Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Merger or Acquisition (October 2008)
29 slides from Commonwealth Bank Of Australia's merger presentation, Oct 8, 2008
Slide 1: Acquisition of BankWest and St Andrew's Australia – Investor Pack
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Slide 2: Important notices
Important notices For personal use only The information contained in this presentation is current as at 8 October 2008 (unless otherwise stated) and could change. The information in this presentation remains subject to change without notice. Circumstances may change and the contents of this presenta
Slide 3: Contents
Contents For personal use only Overview Strategic rationale Summary Appendix 3
Slide 4: Summary
Summary For personal use only BankWest and St. Andrew’s Australia only Consistent with CBA strategy Attractive price and terms: ¾ Purchase price $2.1bn ¾ 0.80 x 2007A book value 1 ¾ 11.2 x 2007A net profit 2 Expected to be EPS accretive immediately S b t ti l costt synergies Substantial i
Slide 5: A compelling strategic growth opportunity
A compelling strategic growth opportunity For personal use only Significantly expanded presence in fast-growing WA market BankWest a well recognised brand Reinforces strong market position in Australian financial services Enhanced retail deposit base provides funding advantage Expected to
Slide 6: Key terms and conditions
Key terms and conditions For personal use only Final purchase price to not exceed $2.1bn Sale and purchase agreement signed Subject to regulatory, ACCC and Govt approvals (discussions commenced) HBOS plc shareholder approval not required Does not require CBA shareholder approval Completi
Slide 7: Contents
Contents For personal use only Overview Strategic rationale Summary Appendix 7
Slide 8: Expanded presence in fast growing WA market
Expanded presence in fast growing WA market For personal use only WA Distribution Footprints Branches 1 No. CBA 77 BankWest 100 CBA/BankWest 177 WBC/SGB 107 ANZ 81 NAB 72 ATMs CBA 275 BankWest 2 366 CBA/BankWest 641 Business Banking Centres CBA 10 BankWest 28 CBA/BankWest 38 1. Source: APRA (June 20
Slide 9: Reinforces strong Australian market position
Reinforces strong Australian market position For personal use only Market Shares - Australia Home Lending Household Deposits Credit Cards 25% 22.7% 40% 21.3% 33.7% 30% 19.7% 35% 29.7% 24.9% 26.2% 20% 30% 25% 21.7% 20.5% 25% 22.3% 15% 13.2% 20% 12.2% 20% 14.1% 15% 10% 15% 12.9% 13.0% 10% 10% 5% 3.0%
Slide 10: Snapshot of merged operations
Snapshot of merged operations For personal use only BankWest & St. CBA Combined Andrew’s Australia Branches 1,011 148 1 1,159 Loans and Advances ($bn) 365 2 55 3 420 C t Customer D Deposits it ($b ($bn)) 262 4 37 3 299 Funds Under Administration ($bn) 185 21 187 Market Share – Total Lending 5 21% 4%
Slide 11: An exciting addition to CBA brands
An exciting addition to CBA brands For personal use only Banking Funds Mgt Insurance 11
Slide 12: Proposed operating model
Proposed operating model For personal use only Business Description Proposed Model Brand retained in WA 860,000 customers East coast retail expansion strategy to be Lending assets of $28bn reviewed Retail Banking Deposits of $15bn Streamlining of administrative functions, 2008 Regional
Slide 13: Significant shareholder value creation
Significant shareholder value creation For personal use only Expected to be EPS accretive immediately Incremental growth/revenue opportunities in fast fast-growing growing WA market Platform for new products, enhanced service delivery Cost/efficiency synergies Complements CBA’s strategy 13
Slide 14: Cost synergies expected to be substantial
Cost synergies expected to be substantial For personal use only BankWest’s cost-to-income ratio is 67.6%1 versus 48.9%2 for CBA Annual pre-tax cost synergies estimated to be at 20-25% of BankWest’s cost base Synergy opportunities: ¾ Streamlined support functions ¾ Merged technology platform (a
Slide 15: Risks well understood
Risks well understood For personal use only Risk Mitigants Minimising customer loss the number one priority BankWest brand to be retained Customer attrition Expanded distribution options for CBA and BankWest customers Enhanced product range available to customers Strong organisational lear
Slide 16: Contents
Contents For personal use only Overview Strategic rationale Summary Appendix 16
Slide 17: Summary
Summary For personal use only BankWest and St. Andrew’s Australia only Consistent with CBA strategy Attractive price and terms: ¾ Purchase price $2.1bn ¾ 0.80 x 2007A book value 1 ¾ 11.2 x 2007A net profit 2 Expected to be EPS accretive immediately Substantial cost synergies 1. Ordinary sh
Slide 18: Contents
Contents For personal use only Overview Strategic rationale Summary Appendix 18
Slide 19: Comparable banking transactions
Comparable banking transactions For personal use only Comparable price-to-book values Comparable price-to-earnings multiples (LTM) (Acquiror / Target) (Acquiror / Target) Westpac / St. George 2.7x Bank of Queensland / Bendigo 21.1x Bendigo / Adelaide 2.6x Bendigo / Adelaide 19.0x Bank of Queensland
Slide 20: BankWest overview
BankWest overview For personal use only About BankWest Funding mix vs peers History y 100% 90% 1895: Established by the Western Australian 80% 37% 42% 47% 48% 49% 41% Government, as the Agricultural Bank of WA, to 70% 60% assist in developing the State’s farming industry 50% 1945: Commenced oper
Slide 21: BankWest Financial Overview
BankWest Financial Overview For personal use only 2005 2006 2007 Unaudited 6 months $m $m $m to June 2008 Net interest income 609 716 857 487 Non interest income 213 208 279 176 Net operating g income 822 924 1,136 663 Administrative expenses (509) (555) (728) N/A Depreciation, amortisation and impa
Slide 22: BankWest Balance Sheet
BankWest Balance Sheet For personal use only 2005 2006 2007 Unaudited $m $m $m June 2008 Loans and advances to customers 31,582 40,276 50,838 55,500 Other assets 5,058 5,398 7,974 7,700 Total assets 36,667 45,674 58,812 63,200 Customer deposits & Intergroup funding 28,482 35,197 45,899 50,800 Other
Slide 23: St. Andrew's Australia overview
St. Andrew’s Australia overview For personal use only About St. Andrew’s Australia Subsidiaries Background g 100% St. Andrew’s Financial St. Andrew’s Australia Pty Ltd (“SAA”) began Services Pty Ltd operations in Australia in 1998 Through six subsidiaries, SAA operates two 100% major lines of bu
Slide 24: CBA funding position very strong
CBA funding position very strong For personal use only CBA’s Existing Source of Funding1 BankWest intra-group funding of 21% ~$18bn easily accommodated within 2% existing CBA internal resources 5% 58% 11% Overview of CBA funding position: 3% Retail Funding Long Term Wholesale maturing in FY09 Sh
Slide 25: Capital ratios maintained
Capital ratios maintained For personal use only Integration – Tier 1 Capital International Peer Comparison 10.0% 12.0% Tier 1 Capital Ratios 11.0% 9 0% 9.0% 0 3% 0.3% 1 3% 1.3% 8.8% 10.1% 10.1% 0.9% 10.0% 8.2% 0.6% 8.0% 9.0% 8.7% 7 6% 7.6% 0.1% 7.6% % 8.0% 7.6% 7.0% 7.0% 6.0% 6.0% CBA (APRA) CBA CBA
Slide 26: Financial Impact of Acquisition
Financial Impact p of Acquisition q 1 For personal use only Pre-tax Net Assets Profit / (Loss) $m $m Indicative fair value of net assets acquired 2,720 Fair value of acquired net Consideration paid (2,100) assets to be finalised Discount on acquisition 620 Gain on acquisition and Transaction cos
Slide 27: Customer satisfaction
Customer satisfaction For personal use only Roy Morgan Research Customer Satisfaction – Retail Banking 80.0% ANZ CBA NAB SGB WBC 70.0% BankWest 60.0% Source: Roy Morgan Research. Aust Main Financial Institution (MFI) Population 14+, % “Very" or "Fairly Satisfied“ (6 month rolling average). 27
Slide 28: CBA Market Update
CBA Market Update For personal use only Comfortable with the current range of analysts’ cash 2009 NPAT forecasts; ABC Learning listed notes marked down (2009 NPAT impact of ~ $100m); As announced, collection is doubtful on Lehman exposures (potential 2009 NPAT impact pact o of ~ $ $100m); 00 )
Slide 29: Acquisition of BankWest and St Andrew's Australia – Investor Pack
NOT FOR RELEASE IN THE UNITED STATES: This presentation is not for distribution or release in the United States or to any U.S. person and may not be forwarded, reproduced, disclosed or distributed in whole or in part to any other person. For personal use only Commonwealth Bank of Australia Determine
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