Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Non-Deal Roadshow (June 2004)
46 slides from Commonwealth Bank Of Australia's roadshow presentation, Jun 28, 2004
Slide 1: Roadshow Presentation
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 28 June 2004. It is information given in summary form and does not purport to be complete. ft is not intended to be relied upon as advice to i
Slide 3: Speaker's Notes
Speaker’s Notes Speaker's notes for this presentation are attached below each slide. To access them, you may need to save the slides in PowerPoint and view/print in “notes view.” Which: Blank Commonwealth ia
Slide 4: Agenda
Agenda » Economy » Highlights of Half Year Result to 31 December 2003 Progress Update 19 May 2004 Wihieky Blainie Today's presentation will consist of three parts: « Firstly, | will provide you with an overview of the economic environment the Bank is operating in. «+ We will then touch on the highli
Slide 5: Economy
Economy Starting off with the Bank’s economic environment.
Slide 6: Economic Environment
Economic Environment AUSTRALIA: HOW WE COMPARE ~, OFFICIAL INTEREST RATES {the last 10 years) 8 8 Jul-O2 Jut-S4 Jul-96 Jul-98 JubOd JulO2 Jutos IB united states EF austraia Source: RBA, OECD Source: RBA Wied Banak ici Fos + As you can see from the chart on the left, Australia has outperformed the US
Slide 7: Credit growth expected to moderate
Credit growth expected to moderate CREDIT 9 (annual % change} ig 40 40 Business personal yl J Sep-82 Sep-86 Sep-90 Sep-d4 Sep-98 Sep-02 Source: RBA. The most recent data point is for March 2004, Wihieky Blainie Conmonwealth ik If we look at credit growth. * Strong economic growth and low interest ra
Slide 8: Highlights of Half Year Result to December 2003
Highlights of Half Year Result to 31 December 2003
Slide 9: Highlights of Half Year Result
Highlights of Half Year Result « Good result: underlying profit growth of 17% to $1,487m « Another record dividend: 79 cents per share « Productivity improvement in all businesses « Further improvement in credit quality « Continued strengthening of Tier 1 capital « Which new Bank meeting early expec
Slide 10: May 2004 Quarterly Progress Update on Which new Bank
The following slides comprised the 19 May 2004 Quarterly Progress Update on Which new Bank 10
Slide 11: Overview
Overview « Our achievements over the past three months — on schedule « Our progress — gathering momentum « Our people - willing to change « Our customers - strengthening their relationships with us Which: Blank Commonwealth ia a 11 * We are on schedule * We are working hard * We are starting to see
Slide 12: Which new Bank highlights
Which new Bank highlights » We will complete all major June 2004 milestones as planned Moving from design to implementation of our most important activities » We expect to deliver 2003/04 spend within planned investment » 2003/04 benefits are likely to exceed targets Emphasis is now on delivering 20
Slide 13: Today's agenda
Today’s agenda Drivers for success Video presentation Today’s agenda: * Progress update on key initiative milestones and financial targets * Progress on key initiatives which are drivers for success during this phase + View a video that we are using as part of our cultural change, showing how initia
Slide 14: Three themes of our service transformation
Reminder: There are three themes to our service transformation “To excel in Customer service’ » Service/Sales (4) Performance Culture (1) » Support (4) Effectiveness » Process/product (3) »'TEnablers (2) » IT Efficiency (2) » Distribution Efficiency (3) « Purchasing (2) » Product (2) {) = Number of
Slide 15: Reminder: Financial impact and outcomes
outcomes Reminder: Financial impact and Over the next three years we will: » Redirect the normal project spend of $600m » Spend an additional $620m « Invest a further $260m in our branch network Which: Blank Subject to current market conditions continuing Over the next three years this will result i
Slide 16: Moving from design to implementation
Moving from design to implementation of our most important activities Sep 03 Jun 04 Jun 05 Jun 06 Planned net $ 200m $ 620m $900m benefits * Progressive pre-tax benefits within each year ¢ Early opportunities realised and scope & design of major activities being finalised + We are already commencing
Slide 17: Progress report on workstream activities
Progress report on workstream activities: June 04 now locked away rkstreal 604 | Jon 04 dl in OS | Ja ¢ Segment Alignment Advice Implementation Service and Sales Divisional Service and Sates infrastructure Single Service View (CommSae) Distribution Optimisation Distribution Efficiency Branch Refurbi
Slide 18: We will complete all major June milestones as planned
We will complete all major June 04 milestones as planned Dec 03 Apr i ‘a ij = 7] 1. Centre for Adviser Development - launch _| 2. Service & Sales Management - 13,000 staff [70% E| 2 | 3, Branch sales effectiveness training - over 3,000 staff : | 4. CommSee - Launch in Tasmania .| 5. Branches - refur
Slide 19: We expect to deliver 2003/04 spend within planned investment
We expect to deliver 2003/04 spend within planned investment Customers 158 270 220 130 Processes 477 280 O8 People 3 16 9) 0] 338 560 425 6 228 Branch 49 400 8 | 8S Refurbishment Total 387 660 40 340 2004, 2605 and 2006 estimates are as disclosed in September 2003 Which new Bank presentation ‘Wiliin
Slide 20: 2004 benefits are likely to exceed targets
2004 benefits are likely to exceed targets FYOSE | FYO6E Gm) | Gm) Customers 132 145 366 498 Processes 56 55 260 408 People 0 0 6 0 Total 188 200 620) SO) 2004, 2005 and 2006 estimates are as disclosed in September 2003 Which new Bank presentation Which Bank Comnemenatihcek 2 - 20 * Achievements to
Slide 21: Today's agenda
Today’s agenda Program status Video presentation ‘Wihieth laink Conmmaoenmealtth ti: <> ot + Examples of 5 initiatives which are drivers for success * Fundamental to the program * Other initiatives will play an equaily important role in later stages of Which new Bank 21
Slide 22: Good progress on key customer, people and process initiatives
We are making good progress on key customer, people and process initiatives _| « No. 2- Service and Sales Management 2| « No. 4- CommSee S| « No. 9 - Performance Culture Program _| « No. 10 - World Class Processing Principles (CommWay) = « No. 11 - Home Loan End to End Which Bank Conmomeraalthiiei:
Slide 23: Service and Sales Management
No. 2 - Service and Sales Management 2 Service and sales meeting each week for all staff Training is tailored for specific client segments e Bank-wide approach to referrals e Service and sales processes reinforced through measurement, incentives, reporting, awards and recognition Whiet Banke ‘Conmon
Slide 24: Service and Sales Management: national retail results
No. 2 - Service and Sales Management Results of national retail implementation Product Sales per Staff Member 418 143 18 405 104 Week 1 Waok 2 Viouk 3 Woek 4 Weak S Waok 6 Wowk Wook & : Cross Sales Ratio* Commannvenalthy lic: 24 * You will remember last time we spoke of results of 120 branches in So
Slide 25: CommSee
No. 4 - CommSee CommSee chosen as Bank-wide service and sales solution Prototype went live in Tasmania in February Staff and customers are positive signatures and documents imaged all customer interactions recorded leads and referrals tracked Developing a new unified front end platform Prototype wil
Slide 26: CommSee: Rapid Implementation Schedule
No. 4 - CommSee Rapid Implementation Schedule 1,006,000 CommSec National {Advisory CHlents} Rollout 800,000 Wy Z Tasmania PFS aa 600,000 4 400,600 Customers: 200,600 Oct-03 Dee-03 Dec-04 Feb-05 =— Customers Which Bani CannonmaalthGas ¢ a 26 * 250,000 customers are now benefiting from CommSee, and th
Slide 27: Performance Culture Program
No. 9 - Performance Culture Program Six Fundamental Principles: « Providing clear and decisive leadership « Empowering people and making them accountable « Encouraging learning and growing to develop our people « Promoting trust and team spirit « Demonstrating discipline and excellence in everything
Slide 28: Staff are positive about Which new Bank
No. 9 - Performance Culture Program Staff are positive about Which new Bank iunderstand need for WnB lam very informed about WaB Initiatives from WnB help me do my job better Source: Staff Survey May Which Bank Commomweatthiin: <p 55 We recognise that engaging our staff through communication is a cr
Slide 29: World Class Processing (CommWay)
No. 10 - World Class Processing (CommWay) Developed a CBA-owned, permanent approach to continuous improvement of processes and operations Combines proven business improvement elements from Six Sigma & Lean Processing methodologies Five pilots in operation across the Bank Initial focus on volume proc
Slide 30: World Class Processing (CommWay): cheque processing
No. 10 - World Class Processing (CommWay) Day 1 cheque processing: Sydney Increase in iterns/staff-hour relative to baseline 25% process improvement over baseline Translates to 15% productivity improvement o FP SP SP OS SS OS FoF FS OE SEE OOS 8 fe get PPP PP EE KE KS PF SS Source: GBA Gperations Pr
Slide 31: Home Loan End to End
No. 11 - Home Loan End to End Significant processing, turnaround and service improvements Forthcoming changes focused on back end processing Enhanced service offering through recent product changes Improvements underpinning increased customer loyalty Which Bank at * Substantial improvements made to
Slide 32: Home Loan End to End: refinancing runoff
No. 11 - Home Loan End to End Seasonally adjusted external refinancing runoff 110% Home Loan E2E changes implemented 6% * 100% i 98% @ s om j 85% 80% 78% Wu Augd3 Sep-03 ons Now0s: Dec-03 Jane Feds ‘Mear04 “indexed fo average of 6 imgnittis to end of October 2003. Whiel awk «Graph measures improveme
Slide 33: Strength of relationship is increasing
Strength of relationship is increasing Strength of Relationship Apr-Jun 63 Jul-Sep 63 Oct-Dec 83 Jan-Mar 64 Time ¢ Strength of relationship score for CBA customers increased from 5.8 in December quarter to 6.1 in March quarter ¢ Strength of relationship measures, among other things, a customer's int
Slide 34: Market shares are stable
Market shares are stable + Home loans — holding our strong position in prime market, with small involvement in low documentation loans + Deposits — holding market share and competing well with niche players * Business Lending - stable market share with good underlying momentum in all segments + Mana
Slide 35: Segment Alignment - Strong Fact Base to Support Change
Segment Alignment - Strong Fact Base to Support Change Customer intelligence + Extensive review of existing research * 22 additional focus groups 4 External intelligence y 4 x Internal intelligence + Interviews with experts in + Interviews with frontline staff 14 countries + Extensive syndication wi
Slide 36: Segment Alignment - Extensive Customer Research
Segment Alignment - Extensive Customer Research The message is that customers: Are comfortable having differing product and service needs met through different models Want expectations on simple needs met before entrusting with complex needs Have complex needs that are mainly shaped by the stage of
Slide 37: Segment Alignment - Proposed model
Segment Alignment - Proposed model through the customer’s eyes Simple needs Compiex needs Proactive contact +Frontline staff can resolve most issues on the spot, particularly on “pain threshold” issues +Bank fulfils basic service requests efficiently and with minimal errors +No difference from most
Slide 38: Simplified Structure
Simplified Structure + An example of segment alignment is the combination of PFS and IBS and the alignment of business and premium customer segments, as announced yesterday * The resulting wider application of CommSee and simpler structure of domestic banking services creates a common relationship a
Slide 39: Today's agenda: video
Today’s agenda Program status Drivers for success Wikies Bank Commonwealth <> 3 «Video is being used for training and gives a flavour of the approach to cultural change and our focus on it PLAY VIDEO 39
Slide 40: Which new Bank summary
Which new Bank summary We will complete all June 04 milestones as planned Moving from design to implementation of our most important activities We expect to deliver 2003/04 spend within planned investment 2003/04 benefits are likely to exceed targets Emphasis is now on delivering 2004/05 and 2005/06
Slide 41: Supplementary material
Supplementary material Wihieh Blane ESR Be <9 at 4l
Slide 42: Which new Bank milestones
Which new Bank milestones Centre for Adviser Development - jaunch | « Service & Sales management - 13,000 staff Branch sales effectiveriess - 3,000 staff CommSee - Launch in Tasmania Branches - refurbish 125 Business banking redesign - complete Queue management - implement new approach Enhanced Firs
Slide 43: Investments & Benefits
Investments & Benefits Initiatives 870 425) 225) 4,220 Branch refresh 90 85) 85 260) Total investment Spend (pre tax) 660, 570] 316) 41,480] |Estimated Benefits (pre tax} TF | 200] 620] 900] (1) Estimated benefits are recurring and continue to grow beyond 2006. They are comprised of 50% cost savings
Slide 44: Impact on Annual Profit
Impact on Annual Profit (excluding all benefits and amortisation) Software capitalised Branch refurbishment Provision Expensed 480 220 410 Total spend Provision for future years. 210 +133 -77 Capitalised amounts ~480 -187 ~123 Normal spend 200 -200 -200 Exp. previously capitalised software 215 - - B
Slide 45: Investment spend
Investment spend Sales and service effectiven Distribution efficiency Product offering IT enablers: :| Product and process simplification .| Purchasing/property ‘| FT efficiency Performance culture Which Hank $0-49m $50-99m (C) st0om+ + From October 2003 roadshow presentation 45
Slide 46: Benefit analysis
Benefit analysis | Sales and service effectiveness Distribution efficiency Product offering tT enablers Product and process: simplification Support redesign Purchasing/property :| IF efficiency | Performance culture IRevenue Eost saving [EA so-4em $50-99m, (J $100m+ onnmnonwealth iia i 46 * From Oct
Commonwealth Bank of Australia — Non-Deal Roadshow (June 2004) on 6ix