Q3 Trading Update

10/08/2010

London, 10 August 2010: National Australia Bank Group, owner of the Clydesdale and Yorkshire Banks, today released a trading update for its UK Region’s* operations in the quarter to 30 June 2010.

Customer Support

• The business remains on track to deliver £10 billion of gross new lending to businesses and mortgage customers by October 2011

Business Performance

• Continuing to perform well despite the difficult market conditions
• While credit demand remains subdued, business confidence is showing some signs of improvement
• Deposit growth remains strong in a highly competitive market
• The charge for bad and doubtful debts has improved on the prior corresponding period although trading conditions remain challenging for businesses and this is reflected in asset quality measures
• The ratio of 90+days past due and Gross Impaired Assets to Gross Loans and Acceptances increased to 3.36% from 2.98%, although the coverage ratio of total provisions to GLAs has also increased to 1.51% (June 2010), 1.40% (March 2010) and 1.37% (September 2009)

Outlook

• The UK economy showed signs of recovery during the quarter, but overall a cautious outlook remains appropriate. The economy is still absorbing the effects of the June emergency budget which set out the new government’s programme for deficit reduction. Financial concerns about European banks are an additional reason for caution.

Lynne Peacock, Chief Executive, said:

“We continue to follow a very steady and prudent course. While the signs of economic recovery remain encouraging, our strategic direction is unchanged. Firmly focused on growing our existing business, we remain committed to supporting our existing customers and are on track to deliver £10 billion of gross new lending by October next year.”