Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Morgan Stanley Asia Pacific Summit 2004
28 slides from Commonwealth Bank Of Australia's conference presentation, Nov 2, 2004
Slide 1: Morgan Stanley Asia Pacific Summit
Morgan Stanley Asia Pacific Summit Commonwealth Bank Stuart Grimshaw Group Executive Investment and Insurance Services Division 2 November 2004 exe Which Bank ConmonwealthBank
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, 2 November 2004. 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: Discussion Outline
Discussion Outline » Commonwealth Bank’s Footprint « Market Conditions and Current Trends « Our Business Model « Key Achievements © Overview of our Business Operations « Insurance » Asset Management « Platforms « Distribution = Conclusion Which Bank ConmonwealthBark
Slide 4: Overview of Commonwealth Bank Group
Overview of Commonwealth Bank Group Banking » Largest Australian retail bank wi » No.1 in retail deposits, No. Over 1,000 branches Strong positions: Insurance No.1 in inforce pr ll otal assets A$306bn Market cap A$38bn International Strong presence in NZ, and smaller scale operations Asia and the UK
Slide 5: Market trends shaping the Australian wealth management industry
Market trends shaping the Australian wealth management industry Funds Management: Decline of retail and the rise of platform Margin squeeze = Slowing, but healthy projected growth in funds management w Rising popularity of blend and model portfolios Insurance: » Strong long-term growth » Rational ap
Slide 6: The only segment with universal downward pressure in margins is platforms / administration
The only segment with universal downward pressure in margins is platforms / administration. Customer Pays Revenue 49 _ 100bps 50-120bps 40-100bps 200bps Margins Margin Trends Drivers ConmonwealthBank
Slide 7: We are well positioned in all the elements of the value chain to take advantage of market conditions
We are well positioned in all the elements of the value chain to take advantage of market conditions IIS products and services by value chain element General ff oe — | Insurance ||. [Dealer group _ Direct | a oe - services . ee Oe ee Research Life || Master Trust Compliance : “Insurance —||‘FirstCho
Slide 8: Our strategy is to foster a leading Australian wealth management business
Our strategy is to foster a leading Australian wealth management business Centre for Adviser Development Launch of Enterprise?" Increased productivity and number of planners lS organisational restructure Legacy rationalisation program on target Cost to income ratio improvement Market leading platfor
Slide 9: Discussion Outline
Discussion Outline « Commonwealth Bank's Footprint Market Conditions and Current Trends » Our Business Model » Key Achievements : Overview of our Business Operations # Insurance » Asset Management « Platforms # Distribution = Conclusion ConmonwealthBank
Slide 10: There remains a significant level of underinsurance in Australia, particularly life insurance
Market Penetration (%)} There remains a significant level of underinsurance in Australia, particularly life insurance Market Penetration by insurance product Market Environment Under-penetration of the industry # Strong growth 10%pa Increasing importance of corporate governance m oe Return to ration
Slide 11: We believe there is significant opportunity to build revenues through cross-selling
We believe there is significant opportunity to build revenues through cross-selling 8% growth in risk inforce premiums Comminsure Cross Sell Penetration Improved General Insurance claims December 2003 ratio % Tight expense controls — expenses 40 flat ; , 30 Continued growth in network channel we ee:
Slide 12: Discussion Outline
Discussion Outline « Commonwealth Bank's Footprint Market Conditions and Current Trends » Our Business Model » Key Achievements © Overview of our Business Operations « Insurance » Asset Management « Platforms # Distribution = Conclusion ConmonwealthBank 12
Slide 13: Across the industry investment returns have improved and flows have responded
Across the industry investment returns have improved and flows have responded, but not to previous levels. 85 , 40% + 30% + 20% + 10% + 0% Net flows ($b) -10% 44 - -20% Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 {Ma industry Net Flows —— Industry Investment Returns
Slide 14: Our diversified asset management base provides growth opportunities
Our diversified asset management base provides growth opportunities. High Growth Potential Low i 7 : r oii init Growth : : | Potential Low High Margin Margin Source: CBA Intemal Analysis and Market Forecasts ConmonwealthBank
Slide 15: Investment performance has been generally strong over the medium term
Investment performance has been generally strong over the medium term. : ae ‘Performance Vs Benchmark Performance Vs Asset Class a a yr) Benchmark (3 yr) Fixed Interest Global Credit . Australian Equities GDP+ Large Cap Australian Equities GDP+ Small Cap Australian Equities Core Large Cap... Austrat
Slide 16: Legacy system rationalisation is on track and delivering savings
Legacy system rationalisation is on track and delivering savings Legacy Funds Management Systems Rationalisation (2002 — 2005) 2004 11 as at Oct 04 ConmonwealthBank 16
Slide 17: Discussion Outline
Discussion Outline « Commonwealth Bank's Footprint Market Conditions and Current Trends » Our Business Model » Key Achievements © Overview of our Business Operations « Insurance » Asset Management « Platforms # Distribution = Conclusion ConmonwealthBank 17
Slide 18: Platforms now capture 80% of retail funds
$billion Platforms now capture 80% of retail funds Retail Market Flows 1998 to 2003 actuals, 2004 to 2006 forecasts Market Trends Platform success driven by: 1998 1999 2000 2001 2002 2003 2004 2005 2006 | Master funds / platforms | Total retail (excluding cash) Source: Plan for Life, DEXX&R. Adviser
Slide 19: We are well represented in the platform market to capitalise on this market opportunity
We are well represented in the platform market to capitalise on this market opportunity @ # FirstChoice has been the fastest growing platform in the market since its launch two years ago - % Over $8 billion FUA (Oct 2004) Competitive pricing Award-winning service Recent enhancements offering more fu
Slide 20: The Value Proposition - FirstChoice vs mastertrusts
The Value Proposition - FirstChoice vs mastertrusts FirstChoice vs mastertrusts 4.0% 7 MLC Masterkey Custom Typical Australian Equities MER 0.85% 3.5% 4 Equalised advice fee 0.6% 8 3.0% 7 oo 2 3 iy £ 2.5% 7 Summit ...... Ww Navi jator, 2.0% - BT Essentials / Skandia / Perpetual / Asgard Elements Fir
Slide 21: FirstChoice: well diversified support and healthy CFS flows
FirstChoice: well diversified support and healthy CFS flows. Inflows: Managing the FUM: FirstChoice Split by Channel CBA Aligned Advisers Extornal 11% 30% CBA Bank Network 44% FirstChoice Split Internal vs External External 60% Source: intemal data; channel split based on flows for 6 months ended 31
Slide 22: FirstChoice margins are attractive, albeit less than our other retail products
FirstChoice margins are attractive, albeit less than our other retail products Revenue - net of external manager costs FirstChoice Other Retail Wholesale Manufacturing Margin & Commissions Which Bank ConmonwealthBark
Slide 23: Discussion Outline
Discussion Outline « Commonwealth Bank's Footprint Market Conditions and Current Trends » Our Business Model » Key Achievements © Overview of our Business Operations « Insurance » Asset Management « Platforms # Distribution = Conclusion ConmonwealthBank 23
Slide 24: Australian distribution challenges and opportunities
Millions Australian distribution challenges and opportunities Retirement Savings Gap by Age August 2003 25-29 30-34 35-39 40-44 45-49 50-54 55-59 Challenges/ Opportunities: # Ageing population with inadequate savings Choice for investors and advisers Growth in DIY products # Regulatory environment:
Slide 25: We are continually strengthening our distribution footprint
We are continually strengthening our distribution footprint Centre for Adviser Development Over 200 trained Feedback very positive Launch of Enterprise’2* Opportunity in the market to offer advice, platform and dealership services to high net worth practices. Increased productivity of network advise
Slide 26: Discussion Outline
Discussion Outline « Commonwealth Bank's Footprint Market Conditions and Current Trends » Our Business Model » Key Achievements © Overview of our Business Operations « Insurance » Asset Management « Platforms # Distribution « Conclusion ConmonwealthBank 26
Slide 27: There are significant opportunities to achieve strong growth
There are significant opportunities to achieve strong growth Improved market returns Superannuation guarantee Continuing product expansion and innovation Distribution capacity and productivity improvements Rationalisation and further efficiency gains Capital efficiency improvements Which Bank Conmon
Slide 28: Morgan Stanley Asia Pacific Summit
Morgan Stanley Asia Pacific Summit Commonwealth Bank Stuart Grimshaw Group Executive Investment and Insurance Services Division 2 November 2004 exe Which Bank ConmonwealthBank
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