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

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

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

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

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

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

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

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

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

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

11. 1.4 – Corporate Australia Re-Capitalised Corporate Australia re-capitalises, with A$120 billion since January 2008. 11

12. 1.4 – Corporate Australia Re-Capitalised Australian Major Banks’ Net Profit (yearly). 12 $b 16 12 8 4 0 -4 $b 16 12 8 4 0 -4 1984 1969 1994 1999 2004 2009

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

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

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

16. 2.1 – Consumer Price Inflation Consumer Price Inflation 16 % 5 4 3 2 1 0 % 5 4 3 2 1 0 % 5 4 3 2 1 0 1997 2000 2003 2006 2009 Year-ended Quarterly

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

18. 2.3 – Consumer Spending Patterns Household Consumption and Income Growth (Year-ended). 18 % 6 3 0 -3 1997 2000 2003 2006 2009 % 6 3 0 -3 Real household disposable income Real household consumption

19. 2.3 – Consumer Spending Patterns Retail sales by Industry (March quarter). 19 Index 300 250 200 150 100 50 Clothing, footwear & accessories Total motor vehicles Household goods Index 300 250 200 150 100 50 1997 2000 2003 2006 2009 2000 2003 2006 2009 Department stores Food Other Cafes, restaurants and takeaway services

20. 2.4 – Wages Percentage Change. 20 % 6 4 2 0 -2 % 6 4 2 0 -2 1997 2000 2003 2006 2009 Wage price index quarterly Year-ended Wage price index Average earnings Year-ended Average earnings quarterly

21. 2.5 – Credit Growth Credit by Sector (Year-ended percentage change) 21 1998 2002 2006 2010 % 20 10 0 -10 % 20 10 0 -10 Housing Business Personal

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

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

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

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

26. 3 – Going Forward The global outlook is a positive backdrop, but not without risks. Global growth recovery forecasts remain robust – Despite market nervousness over tightening liquidity and sovereign credit – Pattern remains Asia leading and Europe lagging – UK PMI at 15 year high, Euro area at 3.5 year high, Germany at 10 year high Global trade recovered 65% of volumes lost during GFC (emerging markets ~90%) Australia and China are intertwined – Current spot prices for iron ore and coal could boost GDP by 1% Interest rates and GDP growth should surprise on the upside AUD to weaken in 2H 2010; range trade 86-94 US cents 26

27. Item 4. BRICs and PIGs 27

28. 4 – BRICs 28

29. 4 – Economic Activity in the BRICs Industrial production accelerated in China in Jan-Feb to the highest level since the start of the data series in 2005. In India, WPI inflation was 9.9%yoy in February, higher than expected. In China, inflation also picked up to 2.7%yoy in February. 29

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

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

32. 4 – PIGs Sovereign Debt Crisis 32

33. Item 5. Close and Questions 33