Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Non-Deal Roadshow (November 2002)
53 slides from Commonwealth Bank Of Australia's roadshow presentation, Nov 5, 2002
Slide 1: November 2002 Investor Roadshow
November 2002 Investor Roadshow David Murray Chief Executive Officer Stuart Grimshaw Chief Financial Officer www.commbank.com.au
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, 4 November 2002. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice t
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.”
Slide 4: Agenda
Agenda « The Australian Economy and recent Equity Market Performance « Commonwealth Bank: Track Record, Differentiators and Growth Drivers « How is Commonwealth Bank Positioned Against the Current Outlook? This is the agenda for today’s presentation. | will be covering three areas: + In the first se
Slide 5: The Australian Economy and recent Equity Market Performance
The Australian Economy and recent Equity Market Performance
Slide 6: Australia's Economy has been Resilient
Australia’s Economy has been Resilient GDP RELATIVE GDP GROWTH {annual % change} or {annual % change) 6 Australia 4 AA a ae fe 8 s % "2 3 Leng-run s ° [ A ar po GY pos o \f 2 al Sep-88 Sep-91 Sep-94 Sep-97 Sep.00 Sep-87 Gop-90 Sep-93 Sep-s6 Sep-aa Gap-62 20 PROFITS. ses VALUE OF RETAIL cay (% of GOP
Slide 7: Interest Rates & Credit Growth
Interest Rates & Credit Growth CREDIT THE CASH RATE 30 7 (3month-ended annual rates) ‘Tr CBA (f) fo) T 20 + “y Wea v\ P| Market (f iol va) , (dun ‘02) i) — on Market (f) (Oct '02)} 9 L 4 1 1 1 1 1 Jub97 Jul-98 Ju+99 JubOO JuFO1 Jul-02 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Business — Housing Other perso
Slide 8: Housing Market
Housing Market EQUITIES AND HOUSE PRICES HOUSING LOAN (RELATIVE PERFORMANCE) ,, gp, APPROVALS 000 index 718 6r 7 46 250 J House Prices* (hs)P-4 4g +14 200 5 Ait Ords~(Ihsy 4 } 7 30 + 12 150 Owner-occupied 1 710 (ex refinance tg 27 7 15 100 Investor Mortgage rate (rhs 7 & (Ihs) 50 Jriclesx 4 0 1 4 n
Slide 9: Housing Market
Housing Market House Price as Multiple of Gross Yearly AWE* Sep02| — Sep-99)Change | Sydney wd MOB] 8:5]. 25% Melboume 67 53| 2% Brisbane cmb DO] ABT 25% Perth 50 46] Adelaide | SOL. 3.8] 82% Hobart p32, 3.5] 8% Canbera | BB] 48] 2a%e Dawn 56 5.1] 10% Total Australia 76 62] 23% AWE: average weekly e
Slide 10: Housing Market
Housing Market || Reais Gioicaimnoante Rosen aise elena euskal soe fp 8 In terms of consistency with longer term trends, real house-price growth is running at a rate above the peak of previous cycles, but is still well below the exceptionally rapid growth recorded in the late 1980's. The Sydney hous
Slide 11: Australian Equity Market Performance
Australian Equity Market Performance World Equity Market Performance {US$ Currency adjusted YTD%)} 0% 70% -26% 38% 40% -50% YTD Performance +B0% LOL EE OP oo As at close of business 15 October, 2002 _Sourde: Deutsche Bark ‘Commmmwentth iiss): <p 11 If we look to Australian equity markets: Throughout
Slide 12: Australian Banks - Credit Quality
Australian Banks - Credit Quality Global Asset Quality Map - Selected Regions/Segments (2002E) DENMARK g © US MID CAP REG SPA Developed Markets Median NPLiLoans 1.7% US MONEY CENTE: Fa *, a AUSTRALIA *, US LARGE CAP REG 8 ¢ JORTUGAL 120 Developed Markets Mediact LURINPLs 100% CANADA@ USFIDUGARY TRUS
Slide 13: Australian Banks - Shareholder Value Performance
Australian Banks - Shareholder Value Performance Global Five Year 300 5 Shareholder Performance index 250 200 150 index 100 50 0 CBA WBC ANZ NAB Source: Oliver Wyman & Co Shareholder Performance Index, 2002. Seermemmeatihivs Dp 13 ‘Period: covered by index: TJdan 1997-34: Dec 2007 “ As indicated by
Slide 14: Commonwealth Bank: Our Track Record, Differentiators and Growth Drivers
Commonwealth Bank: a Our Track Record a Our Differentiators and Growth Drivers 14
Slide 15: Recent Result Highlights
Recent Result Highlights « Solid Earnings Growth « Reported Profit up 10.7% to $2,655m » Cash Profit up 10.6% to $2,501m » Cash EPS up 10.1% to $1.97 » Costs steady year on year « Improved productivity and cost to income ratio » High dividend payout ratio relative to peers « Capital position remains
Slide 16: Net Profit
Net Profit* Full Year = 2,262 Full Year = 2,501 A AN a ™ 4,200 4 1,109 1,153 Dec 2000 Jun 2001 Dec 2001 Jun-02 @ Banking WM Life & Super Ii Funds Management * Net Profit after tax and outside equity interest - cash basis. Excludes appraisal value uplift and goodwill amortisation. Ceurnernmaalth Bae
Slide 17: ROE and EPS
ROE and EPS 110 5 403-7 28% 100 + = 90 5 80 5 70 5 60 7 50 7 EPS “Dec 00" Jun0 Dec01 " Jun 02 a» cw Earnings per share - cash basis —— ROE - cash basis | ‘Commemmeaith a7): a 17 Following the merger with Colonial, we announced to the market our business plan expectation that the merger would be EPS
Slide 18: Dividend Growth
Dividend Growth r 106 50 % Cents 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 ES First Half @@ Second Half — Payout Ratio Coomemmenithiisi © y 18 The Bank continued its tradition of a high dividend payout ratio relative to its peers throughout the financial year. The Bank's final dividend,
Slide 19: Asset Quality Overview
Asset Quality Overview First Half Second Half Charge for Sad & Doubtful Debts (6 months) $290 $159m Charge for Bad & Doubiful Debis to RWWA eppugtisnd 042% 0.23% Impaired Assets (net af interest reserved) 98am $ee4m Spacitic Provisions, $308 $270m General Provision $1,334n $1,386m Genwrat Provision
Slide 20: Current Operating Outlook 2002-2003
Current Operating Outlook 2002-2003 Core business remains sound Equity market volatility has continued in the first quarter of 2003 Additional costs of governance to be included in first half result: = expensing of employee option plans « restructuring provisions taken above the line Commomweatiiix
Slide 21: Commonwealth Bank: Differentiators
Commonwealth Bank: Differentiators 21
Slide 22: Segmentation: Aligned Domestic Structure with Customer Needs
Segmentation: Aligned Domestic Structure with Customer Needs Retail Banking Premium Investment & Institutional & Services Financial Insurance Business Services Services Services Customer | Personal Premium clients | | Agents, Brokers, institutional, Group banking inefuding Financial Advisers Corpora
Slide 23: Scale: Strong Market Share Positioning
Scale : Strong Market Share Positioning Australian Market Share Jun 2001. Dec 2001 Jun 2002 Rank Home Loans* 20.4% 20.1% 20.1%" (Residentially Secured) Credit Cards 21.4% 21.4% 21.6% Retail Deposits* 24.0% 24.1% 24.2% * Retail FUM(Pian for Life) 16.1% 16.1% 15.7% Superannuation/Annuities 16.3% 16.4%
Slide 24: Australia's Most Accessible Bank
Australia’s Most Accessible Bank Over 146m DirectBanking calts Almost 2m registered NetBank users Around 126,000 EFTPOS terminals Over 10,006 third party advisers, brokers and agents Around 4,000 ATMs Nearly 4,066 postal and private Business agencies Over 1,000 branches Over 700 EzyBanking store loc
Slide 25: Brand: We Have More Relationships Than Any Other Financial Institution
Brand: We Have More Relationships Than Any Other Financial Institution 60 50 40 x 30 20 10 o Popularity of Australian Financial Institutions.... ay ss {p42 w27 ° m2 a M22 e wv a a | om 2 vd cs T T 1 Overall Youth* Premium Retail“ [@NAB Group AANZGroup ©CBAGroup MB Westpac Group i St George Group| ur
Slide 26: Brand: We Achieve Consistently High Ratings from Retail Customers
Brand: We Achieve Consistently High Ratings from Retail Customers Average across all brand attributes for CBA % Vs average of ANZ, NAB and Westpac + In touch with its customers + Is leading the way * Is doing new and different things * Has knowledgabie and competent staff * Has friendly and Jan Mar
Slide 27: Strong Corporate Governance Policies
Strong Corporate Governance Policies « CEQ is the only Executive Director + Audit Committee independence « Roles of CEO and Chairman separate « Limits piaced on share trading * Limits on Board members’ terms of « Options eliminated from executive office remuneration « Nominations Committee establish
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Slide 30: Brand - Colonial First State
Brand - Colonial First State Consumer Brand Awareness - Unaided Consumer Brand Awareness - Total 25% 100% 80% 60% Cotoniat oF 40% Cotoniat First 20% State om Adviser Brand Awareness - Overail Consumer Purchase Intention Opinion of Organisation 8.35 8.20 2.08 7.90 278 7.60 7.48 7.30 4 nce: Consumer C
Slide 31: Funds Under Management
Funds Under Management 120 100 $103bn $billions Dec2000 Jun2001 Dec2001 Jun 2002 Ea Australian Retail Funds Ga Austen Wholesae Furs, I intemationa Funds GB intemal Life Assets — Average FUM in terms of our recent funds management performance: Despite recording growth in underlying earnings of around
Slide 32: Innovation through FirstChoice Masterfund Product
Innovation through FirstChoice Masterfund Product You and your Financia Adviser Colonial First ‘Your financial: future ernment je 20 | would now like to talk about our latest product innovation in non-banking products, “FirstChoice”. In May 2002, the Bank entered the retail masterfund market through
Slide 33: Premium and Business Opportunity
Premium and Business Opportunity Premium Customers 2) Current number of premium customers E4 Potential number of premium customers Business (Middle Market! 1 Current market share FE Natural market share Source : Commonweaith Bank illustration ‘Commemmeaith a7): a 43 As highlighted by the changes fo
Slide 34: Premium: A Differentiated Business Model
Premium: A Differentiated Business Model ersonal. > . . Banker Borrowing Services Lending Services Transactional Banking Advisory Services Banker Direct Investment Investment/ _ Equities a 2 Expert indirect Investment Debt Products Equity Products Broking Platform Event Based -->% __ Adviser Primary
Slide 35: Business: Increasing Cross-sell
Business: Increasing Cross-sell Corporate Segment Example Bundled Products Example Business Banking i 1 1 Working H Capital ccspenwes ' : Services | interest rate risk Financial | Management — ‘Markets | PX products Corporate Finance a 26% of corporate clients use products from all three areas For o
Slide 36: Productivity: Focus on Efficiency
Productivity: Focus on Efficiency Five productivity initiatives... ..to achieve: + Abetter service experience for customers, through greatly improved turnaround times Remove all remaining back-office: functions from branches Streamline home loan. processes. + Elimination of duplication and inefficie
Slide 37: How is Commonwealth Bank Positioned Against the Current Outlook?
How is Commonwealth Bank Positioned Against the Current Outlook? a Credit Quality a Capital Position a Investment Market Volatility a Productivity Focus 37
Slide 38: Commonwealth Bank Group: Low Credit Risk Profile
Commonwealth Bank Group: Low Credit Risk Profile = Housing Loans 53% of total loan book* Loan loss rate of < 3bps in 17 of last 20 years 55% average loan to valuation ratio Extensive stress testing of loan portfolio undertaken « Asset Quality Impaired assets to risk weighted assets of less than 1% i
Slide 39: Credit Risk
Credit Risk Total Individually Rated* Exposures 100% 7 80% 4 61% Investment 60% 4 Grade 40% 7 20% 7 0% 1 Dec 2000 Jun 2601 Dec 2001 Jun 2002 [ wother pRB A WAAAIAA * Corporate and business lending Conmomeealthiist <p 19 The Bank maintains a high quality credit portfolio, with over 60% of the individ
Slide 40: Investment Grade Exposures by Size
Investment Grade Exposures by Size $0-$50m O0$50m-$100m 8 $100m-$250m 1 $250m-$500m $500m-$750m 1$750m-$tbn >$tbn customers ‘Cormemmeatth 275 This slide shows sets out the exposure size of our investment grade portfolio. The bulk of the Bank's investment grade counterparties over $750m are primarily
Slide 41: Offshore: Loans & Advances by Industry
Offshore: Loans & Advances by Industry Other Commerciai Government \ Agriculture cludes New Zealand (ASB) _ Finance _-— Construction , ~~ Personal Leasing ‘Conmeunmeatth ari > 4 Total loans and advances excluding ASB are around $5bn, or less than 8% of total lending excluding home loans. Of these of
Slide 42: Aggregate Provisions
Aggregate Provisions 2,006 7 r 300 4,800 4 4,600 7 250 1,400 4 L o¢0 21,200 7 £1,000 7 P 150 = soo 1 * 600 4h L +00 400 444 F L so 200 4h 4 4k 4 4 E E E ta) LL Se r 0 Jun Jun Jun Jun Jun Jun Jun Jun dun 94 95 96 97 98 99 oo* o1* 62 Ml General Provision E44 Specific Provision — Total Provisions/Gross
Slide 43: Net Impaired Assets
Net Impaired Assets 2500 7 r 36 2000 4 y 30 7 b 24 » 150096 i— A siti r 5 eo | C4 8% & 12 500 4 ite 04 FO Jus Jun Jun Jum dun Jum Jun Jun Jun 1994 «1995-1996 «1997 «1998 «= 1999) «20082001 9 2002 Commoweaith Bank Group (Other Countries)* Ea Commonwealth Bank Group Australia)” -= Net impaired assets
Slide 44: Non-Accrual Loans by Size
Non-Accrual Loans by Size As at 30 June 2002 <$5m $5m<$10m $10m<$20m ae Customers: $20m<$50m |). >=$100m $50m<$100m ‘Comnmnacewonaaitn fx 2: cf 44 We have continued to focus the development of our credit management methodology and portfolio management to ensure we manage the concentrations in the po
Slide 45: Non Accruals by Industry
Non Accruals by Industry As at 30 June 2002 Mining Agriculture Accommodation, ——___ Cafes & Restaurants Transport Manufacturing Government Property & / ” Business Services Finance ‘Conmmarewwmalth Hive: <p 45 The non accruals are spread across the industries that make up the Australian economy. The
Slide 46: Industry Exposures
Industry Exposures Exposure to selected industries $e Accommodation, Cafes and a Insurance bd Transport and Storage 40 Restaurants 134 | 36 45% | 80 48% 40 4244 ww Hh “to fl ) a 10 ™ a w || - dun00 dunt Su 02 dun-t0 SuneG4 Jun-82 Services to Agriculture, Forestry, sp Metal Mining & Manufacturing oy
Slide 47: Strong Capital Position
Strong Capital Position 12.00% « Strong credit ratings x Shareholders equity 4.00% up $637m « Strong regulatory 460% capital ratios « Payments to shareholders of $1,622m 4.00% 2H6t tHO2 2HO2 2HO01 1HO2 2HO2 Tier 1 Total eA CBA Target Range ‘Soermanweatth 7): > AT The Bank's financial strength has be
Slide 48: Economic Equity
Economic Equity » Regulatory capital ratios can be misleading: Risk weights are not risk aligned Capital required for residential mortgages is overstated No operational risk charge No value placed on earnings and risk diversification » Internal models show the Group is strongly capitalised Commanwee
Slide 49: Shareholder Funds in Life Insurance Companies
Shareholder Funds in Life Insurance Companies Risk* Unit Linked Group $2.1 billion $0.5 billion $2.6 billion Income [J Growth Bl *Risk includes traditional, investment account, annuities, personal risk and group fisk. Boniemenait i: <p 49 For financial year 2002, volatility in domestic and offshore
Slide 50: Greater Cost Control & Targeted Investment in Priority Areas
Greater Cost Control & Targeted Investment in Priority Areas Focus on achieving further ..by reducing costs and spending productivity improvements... to improve service quality and drive revenue growth + Upgrading infrastructure to improve service + Developing and managing relationships with all cus
Slide 51: Strategic Outcomes
Strategic Outcomes _... Business Driver _ S-Year Plan Growth in market share Major product groups At or above market Margins Comparable for Continuing decline business mix Comparable financial Continued shift institutions toward non-interest Reduction in cost- 3%-6% p.a. income - best practice produ
Slide 52: Summary
Summary The Australian Economy and the Australian Equities Market Have been relatively resilient Economic outlook remains positive in global context Commonwealth Bank’s strengths include: Our track record Our differentiators Our growth drivers How is Commonwealth Bank Positioned Against the Current
Slide 53: November 2002 Investor Roadshow
November 2002 Investor Roadshow David Murray Chief Executive Officer Stuart Grimshaw Chief Financial Officer www.commbank.com.au 53
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