A Global Economic and Market Outlook May 2010 Presented by Dr Chris Caton

2 Key Budget parameters

3 It’s the economy, stupid: how the Budget outlook has changed ( cumulative 2009/10 to 2012/13, $billion)

4 Mission accomplished; real growth in spending is held below 2%

5 Australia is a paragon when it comes to public debt

6 Government net debt for various countries – Australia simply doesn’t have a problem

7 Major savings in the Budget

8 Financial Market Forecasts Now (27 May) End-June 2010 End-Dec 2010 AUD/USD Official cash rate (%) Year Bond yield (%) ASX

9 The Australian Dollar and US Trade Weighted Index Source: Datastream IndexAUD/USD US TWI inverted (LHS) AUD/USD (RHS)

10 Australian Sharemarket Performance – ASX200 Source: Bloomberg

11 As a result of the recent correction the Australian market is again cheap (forward P/E ratio)

12 Recoveries from “big ugly bears”

13 Australian shares still look to be good value

14 US Housing starts have stopped falling Source: Datastream (Millions)

15 US Employment is looking better Source: Datastream 3mth / 3mth chg(%)

Growth Forecasts (%) Month of Forecast N-09D-09J-10F-10M-10A-10M-10 Australia New Zealand US Japan China Germany UK “World” Source: Consensus Economics

17 Real GDP growth in Australia and the US Source: Datastream Year to % change

18 Retail trade was so much stronger here, but has been weak lately

19 Export growth *(volume, %change, 9 months to June quarter 2009)

20 Our exports to China

21 The Labour market is on the mend Source: ABS 000’s% Employment (LHS) Unemployment Rate (RHS)

22 Australian Inflation Source: ABS % BT Forecasts GST Effect

23 Interest payments as a share of after-tax household income (%)

24 House Prices - Australia v Sydney Source: ABS Index (1987 = 100)

25 Another look at house prices (in thousands!)

26 Gross Domestic Product Source: ABS % BT Forecasts GST Effect

27 Source: Consensus Economics GDPInflation Australia United States New Zealand Canada Norway Sweden United Kingdom Netherlands Switzerland France1.8 Spain Euro Zone Japan Germany Italy Global Medium-Term Economic Growth and Inflation Prospects ( )

28 Asia-Pacific Medium-Term Economic Growth and Inflation Prospects ( ) GDPConsumer Prices China India8.0na Indonesia Malaysia Philippines4.9 Thailand Singapore Taiwan South Korea Hong Kong Australia New Zealand Japan Source: Consensus Economics

29 Morgan Stanley Capital Indexes Source: Datastream Developed IndexAsian Emerging Markets Index Asian Emerging Markets Index (RHS) World Developed Index (LHS)

30 Summary  The global economic recovery continues, with the US and Emerging Asia doing better than Europe.  The Australian economy survived the GFC remarkably well.  Rates will probably rise further.  The exchange rate is still above fair value.  Shares should resume their rise soon.

31 This presentation has been prepared by BT Financial Group Limited (ABN ) ‘BT’ and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on :00am to 6:30pm (Sydney time)

32 Small business variable lending rates