david murray half year results - december 2000

David MurrayDavid MurrayHalf Year Results - December 2000Half Year Results - December 2000

www.commbank.com.auwww.commbank.com.au



2www.commbank.com.auwww.commbank.com.au

The material that follows is a presentation of The material that follows is a presentation of general background information about the Bank’s general background information about the Bank’s activities current at the date of the presentation, 13 activities current at the date of the presentation, 13 February 2001. It is information given in summary February 2001. It is information given in summary form and does not purport to be complete. It is not form and does not purport to be complete. It is not intended to be relied upon as advice to investors or intended to be relied upon as advice to investors or potential investors and does not take into account potential investors and does not take into account the investment objectives, financial situation or the investment objectives, financial situation or needs of any particular investor. These should be needs of any particular investor. These should be considered, with or without professional advice considered, with or without professional advice when deciding if an investment is appropriate.when deciding if an investment is appropriate.

DisclaimerDisclaimer


Speaker’s NotesSpeaker’s Notes

• Speaker’s notes for this presentation Speaker’s notes for this presentation are attached below each slide.are attached below each slide.

• To access them, you may need to To access them, you may need to save the slides in PowerPoint and save the slides in PowerPoint and view/print in “notes view.”view/print in “notes view.”


The SettingThe Setting

60

70

80

90

100

110

Jan 00 Mar-00 Jun 00 Aug 00 Nov 00 Feb 01

EQUITY INDICESJan 3 2000=100

Far East(ex Japan)

United States

Australia

Using Morgan Stanley Capital International Index (MSCI). Rebased. Local currency terms.

AgendaAgenda

1.1. Progress on StrategyProgress on Strategy

2. Integration Progress Report2. Integration Progress Report

3. The Operating Environment3. The Operating Environment


Group StrategyGroup Strategy

Business Goals

To be To be

the best the best

brand in brand in

helping helping

customers customers

manage and manage and

build wealthbuild wealth

To be To be

the best the best

brand in brand in

helping helping

customers customers

manage and manage and

build wealthbuild wealthDevelop offshoreDevelop offshore

opportunitiesopportunities

Global best-practice costsGlobal best-practice costs

Best TeamBest Team

Attract more customers Attract more customers & more revenue per customer& more revenue per customer

Best value service through Best value service through innovation & on-line leadershipinnovation & on-line leadership

Strategic Vision Financial Goal

Top

Quartile

TSR

Top

Quartile

TSR

Growth with lowGrowth with low

inflationinflation

Major technologyMajor technology

shiftshift

WHY?

Pace of changePace of change

Limited longerLimited longer

term domestic term domestic

scopescope

Margin squeezeMargin squeeze


Attract More Customers & More Attract More Customers & More Revenue per CustomerRevenue per Customer

• Approximately 10 million personal customersApproximately 10 million personal customers

• Growth in customer numbers and/or revenue Growth in customer numbers and/or revenue across all customer segmentsacross all customer segments

• New sales management system implementedNew sales management system implemented

• Service measurement system builtService measurement system built


Retail Financial Services

NetBank 535,689 67.5 24.2M 72.9

HomePath** 78,488 105.4 1,426 274.8

MobileBank 14,684 110.7 100,822 68.3

ComSec Online 175,100 13.0 (366,000) (29.3)

Business Services

Diammond/eCommCorporate 8,236 13.4 656,064 10.9

Quickline 40,992 14.6 7.1M 19.1

NZ

Innovation and On-Line LeadershipInnovation and On-Line Leadership

Measure

Electronic : Over the Counter Ratio 84:16 (Dec 00) 81:19 (Jun 00)

CustomersNo. (at 31 Dec) Growth* (%)

Transactions^Growth (No.) Growth (%)

Through ASB Bank (NZ) 85,944 48.7 1.6M 41.6

* From 30 June to 31 Dec 2000 ** Registered users ^Growth in transaction numbers for half year ended 30 June v. 31 December 2000


Best TeamBest Team

• Leadership forums conducted for over 6,000 staff

• Retention of key skills and people from Colonial

• 20% of employees, mostly at management level, on individual contracts

• Increased performance component for key sales and service staff

• Performance based staff share plans extended


• Acquisition of remaining 25% of ASB Group

• Integration of Sovereign with Colonial Life well progressed

NZNZ

Develop Offshore OpportunitiesDevelop Offshore Opportunities

AsiaAsia

EuropeEurope

Last 6 monthsLast 6 months Target/GoalTarget/Goal

• Sale of Colonial Finance (UK)• Sale of Colonial Life (UK)• Entry into UK mortgage market• Integration of Stewart Ivory & Colonial

First State

• Reviewed life insurance businesses • China: commenced life insurance

business

• Develop existing businesses

• Funds management: Pursue growth in retail and wholesale funds under management

• UK mortgage market: Build market share

• Develop life insurance businesses• Grow funds management operations

in Singapore & Hong Kong• Weight geographical mix toward North

Asia


Global Best Practice CostsGlobal Best Practice Costs

• Colonial integration on trackColonial integration on track

• Focus on technology driven productivityFocus on technology driven productivity

• Leverage the increased scale from integration Leverage the increased scale from integration

Integration Progress ReportIntegration Progress Report


Overall TargetsOverall Targets

• Expect majority of cost synergies to be achieved by Expect majority of cost synergies to be achieved by year two whilst revenue synergies will progressively be year two whilst revenue synergies will progressively be realised over the next few yearsrealised over the next few years

• Funding benefits from anticipated improved ratings Funding benefits from anticipated improved ratings and capital managementand capital management

• Maintain & improve service levelsMaintain & improve service levels

• Maintain the momentum of Colonial First State Maintain the momentum of Colonial First State Investments Investments

• Continue strong relationships with independent Continue strong relationships with independent distributorsdistributors


Outcomes to DateOutcomes to DateRetail banking operationsRetail banking operations

• Network distribution model implemented Network distribution model implemented

• Systems build completeSystems build complete

• Systems User Acceptance Testing commencedSystems User Acceptance Testing commenced

• Transaction bridge operationalTransaction bridge operational

• Colonial non-branch ATM conversion program completeColonial non-branch ATM conversion program complete

• LauncestonLaunceston call centre site build (stage 1) complete call centre site build (stage 1) complete

• Branch amalgamation complete (SA/WA)Branch amalgamation complete (SA/WA)

• Detailed eastern seaboard branch amalgamation Detailed eastern seaboard branch amalgamation

program now being executedprogram now being executed

• Colonial customer retention on trackColonial customer retention on track

OtherOther

• All Centre functions and Institutional Banking integratedAll Centre functions and Institutional Banking integrated

• ASB product & systems changes completeASB product & systems changes complete

CompletionCompletion

Oct 00Oct 00

Dec 00Dec 00

Jan 01Jan 01

Jan 01Jan 01

Jan 01Jan 01

Jan 01 Jan 01

Feb 01Feb 01

Feb 01Feb 01

Feb 01Feb 01

Feb 01Feb 01

ForecastForecast

Dec QtrDec Qtr

Dec QtrDec Qtr

Mar QtrMar Qtr

Mar QtrMar Qtr

Mar QtrMar Qtr

Mar Qtr Mar Qtr

Mar QtrMar Qtr

Mar QtrMar Qtr

OngoingOngoing

Jun QtrJun Qtr

Jun QtrJun Qtr


• Conversion Management System operationalConversion Management System operational

• Launceston call centre operationalLaunceston call centre operational

• Retail bank systems integratedRetail bank systems integrated

• Back office processing integratedBack office processing integrated

• Outsourcing contracts rationalisedOutsourcing contracts rationalised

• Branch amalgamation for eastern seaboard completeBranch amalgamation for eastern seaboard complete

• Systems decommissioning completeSystems decommissioning complete

• Stage 1 property rationalisation completeStage 1 property rationalisation complete

• Service levels met & improvedService levels met & improved

Planned Outcomes for 2001Planned Outcomes for 2001

Jun QtrJun Qtr

Jun QtrJun Qtr

Sept QtrSept Qtr

Sept QtrSept Qtr

Dec QtrDec Qtr

Dec QtrDec Qtr

Dec QtrDec Qtr

Dec QtrDec Qtr

OngoingOngoing

The Operating Environment The Operating Environment


US Financial Snapshot US Financial Snapshot

US Equities

Jan 3 2000 = 100

-40

-20

0

20

40

60

80

100

8-Jun 8-Jul 8-Aug 8-Sep 8-Oct 8-Nov

Basi

s Po

ints

AAA Rated AA2 Rating BBB1 Rating

-22

-12

55

8

25

90

5 Year US Corporate (Generic) Curve to Spread over Libor

NB: 100 basis points = 1%

Feb-0160

70

80

90

100

110

Jan-00 Mar-00 Jun-00 Aug-00 Nov-00

Using Morgan Stanley Capital International Index (MSCI).

Rebased. Local currency terms


-6

-3

0

3

6

Sep-87 Sep-90 Sep-93 Sep-96 Sep-99-6

-3

0

3

6

% of GDP% pa

GDP growth

(lhs)

US Growth & TradeUS Growth & Trade

Consensus

(f)

Current account(rhs)

Consensus


AsiaAsia

ASIAN EXPORTS(% of exports to US)

0

5

10

15

20

25

30

35

40

Perc

ent (

%)

Source: IMF

Hong Kong Korea Singapore China Indonesia Malaysia Philippines Thailand Japan


Australia - Australia - Credit Cycle and Asset QualityCredit Cycle and Asset Quality

-10.0%

0.0%

10.0%

20.0%

30.0%

Jun-83 Jun-86 Jun-89 Jun-92 Jun-95 Jun-98

Ch

an

ge i

n C

red

it

-2.00%

0.00%

2.00%

4.00%

6.00%

Imp

air

ed

Assets

Change in Credit Volumes (market)

Impaired Assets to Gross Loans

(Commonwealth Bank Group)


Sector GrowthSector Growth

Credit Growth

0

100

200

300

400

500

600

700

800

900

1000

1997 1999 2001 2003

$B

illi

on

0%

2%

4%

6%

8%

10%

12%

14%

Total Credit (Commonw ealth Bank Group )

Total Credit (Industry)

Annual Grow th (%)

Retail Deposit Growth

0

50

100

150

200

250

300

350

400

450

1997 1999 2001 2003 2005 2007

$B

illio

n

0%

1%

2%

3%

4%

5%

6%

7%

8%

Retail Deposits (Commonwealth Bank Group)

Retail Deposits (Industry)

Annual Growth (%)

Retail Funds Management (Non-Life & Life)

0

100

200

300

400

500

600

700

1997 1999 2001 2003 2005 2007

$Bil

lio

n

0%

5%

10%

15%

20%

Retail FUM (Commonw ealth Bank Group)

Retail FUM (Industry)

Annual Grow th (%)

Life Insurance (Risk Products)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1997 1999 2001 2003 2005 2007

$B

illio

n

-5%

0%

5%

10%

15%

Annual Premium Inforce (Commonwealth Bank Group)

Annual Premium Inforce (Industry)

Annual Growth (%)

Source: ABS, Commonwealth Bank Source: Salomon Smith Barney Estimates, APRA, Commonwealth Bank

Source: Salomon Smith Barney Estimates, ASSIRT, Commonwealth Bank Source: Plan for Life, Commonwealth Bank


Areas of Strategic FocusAreas of Strategic Focus

• Rapid completion of Colonial integrationRapid completion of Colonial integration

• Emphasis on domestic business growthEmphasis on domestic business growth

• Improvement in service levelsImprovement in service levels

• Technology driven productivity gainsTechnology driven productivity gains

david murray half year results - december 2000

Documents

integration slide

disclaimer slide

north asia slide

operating environment

momentum of colonial

revenue synergies

personal customers growth

customer best value