader for the bank, and he has a talented experienced team behind him. Together, they've created a refreshed group strategy with fast, simpler approach, which brings much sharper, discipline and focus. The business structure has been reorganized to make accountabilities clearer and decision-making faster. The bank is much more focused on serving customers well and on getting the basics right. There was already greater discipline in processes to better manage nonfinancial risks. We've certainly not forgotten the lessons learned from the Royal Commission and through our self-assessment, and I'm pleased with the progress that has been made to improve culture, governance and accountability practices and outcomes for NAB's customers. Our reform program is rigorous, and its completion will be critical to our future. The Board believes the right foundations are in place, and we will continue to seek evidence of ongoing improvement. We are a stronger, better bank than a year ago. We're also operating in a much better economic environment than we anticipated even just a few months ago. While significant uncertainty remains, there is increased optimism emerging following the early stage rollouts of vaccines overseas. Here in New Zealand and over in New Zealand -- sorry, here in Australia and over in New Zealand, we're in a very fortunate position. Relative to other developed nations, we have managed the health and economic challenges well. The actions and cooperation of governments, regulators and the banking industry has helped more businesses stay open and kept more people and jobs. The resources and agricultural sectors have been a consistent strength for the Australian economy. Our state and territory borders have reopened and restrictions have continued to ease, and it's pleasing that a very large majority of those who chose to defer their loans are now getting back on track. Around 90% of home loan customers who were on deferral are resuming payments. After experiencing Australia's first recession in nearly 30 years, the recovery is underway, but it will take time. There will be some sectors that continue to be constrained. Some companies whose business models simply won't work in a COVID-19 normal environment and some households who will remain under concerning financial stress. As we manage through the recovery, we will remain sensitive to customers in these situations and provide appropriate support. We will lend responsibly with a clear approach not to put people into further debt if they cannot afford to repay. As Australia's largest business bank, it's also our responsibility to support customers through the cycle. We continue to lend, and we are working collaboratively with government on support initiatives, such as the SME guarantee scheme and the business growth fund. Australia has a dynamic small business sector. NAB will help businesses adapt to a different world to create jobs and fuel critical growth in the coming years. The Board is also focused on the long-term challenges we face, which is why, for the first time, sustainability is a key anchor of our refreshed business strategy. Climate change is an issue that presents commercial risks and opportunities for NAB as well as for our customers and their communities. Our commitment is to achieve a net 0 emissions lending portfolio, consistent with the global ambition to achieve a net 0 emissions economy by 2050. NAB is the only Australian bank to have signed the collective commitment to climate action to bind us to this target alongside 38 banks globally. This is an ambitious commitment, of which I'm proud and which helps shape our strategic considerations. More of our customers are also preparing for a net 0 emissions world, and we have a natural interest in supporting businesses as they undertake that preparation. These are commercial risk-based decisions and as a relationship-led bank, it's our responsibility to support our customers through this transition. The way we seek to address sustainability risks is not limited to climate change. We're constantly improving the way we account for environmental, social and governance risks. We are pleased to have been ranked among -- second among Australian banks and among the top 12 banks globally in the Dow Jones Sustainability Index for 2020. As we navigate these challenges and opportunities, we're taking a steady and thoughtful approach to board renewal. We are carefully considering the skills and experience of the Board as a whole. As well as the Chairman and group CEO transitions last year, Kathryn Fagg was appointed to the Board at last year's AGM. This was followed by the commencement of Simon McKeon as a non-executive director in February. These changes have delivered fresh thinking, diversity and stability. After serving almost 7 years on the Board, Geraldine McBride will today retire as a nonexecutive director. Geraldine has served as a member of the bank's Audit and Customer Committees. Geraldine's expertise in data and technology and her experience and strategy and innovation have been valuable to the Board. I thank Geraldine for her contribution. Simon McKeon stands today for election as a nonexecutive director. Simon has more than 40 years experience in financial services, law, government and the not-for-profit sector. He's Chairman of the Board's Risk and Compliance Committee and a member of the Board's Nomination and Governance Committee. David Armstrong, Peeyush Gupta and Ann Sherry all stand for reelection today. We anticipate appointing a new director in 2021 to achieve our target board size of 10 members, including the Managing Director. We will do this with a view to maintaining a diverse range of relevant skills and experience. In closing, NAB is focused on what matters most, serving customers well and helping our communities prosper. That's why we are here and how we will succeed. Thank you to our shareholders for your ongoing support. The Board and I appreciate your commitment to the company. I'll now hand over to the NAB Group Chief Executive Officer, Ross McEwan.

Thank you, Phil. Good morning, everyone. I appreciate the opportunity to be with you today, 12 months into the role of Nab CEO. NAB is a good bank with very good people, and I'm delighted to be leading it for you. During a very difficult year, I have been heartened to see my colleagues step in to support Australians hard hit by fires, flood, drought and then the pandemic. I've seen how we helped businesses keep the lights on when their revenue disappeared overnight. This has been a challenging time. I'm confident that our customers and communities will rebound and grow again. And I'm confident that NAB will grow with them. We have a clear plan to build a better bank, and we're getting on with it. We still have some things from our recent history that need to be fixed, and we will do that. NAB was once Australia's leading bank, we are doing the right things to, again, build a successful future. As Phil said, what matters most is supporting our customers. We only succeed when our customers do. Today, many of our customers are in a better place than we anticipated just a few months ago and that's an enormous relief for all of them and the country more broadly. This is thanks to our government's effective management of COVID-19 health risks and has been backed up with unprecedented and practical economic support at the federal and state levels. NAB took immediate action when COVID-19 hit. We deferred a $60 billion in loans, and we put 1,000 extra colleagues in support roles where customers needed them most. It's pleasing that around 90% of customers who were on deferral are getting back on track with their payments. Despite the positive signs, some are not yet through the worst, but we are resolute in helping them. In the past few weeks, I've written to 5.8 million customers to personally outline this commitment. In almost all cases, what has happened during COVID-19 has not been their fault. Most will just need a bit more time to recover. For some customers situations have changed permanently. We'll work with them to help them protect their equity. That's the responsible thing to do. In 2020, we added $1.86 billion to our forward-looking provisions to cover the potential impacts of the pandemic. This includes coverage for sectors, such as aviation, tourism, hospitality, retail and commercial property, all of which have been impacted in some shape or form. We're in a strong capital position with a common equity Tier 1 ratio of 11.47% at the full year. This means we remain a very safe bank. We have kept lending throughout this crisis, and we're ready to grow. Against the uncertainty of 2020, we maintain a long-term view. That's why we've set a clear plan for NAB to achieve sustainable performance, and we're getting on with implementing it. While revenue headwinds from low credit growth at ultra-low interest rates remain, we see opportunities for growth in our core banking businesses, NAB, BNZ and UBank. As we lift performance, we expect to have the opportunity to return more profit to you, our shareholders. We are a dividend-paying stock and will resume paying at higher levels when it's right to do so. Achieving double-digit cash returns on equity will be a key measure of our success. Cost and capital discipline are essential to delivering better returns. It is our responsibility to spend NAB's shareholders money very carefully. I expect each and every dollar spend to be justifiable. That's my obligation and commitment to you. Our planned investment spend of $1.3 billion in the next financial year will go towards what matters most, improving our systems, simplifying the business and building our capabilities. Our ongoing investment in technology prior to COVID-19 has proved critical. It has given us greater systems resilience and the ability to serve customers remotely. We're continuing our work to keep the banking customers safe from the growing threat of fraud, cybercrime and other criminal activity. This bank plays an important role in monitoring and reporting suspicious activity to help keep Australia's financial system safe. We're increasingly using the industry-leading technology and machine learning transaction monitoring techniques. We're also committed to our partnership with Fintel Alliance, which brings together government and the private sector to fight financial crime. In total, more than 1,000 colleagues are dedicated to combating financial crime. Our colleagues are our greatest asset, and I'm pleased that this year, our employee engagement score was 76 out of 100. That's up from 66 just a year ago. While it's a sound improvement, there is more work to do. The critical importance to us is why we're investing $50 million in lifting the skills of all banking colleagues, myself included, each will complete the FINSIA professional banking qualification that will raise the bar of professionalism in banking in this country. Additionally, all leaders will complete a single leadership program to create consistent management disciplines across the organization. NAB will have the best bankers and the best leaders in the industry. We will get the basics right and therefore, make less and fewer mistakes. This is how we'll get on with the things that matter most to customers. Of course, our strategy is only as good as our execution. In the past, NAB has made things too complicated and tried to do too many things. The sale of MLC Wealth to IOOF is due for completion before the middle of next year. It will mark our last major structural change to NAB enable us to focus on growing our core banking businesses. Our new operating model has created end-to-end accountabilities for the executives leading each of our 5 key customer-facing business units. When I started, we had over 460 active projects at the bank, today we just have 19 programs. We have prioritized them. We review them fortnightly, and we ensure they are being delivered successfully. We're not distracted by the volumes of less significant activities and these are the things that matter most and where you would expect me to put my attention. Banking should be a simpler business. You serve customers well by making it fast and easy for them to manage their money. With the onset of COVID-19, more Australians than ever shifted to the online economy, and many will stay there. The NAB online retail sales index shows online spending is up about 60% year-on-year. The decline of cash and checks accelerated drastically. More than 90% of our customers' interactions are now taking place online or by phone. We must adapt to this large change in how our customers bank with us. Australians have shown that if it is simple and fast, they will embrace it, and that is what we're striving for. This year, we launched new product and service innovations across the bank. One of these is StraightUp, Australia's first ever interest-free subscription credit card. While some of our branches are no longer used by many customers, we need to consider the sustainability of each location. We're particularly cognizant of the role of the local branch in regional and rural areas. And where we can, we will find new ways of keeping the branch viable and jobs local. Colleagues in 114 branches are now providing customers with digital and phone banking support at times of the day, which were previously very, very quiet. I've visited a number of these towns across the country this year, and I understand how important our bankers are to the local community and local businesses. We have an important responsibility to work with our customers to support this country's economic recovery. We are the leading business bank, and it is businesses that will invest and businesses that will create new jobs. We must adapt our banking services to help our customers safely achieve their ambitions. We're partnering with Pollinate, a global cloud-based platform to give small business customers real-time insights to better manage and grow their businesses. Further access to capital can be a barrier to small business growth. NAB has been lending $2.4 billion per month at historically low interest rates. We have, and we will keep lending to help the country rebound and grow. We've advocated strongly for more diverse range of financial options for SMEs. The Federal Government's SME Loan Guarantee Scheme has been a very good initiative that is quickly getting cash flow into businesses, and NAB has provided more than $600 million in funding through this program. We've also invested in the federal government's $540 million business growth fund, a new way to access funding in the form of long-term equity capital. If we can help businesses invest, buy new equipment or hire more people, we'll get the economy going faster. The federal government's extension of interest asset write-off has been a welcome addition in this regard. While it will take time, Australia and New Zealand are clearly on the road to recovery with GDP rising by 3.3% in the September quarter, driven by a strong rebound in consumer spending. NAB's latest monthly business survey shows business confidence rose 9 points in November, while business conditions rose 7 points. Forward orders and business cash flow also lifted by 9 and 3 points, respectively. We now think the economy will be back to 2019 growth levels by the end of 2021. That's about a year earlier than we had previously thought. And it's not just data that fuels my optimism, it also comes from what I've seen and heard during recent trips around Australia, from conversations with customers on these travels, it's clear that businesses want to get going again. Australian agriculture is probably in its best shape since 2016 and this is thanks to good seasonal conditions and encouraging price trends. One Victorian farmer, I met recently told me his grandfather, who was in his 80s, described it as the best season of his life. The development and effectiveness of several vaccines is very encouraging and essential for reopening the global economy. As outbreaks occur, we are moving faster to get on top of them, and this is evident in the rapid response to the changing situation occurring in the northern beaches of Sydney. We also say this as a major employer in Australia and New Zealand. Overall, despite some continued uncertainty, the recent and current economic picture reflects what we considered our base case and our scenario planning from earlier on in the year. Australia and New Zealand are emerging from this pandemic in a strong position. And I've said before, there's nowhere I'd rather be in the world than Australia or New Zealand. To conclude, I want to extend my sincere thanks to all our shareholders for your support this year. Your investment in NAB allows us to support Australia and New Zealand's economic recovery. In doing so, we will grow NAB, our business at the same time. We have the right plan and the right team. And I thank my colleagues again for their hard work this year. They will deliver performance over the long-term and a return on your investment in this business. I appreciate the opportunity the Board has given me to lead this business, and I'm optimistic for our future. I'll now hand back to our Chairman, Philip Chronican. Thank you.

Thank you, Ross. I'll now proceed with the formal business of the meeting. The notice of meeting was made available to shareholders in November, and I propose that it be taken as read. Voting on all resolutions today will be carried out by way of a poll, and Computershare will act as the Independent Returning Officer. Items 2, 3, 4, 5 and 6a are resolutions to be voted on at today's meeting. Item 6b is a conditional item, which will only be put to the meeting if Item 6a is passed. For Item 6a to be passed, at least 75% of the votes validly cast on that item would need to be in favor of that resolution. I will be asking David Armstrong to Chair the meeting for Item 5 relating to the National Income Securities, as I have a personal interest in that matter as a holder of those securities. During the meeting, we will display the direct and proxy votes received in advance of the meeting for each item. Several large investors expressed interest in seeing the results of direct and proxy voting on the conditional item of business. In the spirit of transparency, we will show the voting on that item, even if that item is not formally put to the meeting. Where the Chairman of the meeting has been nominated as a shareholder's proxy, all open and available proxies will be voted in favor of items 2, 3, 4 and 5 and against items 6a and 6b. There are also voting restrictions for some resolutions, as outlined in the notice of meeting, which apply to those who have an interest in the resolutions and certain of their related parties or associates. I now declare the poll open on all resolutions. The poll will be closed 10 minutes after the end of the meeting to allow time for those who did not vote earlier in the meeting to do so. A reminder to this effect will be given just before the meeting is formally closed. As the poll on all items will remain open until then, we will not be able to show the final voting results during the meeting. As Louise said, we will announce the results of the AGM on the ASX and AGM page of our website later today. If you haven't already done so, I encourage you to submit your questions now. I turn to the first item of business, consideration of the financial statements and reports. The Corporations Act requires the directors to lay before the Annual General Meeting, the financial report, the directors' report and the auditor's report for the last financial year. Some shareholders submitted questions in advance of the meeting that relate to the financial report or matters related to financial reporting, including NAB's performance, strategy, capital and dividends. I'll address the major themes on these questions. I propose to answer any questions relating to climate change risk and disclosures at Item 6 rather than this item in order to keep related topics together. Several shareholders submitted questions ahead of the meeting on the outlook for dividends. Ross made a comment about dividends in his address, and I'll say some more now. We recognize the importance of dividends to our shareholders. Our 2020 interim and final dividends reflected the Board's careful consideration of our desire to maintain a strong capital position. The uncertain outlook due to the impacts of the pandemic and APRA's dividend guidance. We recognize that our shareholders were also hurting, and we shared that impact both as shareholders ourselves and by reducing directors fees and the group CEO's fixed pay in 2020. In addition, the executive leadership team did not receive any variable reward this year. Looking ahead, over time, we would like to increase dividends to a higher but sustainable payout ratio once the economic and regulatory environments improve. Final decisions on dividends will also be based on the financial performance and the capital position of the group. Another theme in shareholders' questions ahead of the meeting related to NAB's institutional placement and share purchase plan earlier in the year. Shareholders asked why this form of capital raising was used rather than other options like a rights issue. Other shareholders were critical of how the scale deck was applied. I assure shareholders that the Board carefully considered the most appropriate form in the environment in which we were operating at the time. An institutional placement provided the greatest certainty and reduced execution risk. It was the right thing to do given volatile market conditions at the time of launch. Following completion of the institutional placement, a share purchase plan provided an opportunity for retail shareholders to acquire new shares at the same price. The strong retail demand meant that the SPP was increased from $500 million to $1.25 billion. Our aim was to ensure that shareholders were not disadvantaged, but to recognize that some dilution was inevitable for an overall capital raise of this size. The scale back was conducted having regard to the pro rata shareholding of the applicant. 98% of applications received a pro rata or better allocation. For this purpose, only the holdings through which a shareholder made their application was able to be considered, we were unable to aggregate a shareholders' holdings if they held multiple accounts. This was the most practical approach we can take operationally with our share register and is consistent with market practice. Virginia, have any questions been submitted during the meeting for either the Board or the auditors on the first item of business, the consideration of the financial statements and reports?

Chairman, we have a question from [Christine Hayden] as a volunteer monitor on behalf of the Australian Shareholders' Association. Referring to the financials and the costs, we noticed that the spend is higher on regulation and compliance, security and technology, which is likely to be ongoing. Where do you see improvements in the future?

Thank you. It is absolutely true that we have significant increases in expense on issues relating to regulation and compliance. And I think most shareholders would understand the background to that. And of course, we face challenges in terms of IT security and needing to continue to invest in the latest technology for the business. That means that we need to look into other parts of our organization to find cost efficiencies, and we have over the last 3 years, done exactly that, which is find productivity benefits from our administration areas, in many cases, operations where we can automate to reduce cost and by operating at a more streamlined level in many of our head office areas. So these are important things for us. But looking forward, I can assure you that the management team through Ross and the executive team are very focused on finding where inefficiencies are, whether it's duplication and getting rid of that so that we can have our available spend directed on those things, which either directly benefit customers, while they have new products and services, all which make us a safer and more efficient bank through investing in highly reliable and secure technologies. Thank you.

Chairman, we have a question from [Michael Sanderson] as proxy for [Mr. Crip]. What is the NAB Board's position on the proposed repealing of responsible lending laws, which is in direct contradiction to the recommendations of the Financial Services Royal Commission. Does the Board support the changes or are they happy with the status quo?

The position on the proposed changes to the responsible lending legislation need to be understood, I think, in context. We are absolutely convinced of 2 things, one is that it is a duty to lend responsibly, and we certainly endeavor to do that. The other is, and I think this was highlighted in a court case that another bank was engaged in, is that an overly prescriptive approach to responsible lending legislation doesn't necessarily achieve the best outcomes for our customers. So we are very keen to work in conjunction with the government to find a practical way in which we can discharge our duty to lend without making it so complicated that we inhibit the flow of credit to the economy. And to that end, we are supportive of some of the moves that have been proposed recently.

Chairman, we have a further question from Mr. [Michael Sanderson] as proxy for Mr. [Crip]. The monopoly external disputes resolution body in this country is the Australian Financial Complaints Authority, a private company limited by guarantee that is mandated by the AFCA Act to put consumers first. The vast majority, if not all, AFCA members and staff are from the supply side of the financial industry. AFCA excludes demand side industry members and in doing so, exclude those that have experience of the real constraints of consumers. This leaves AFCA exposed to at best unconscious bias. Would NAB proactively demands that AFCA include real demand side industry members on the AFCA board that AFCA recruit proportionate staff from the demand side of industry and encourage their membership?

I must say this is not an issue that I've spent much time on -- focusing on. I am well aware that the establishment of AFCA has led to a significant improvement in the coverage of complaints in the industry. And the role that AFCA has played, I think, has been extremely productive, and we find that while we don't always agree with their findings, we are finding that they are providing a very solid and reliable and consistent approach to dealing with complaints. But I'll certainly take that feedback on notice and raise it in our conversations with AFCA, if that's a view that has some support. So thank you.

Chairman, we have a further question from [Christine Hayden] as a volunteer monitor on behalf of the Australian Shareholders' Association. There has been changes to the risk and compliance committee now chaired by Simon McKeon. How has the risk management framework changed? Has there been a formal review? And if so, how is the effectiveness measured?

Sure. Thank you for that. We've made significant changes to the risk management framework here at National Australia Bank in the aftermath of both the Royal Commission and of our self-assessment document that we published just over 2 years ago. Part of that was to expand the remit of the risk committee to be very explicit that it covered the nonfinancial risks, including compliance, and we've done an overhaul of the way in which that board committee process sits above the management processes within the management team. We have evaluated that continuously, and we also engage with our regulator in terms of how that has been effective. And obviously, as part of our prudential consultation process, our regulator sees firsthand the way in which that operates. So we have had an internal review of the effectiveness of the Board's risk and compliance committee, and that has indicated that we have made material improvements, both in the role that the Board committee has played, but more importantly, improvements in the quality of risk management throughout the organization. So thank you for that question.

Chairman, we have a further question from [Christine Hayden] as a volunteer monitor on behalf of the Australian Shareholders' Association. We refer to the April placement of $3 billion for institutional holders and the original allocation of $500 million to retail. At that time, Australian shareholders' association wrote to the chair because of their concern for equitable treatment of retail shareholders. Subsequently, the Board extended the cap to $1.25 billion, but nonetheless, refunded $1.65 billion. Our retail shareholders being diluted, and will you please consider renounceable rights as being the fairest option for capital raising next time.

Thank you for that. And I think I made comments about the capital raise in my introductory comments. The Board is concerned, as you are, that's the nature of a placement and retail offer does run the risk of seeing retail shareholders diluted. And that is why we went to considerable lengths to protect those retail shareholders who applied through the share purchase plan process. And I'm pleased that we were able to increase the size of the retail offer. And as I said, 98% of relevant holdings that applied were not diluted. They received at least their pro rata benefit. But I do accept that had we more time that a traditional rights offer is, of course, the fairest way of achieving a capital raise. It is just not the most time-efficient when you are working in volatile times. So the Board is extremely conscious of these issues and understands the concerns that the shareholders' association is raising. And thank you for it.

Chairman, we have a question from Mr. [Craig Corfield]. What impact does NAB see by repealing responsible lending laws regarding your approach to lending and credit risk appetite?

The -- it's very unlikely that we would have any change in our risk appetite in that the decisions we make on lending to consumers essentially are based on a credit risk assessment, and that is we are required to ensure that we lend to customers who have the ability to repay. That's in our interest as a bank. It's also in the interest of our customers that we don't put them in a position of lending them more than they can repay. The responsible lending laws, and I think this again harks back to the court cases ran the risk of becoming overly prescriptive and not being responsive enough to changing economic circumstances, but also changing technologies in terms of how we can assess the ability of people to repay. And that's how we've come to our position.

Chairman, we have a follow-on question from Mr. [Craig Corfield]. Sorry, I'll have to pause there and go on to the next question. Chairman, we have a question from [Amy Gordon]. The federal government's cashless debit card is punitive and doesn't work. 81% of people who are forced to use the card right now are aboriginal and Torres Strait Islanders. The evidence shows that compulsory income management doesn't work, doesn't improve health and well-being outcomes, limits people's ability to purchase various permitted goods and services because of lack of cash and destroys people's right to privacy. Are you considering administering a national rollout of the cashless debit card?

So we've made no commitments in terms of the use of NAB's cards. Although we are working in a working group in conjunction with the government on the technical elements of this. I think we share some of the concerns that give rise to this question, which is that we would want all Australians to have choice and control of their finances. And we want all Australians to have access to fair and affordable products. I also appreciate, of course, that the driving force behind those who advocate for this is about protection of communities. So will we continue to talk to government? But we certainly have not committed to any role in the ongoing rollout of this program.

Chairman, we have a question from [Christine Hayden] as a volunteer monitor on behalf of the Australian Shareholders' Association. We note nonexecutive directors, 20% reduction in fees from 1st April to September 30, the CEO's reduction in base fees and fixed remuneration for the same period and the executive leadership team who will not receive an annual variable reward as part of their remuneration and acknowledge this as a very appropriate approach under the circumstances. The Royal Commission revealed a lack of concern for customers, and there seems to be a priority to improving customer satisfaction at the expense of the shareholders. What is the plan to restore shareholder value?

So I need to be very clear that the Board does not see improving our position with customers as any way being in conflict with the role or the benefit to shareholders or the interests of shareholders. As a business, we can only succeed by being relevant to our customers and by growing, by attracting more customers to do more business with us. So by being good for customers, we expect that we will be a good bank for shareholders. And that's very clear in the expectations that we've set through the Chief Executive and the management team is we expect to be more relevant to our customers, to be better and easier to deal with. But as through that, we expect to gain more customers and like -- through that process, gain more revenues and be a growing bank, which will then be able to thrive and be able to generate returns for our shareholders. So please do not be any under any illusion. The reason that we are trying to be a better bank for our customers is so that we can be a better bank for our shareholders.

Chairman, we have a second part to a question from Mr. [Craig Corfield]. If you believe repealing responsible lending laws won't change NAB's approach to lending, do you also support removing consumer rights to take legal action where irresponsible lending does occur?

I'm not sure I can answer that in any detail on this. I'm not sure what consumer rights are proposed or have been removed. But clearly, the area of responsible lending has many regulators. Indeed, that is one of the issues that we face is trying to simplify the number of regulators who have an interest in this. And I think it's really something as part of the evolution of this process to ensure that there is recourse for borrowers who have been disadvantaged. I understand that, that the proposed changes certainly don't remove regulatory oversight of the bank's lending, indeed, what it does is focus that on one regulator and not have it spread over a number.

Chairman, we have a question from Mrs. [Sally Mellick]. Will the Board give consideration to having a hybrid AGM going forward so that shareholders who can't physically attend are able to participate in the discussion?

So we're -- obviously, this is the first time we have had a virtual AGM. And I think it'd be fair to say we're learning a lot from it as we go. So we've not turned our mind to what form AGMs might take in the future. I think we want to understand what worked both for our shareholders and for our own people. What's worked well out of the virtual meeting, and then how that compares with the traditional physical meeting. So that's something that we'll be looking at in the course of next year. And it's really premature to be able to form any view on that at the moment.

Chairman, we have a question from Mr. [Henrik Kay]. What is the NAB doing to help those over 50 or people with disabilities get employment in NAB?

Well, I think our Chief Executive and I have joked that we've done very well at getting over 50s employment by hiring some more mature leaders in the business. But I take the point of the question, we do have disability action plans, and we are interested in employing a wider range of people. I can say that actually, there are some strong business interests in mature age recruitment. What we find is mature age workers tend to have lower turnover, tend to be more loyal. So we are absolutely interested in having a full range of people working as employees in the organization. And we do have a number of programs to ensure that people with disabilities have access through our disability action plan. So yes, we do take that issue very seriously. Thank you for the question.

Chairman, we have a further question from Mr. [Henrik Kay]. How can the public contact the community links section for grants to community groups?

I think I'll need to pass. That a very technical question about where to, but I'm sure if you were to go through one of our general inquiry lines, we can ensure that, that question is answered. And I think this is one where we may get the support team to this AGM to get back in direct contact with you.

Chairman, we have a further question from Mr. [Selwin Crip]. Last year, I questioned the Board on the NAIRU, nonaccelerating inflation rate of employment and NAIBER, nonaccelerating inflation buffer employment ratio, followed with information to Mr. Chronican and Mr. McEwan. Adoption of NAIBER would enable a voluntary locally administered job guarantee that pays a living income, eliminating involuntary unemployment and would act as bottom-up countercyclical federal fiscal stabilizer. Since the last AGM, as a consequence of COVID-19, unemployment and underemployment have increased significantly. Poorly targeted federal fiscal stimulus such as JobKeeper and JobSeeker have limited the damage, but were seen wanting and remain so. The federal government has spent more on these stimulus measures than it would have cost to eliminate unemployment via a job guarantee. Will NAB use its considerable influence and lobby the federal government to adopt NAIBER and full employment?

So I need to be clear. I think this is really a question that should be being put to the treasury, and it's not really within NAB's purview to comment on that. We, obviously, have supported the federal government's rapid intervention measures that have protected household incomes and kept people associated with their employers, both through the job keeper and job seeker payments, recognizing, of course, that these would always only be transitory measures. But I don't really think it's appropriate for us at this meeting to comment on questions of broader macroeconomic policy and these are better directed to the treasury.

Chairman, we have a question from Mr. [ Robert Cruzera ]. Over the next 12 months, will directors minimize costs to improve NIMs and strengthen its CET1?

So we absolutely have a strong focus on costs. I think this was in response to one of the questions from the shareholders association earlier. We know that there are some areas where our costs inevitably are going to remain high or increase further, in areas such as regulatory burden and the need to continue to invest in IT and security. And of course, net interest margins are negatively impacted by the very low interest rate environment that we're currently operating in. The good news is that our CET1 is very strong. I think it's around 11.47% at the moment, which is well above the 10.5% that our regulator, APRA had deemed as being unquestionably strong. So we have a very strong CET1. We will continue to face some revenue headwinds because of the very tight net interest margins that we'll be operating under. And I know that Ross and the management team are very much focused on controlling costs. So you can be assured of that.

Chairman, we have a further question from Mr. Craig Caulfield. Warren Buffett speaks of a Director's Club where known directors who will not rock the boat or vigorously challenge the status quo get elected. Directors who constantly challenge incumbent views are avoided. Had such challenge being ventilated by directors in previous years, many bank failures may have been averted and shareholders' wealth protected. Will the Board consider something akin to the German model where a second board, comprising customers and staff representative provide challenge, feedback and alternative views?

Thank you. I can assure you that the Board of the NAB, and I can say this confidently over the last few years, has been anything but one, which has avoided challenge. Indeed, as you will appreciate, this organization has been through some very difficult periods over the last 2 or 3 years. And it has had to make some very, very strong and in some cases, quite disruptive decisions to ensure that we get this company on a sound footing. We do welcome input from customers and staff representatives. I'm not sure that the German model being applied in Australia would necessarily be the correct answer for that. But one of the things you can be assured of is that the Board spent significant amount of time listening to our people and listening to customers. Both directly and through some third-party agencies, and it's something that I've continued to encourage the board to do. Because it is important that we have an honest understanding of everyone's experience of the organization. We don't always agree with everything that's put to us. And I say that we don't always agree with some of the things that are put to us internally or externally, but we need to form our own views on those.

Chairman, we have a question from Denmark Dream Proprietary Limited. Chairman and CEO, at NAB's 2019 AGM, you said NAB would meet with aggrieved customers. Whilst several attempts were made by some to arrange a meeting, Jocelyn Turner, Executive Customer Resolution and Remediation, intervened on the multiple requests, caused delays by not responding and put up roadblocks and denied some customer meetings. Ms. Turner undermined what you both said at the last AGM. Chairman and CEO, please reconfirm when the environment permits, you will meet aggrieved customers.

I need to be clear, we have -- pretty sure Ross has met with a number, and I certainly have met with a large number of aggrieved customers. And other members of our Board have met with aggrieved customers and reviewed aggrieved customers' cases. That doesn't mean we can meet with every aggrieved customer. I think that's simply impractical. But I need shareholders as a whole to understand that this is an issue that this Board has taken very seriously and through establishing a customer committee, under the leadership of Ann Sherry, has actually spent a lot of time trying to understand why we have long-term aggrieved customers. And I can say with, I guess, some comfort that actually of the many long-standing cases that we've had, I think it was something of the order of 60 cases that have been brought to our attention, we have, over the last 2 years, achieved resolution on approximately 30 of them. And I think that shareholders as a whole should understand that's a significant progress that we've made, given that some of these grievances date back 10, 20 years or even longer.

Chairman, we have a question from Ms. [ Diana Beer ]. Commonwealth Bank disclosed an assessment last year finding that it's grains, livestock and dairy agriculture portfolios faced declines in productivity and profitability of 40% to 50% out to 2060 as a result of climate change impacts unless mitigating steps are taken. Our sustainability report says we are Australia's largest agribusiness lender. What is the change in anticipated default rate to our agri loan book under scenarios of unmitigated climate-related losses among our agricultural sector?

So I don't have a number. This is an issue that actually we have spent quite a lot of time on. And we've done work with some external bodies on the impacts that climate will have on the agriculture portfolio. And we've spent a lot of time with customers, both individually and through some of the customer-related organizations, looking at mitigating steps that can be taken in the agricultural sector and that includes, for example, reforestation and replanting on land, which has been subject to erosion, areas around creeks and rivers to help improve water retention. So it is an issue that we take very seriously. And as part of our sustainability report, again, shareholders as a whole should understand that we are looking forward at the ways in which climate change may affect the nature of our business. And we are looking to reposition our own lending book and in conjunction with our customers to see how we can transition to a world of 0 net emissions by 2050, which is the, I think, now the increasing consensus globally about where we will need to be. So it is an issue we take. I don't have a specific number, but it is an issue that we're acutely conscious of and working with customers in terms of helping them understand the notion of shared value and how they can improve through their own practices, building a more resilient activities in agricultural sector.

Chairman, we have a further question from Denmark Dream Proprietary Limited. Chairman, whilst the Board delegates the day-to-day responsibility for the management and operation of the company to the CEO, the Board remains responsible for overseeing management's performance. Have the responsible persons under BEAR within the Board, executive and management reported or recorded any breaches in the last 12 months? If so, how many?

I don't think I can provide a specific answer to that question. We've had established a process over the last 12 months for establishing a breach review process. And that gives rise to a couple of issues where we reviewed to see had there been any potential breaches. And my understanding, and I might look to my company secretary, help me on this, I don't believe we identified any as part of that. So there were a couple of incidents that we reviewed as a Board, but no breaches have been identified.

Chairman, I have no further questions.

Thank you.

Apologies, Chairman. I've just had one come through.

Sure.

From Mr. Craig Caulfield. NAB has requested a limit of 2 questions per resolution, which only appeared this morning at log-in. It says only submit 2 questions per item of business and submit them separately. There is no drop-down menu available online to attribute questions to individual resolutions nor is the list of resolutions available at the time of lodging questions. Please advise all questions will be read out.

Thank you. I can't commit that all questions will be read out. I think that shareholders as a whole would find that difficult. For example, many questions are simply identical. And I can say this was some confidence based on the pre-meeting questions we got with several -- in fact, a large number of customers asked when the dividends would be restored. And I don't think it's a good use of the meeting's time to read those out one after the other. And that is why we've sought in the interest of conducting a meeting to have people limit their questions. But obviously, Mr. Caulfield, I think you'll appreciate, we're -- I don't think this is your second. So we're obviously being flexible on this one to allow you to ask these questions. But we do have to get through the business of the meeting, and it is appropriate that we have some limitation on questions.

Chairman, we have a question from Mrs. [ Patricia Volkheimer ]. On the choice of new directors, surely with so many outstanding women in the law and commerce, we could have found another female director.

Thank you. And I think I would agree with you that there are many outstanding women in business and in law. And in fact, we've been well served by having a number of outstanding women serve on our Board to date. This time last year, we introduced Kathryn Fagg to the meeting as our new director. Ann Sherry is standing again for reelection today. And we have Anne Loveridge, who's the Chair of our Remuneration Committee. And while today, Geraldine McBride is retiring from the Board, you should expect that at least 1 of the next 2 directors of board is likely to be a woman because we will be looking to maintain our target gender mix on the Board going forward. So I'd just like to agree with the points made by Mrs. [ Volkheimer ] that there are many outstanding women, and we hope to be able to recruit one, at least, on to the Board over the next year or 2.

Chairman, we have a question from [ Rita ]. NAB's Board Customer Committee charter says the committee is responsible for customer complaints, including to require and oversee a significant lift in the importance given to the voice of the customer and a more intense focus on customer outcomes. By reviewing and evaluating regular management reports on complaint levels, complaint handling metrics, customer satisfaction indicators also to identify systemic trends impacting customers. Could you confirm the Board and the Board Customer Committee reads actual customer complaint files and does not just review and evaluate NAB's end outcomes?

Yes, I can confirm. The Board's Customer Committee -- this was its first full year of operations, and it actually meant, I think, something like 10x. That's not a level that we would expect going forward. But that's included a number of workshops at which the committee became familiar with a large -- or a significant number of long-standing complaints to get a better understanding of what the complaints were and why they had been long standing. I can also say that in the time that I spent last year more deeply involved in the organization as the Acting Chief Executive, I read, I think, something like between 30 and 40 of the long-standing customer complaints to understand them. So I think you can be assured that the Board does indeed get involved at that level and has a deep understanding of these issues.

Chairman, we have a further question from [ Rita ]. NAB has developed nonfinancial risk reporting to improve the visibility of nonfinancial risks to the Board Risk and Compliance Committee. Through this committee, the Board has overseen enhancements to nonfinancial risk reporting that have driven greater focus and clearer insights on compliance, conduct and operational risks. This has improved dialogue and transparency of nonfinancial risk issues reported to the Board. Could you confirm if this nonfinancial risk reporting is applied to NAB's legacy cases for visibility to the Board? If not, why not?

I think the answer is yes. The Board has certainly had visibility of legacy cases through their lens.

Chairman, we have a further question from [ Rita ]. Chairman, the Board's skills matrix outlines experience of board members. Could you please advise which board members have legal experience or a legal background?

There may be a number of board members who have some legal background, but certainly the director standing for election for the first time today, Mr. Simon McKeon, was -- spent a significant part of his career as a lawyer.

Chairman, we have a question from [ Peter Star ]. How many legacy case does NAB still have to deal with?

The -- I think the issue is -- I think I mentioned these numbers earlier in the meeting, but there were around 60 cases -- and I have to be careful here because the definition of the legacy case is not as black and white as we might want it to be. But we certainly have, over the last 2 years, resolved 30 of them. And I think 9 of those have been resolved in the last year. Some of them, I have to accept, are unresolvable because the positions are just too far apart.

Chairman, we have a further question from [ Rita ]. Under NAB's Board skills matrix, it says that NAB undertakes an assessment of the skills and experience of each director and the combined capabilities of the Board. Under NAB's Board skills matrix, risk management, also customer outcomes and transformation, digital technology, data and analytics are the 3 lowest scoring skills. NAB has many known breaches and failures. Why hasn't NAB addressed these critical skilled shortages and increased the Board's skills and capabilities of directors, which includes changing directors to bring more appropriate experience and skills waiting to NAB's Board?

So I need to take issue with the point that's just because something has identified as relatively lower that this constitutes a critical skill shortage. Each of the issues you've mentioned, risk management, customer outcomes and digital transformation, data and analytics are areas where a number of our Board members have significant skills. We just haven't rated them as highly as other areas. And we do use the skills matrix for helping us understand the skills we need as we reshape the Board going forward. So the answer is that we will continue to use that skills matrix. And you can be assured, and I can assure shareholders as a whole that we have a wide range of skills on the board. And at the moment, that has served us well as we've been improving the performance of the organization.

Chairman, we have a question from Mr. [ Peter Star ]. Why did NAB dilute shareholders by raising capital?

I don't think I can add much to the comments I've already made on this issue, which is that in the face of a significant disruption from COVID-19, we saw a need to strengthen the capital structure of the company. And we chose a method, which was the best available trade-off between the speed and certainty that we required on the one hand. And the desire to be as fair to our shareholders as we could possibly be by avoiding dilution. And as I've pointed out, for 98% of applicants under the retail share purchase plan, we were able to give them at least as good at least as much as a pro rata participation in that share issue.

Chairman, we have a further question from [ Rita ]. NAB announced it successfully completed the book build with NAB Capital Notes 5 increased from $750 million to $2 billion, with the ability to raise more or less. The use of net proceeds of the offer will be used for general corporate purposes. NAB Capital Notes 5 once issued will be used as additional Tier 1 capital for NAB's regulatory capital requirements. Prior to the issue of NAB Capital Notes 5, did NAB comply with APRA's liquidity requirements or did NAB breach the prudential standards?

So we have, at all times, as far as I'm aware, complied with our capital requirements and liquidity requirements. As I think I mentioned, our core equity Tier 1 ratio at 30 September was just short of 11.5%, which is a clear 1% ahead of the regulatory guidance of 10.5%. And our total Tier 1 ratio was 13.2%, which is well ahead of the total Tier 1 requirement that APRA sets. So you can be assured that at all times, we have operated with capital ratios in excess of our regulatory minimums and that our liquidity position has been inside regulatory guidance. Obviously, we raised these funds through these forms ahead of when we are required to need them, not after.

Chairman, we have a question from MSCIF Proprietary Limited. Is it also possible to consider that there is a 3-hour time delay with the West Coast? This started at 6:30 a.m. WST.

Thank you. And I think I made the comment earlier that we've been learning a lot about the virtual AGM. And we, of course, will have shareholders joining us from a range of jurisdictions, including I'm sure there are many in New Zealand who are 2 hours ahead of us here in Melbourne and in Perth, Western Australia more generally, I appreciate that, that's 3 hours behind us. We'll take that on board and our assessment of how this has gone after the meeting. So thank you.

Chairman, we have a question from Ms. [ Sally Mellick ]. How does the Board keep abreast of the challenges that come with greater IT use? And what has been the greatest learning through COVID?

Well, we certainly -- there's a lot through COVID. And very early on in the process, our technology people were presented with a significant challenge as well over 30,000 of our people suddenly having to figure out how they could work from home. And I have to say I've been very impressed at the speed with which our technology people have been able to move to be able to have our people work from home in areas that we might not have thought previously that, that would be possible. Now that did present both logistics and security issues, and our IT teams had to focus in on those. But I think if you look at what we have achieved this year in terms of managing our customers through the disruption of COVID, managing our staff through the disruption of COVID and still exiting this year a stronger organization with stronger customer, net promoter scores, customer satisfaction improving, with our business operating soundly and no major operational incidents during the course of the year, I'd have to say that I think our people have performed very well. But of course, we've learned a lot from managing that disruption, and we'll be taking all of that onboard to think about future disruptive events that might occur. But certainly, it has been a challenging year, but I've been very pleased with the way the organization responded.

Chairman, we have a question from Ms. [ Athena Pattoli ]. NAB thinks being better for customers is far more important than being a better bank for shareholders. If NAB can't do both of these at the same time, then it has failed as a company. NAB is not a welfare institution nor a government. I do not consider that being better for customers is necessarily correlated with being better for shareholders. It would just make them good at welfare and the like. There's a little further question, Chairman. What can NAB do to consider equality between customers and shareholders' rights? That is what a good company would do.

So while I wouldn't have chosen the same wording, I think I agree with the sentiment of the question, which is to be a successful company we have to be good for shareholders and good for customers. And that is clearly what we are expecting to do. The one thing I absolutely am convinced of is that if we are not good for customers, then we cannot deliver for shareholders. And the experiences over the last few years, culminating in the issues that were aired at the Royal Commission have highlighted that where we try to put customer outcomes, subordinate to other considerations that ultimately will backfire. So I agree with your contention that a good company is one that aligns its customer outcomes and its shareholder outcomes.

Chairman, we have a question from Mr. [ Christian Langeberg ] and Mrs. [ Ding Ying Tsao ]. While I enjoy the user friendliness of nabtrade platform, during the past year, there have been numerous instances where the platform has been unavailable for long periods during the Australian trading day. What plans does NAB have to improve the stability and availability of the platform?

I am conscious that there is work going on to improve the stability of the platform. We've put a lot of work into technology resilience across the company over recent years. And I can say over the last 5 or 6 years, we've had a 95% reduction in high-priority incidents. And that's in no small part due to the significant investment we've put into providing for a more resilient technology environment. The nabtrade issues, I'm aware of them. And even though we've had a significant fall in incidence overall, that's obviously a little comfort to those customers who are trying to engage in the -- the one platform that is out at a point in time. But I have to say, I'm very pleased with the fact that we no longer have had significant outages on our largest platforms, and that's where, obviously, the priority has been. But I know that the team are focused on the nabtrade platform as at now. And I would fully expect that we're going to improve stability on that platform going forward.

Chairman, we have a question from Mr. [ Peter Logiotatos ]. Do you foresee any near future requirements for further capital ratings going forward?

So as I said before, our current capital ratios are well in excess of the APRA minimums. But I'm also conscious as we learned in this year that it's quite a problematic issue to forecast what might happen in the future. So all I can say is that as at today, we have a capital position that is very strong.

Chairman, we have a further question from Mr. [ Peter Logiotatos ]. How will you combat the movement of transactions from cash and competition from Apple Pay and other technologies?

So it's absolutely true that transactions are moving away from cash. And this year, I think, has been quite phenomenal in terms of the speed with which that transition has occurred. Indeed in my own day-to-day experience, I see little use of cash at all in the stores when I'm out and about. So it is true that we're moving towards a more cashless society, and obviously, we have to play our part. So we have provided cards. We've provided the access to Apple and Google Pay type facilities for our customers. And we're continuing to invest in our digital offerings. You'll be familiar with the fact that we have a digital online bank, UBank. And I know that both through our own NAB-branded accounts and through UBank, we are seeking to stay abreast of changes in payment technologies so that we can be relevant to our customers.

Chairman, we have no further questions on the first item of business.

Thank you. So if no further questions, then I declare that the financial statements and reports have been received and considered at the meeting. The next item of business is item 2, which is the reelection and election of directors. This year, 3 directors retire at this meeting and in accordance with the company's constitution and being eligible, offer themselves for reelection. They are David Armstrong, Peeyush Gupta and Ann Sherry. The Board has undertaken an evaluation of the performance of each of the directors standing for reelection. And based on the results of this evaluation, the Board fully supports each reelection. We also have 1 director standing for election, having been appointed since the last Annual General Meeting. The Board announced the appointment of Simon McKeon in February 2020. Details of the qualifications, career, experience and other interests of each of the directors standing for reelection and election are set out on the notice of meeting and in the directors' report. David, Peeyush, Ann and Simon will each speak to you about what they bring to the collective capability of the Board. I now turn to the reelection of David Armstrong as a Director of National Australia Bank Limited. If reelected, this will be David's third term serving you on the Board. The Board considers that David's extensive financial reporting, auditing and commercial experience are valuable contributions to the Board's existing skills and expertise. The Board has also concluded that David is independent and has sufficient capacity to undertake the duties expected as a Director of the company. David, would you like to address the meeting, please?

Thank you, Phil, and good morning, ladies and gentlemen. In offering myself for reelection to the Board, I thought it might be useful to do 2 things: briefly touch on my career prior to joining the Board, and secondly, what I believe I can best contribute to the Board's discussions and deliberations. Prior to joining the Board, I had a 33-year career with PricewaterhouseCoopers with 24 years as an audit partner. I was very fortunate throughout my professional services career to be able to focus specifically on banks and financial services organizations. The profession also offered me the opportunity to live and work for extended periods of time in London, New York and throughout Asia, always with a focus on banking. As a partner, I had responsibility for a range of domestic and international banks, property trusts and stockbrokers. During the last 18 years with PwC, I was the lead auditor for one of Australia's largest retail banks and our largest Australian investment bank. The experience of having been an auditor of a similar organization to NAB and the knowledge and understanding of the regulatory and reporting environment is one of the core contributions I feel I can bring to the Board of NAB. Perhaps not surprisingly, I am chair of the Audit Committee of the bank. And in that role, I've been able to contribute and influence on a range of financial reporting and presentation matters and their related judgments and also the various due diligence committees to support the Board's capital, liquidity and strategic decisions. I have experience of banking in the good and the not-so good times, including the early 1990s. And I believe that experience can be brought to the table as we work through our current economic challenges. This experience of banking, and more broadly as an auditor, helps me contribute strongly to the Board's Risk and Compliance Committee and at the Board table more generally. I don't limit my contribution to board discussions to financial reporting matters. I feel confident in challenging and testing management on a range of matters when I feel it's necessary and adds value. My other directorships are not-for-profit related, and I have the time necessary to devote to the important role of representing the interest of shareholders. I have the necessary experience to contribute effectively as a director of our company, and I seek your support. Thank you.

Virginia, have any questions been submitted during the meeting in relation to the reelection of David Armstrong?

Chairman, I confirm we have no questions on this item of business.

Thank you. So if there are no questions, then I'll formally put the motion that Mr. David Armstrong be reelected as a Director of the company. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We have received 98.64% of votes for the resolution. Please record your vote now if you have not already voted. Thank you, David. [Voting]

I now turn to the reelection of Peeyush Gupta as a Director of National Australia Bank Limited. If reelected, this will be Peeyush's third term serving you on the Board. The Board considers that Peeyush's extensive wealth management, governance and strategic experience are valuable contributions to the Board's existing skills and expertise. The Board has also concluded that Peeyush is independent and has sufficient capacity to undertake the duties expected as a Director of the company. Peeyush, would you like to address the meeting, please?

Thank you, Phil. Good morning, ladies and gentlemen, and fellow shareholders. I present myself for reelection to the Board of National Australia Bank. I first joined the Board in November 2014 and currently serve on the Board's Remuneration and Risk Committees. I bring to the role over 35 years' experience in the financial services sector. I've been a successful entrepreneur, having co-founded and grown a wealth management firm and also worked as a senior executive in a global multinational firm to whom we sold our business. My executive life was spent in the stewardship of other people's money, a role requiring trust. I have experience across small, medium and large firms similar to the many businesses that the NAB banks. I've been a company director for over 35 years and been a full-time director for over 10 years now. My governance experience is extensive across the corporate, government and not-for-profit sectors, on boards, large and small and in the public and private sectors. My listed company directorships include Link Group and Charter Hall Long WALE REIT, which I chair. My other directorships are across media, education, technology and insurance. These experiences across a range of industries equip me to bring broad perspective and sound oversight, counsel and judgment to matters for which the NAB Board is responsible. Moreover, my executive experience in wealth management is helpful to the issues NAB faces as it goes through divesting MLC Wealth and transitioning that business to IOOF and as NAB addresses customer remediation. COVID has disrupted our lives and communities. In the next few years, the banking sector, including NAB, has a vital role to support families, business and communities to rebuild and grow. I look forward to making a contribution to these challenges. I'd like to thank my Board colleagues for their unanimous support for my reappointment, and I confirm to you my capacity, desire and capability to represent you. I'd be honored to serve as one of your directors and proud to be part of that great institution, that is the National Australia Bank. Thank you.

Virginia, have any questions been submitted during the meeting in relation to the reelection of Peeyush?

Thank you, Chairman. We have no questions on this item of business.

Thank you. If there are no questions, then I'll formally put the motion that Mr. Peeyush Gupta be reelected as a Director of the company. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We have received 98.36% of votes for the resolution. Please record your vote now if you have not already voted. Thank you, Peeyush. [Voting]

I now turn to the reelection of Ann Sherry as a Director of National Australia Bank Limited. If reelected, this will be Ann's second term serving you on the Board. The Board considers that Ann's extensive commercial and leadership experience across a range of industries, including banking and financial services are valuable contributions to the Board's existing skills and expertise. The Board has also concluded that Ann is independent and has sufficient capacity to undertake the duties expected as a Director of the company. Ann, would you like to address the meeting, please?

Thank you, Chairman. Ladies and gentlemen, fellow shareholders, I present myself for reelection to the Board of the National Australia Bank. I bring to this role a variety of business and government experience, as I spent the early part of my career working in state and federal governments in both policy and operational roles. I also bring banking experience, having spent 12 years as an executive at Westpac working as a Group Executive in Human Resources, Chief Executive of the Bank of Melbourne; and Chief Executive of Westpac New Zealand and Pacific. Until 2019, I was Chairman of Carnival Australia. And prior to that, was Chief Executive for 11 years. That business gave me a deep understanding of customer behavior, complex operating experience and global perspective. I've led diverse teams and was on the executive of Carnival Corporation, a dual-listed global entity listed on both the FTSE and the New York Stock Exchange. I've also been a nonexecutive director for more than a decade, serving on both global and locally listed boards, including ING Banking Group, and I'm currently on the Boards of Sydney Airport Corporation and Enero Group. I serve on 2 not-for-profit boards, and I'm active in supporting community-based NGOs. I bring experience and insight from customer-facing businesses and an understanding of the technology changing the way many of our customers operate and choose to interact with their service providers. In my 3 years as a NAB Director, I've served on the People and Remuneration Committee and Chaired the Board Customer Committee, where the Board gives oversight and challenge on the customer issues we face when designing products, dealing with vulnerable customer groups and that are raised through our internal complaint and feedback channels. I believe passionately that strong banks are a critical part of the ecosystem to support our economy and prosperity, and that has been clearly demonstrated over the last 12 months. I look forward to continuing to serve you as a member of the NAB Board. Thank you.

Virginia, have any questions been submitted during the meeting in relation to the reelection of Ann Sherry?

Chairman, we have a question from Mr. Craig Caulfield. Ms. Sherry, I support your reelection today. I thank you for listening to concerns and recommendations from our Bank Warriors and Bank Reform Now networks. The AFCA Datacube shows customer complaints at NAB are higher than CBA and Westpac exceeded only by ANZ on a pro rata basis. Why is NAB unable to resolve thousands of serious customer complaints each year within the NAB's IDR and Customer Advocate? What specific steps is NAB taking to properly listen to and understand customer complaints? Please note, I do not have any personal customer complaint with NAB.

Thanks, Mr. Caulfield. And thank you for indicating that you support Ann's reelection and noting you have no complaints. Ann, I know as Chair of the Customer Committee, you have reviewed the processes. And maybe you'd like to comment on that.

Thank you. And thank you for the question. As Phil mentioned, we've had our first full year of operation of the Customer Committee, and we've done a lot of work primarily at this stage, focusing on the long-standing customer complaints. And as Phil mentioned, we've had a lot of success in resolving complaints and attending to complaints that have been dealt -- have been around for a very long time. Your specific question about why NAB has more customer complaints, I think goes to the matters that Phil has already addressed during the meeting, which is that we are working hard to make sure our processes and systems work better for customers. And therefore, we take complaints out of our systems. And as a committee, the executives of the bank come and talk to us about product development and matters that are being raised by customers so that we can challenge the solutions that are being put in place, and hopefully, over time, reduce the prevalence of complaints that need to come either to AFCA or to us.

Thank you.

We have one more question from Mr. [ Peter Star ]. Ann Sherry promised to do a full review of outstanding legacy cases to me, but she failed to get back to me.

I'm not sure if Ann made a formal commitment to get back to you, but I can assure you that there has been a -- as I think I've already indicated, the Customer Committee has had a review of a large number of these cases through a number of workshops that have been held. And if Ann did indeed make such a commitment, I'm sure she will be prepared to do so.

Chairman, we have a question from Mr. [ Steven David Maine ]. What lessons did Ann Sherry learn from her involvement with Carnival cruises leading up to and during the COVID-19 crisis? Did the cruise industry learn any key governance and crisis management lessons during this crisis? And what was Ann's involvement, if any, during the COVID crisis this year?

I will let Ann answer briefly that question. But I would caution people about asking questions about companies that are nothing to do with National Australia Bank. But I think in this context during -- because of the COVID issue, I'll let Ann just answer the part that's been addressed to her.

Thank you, Phil. The -- I stepped down as Chairman of Carnival at the beginning of 2019. So my involvement in the COVID activities at Carnival has been nonexistent in any formal capacity. I'm sure there are many lessons learnt, however.

Thank you. Virginia?

I confirm we have no further questions on this item of business.

Thanks, Virginia. So as there are no further questions, I'll now formally put the motion that Ms. Ann Sherry be reelected as the Director of the company. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We've received 98.38% of votes for the resolution. Please record your vote now if you have not already voted. Thank you, Ann.

Thank you. [Voting]

As I said earlier, Simon McKeon joined the Board in February of this year. And in accordance with the requirements of NAB's constitution, Simon retires and offers himself for election for his first time. The Board fully supports his election. The Board considers that Simon's extensive commercial and leadership experience across a range of industries, including banking and financial services, are valuable contributions to the Board's existing skills and expertise. The Board has also concluded that Simon is independent and has sufficient capacity to undertake the duties expected of a Director of NAB. Simon, would you like to address the meeting, please?

Good morning, shareholders, and thanks, Phil. I've been privileged to have served for most of this year on the NAB Board and also as of August to Chair the Board's Risk and Compliance Committee. If endorsed by shareholders today, I would be honored to continue. After practicing as a lawyer specializing in corporate law, I joined Macquarie Group in 1984. I focused on mergers and acquisitions, along with corporate fundraising and became Executive Chairman of Macquarie's Melbourne office in the late '90s. I came to a point where I wished to devote more time to the community and Macquarie agreed to my transitioning to a part-time role. Prior to this, I had served on the Board of Australia's largest overseas aid agency World Vision. But ceasing full-time employment enabled me to substantially increase my involvement with organizations involved in a range of causes, including indigenous health, education, addiction, homelessness, heritage, disability, environment, climate change and medical research. In addition, I was able to accept roles chairing CSIRO, AMP and MYOB as well as establishing and being the first President of the Federal Government's Australian Takeovers Panel. I'm presently Chancellor of Monash University and on the Board of Rio Tinto as well as on the boards of several non-for-profit organizations. I recently retired from the Board of Spotless following it being taken over by Downer Group. Whilst my Executive career has been with a large financial services organization with, I think, some relevance for NAB, I believe that my contribution to NAB is much more broadly based. I have spent considerable time in the area of community need, and I believe that, that experience assists me in sharing with the Board and NAB generally what the community expects nowadays of a large Australian-based bank. And in this present era, I consider this to be critical. And the past year has reinforced the importance of a company standing in the community and the level of trust that goes with that. Communities expect that substantial companies have in place the right frameworks, policies and cultures to honor that trust. From a banking perspective, the COVID pandemic has heightened that even more as our customers have dependent on us to support them more than ever in a time of need. While at the same time, our regulators, deposit customers and, of course, shareholders need us to be prudent and manage risk well. Having the necessary frameworks, policies and culture is something that I will play -- pay close attention to in my role as Chairman of the NAB Board's Risk and Compliance Committee. I believe I have been able to devote appropriate focus towards NAB since joining the Board and with your endorsement, I look forward to doing so. Thank you.

Virginia, have any questions been submitted during the meeting in relation to the election of Simon McKeon?

Chairman, we have a question from Mr. Craig Caulfield. Mr. McKeon, I support your reelection today. Given your early membership and executive role in the banking and finance oath and also noting the Chairman's advocacy, would you agree NAB could have a very reasonable target of just 1 in 50 employees elect to subscribe to the BFO in the next year? Membership is on a voluntary basis, so dedicated promotion of the benefits of joining by NAB is required. Do you agree that an uplift in ethical behavior and trust in bankers is in lockstep with increasing total shareholder returns?

Before I pass to Simon to answer that, thank you for noting the membership that both Simon and myself have had in the BFO over recent years, Mr. Caulfield. And I can assure you, I think, in response to a question I was asked last year that all of the current board signatories to the oath. But Simon, maybe you'd like to comment on the points about the benefits and the link to total shareholder returns.

Yes. Thanks, Chair, and particularly, Craig, thanks for the question. I'm a little conflicted in answering this question because I fundamentally support the BFO, was involved in its establishment, headed up one of its Policy Review Committees. And I absolutely agree that the more employees and those that are seriously involved in this sector who understand what the BFO stands for and signs up to it, not only the better the sector will be, but indeed, the more profitable it will be as well. So your particular challenge, about 1 in 50, I actually regard as a very sensible challenge. And indeed, I think over the years, I'd like to see it way beyond that. But thank you for the question. I agree with the sentiment.

Thank you. Virginia?

Chairman, we have a question from Bleecker Street Proprietary Limited. Further to the previous point of appointing from a small pool of directors who did not rock the boat, NAB has chosen to appoint Kathryn Fagg, who has presided as Chair over a very poor performance at Boral, and Simon McKeon, who has been Chair of AMP and on the Board of Rio Tinto, both of which have had torrid times. Surely, there are other people not in the usual pool of public company directors, who would have been more suitable.

Thanks for that question, and I'll answer that one. We have sourced directors from a wide list of potential candidates based on their skills and experience and attributes that they bring to the table. It's clearly inappropriate for us to discuss issues that may have occurred at other companies, either recently or in some cases, significantly in the past. Other than I can assure you that the Board did its own due diligence on all of the director appointments to ensure that we were comfortable with the roles that these directors have played. So I think I'll leave that side of the question there. So thank you.

Chairman, we have a question from Dr. [ Linda Newland ]. Simon McKeon is also a Director of Rio Tinto. The debacle around the blowing up of Juukan Gorge showed that Rio Tinto has had significant cultural and structural problems with regard to communication and its attitudes towards community. Can Mr. McKeon explain his positioning in regards to this?

I'm not going to ask Simon to answer that question. I'll just repeat my comments that this is a National Australia Bank Annual General Meeting. I do understand that each director's other accountabilities have some relevance, but it's inappropriate to put Simon in the position of having to talk in detail about issues that occurred at another company. Other than in our conversations that I've had with significant investors is an understanding that Simon has an important role to play in the resolution of these issues, given his recent appointment as the Lead Australian Independent Director at that company. But I really don't want to go any further into another company's business.

Chairman, we have a question from Mr. [ Steven Maine ]. Simon is a great appointment to the NAB Board, but there are some issues with his other boards. Why has he never properly explained why he resigned suddenly as AMP Chairman a few years back? And what are his reflections as a Rio Tinto Director after the Juukan Gorge disaster earlier this year?

I think that's so close to the previous question. I'm not sure I should fully repeat the answer. Obviously, what happens in other boards is confidential with those companies. But you may be assured, Mr. [ Maine ], that this board did its full due diligence in terms of the appointment of Simon, has satisfied itself in terms of any previous issues, that there was nothing that would present any impediment to Simon making a contribution to the Board. Indeed, I'll go further than that and say that over the 10 months that Simon has been on the Board, he has provided a significant contribution, and in many cases, some fresh thinking to this Board. So, thank you.

Chairman, we have another question from Mr. [ Steven Maine ]. Does the Chairman agree that a director's CV and performance as a public company director is a legitimate topic of discussion when a director is up for election? Or are these sorts of questions banned as this seem to be the suggestion in his comments during the Ann Sherry discussion? Don't CVs matter even for public company directors?

So thanks for the question, Mr. [ Maine ]. CVs do matter. And I think it is appropriate that when directors are being evaluated, the whole of their contribution to public life is taken into account. What I want to avoid is a situation where people are being asked detailed questions about another company's affairs at our annual general meetings. And that is the line that I'm trying to protect here. Obviously, these companies that are being referred to today have their own annual general meetings and have their own forums in which people can put these questions. And it simply is inappropriate for us to get into those levels of detail. But I do fully understand that these linkages are relevant and that is why I think it's important that I assure our shareholders at large that where these issues have predated their appointment to the Board, you can be assured that we have looked into them as far as we are able to, to satisfy ourselves. And that the directors involved in other organizations are open about these issues with us in our discussions with them prior to their submitting for reelection.

Chairman, we have a further question from Mr. [ Steven Maine ]. Does Simon still own any Macquarie Group shares? If yes, is this appropriate given that Macquarie is a competitor to NAB? Is he also intending to increase his shareholding in NAB?

I have no idea whether Simon owns shares in Macquarie. I'll leave that to him to answer. I don't know whether you wish to answer that, Simon?

I have no problem disclosing that I do. And indeed, as to the issue of conflicts, I mean I just fundamentally reject that. I'm just happy to debate that another time. Thank you.

Thank you. Are there any further questions, Virginia?

Chairman, we have no further questions on this item of business.

Thank you. If there are no further questions, then I'll formally put the motion that Mr. Simon McKeon be elected as a Director of the company. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We've received 98.33% of votes for the resolution. Please record your vote now, if you have not already voted. Thank you, Simon.

Chairman, we have 2 further questions, which have just been lodged for items 2A and 2B in relation to David Armstrong's election and Peeyush Gupta's election.

So I think the only way I can handle this one sensibly is to note that those items of business have closed, but in the interests of shareholders hearing what those questions were, Virginia, I think I will allow you to read those questions.

Thank you, Chairman. We have a question from Mr. [ Steven Maine ] in relation to David Armstrong's election. What did David learn from auditing all those Macquarie entities over the years? And was it appropriate that he simultaneously was signing audit partner for Macquarie Group, plus several of its listed associated externally managed vehicles, such as Macquarie Airports and Macquarie Infrastructure? Babcock & Brow went for different independent auditors of its listed satellites.

Yes, I think -- so I've allowed that question to be asked, but I'm not going to ask David to answer it. It is a little of detail relating to issues of many years ago. Indeed, I think Babcock & Brown from recollection hasn't been in business for over 10 years now. So thank you, and I have allowed the question to be asked, but I don't see any purpose in having David answer it.

Chairman, we have a question from Mr. [ Steven Maine ] in relation to the election of Peeyush Gupta. Does the candidate intend to serve a full term? And will he be retiring in 2023 at the conclusion of his third term after almost 9 years of service?

So under our policy, directors serve a maximum of -- nonexecutive directors serve a maximum of 3 terms. So the end of 2023 would normally lead to the termination or the retirement of Peeyush. So that is what shareholders should be expecting.

Chairman, I confirm we have no further questions on this item of business.

Great. Thank you very much. The next item of business is Item 3, the remuneration report. The remuneration report is contained in the 2020 Annual Financial Report and sets out the performance and remuneration of the company's key management personnel, being the Board, the group Chief Executive and members of the executive leadership team during the financial year ended 30 September 2020. The remuneration report includes an explanation of the company's policy for determining the remuneration of executives and directors, a discussion of the relationship between that policy and the company's performance, and details of the performance conditions associated with the remuneration of executives and directors. No changes to the executive remuneration framework were made in 2020. Similarly, there were no increases to nonexecutive director fees or executive fixed remuneration for 2020 other than for executives who had their accountabilities increased in the year. As I said in my address earlier, the Board felt it was appropriate that the experience of customers and shareholders during 2020 should be reflected in remuneration outcomes. That is why the executive team received no short-term variable -- short-term annual variable reward for the 2020 financial year. In addition, the group's CEO offered and took a 20% reduction in his fixed remuneration for the second half of the financial year as did the Board in respect of base director fees. The Board has awarded long-term incentives to the executive team and group Chief Executive for 2020. This long-term variable reward will be subject to testing in December 2024 and was granted to executives to align their interests with the interests of shareholders over the longer term. The Board feels the performance hurdles attached to these long-term incentives are stretching. A theme raised by shareholders ahead of this meeting related to why we did not further reduce executive and Board remuneration. In response to that, I'd like to emphasize that the Board took decisive action on remuneration in April during a period of significant economic uncertainty. While the group Chief Executive and the Board voluntarily reduced their fixed remuneration, the Board did not consider it to be in the best interest of the company to reduce the executive team's fixed remuneration, having already decided that no short-term annual variable reward would be paid to that executive team for 2020, taking into account retention risk and their commitment that we require from that executive team to lead their teams and manage the business at a time of considerable volatility and uncertainty. I'd also like to clarify that the nonexecutive directors on the Board do not receive bonuses or variable remuneration or shares. They each receive a fixed base fee as well as fees for the committees that they serve on, either as a chair or a member. Shareholders approved the aggregate fee cap, which was last approved or last increased in 2008. Base fees were last increased on the 1st of January 2016. Directors voluntarily took a reduction in their fees this year. Virginia, have any questions been submitted during the meeting, on the remuneration report?

Chairman, we have a question from Christine Haydon as a volunteer monitor on behalf of the Australian Shareholders' Association. On remuneration, given the announced changes to allow the variance of financial and nonfinancial metrics from 50-50, are there any plans to change these metrics again, particularly to make the remuneration system understandable to the retail shareholder?

Thank you. And we are looking to continually -- or continually -- we are looking to further refine the way in which we reward our executives in the future. But for the 2021 year, I think I said at the introduction, there are no changes to that rem structure. And we are required by the regulator, APRA, to ensure that nonfinancial metrics play a considerable role in the rewarding of executives. And we try to make sure that those nonfinancial measures that we do adopt are those that align our executives' incentives with the long-term interests of shareholders, and that is through good risk management and good customer outcomes. So there will be some further changes in the future. And I hope that it makes the system more understandable for shareholders. But I have to say that it's a very difficult thing to do with both regulators and institutional shareholders, each having requirements that I think sometimes push us in the direction of less simplicity and clarity rather than more.

Chairman, we have a question from Mr. Craig Caulfield. John Lonsdale of APRA recommends greater disclosure of nonfinancial metrics in calculating rem. Despite improvements, it is still opaque for shareholders to see granularly how short-term incentives are paid to executives. Surely NAB should consider a range of additional metrics beyond the constrained Net Promoter Score. All too often, shareholders hear measuring nonfinancial metrics is too difficult. Will you include, for example, the AFCA Datacube complaints information as a better and more granular measure than Net Promoter Score?

So I think the one thing I can say is this year, short-term incentives paid to executives couldn't be clearer as we have not paid short-term variable rewards to our executives this year. But going forward, I understand the shareholder demands to see how we come to terms with that. And in the past, we've sought to give an indication for each of the key management personnel, how their short-term variable rewards are calculated, and we will continue to aspire to that. Net Promoter Score is just one measure, and it does have its limitations. And obviously, the AFCA information, which at least at the summary level is made public by AFCA is also a relevant point of information. The AFCA data, of course, is somewhat limited, and that it really only relates to our Australian retail customer base. And we're an organization that operates both in New Zealand globally through our corporate and institutional business through our business bank as well as our retail bank, but we will be looking for more broad measures to apply.

Chairman, we have a question from [ Mr. Stephen Maine ]. Gambling is a scourge on the Australian society with $25 billion a year lost by Australian gamblers, yet NAB executives are profiting by treating every credit card transaction with a sports gambling company as a cash advance immediately costing exorbitant interest rates as high as 20%. Even though it will reduce revenue and executive bonuses, will NAB consider following Macquarie Group's lead and banning all credit card transactions with gambling companies?

So the point -- we recognize, of course, the harm that problem gambling creates. I just want to be very clear that the interest rate charged on cash advance to gambling -- payments made to gambling companies is highly unlikely to have ever affected anyone's short-term variable reward with any level of materiality given the size of it. And it would, of course, be related to only one division of the business as well. We have implied gambling blocks that customers can elect into, and we know that [ problem gamblers ] have found that. This is always a difficult trade-off between customers who want to be able to access their own money for illegal activity against the damage that I recognize that problem gambling has done and continues to do for a large number of people in the community. And we're continuing to work with groups and through the industry associations to find the best way of balancing those 2 interests, but thank you.

Chairman, we have a further question from [ Mr. Stephen Maine ]. Why did the Chairman address the meeting on rem issues rather than the chair of the Rem Committee? Is the rem chair available to answer questions, such as when the next review of non-Executive Director Board pay is due to occur?

I think that would be a question that would come directly to the chair. So I'm not sure that that's relevant. The Rem Committee Chair is available to answer questions on any specific issues relating to the rem framework and the rem policies and the rem report. But for the conduct of the meeting, we have, as a matter, of course, had this section chaired by the Chair and have not seen any need to make a differentiation for this meeting. But of course, the Rem Committee Chair is available by phone. Unfortunately, she's unable to attend here in person today because of COVID-related travel restrictions.

Thank you, Chairman. We have no further questions on this item of business.

Thank you. So with no further questions, I'll now formally put the motion that the remuneration report for the year ended September 30 be adopted. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We have received 97.93% of votes for the resolution. Please record your vote now, if you have not already voted. The next item of business is the grant of performance rights. This item seeks approval for a grant of performance rights to the group Chief Executive and Managing Director, Ross McEwan, under the company's long-term variable reward plan as part of the remuneration package for 2020. Details of this plan, including the performance criteria and lapse conditions for this grant, are set out on Pages 21 to 23 of the notice of meeting and are also explained in the remuneration report. As I said earlier, the Board has awarded long-term incentives to the executive team and the group CEO for the 2020 financial year-end subject to shareholder approval, will be granted to the group's CEO in the performance -- in this form of performance rights. This long-term variable reward will be subject to testing in December 2024 and was granted to align the interests of executives with shareholders over the long term. The Board sees this as an important remuneration component to attract and retain executives, including the group Chief Executive. The Board feels the performance hurdles attached to these long-term incentives are stretching. Virginia, have any questions been submitted during the meeting for this resolution?

Chairman, I confirm that we have no questions on this item of business.

Thank you. As there are no questions, I formally put the motion for resolution 4 that the grant of performance rights to the group Chief Executive Officer, Mr. Ross McEwan, under the company's long-term variable reward plan on the terms described in the explanatory notes be approved. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We've received 98.03% of votes for the resolution. Please record your vote now, if you've not already done so. The next item of business, item 5, relates to the selective buyback of 20 million preference shares that are associated with the National Income Securities, the NIS buyback scheme. This item is a special resolution. A special resolution requires approval by at least 75% of eligible votes cast on the resolution. As I have a personal interest in this matter, I will now hand over to David Armstrong to Chair the meeting for this item of business. David?

Thank you, Phil. The purpose of this item is to give the company flexibility to repay the NIS in 2021 for $100 per NIS plus any accrued interest that may be outstanding on at least 30 days' notice and if and when the company elects to do so without the need to convene an extraordinary general meeting at that time. Details of the NIS buyback scheme are described in the explanatory notes on Page 23 to 26 of the notice of meeting. We recognize this has been an area of focus for holders of NIS for some time. It is important to keep in mind that no decision has been made as to whether to repay the NIS or when repayment might occur, if shareholder approval is obtained today. Repayment will also require APRA approval. If the Board makes a decision to buyback the NIS, an announcement will be made to the market, and the repayment would occur no earlier than 30 days after the date of that announcement. NAB will not repay the NIS if it would have a material adverse impact on its financial position or materially prejudice NAB's ability to pay its creditors. Virginia, have there been any questions submitted during the meeting in relation to the NIS buyback scheme?

Chairman, we have a question from [ Mr. Michael Chambers ]. How much will it cost NAB's ordinary shareholders to buy back the NIS securities?

The total -- just the total value of the NIS on issue is $2 billion, and the intent is to -- if we proceed, they would be repurchased at par, which would be exactly that value, plus any accrued interest that's outstanding at that point in time.

Chairman, we have a further question from [ Mr. Michael Chambers ]. Why wasn't there a separate meeting of NIS holders to vote on this buyback?

There's a degree of complexity of this, and I'll try and just give a little bit of background. Firstly, the NIS is a stapled security. It's both a debt note, which is fully paid; and secondly, an unpaid preference share. It's the existence of the preference share that gives rise to the need for a special resolution and a shareholder meeting. Because the selective buyback relates to shares on issue. This must come before the NAB Board -- the NAB extraordinary meeting. There is no need for an NIS Board meeting -- or sorry, there's no need for an NIS shareholder meeting under the terms of the NIS. So we are here today to consider this item as a NAB shareholder meeting, but that's the reason why there is no separate meeting for NIS.

Chairman, we have a question from [ Mr. Stephen Maine ]. If shareholders approve this proposal and the NIS are bought back, will NAB promise to only raise ordinary equity by way of a Paitreo, P-A-I-T-R-E-O, if fresh equity is needed after this NIS buyback?

I think the Chairman has probably dealt with this question earlier that there are no plans to deal with the ordinary shares. There's no intent to raise ordinary share capital of the bank at this time. But of course, in the future, we would need to look to what's in the best interest of all shareholders and the company itself.

Chairman, we have a further question from [ Mr. Stephen Maine ]. If the Chairman has a conflict of interest, just because he owns a small number of NIS, why does Simon McKeon not have a conflict of interest as a big shareholder in Macquarie Group, one of NAB's biggest competitors?

So the corporations law does not permit an affected shareholder to vote at a meeting for a selective buyback. And it's the existence of the Chairman's interest in the NIS that is precluding him from his ability to deal with this particular matter.

Thank you, Chairman. We have no further questions on this item of business.

I'll welcome back the Chair. Thank you.

[ Take it for the resolution ].

Sorry. If there are no further questions, I will formally put the motion for this special resolution 5. The company be allowed to repay the NIS for $100 per NIS plus any accrued interest on at least 30 days notice if and when the company elects to do so during the 2021 calendar year without the need to convene an extraordinary general meeting as described in the explanatory notes of the notice of meeting. Direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We have received 99.43% of votes for the resolution. Please record your vote now, if you have not already voted. I'll now hand back to Phil to continue Chairing the meeting.

Thank you, David. The next items of business are items 6A and 6B, which are requisition resolutions promoted by market forces and relate to an amendment to the constitution and climate change transition planning disclosures. Item 6a is a special resolution. As I noted earlier, a special resolution requires approval by at least 75% of the eligible votes cast on the resolution. Resolution 6a a is not endorsed by the Board. The Board respects the rights of shareholders to requisition a resolution to amend the company's constitution. However, the Board believes that the proposed resolution is not in the best interest of the company and shareholders as a whole, and recommends that shareholders vote against it for the reasons outlined in the notice of meeting. Under the company's constitution, the power to manage the business of the company is vested in the directors who are required to make decisions and manage risks in the best interests of the company and shareholders as a whole. In order to discharge that duty, the Board must consider a range of issues having regard to the nature and complexity of NAB's business and its operations in a global environment. The proposed amendment would provide a platform for groups of shareholders to promote any number of matters that may not be in the best interest of the company and shareholders as a whole. The Board considers it would be inappropriate for any one issue promoted by shareholders to be given increased prominence over another. The company encourages transparency and appropriate shareholder discussion and provide shareholders with a number of avenues to raise issues or concerns. The company has a comprehensive Investor Relations engagement program, which aims to facilitate regular and extensive engagement between the Board and senior management and investors. Environmental, social and governance considerations, including climate risk, regularly form a significant part of this engagement, and the company's progress on such matters is reported through its annual reporting suite of documents, including the 2020 annual financial report, which contains disclosures aligned to the recommendations of the task force on climate-related disclosures as well as its annual results, investor presentation, sustainability report and sustainability data pack. In addition, at each AGM, the Chairman encourages shareholders to ask questions and make comments about the company. Shareholders are also invited to submit questions before the AGM, which help the company understand shareholder issues and concerns and to address key areas of shareholder feedback at the meeting. Item 6b, which relates to transition planning disclosure, is conditional upon the item being supported by shareholders. The Board does not endorse item 6b as we do not consider this resolution to be in the best interest of the company and shareholders as a whole. In the Board's view, the NAB has made significant progress on its energy and emission strategy and already provides detailed reporting on that progress, which we explained in the notice of meeting and in our 2020 sustainability report. NAB is a signatory to the global collective commitment to climate action, which is a more comprehensive set of actions than any single motion being considered here today. In our view, the collective commitment to climate action is a worthy and important set of expectations for us to live up to for our shareholders and the community. Achieving net 0 emissions by 2050 requires a comprehensive whole of business approach, focusing solely on one element is an inadequate response, and it should not distract from that broader goal. In questions submitted in advance of the AGM, some shareholders challenged us on whether NAB should be doing more in relation to energy, fossil fuels and climate change. At the same time, others have challenged the role of activists and company policy setting. This illustrates how important it is for the Board and for leadership to determine the best interest of the company over the long term while working closely with government, our customers and communities in which they operate and certainly supporting energy security in Australia and in New Zealand. We have made several important commitments during 2020, and we'll continue to review these commitments against current science and technology. While the Board has taken this position, as a sign of respect and consistent with last year, I have invited Market Forces to address shareholders through a short video clip, which we will play now.

I'm Jack Bertolus from Market Forces. We work with shareholders to coordinate items 6a and 6b, and I'll speak briefly today in favor of the resolution calling on NAB to report strategies and targets to reduce exposure to fossil fuel assets in line with the climate goals of the Paris Agreement. This resolution presents an important opportunity to improve corporate governance and risk management at NAB, ahead of the market and regulatory changes that can be foreseen as the world moves to meet its commitments under the Paris Agreement on climate change. Despite committing to support the climate goals of the Paris Agreement, NAB has failed to align its lending practices or policies with these goals and lags its peer group in this regard. Failure to bridge this gap leads NAB exposed to needless financial climate change transition risks and reputation risks. Mainstream climate science tells us that in order to meet the Paris climate goals, we need to phase out coal power in OECD countries by no later than 2030. This deadline is supported by leading investors and financial institutions around the world. Unlike its major competitors, Commonwealth Bank, Westpac and ANZ, which plan to exit thermal coal by 2030, NAB remains committed to exit thermal coal mining by 2035, 5 years later than what's considered aligned with the Paris Agreement. Beyond coal, mainstream climate science tells us that in order to meet the Paris climate goals, global oil and gas production needs to decline annually by 4% and 3%, respectively. In August, 25 leading scientists at Australian universities and institutions wrote that to meet the upper Paris goal, we must achieve net 0 emissions by 2040 to 2050. This requires a rapid phase out of existing fossil fuel infrastructure, leaving no room for expansion of the gas industry. As NAB works to update its approach to funding oil and gas, this resolution presents an opportunity for investors to set clear expectations of the bank's funding for the sector moving forward. Shareholders need NAV to disclose clear targets and strategies to reduce exposure to all fossil fuels along with appropriate accountability mechanisms to ensure this company is adequately managing its exposure to climate change transition risks. The banking sector knows all too well the financial impacts of betraying community expectations. With last year's unprecedented drought and bushfire conditions in mind, I ask the shareholders to carefully consider how NAB's funding for fossil fuels will impact its reputation in the face of community demands for strong climate action. Investor support for this resolution is necessary to encourage NAB to review its lending practices and policies with respect to coal, oil and gas, and update them to align with mainstream scientific projections of the energy transition required to meet the goals of the Paris climate agreement and avoid the worst impacts of climate change. We ask shareholders to support this resolution with the long-term interests and sustainability of the company in mind. We thank those investors that have already cast votes in support of the resolution, and we hope the level of support for resolution 6 encourages the company to commit to disclosing Paris-aligned strategies and targets to reduce fossil fuel exposure in the coming year. Thank you.

Thank you, Mr. Bertolus. For the benefit of all shareholders, I do want to correct some of the assertions that have been made in that video clip. As I've stated, by signing the collective commitment to climate action, NAB committed to set and disclose sector-specific scenario-based targets for the Paris Agreement alignment with our lending portfolio by November '22, by next year -- sorry, 2 years from now. This means working towards a net 0 emissions lending portfolio by 2050. It's the only Australian bank to have signed this commitment, which is coordinated through United Nations Environment Programme Finance Initiative, we have indeed taken a leading position amongst both our global and domestic peers. Making progress towards the collective commitment to climate action this past year, we have calculated our financed emissions to form baseline for a number of key sectors and then work with leading climate science organization, ClimateWorks Australia, to understand potential Paris-aligned decarbonization pathways for these sectors. The outcomes of this work are disclosed in our sustainability report. In our notice of meeting, we provided our expectations on the time lines by when our thermal coal mining exposures will reduce to effectively 0, consistent with the objectives of the Paris Agreement. We've also announced our intention to finalize our review of our oil and gas exposures by September next year. The Board will continue to support the measured approach taken by NAB to mitigate the risk of climate change while working with and supporting our customers in the transition to a low-carbon future. Before asking shareholders to vote on item 6a, Virginia have any questions been submitted during the meeting on item 6a?

Thank you, Chairman. We have a question from [ Mr. Scott Michelman ]. My family are fifth generation grain producers on the Liverpool plains and will probably be the last. To the NAB Board, I cannot overstate the critical impact that climate change is having on food production, our landscape and wildlife. This is a clarion call for smart leadership and investment for Australia and the world's future prosperity. We have 110 years of weather data on our property. We used to average 21 days over 35 degrees and 1 day over 40 degrees. It's now 65 days above 35 degrees, representing a 330% increase and 21 days, over 40 degrees, representing an 800% increase. When will NAB show the leadership and directive required for our nation's future and divest from companies like Santos, pursuing high methane, high CO2 and water contaminating projects, such as the Narrabri Gas Project?

Thank you for the question. And I share the concerns raised by [ Mr. Michelman ]. And I can just reiterate, that's the reason why we have taken a comprehensive and leading approach through the collective commitment to climate action. And as I've indicated, that will involve us reviewing all of the emissions in terms of sectors and emissions consuming sectors so that we can have a comprehensive approach to this issue. But I share the concerns you have around the impact of climate in the agricultural sector. So thank you.

Chairman, we have a question from Litigo Dion Nominees Proprietary Limited. Our report published 2 weeks ago, co-authored by the United Nations Environment Programme, found that global oil and gas production must decline annually by 4% and 3%, respectively, to be consistent with the Paris Agreements 1.5 degree pathway. Page 44 of NAB's annual results presentation shows our exposure to oil and gas extraction declined 27% from 2019 to 2020. Will NAB's oil and gas exposure decline moving forward, consistent with the Paris Agreement?

So I think the -- I think the question was pretty much answered itself, which is our reduction in oil and gas exposure has materially outstripped, any of the indications given. Whether it continues to decline at that rate is not clear. Sometimes these numbers move around purely because they're expressed in different currencies. But as we indicated during the introduction to this, as part of our signing up to the collective commitment to climate action, we will be publishing our pathways for oil and gas next year. So we'll be in a much clearer position to be able to take shareholder base through that at that time. But we absolutely understand. And just -- I think sometimes our shareholders may not have a sense of perspective on these issues. Our exposure, for example, to thermal coal mining in Australia is $675 million. That's out of total credit exposures at around $880 billion. So it's about 0.8 of 1% of our lending exposures. Oil and gas, on the other hand, of course, is a more material number. It's around $2.7 billion. Again, it's not a large proportion of our total exposures. But it is something like 4x the size of our thermal coal exposure. So to that extent, it's obviously a much more meaningful question.

Chairman, we have a question from Wattle Ag Proprietary Limited. As a farmer at Boggabri, I have witnessed firsthand the devastation Whitehaven Coal has brought upon our region environmentally and socioeconomically. Whitehaven has a litany of environmental prosecutions, no social license. And just last week, pleaded guilty to 19 charges for breaching mining laws that caused potentially decades-long environmental damage. Planned expansions will threaten the groundwater I rely on for my business. As a funder of Whitehaven, what is NAB doing to alleviate the concerns of impacted landowners?

Thank you. Again, in the context of not being able to talk about individual customers, I can only talk about what we at National Australia Bank are doing. But as I've indicated and as we've published, we expect to no longer have any meaningful thermal mining civil coal exposure by a date somewhere around 2030 at this stage. So I think that sets out our path forward.

Chairman, we have a question from Jack Bertolus. In August, 25 leading scientists at Australian universities wrote that achieving the Paris Agreement means the time has passed for any new fossil fuel infrastructure, including the proposed expansion of the gas industry in Australia. Yet according to analysis by Market Forces, between 2016 and 2019, NAB loaned $1.2 billion to 12 new or expansionary fossil fuel projects that would enable the release of 2.5 billion tonnes of CO2. Over the same time frame, NAB loaned more than $1 billion to a group of 10 large ASX-listed companies, which are either expanding the fossil fuel industry or relying on energy demand scenarios consistent with the failure of the Paris Agreement or both. When will NAB rule out funding the expansion of the fossil fuel industry?

So I'm not sure I can add any new information other than to reemphasize that over the last couple of years, we have materially reduced our exposure to both, the oil and gas industries and to thermal coal. And in respect of several coal, we have set out a time table for the period by which we expect to have exited and under our commitments to the collective commitment to climate action under the United Nations Environmental Programme, we will be articulating our pathway for oil and gas next year.

Chairman, we have a question from [ Mr. Guy Abrahams and Ms. Kim Abrahams ]. In October, the UN Environment Programme Finance Initiative signed an open letter requesting that assumptions made by companies in preparing financial statements under IFRS be compatible with the Paris agreement. As a member of the UNEP/Fi, what actions has NAB taken to ensure our clients, particularly our large fossil fuel clients, disclose Paris-aligned assumptions in financial statements in line with the open letter demands? What consequences do clients face if such assumptions are not disclosed?

So improving climate disclosure is important for us as a bank. And also, we see that as an important issue for our customers as well. We are working with 100 of our large emissions and temps or energy dependent clients to understand their transition planning. But obviously, with the way that we expect the world to head, companies that do not have a transition path towards 2050 will run the increasing risk of their business models no longer being viable. And as a bank, for us, that becomes a risk exposure, and that's why we're taking the comprehensive approach that we are taking on managing climate risk.

Chairman, we have a further question from Mr. Guy Abrahams and Ms. Kim Abrahams. In October -- excuse me, we've read that question before. We have a question from [ Molly Wickham ]. Chairman, we received multiple questions from [ Moly Wickham, Noah Ross and any Morgan banks ] on the topic of NAB's involvement in a pipeline project in Canada. We have selected the question that best represents the scope of those questions to be read to the meeting. It is as follows. There are 3 [ wet sweat ] on reoccupation sites along the pipeline route under the authority of the [wet sweat ] on hereditary chase. [indiscernible] clan please excuse the pronunciation. The hereditary chiefs have and still do oppose these projects and have not provided their free prior and informed consent for the project. CGL argued in court against the wet sweat on that their resistance had already cost them millions, and we know that the resistance, since that time, has cost some millions more. How many millions are set aside in dealing with ongoing wet sweat on resistance?

Thanks for the question. But I think as shareholders will understand from the question, this is a question about the operations of one of our customers. And as you fully appreciate, we're not at liberty to disclose issues relating to our relationships with customers. And of course, in many cases, the questions seem to relate to issues within that company, which we are not necessarily privy to. So I really cannot answer the question other than to acknowledge the issue that there is a pipeline that is clearly a sensitive issue, and we're aware of it.

Chairman, we have a question from [ Mr. Will Stefan ]. As a climate scientist, I know that if we are to avoid catastrophic climate change and limit warming to under 2 degrees Celsius, there cannot be any expansion of fossil fuel production, coal, oil or gas. Existing and planned fossil fuel infrastructure is already sufficient to exceed a 2 degree target. NAB has already committed to phasing out coal but continues to provide finance to the gas industry. This is not consistent with the Paris accord. With significant transition and repetitional risks of continuing to lend to the fossil fuel section, will NAB adopt a policy to rule out any further financing of new gas projects?

Again, I made the comment earlier that over the last year, our exposure to oil and gas has moved from about $4.1 billion to just over $2.7 billion, quite a material decrease, nearly 30%. And we are committed to having a more clearly articulated pathway by this time next year under our commitments under the UNEP collective commitment to climate action. So the answer is that when we publish that pathway, you will see the way in which that we expect the oil and gas exposures to move over time --

Chairman, we have received multiple questions from Charlotte Cox and Anusha Müller on the topic of the Beetaloo Basin gas project in the northern territory. We have selected the question that best represents the scope of those questions to be read to the meeting. It is as follows. Fracking in Beetaloo Basin would release 22 billion tonnes of CO2 equivalent emissions. Globally, in 2020, we will have witnessed the impacts of climate change, most notably, catastrophic bushfires in Australia and now California. People have lost lives and livelihoods. The science is clear. We need to leave all new reserves of fossil fuels in the ground to avoid the worst impacts of climate. NAB lend $3.8 billion in June 2018. And in 2019, a $500 million bank guarantee. Traditional owners have repeatedly refused consent. Will you continue to invest in Origin Energy?

So I don't think I can add anything new to this question from what I've already said about our -- and I'll reiterate the migration that we have planned, and we will be clear on this time next year in terms of our oil and gas. Our commitment to work with our -- with 100 of our high emissions customers to ensure that they have their emissions -- sorry, that they have a transition plan to a net 0 economy by the middle of the century. And it will be judged by our actions in achieving those. So I'm not sure if I can add anything here again because it gets specific to an individual customer, which I'm not at liberty to discuss.

Chairman, we have a question from Dr. Diana Sainsbury and Dr. Peter Sainsbury. Page 37 of our sustainability report makes the case that there must be planning and investment before the closure of coal mines to avoid stranded workers and stranded communities, during the transition, to a low-carbon future. Yet in February this year, almost 5 years after the Paris Agreement, our bank loaned $110 million to Whitehaven Coal, an entirely undiversified coal mining company with no diversification plans. Why is NAB creating the conditions for the negative impacts you say must be avoided?

So the reason that we have signed up to the collective commitment on climate action to set out a transition pathway is so that we can, in a measured way, achieve exactly the end goals that I think you as a questioner are asking us to do. And everything else, I think I can say I have said.

Chairman, we have a question from Adam McCray. I'm a fifth generation farmer from Coonamble, New South Wales. My farm and the community I live in, like many others, is located and completely dependent on the great Artesian Basin. It is only the source of permanent freshwater for farming and non-farming businesses, service industries and communities. Santos and APA, funded by NAB, are pursuing projects that pose unacceptable risk to the health of the GAB. What actions have you taken to understand the impacts these companies are having on our communities?

Thank you. Again, I can't speak about the individual companies that you've sought to name other than to say that we review the impact that all of our sensitive transactions have, and it will be always in the context of our medium-term scenario planning.

Chairman, we have a second question from [ Dr. Diana Sainsbury and Dr. Peter Sainsbury ]. In December 2017, NAB said we will no longer finance new thermal coal mining projects. NAB has breached this commitment multiple times. For example, NAB's 2018 loan to New Hope, which disclosed the loan was sufficient to fund the New Acland Stage 3 thermal coal project. This has been raised by shareholders and members of the standing committee on economics. Who is responsible for the breaches? What disciplinary action will result? When does NAB intend to review and withdraw its exposure to affected borrowers?

So all -- again, these questions have a strong element of repetition, but there is no breach that I'm aware of our policies in this issue. And that all sensitive lending is reviewed. And the reduction in our lending to thermal coal is well documented, and our path to net 0 is clear and should be available to all shareholders.

Chairman, we have a question from Grubbs Superannuation Proprietary Limited. Of the $42.5 billion we committed to environmental finance since October 2015, how much of this was directed towards renewable energy? This is not disclosed in our sustainability report or accompanying data pack, which simply shows the breakdown of finance type.

Sure. Okay. The -- my understanding of renewable energy project finance is that around $10 billion has been -- sorry, has been lent under that. That's a cumulative number. Obviously, there has been runoff. As at now, we have something like $5.5 billion of exposure to renewables. Again, for the benefit of broader shareholders, that $5.5 billion of exposure to renewables compares to $670 million in thermal coal that we spoke about earlier and around $2.7 billion in oil and gas. The rest of the broader environmental financing is, of course, in the much larger issues that are much more material for our organization around environmental finance in agriculture, environmental finance in energy-efficient buildings, both commercial and residential and so on as well as other green projects. So that -- I hope that answers the question, but yes, $10 billion is the amount that we financed over that period into renewable energy.

Chairman, we have a question from [ Mr. Selvan Krep ]. Although there is a myth based moratorium on nuclear energy, historically, statistically, the safest form of low-carbon base load energy source. Safety will be further enhanced by the new generation 4 small modular reactors. Has NAB explored the role that nuclear could play in low-carbon future?

Well, the answer is no because none of our customers have come to us with proposals for nuclear energy. And it's, quite frankly, not our role to choose which technologies are the most appropriate. That will be a function of the way most of these technologies evolve, their costs, the economics of them. My understanding at this stage is that the cost curves for onshore wind and solar present the most cost-effective ways of generating, even though there are a lot of questions around -- issues around stability and reliability, which is why other forms of energy are being contemplated also other technologies that may overcome the intermittency issue that solar and wind produce, but this is not really a question for us to answer.

Chairman, we have a further question from [ Dr. Diana Sainsbury and Dr. Jeffrey Sainsbury ]. The Chair said during this meeting that there is increasing consensus that the world needs to be net 0 by 2050. That's correct, but advanced countries need to get there by 2040. Will the Board review this?

Well, again, it's not a question for the Board. The issue of Paris Agreement is an intergovernmental agreement. Our role is to ensure that our lending practices are consistent with those into governmental agreements. So I note your point, but it's really outside of our purview.

Chairman, we have a question from [ Mr. Terence Berg and Ms. Lannett Berg ]. Chairman, the NAB has made a commitment to withdraw lending from all coal industry businesses. Does this mean withdrawing from supporting all supply chain businesses as well? What impact will this have on NAB business? And what is the strategic plan to replace this business in NAB?

So the mining sector as a whole, obviously, has a whole range of ancillary businesses, and we are bankers to many of those. And it's the -- I need to just stress for the benefit of all shareholders that our planned phase out as of thermal coal, there's expected to be ongoing metallurgical coal mining after 2030. But obviously, in the context of the commitment by 2050, we would expect fossil fuels generally to be largely eliminated, although just bearing in mind the commitment that governments have signed up to us to a net 0. So there may be some ongoing role at a low level for some fossil fuels. So the strategic plan essentially is to work with customers as they identify alternative energy sources and look at the new energy -- the new industries that arise in that context. Hence, the lending that we've done into renewable energy projects, which have downstream and upstream industries associated with them as well, and we look forward to being able to be a banker to those industries as they grow in the future.

Chairman, we have a further question from [ Mr. Terence Berg and Mrs. Lannett Berg ]. Chairman, the NAB has committed to the Paris Climate Agreement. The Paris Agreement has a commitment to reduce live animal farming. Will NAB be reducing its exposure to the farming and supply chain businesses? And if so, how will NAB replace this lost income?

So again, there are a number of ways in which the emissions from animal farming can be offset or reduced. So we have an ongoing interest in agriculture. And the -- all I can say is that it's an area of considerable interest to us. But it highlights the point I've been trying to make before, which is that the issue of getting to a net 0 emissions lending portfolio by 2050 does involve having a comprehensive view of how emissions arise and how transitions are going to be affected. So the -- hence the desire of this board to get the debate away from one single industry and actually elevate it to this broader issue. So we agree with the sentiment, which is that the world of net 0 emissions is going to look very different from the world we're in today, and we need to be helping customers identify what opportunities that presents because some industries will be reduced, but other industries will increase. And it's exactly that strategy. And I'm glad you've asked the question in this way. It's exactly that broader approach that we think is the most appropriate for a company like ours to take.

Chairman, we have a further question for [ Mr. Terence Beg and Mrs. Lannett Berg ]. The NAB has committed to the Paris Climate agreement as its guiding strategy. Has the Chairman read this document? Has the whole Board read this document?

I've -- so I've heard summaries of the Paris Climate agreement. I'm not sure that I've read the whole document. I can assure you that I have read the whole of the collective commitment climate action under the unit framework, which I made a point of -- during the course of this year. And I imagine that the rest of the Board will be in a similar position to me of having read summaries of the Paris Agreement, bearing in mind that the Paris Agreement is itself an intergovernmental agreement. The document that's most relevant to NAB is the UNEP/Fi collective commitment on climate action. And I'm sure most of the Board will have read that.

Chairman, we have a question from [ Rita ]. Chairman, is there a conflict of interest to the farmer when green bonds are created through carbon trading without the farmers' knowledge?

I'm not sure I can answer that question because I'm not sure I even understand how a green bond can be created without a farmer's knowledge. So I'm just going to have to pass on that one, I'm afraid.

Chairman, we have a further question from Mr. [ Selvan Krep ]. Does NAB support China's climate change policy by proxy on behalf of the fossil fuel led Australian federal government. Would NAB support further proxy initiatives by foreign powers such as the banning of gas imports?

So again, it's well beyond my role in life to advise other governments on how they are going to adjust to a net 0 emissions world. We've taken the path, which we think is most appropriate for NAB, which is the collective commitment to climate action, understanding what that requires of us, what's likely to be the implication for the Australian economy and adjusting our lending portfolios accordingly.

Chairman, we have a question from [ Mr. Stephen Maine ]. Will the Chairman read out or display the proxies on these 2 resolutions before the Q&A session is closed, so that shareholders can ask questions about why there has been a material rejection of the Board's voting advice, if that is indeed the case's occurred at ANZ's recent AGM? This earlier proxy voting disclosure is Australian Shareholders' Association best practice and should have been adopted by NAB on all resolutions today.

So the answer is no. We will be disclosing it at the relevant item of business, but we'll take the point I'll notice for any future resolutions that may occur. I can assure you that in relation to 6a, there will not be a rejection based on my understanding of the proxy votes at this moment. Are there any further questions, Virginia?

Chairman, there are no further questions on this item of business.

As there are no further questions, I'll now formally put the motion for 6a that NAB's constitution be amended to formally and publicly allow shareholders the opportunity at shareholder meetings, such as the Annual General Meeting. Two, alert Board members that shareholders seek more information or favor a particular approach to corporate policy, direct and proxy votes received in advance of the meeting for this item are now displayed on the screen. We have received 92.6% of votes against the resolution. Please record your vote now, and if you have not already voted. Based on the results of direct voting in advance of the meeting and proxy votes, we're able to determine this resolution has failed. As item 6a was not successful, item 6b will not be put to the meeting. As I said earlier, in the spirit of transparency, we will now share the proxy votes received in advance of the meeting in relation to this conditional item. Direct and proxy votes received in advance of the meeting for the item are now displayed on the screen. We received 73.3% of votes against the resolution. That now covers all of the formal business of the Annual General Meeting. I will now open the meeting to general questions. And I want to be clear that this is for general questions that have not been covered already. Virginia, have any further questions been submitted during the meeting?

Chairman, we have no further general questions.

Thank you. As there are no general questions, on behalf of the Board, executives and staff of the company, I'd like to thank you all for joining us today. On behalf of the Board, I once again want to thank Geraldine McBride as she retires at the end of this meeting. Geraldine, we will miss your passion and the perspective you have bought to the table. I'd also like to thank our customers and shareholders for their continued support of National Australia Bank. And I now formally declare this annual General meeting closed and confirmed that voting will remain open for a further 10 minutes to allow ample time for shareholders and proxy holders to submit any final votes. Voting results will be released to the ASX and will also be available on the AGM page of our website. Thank you.