Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — UBS Australian Financial Services Conference 2003
32 slides from Commonwealth Bank Of Australia's conference presentation, Jun 12, 2003
Slide 1: UBS Australian Financial Services Conference
UBS Australian Financial Services Conference Michael Cameron Chief Financial Officer 11-12 June 2003 soewecommbani-coman Commonwealth Bark |” a
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, 12 June 2003. 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 i
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.” Commamaeaithie: i» 3
Slide 4: Agenda
Agenda Long Term Growth Outlook Commonwealth Bank’s Position Divisional Focus Commanaeaitiiie: iy 4 * Good afternoon. | hope you have enjoyed the last day and a half. It’s my pleasure to talk to you about Commonwealth Bank whilst you enjoy your lunch. + In keeping with the theme of the conference, m
Slide 5: Long Term Growth Outlook
Long Term Growth Outlook Let’s start with the long term growth outlook
Slide 6: Strong credit growth over the last years...
Strong credit growth over the last 20 years... In Australia, average total credit growth over the last 20 years has been 12%p.a. 1860-2000 1982-2002 ‘ae ee exe Per cent of nominal GDP Per cent of nominal GDF Sources: Cyclical Prudence - Credit Cycles in Australia, Kent & D'Arcy; Commonwealth Researc
Slide 7: ...but banking margins have been squeezed
«but banking margins have been squeezed Average Operating Margins* 4 Major Banks (1997 - 2002) Importance of: Qari nnn nn ai ch » Scale 3.7 » Brand BB pr » Large customer base » Extensive third party 2.9 distribution 1997 1998 1999 2000 2001 2002 *Margin calculated as Total Income / Totat Controllab
Slide 8: Investor returns - natural cycle or structural shift?
Investor returns - natural cycle or structural shift? 4 Ratio of Market Value of Companies Over Fundamental Value % (1926 - 2002) 1827 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 (Source? Moody's Manual of Investments? Value Management so, ah Research Engine; Top Perfo
Slide 9: Weak equity markets and declining fund flows
Weak equity markets and declining fund flows index Equity Markets Total Net Retail Fund Flows (Base 100} {for quarter ended) 11% ES a - i be Ea | = ece1 Mar-02 Jun-2 Sop-02 DacO? Mar-03 Deodt = MarO2 Jun02 Sepo2 Decd2 MarGd (CSC wore 1 Orcinarios ] Source: Bloomberg Source: Plan for Life (ex Cash) a
Slide 10: Recent trends shaping the future of funds management...
Recent trends shaping the future of funds management... Projected Size of Various Product Segments 300 Ev i faVause at ane 2002 « Strong inherent growth # Projeclert Vaiue to June 2042 ‘ « expected, particularly retail « Growth of mastertrusts $ Billion « Industry consolidation « Institutionalisatio
Slide 11: ...and the life insurance industry
«and the life insurance industry Projected Size of Various Product Segments @ Vatue at Juno 2002 ‘@ Projactod Value to Juna 2012 Strong ind ustry growth 57 . to continue 3 Bilfion & » Repricing of products » Product rationalisation & customer migration Term &Trauma Disability Group Risk __ Source: D
Slide 12: Summary: Long Term Growth Outlook
Summary Long Term Growth Outlook » Credit growth will slow » Margins will decline » Funds Management and Insurance to grow Commamaeaithiizn i» 12 * So, in wrapping up the long term growth outlook, we think credit growth will slow and margins will continue to decline, whilst funds management and life
Slide 13: Commonwealth Bank's Position
Commonwealth Bank’s Position Let’s now move onto the Bank’s position 13
Slide 14: Organising to meet current and longer term challenges
Organising to meet current and longer term challenges immediate Environment: Productivity Implementation of strategic initiatives Longer Term Environment: Leverage key competitive strengths Scale Brand Risk Profile Products and Businesses Distribution Innovation People ip 14 It's simple, we are comm
Slide 15: Our starting position
Our starting position Commonwealth Bank Market Shares* Rank Merchant Acquiring Sovereign Deposits. Transaction Services Credit Cards Home Loans Global Markets Asset Finance Managed investments. Life Insurance Corporate and Business Lending Institutional Banking Products New Zealand Deposits New Zeal
Slide 16: A re-aligned organisational structure
A re-aligned organisational structure Retail Banking Premium Investment & Institutional international Services Financial Insurance & Business Financial Services Services Services Services Customer Personal Premium client Agents, Brokers, Institutional, Personal, Group banking including Financiat Cor
Slide 17: Deepening our customer relationships
Deepening our customer relationships From... To... Pure cross sell “* Needs based bundling Fragmented definition “2 Concise definition Varied measures “* Consistent measure Inconsistent group-wide sales and service system One Group approach No published targets m Transparent targets Commamaeaithiiiz
Slide 18: Summary: Commonwealth Bank's Position
Summary Commonwealth Bank’s Position » Productivity Improvement » The Customer Commanaeaithiz: i» 18 So, to wrap up the Bank’s positioning, it’s about productivity improvement and more importantly, it’s about the customer. 18
Slide 19: Divisional Focus
Divisional Focus * Retaii Banking Services = Premium Financial Services = Institutional & Business Services = Investment & Insurance Services = International Financial Services I'll now highlight some examples of how the Bank’s five customer facing divisions are positioning themselves to perform str
Slide 20: Retail: a leading profile
Retail: a leading profile Our staff - Our footprint - 18,000 people Leading market share in core {including operations) Retail products ~ total footings Our network - of $169.6bn at 31 March 2003 BranchiAgencies Online Electronic Total Branches 1,016 Neibank customers 26m © Total ATMs 3.116 Total Ag
Slide 21: Retail: product positioning
Retail: product positioning Transaction accounts Sustainable cost to - simplified and rationalised : income ratios Home loans > Improved service at - re-engineered by 2004 lower cost Credit cards ap Increased cross-sell - growing and innovation Deposits = nlatform: funding - 65% of Bank funding Conm
Slide 22: Premium: a differentiated business model
Premium: a differentiated business model Advisory Services ~ : Direct investment Broking ; Platform Indirect investment —p Debt Products Equity Products H ? Borrowing Services —b aIng F . rm Lending Services Transactional Banking ~—p Primary: Relationship: Manager: Hwa, aol Secondary Relationship Ma
Slide 23: Premium: building a long term business
Premium: building a long term business Key Performance Indicators: Physical capacity substantially completed We have recently acquired TD Waterhouse. Over 170,000 client relationships migrated by end June 2003 Apr 02 Dec 02 Jun 03 Relationships 40,000 | >75,000 | >170,000 Staff 830 1,130 1,546 Locat
Slide 24: Institutional & Business: redesign for business customers
Institutional & Business: redesign for business customers Cost-to- Market Client —CHlent Totai_ «= Number == income Share. ations Focus of Turnover Footings: of 2002 2002 tonship Change Segment {Sm} {Sm} Cilents {%) +) Modet toltialives 800 26 Y - veepen retetionship + More clients 5 2,200 38 u + De
Slide 25: Institutional & Business: improve overall satisfaction levels
Institutional & Business: improve overall satisfaction levels Banking (Business Customers) Satisfaction with Main Financial Institution Relationship Main Bank clients CBA ANZ NAB WBC Very Dissatisfied 5% 6% 5% B% 10% 8% 24% | 26% | 28% 34% | 32% | 33% 29% | 25% | 25% Fairly Dissatisfied Neither Sati
Slide 26: Funds management: building opportunities
Funds management: building opportunities FirstChoice Other Strategic Initiatives $m i Realise integration benefits, including further rationalisation of legacy systerns Offer increased style diversification : Leverage internal distribution opportunities i i Leverage scale to reduce costs i Grow alte
Slide 27: Insurance: distribution, service and risk pricing
Insurance: distribution, service and risk pricing Trend in Share of Inforce Premiums Strategic Focus Top 5 Players ah » Increase internal distribution 35% through: Hh Personal insurance Consultants Business Investment Managers » Repricing of premiums » Upskilling of call centre staff » Product ratio
Slide 28: International: our geographical presence
International: our geographical presence Banking Life Funds insurance |Management New Zealand v v v UK v v USA v Hong Kong v v v Singapore v v Other Asia & Pacific* v v v * includes Japan, indonesia, Vietnam, China, Fiji Commanaeaithiiz: |» 28 + Our International presence spans banking, life insuran
Slide 29: International: ASB Bank a strong performer
International: ASB Bank a strong performer ASB Bank 10% Net Profit - Banking ASB Bank represented 10% of the total banking net profit after tax {as at December 2002) ASB Lending Assets - Banking ASB Bank represented 11% of the total banking lending assets (as at December 2002} Commamaeaithiiiz: oy»
Slide 30: Summary: Divisional Focus
Summary Divisional Focus « Further improve the service experience » Building on our leading funds management position « Insurance business well positioned » Continue to develop international businesses Commanaeaithiiiz: © 30 + Let me summarise the key points for the divisions: * Across our Banking b
Slide 31: Key Points
Key Points :» Anumber of trends are shaping the outlook for financial services: Banking: Slowing growth in a lower margin environment Funds Management: industry dynamics are changing insurance: positioning to drive growth and efficiency gains » Focus on improved productivity and customer commitment
Slide 32: UBS Australian Financial Services Conference
UBS Australian Financial Services Conference Michael Cameron Chief Financial Officer 11-12 June 2003 soewecommbani-coman Commonwealth Bark |” a 32
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