Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Macquarie Capital Securities Australia Conference 2008
20 slides from Commonwealth Bank Of Australia's conference presentation, May 8, 2008
Slide 1: Strength in uncertain times
For personal use only Strength in uncertain times Why CBA is well positioned in this period of global financial markets uncertainty Presentation to Macquarie Capital Securities Australia Conference 8 May 2008 Commonwealth Bank of Australia ACN 123 123 124
Slide 2: Disclaimer
Disclaimer For personal use only The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 8 May 2008. It is information given in summary form and does not purport to be complete. It is not intended to be relied
Slide 3: Agenda for today
Strength in uncertain times For personal use only Agenda for today…. Global uncertainty - current state-of-play CBA - well positioned Strategy update 3
Slide 4: Current state-of-play: Globally
Current state-of-play ……Globally For personal use only Crisis averted? (Reported) losses to date over $200bn Credit Markets: ¾ Concerted policy & central bank response ¾ Some early signs of easing ¾ Sustained recovery will take time Bank recapitalisation and balance sheet strengthening Bro
Slide 5: Current state-of-play: Australia
Current state-of-play …. Australia For personal use only Minimal direct sub-prime exposures Major impacts: ¾ Higher funding costs ¾ Single-name corporates Changing competitive dynamics: ¾ Flight-to-quality ¾ Non-bank models under pressure Economic conditions remain sound: ¾ Robust labour mar
Slide 6: A return to stability: some prerequisites
A return to stability….some prerequisites For personal use only ► Full disclosure of all sub-prime and related losses ► Minimum two “clean” reporting cycles ► Central Bank intervention (success of) ► US house price stabilisation ► Positive surprises - US economic activity ► Asset quality risk – back
Slide 7: Share price movements
Share price movements For personal use only Australia % CBA 37 St George 32 NAB 30 ANZ 27 Westpac 25 Global Citigroup 37 Merrill Lynch 26 Credit Suisse 23 HSBC 16 Bank of America 14 Movements reflect closing price 31 December 2007 compared to lowest closing price in the period to 31 March 2008 7
Slide 8: Why CBA is well-positioned
Why CBA is well-positioned For personal use only ; Strong competitive position ; Prudent funding and liquidity management ; Strong capital position ; Sound risk management ; Low-risk, domestically focussed strategy 8
Slide 9: Strong Competitive Position
; Strong Competitive Position For personal use only CBA brand a key strength Revenue % by Business Line* Diversified earnings streams International 11% Other 1% Retail Deposits Colonial First 20% Volume & share growth at the right price State 7% CFS GAM Changing competitive dynamics: 7% Home
Slide 10: Prudent funding and liquidity management
; Prudent funding and liquidity management For personal use only Market-leading retail funding position: Diversified Funding Mix ¾ 54% of total funding as at 31 March 2008 ¾ ~30% share of household deposits 25% Short term wholesale No reliance on securitisation Long term wholesale 54% Wholesal
Slide 11: Higher funding costs – our response
Higher funding costs – our response For personal use only Dislocation expected to last through calendar 2008 Long term wholesale funding costs Costs of ~$100m in 1H08 – no easing Q308 Pricing response; 120 bp 1.20% 103 110 1.00% 95 ¾ Product rates under constant review Margin to BBSW M argin t
Slide 12: Strong capital position
; Strong capital position For personal use only Basel II advanced accreditation: ¾ More sophisticated internal systems ¾ More flexible decision-making Very strong capital position: Upper end of target range Well-placed compared to peer group No current plans (or need) to raise additional c
Slide 13: Sound risk management: Consumer
; Sound risk management….Consumer For personal use only Conservative policies and approach: Home loan arrears ¾ Interest rate buffer 1.60% ¾ Home loan portfolio LVR ~50% 1.40% 1.20% ¾ 60% two+ payments in advance 1.00% 0.80% ¾ Disciplined arrears management 0.60% ¾ No zero-rate cards 0.40% 0.20% 0
Slide 14: Sound risk management: Commercial
; Sound risk management…Commercial For personal use only Healthy corporate profitability + low gearing CBA portfolio quality remains sound: ¾ Two-thirds of exposures investment grade ¾ Security over 82% of non-investment grade exposure ¾ Financial and property exposures well diversified ¾ No exp
Slide 15: Low risk, domestically focussed strategy
; Low risk, domestically focussed strategy For personal use only Focus on core domestic franchise Customer Satisfaction Significant organic growth potential: % main financial institution customers 85% ¾ Customer service upside 80% 75% ¾ Cross-sell to 9m customers 70% 65% CBA ¾ Potential scale ad
Slide 16: Strategy: key achievements to date
Strategy … key achievements to date For personal use only X Customer satisfaction at 10 year high X Over 1,000 new frontline staff X Sales & Service training – over 7,500 “Masters” X New branch operating model and new design branches X Market-leading front-end systems – CommSee, CommSec etc X Ongoin
Slide 17: Core Banking Modernisation - our next important step
Core Banking Modernisation - our next important step For personal use only Our Journey CBM the next so far important step Significantly improved “Front-End”: “Back-End” systems and processes the key impediment to step-change Sales & Service Training in customer service Over 1,000 new frontli
Slide 18: A step-change improvement in customer service
A step-change improvement in customer service For personal use only Improved customer interactions Real time, 24x7 processing removes hand-offs and improves service Introduction of common processes across businesses and segments Improved product functionality, agility and speed-to-market E
Slide 19: Summary – strength in uncertain times
Summary – strength in uncertain times For personal use only CBA brand a key strength Strong competitive Flight-to-quality response in key markets position Non-bank models under pressure Prudent funding Diverse funding sources – market leading retail funding Globally respected funding opera
Slide 20: Strength in uncertain times
For personal use only Strength in uncertain times Why CBA is well positioned in this period of global financial markets uncertainty Presentation to Macquarie Capital Securities Australia Conference 8 May 2008 Commonwealth Bank of Australia ACN 123 123 124
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