Commonwealth Bank of Australia · ASX:CBA
Commonwealth Bank of Australia — Corporate Update (May 2004)
39 slides from Commonwealth Bank of Australia's corporate update, May 19, 2004
Slide 1: Progress Update
Progress Update David Murray Chief Executive Officer 19 May 2004 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, 19 May 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 to in
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.” 3
Slide 4: 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 4
Slide 5: 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 deliverin
Slide 6: Today's agenda
Today’s agenda Program status Drivers for success Video presentation 6
Slide 7: Reminder: There are three themes to our service transformation
Reminder: There are three themes to our service transformation ‘To excel in customer service’ via Supported Customer service Through Engaged people by Simple processes Service/Sales (4) Performance Culture (1) Support (1) Effectiveness Process/product (3) IT Enablers (2) IT Efficiency (2
Slide 8: Reminder: Financial impact and outcomes
Reminder: Financial impact and outcomes Subject to current market conditions continuing Over the next three years we will: Over the next three years this will result in: Cash EPS growth exceeding 10% CAGR Redirect the normal project spend of $600m 4-6% CAGR productivity improvements Spend an
Slide 9: Moving from design to implementation of our most important activities
Moving from design to implementation of our most important activities Which Capture early Implementation Ensure new Bank opportunities of major sustainable program Design of major initiatives transformation set up initiatives Sep 03 Jun 04 Jun 05 Jun 06 Planned net $ 200m $ 620m $900m benefits* * Pr
Slide 10: Progress report on workstream activities: June now locked away
Progress report on workstream activities: June 04 now locked away Workstream Jan-Apr 04 May-Jun 04 Jul 04-Jun 05 Jul 05-Jun 06 To do Done To do Done To do Done To do Done Segment Alignment 3 2 1 - - Advice Implementation 1 Done 1 1 Done 3 Done 1 Service and Sales 4 4 2 7 - Customer Divisional Servic
Slide 11: We will complete all major June milestones as planned
We will complete all major June 04 milestones as planned Dec 03 Apr 04 Jun 04 1. Centre for Adviser Development - launch 100% 2. Service & Sales Management - 13,000 staff 70% 3. Branch sales effectiveness training - over 3,000 staff 60% Customer 4. CommSee - Launch in Tasmania 100% 5. Branches - ref
Slide 12: We expect to deliver 2003/04 spend within planned investment
We expect to deliver 2003/04 spend within planned investment Themes April YTD FY04 Estimate FY05E FY06E ($m) ($m) ($m) ($m) Customers 158 270 220 130 Processes 177 280 205 95 People 3 10 0 0 338 560 425 225 Branch 49 100 85 85 Refurbishment Total 387 660 510 310 2004, 2005 and 2006 estimates are as
Slide 13: 2004 benefits are likely to exceed targets
2004 benefits are likely to exceed targets Themes April YTD FY04 Estimate FY05E FY06E ($m) ($m) ($m) ($m) Customers 132 145 360 495 Processes 56 55 260 405 People 0 0 0 0 Total 188 200 620 900 2004, 2005 and 2006 estimates are as disclosed in September 2003 Which new Bank presentation 13
Slide 14: Today's agenda
Today’s agenda Program status Drivers for success Video presentation 14
Slide 15: We are making 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 Customer No. 4 - CommSee No. 9 - Performance Culture Program People No. 10 - World Class Processing Principles (CommWay) Process No. 11 - Home Loan End to End 15
Slide 16: No. 2 - Service and Sales Management
No. 2 - Service and Sales Management Service and sales meeting each week for all staff Training is tailored for specific client segments Bank-wide approach to referrals Service and sales processes reinforced through measurement, incentives, reporting, awards and recognition 16
Slide 17: No. 2 - Service and Sales Management results
No. 2 - Service and Sales Management Results of national retail implementation Product Sales per Staff Member 113 113 115 116 108 105 101 94 Benchmark: 100 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Cross Sales Ratio* 127 120 116 112 108 108 100 92 Benchmark: 100 Week 1 Week 2 Week 3 We
Slide 18: No. 4 - 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 Pro
Slide 19: No. 4 - CommSee Rapid Implementation Schedule
No. 4 - CommSee Rapid Implementation Schedule 1,000,000 CommSec National (Advisory Clients) Rollout 800,000 Tasmania Customers PFS 600,000 400,000 200,000 0 Oct-03 Dec-03 Dec-04 Feb-05 Customers 19
Slide 20: No. 9 - 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 21: No. 9 - Staff are positive about Which new Bank
No. 9 - Performance Culture Program Staff are positive about Which new Bank I understand need for WnB 23 62 85 I am very informed about WnB 19 67 86 I feel positive about Wnb 18 61 79 Initiatives from WnB help me do my job better 12 58 70 0 20 40 60 80 100 Strongly agree Agree Source: Staff Survey M
Slide 22: No. 10 - 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 vol
Slide 23: No. 10 - Day cheque processing: Sydney
No. 10 - World Class Processing (CommWay) Day 1 cheque processing: Sydney Increase in items/staff-hour relative to baseline 40 35 30 • 25% process improvement 25 over baseline % 20 15 • Translates to 15% productivity 10 improvement 5 0 4 30 -04 09 -04 23 -04 06 -04 13 -04 27 -04 19 -04 4 20 -04 16 -
Slide 24: No. 11 - 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 24
Slide 25: Indexed External Refinancing
No. 11 - Home Loan End to End Seasonally adjusted external refinancing runoff 110% Home Loan E2E changes implemented 105% * 100% Indexed External Refinancing 95% 90% 85% 80% 75% Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 End of Month *Indexed to average of 6 months to end of Octo
Slide 26: Strength of relationship is increasing
Strength of relationship is increasing Strength of Relationship 7 6.1 Score 6 5.8 5.8 5.7 5 Apr-Jun 03 Jul-Sep 03 Oct-Dec 03 Jan-Mar 04 Time 26
Slide 27: 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 28: 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 Proposed model External Intelligence Internal Intelligence • Interviews with experts in • Interviews with frontline staff 14 countries • Extensive syndica
Slide 29: 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 sta
Slide 30: Segment Alignment – Proposed model through the customer's eyes
Segment Alignment – Proposed model through the customer’s eyes Simple needs Complex needs Proactive contact •Frontline staff can •Specialist services •Courtesy contact resolve most for specific events routinely to check issues on the spot, on overall particularly on •Easy access to satisfaction and
Slide 31: Simplified Structure
Simplified Structure CEO – David Murray Premium Business Insurance & International Retail Banking Services Services Investment Services Financial Services Group Executive: Group Executive: Group Executive: Group Executive: Hugh Harley Michael Katz Stuart Grimshaw Garry Mackrell Financial & Risk Mana
Slide 32: Today's agenda
Today’s agenda Program status Drivers for success Video presentation 32
Slide 33: 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 a
Slide 34: Supplementary material
Supplementary material new! Which Bank ConmonwealthBank 7,
Slide 35: Which new Bank milestones
Which new Bank milestones June 04 June 05 June 06 • Service models - align • Centre for Adviser Development - launch • Advice Model - implement • Service & Sales management - 13,000 • Service & Sales management - 30,000 staff staff Customer • Branch sales effectiveness - 3,000 staff • „One Team‟ ref
Slide 36: Investments & Benefits
Investments & Benefits Total Investment Analysis ($m) 2004 2005 2006 2004-06 Estimated Investment Spend Initiatives 570 425 225 1,220 Branch refresh 90 85 85 260 Total Investment Spend (pre tax) 660 510 310 1,480 Estimated Benefits (pre tax) (1) 200 620 900 (1) Estimated benefits are recurring and c
Slide 37: Impact on Annual Profit (excluding all benefits and amortisation)
Impact on Annual Profit (excluding all benefits and amortisation) ($m) Total Spend 2004 2005 2006 Total 200 Software capitalised 90 72 38 200 260 Branch refurbishment 90 85 85 260 1,020 210 Provision 0 133 77 210 1,480 810 Expensed 480 220 110 810 Total spend 660 510 310 1,480 Impact on Profit 2004
Slide 38: Investment spend by theme
Investment spend Themes FY04 FY05 FY06 Customers Sales and service effectiveness Distribution efficiency Product offering $0–49m IT enablers $50–99m Product and process $100m+ simplification Processes Support Purchasing/property IT efficiency People Performance culture Total ($m) 570 425 225 $1,220m
Slide 39: Benefit analysis
Benefit analysis Themes FY04 FY05 FY06 Sales and service effectiveness Customers Distribution efficiency Revenue Cost saving Product offering IT enablers Product and process $0-49m simplification Processes $50–99m Support redesign $100m+ Purchasing/property IT efficiency People Performance culture $
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