John Mulcahy UBS Warburg Conference 6 June 2001 .

John MulcahyJohn MulcahyUBS Warburg Conference UBS Warburg Conference

6 June 2001 6 June 2001www.commbank.com.auwww.commbank.com.au

John MulcahyJohn MulcahyUBS Warburg Conference UBS Warburg Conference

6 June 2001 6 June 2001www.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, 6 activities current at the date of the presentation, 6 June 2001. It is information given in summary form June 2001. It is information given in summary form and does not purport to be complete. It is not 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.”


• Group Performance Group Performance

• Progress Report on Integration and Progress Report on Integration and Group StrategyGroup Strategy

• Drivers of growth in Financial Drivers of growth in Financial ServicesServices

• Group Performance Group Performance

• Progress Report on Integration and Progress Report on Integration and Group StrategyGroup Strategy

• Drivers of growth in Financial Drivers of growth in Financial ServicesServices

AgendaAgenda


Group PerformanceGroup Performance

Net Operating Profit

1,033 1,0351,109

0

200

400

600

800

1,000

1,200

Dec 1999** Jun 2000** Dec 2000

$m

* Net Profit after tax and outside equity interest - cash basis. Excludes abnormal items, appraisal value uplift and goodwill amortisation

** Proforma

Operating Income

2,070 2,086 2,221

1,072 1,106 1,196

739664320

300241

818

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Dec 1999* Jun 2000* Dec 2000

$m

Net Interest Income Other Banking Operating Income

Funds Management Income Life Insurance Income

* Proforma


Group PerformanceGroup Performance

Funds Under Management

23 25

28 32 35 36

202423 24 26

10

2018

2122

14

1210

8

0

20

40

60

80

100

120

140

Dec 1999* Jun 2000 Dec 2000 Mar 2001

$b

Australian Retail Funds** Australian Wholesale Funds

International Funds Australian Life Assets

Other Life Assets

Share Price Performance

0

5

10

15

20

25

30

35

Dec 1996 Dec 1997 Dec 1998 Dec 1999 Dec 2000

Sh

are

pri

ce $

0

10

20

30

40

To

tal

Sh

areh

old

er

Ret

urn

%

Closing share price ($)Total Shareholder Return for 5 years (%)Average TSR (ANZ, NAB, Westpac)

Mar 2001


Index of Top Consistent PerformersIndex of Top Consistent Performers100.0

99.398.7

97.0 96.8 96.695.9 95.6 95.5 95.4 95.3 95.3 95.2 94.9 94.6 94.4 94.3

93.8

92.7

Idea

l Fir

m

Aeg

on

CB

A

Med

iola

nu

m

No

rth

ern

Tru

st

Cap

ital

On

e

Ch

arle

s S

chw

ab

BB

VA

Pro

vid

ian

Fin

l.

Ban

k o

f N

ew Y

ork

AIG

Po

wer

Fin

l.

Sw

iss

Re

Am

eric

an E

xpre

ss

Ska

nd

ia

Mel

lon

Gre

at W

est

Lif

eco

Ro

bec

o G

rou

p

Fo

rtis

Source : Oliver, Wyman & Company Report Number 3 Volume 11 March 2001

SP

I th

rou

gh

Dec

emb

er

200

0.


Australian Market Share Australian Market Share Jun 2000

Dec2000

Mar2001

Home Loans 21.38% 20.78% 20.93%

Credit Cards 29.00% 29.00% N/A

Personal Loans 23.89% 22.85% 23.63%

Retail Deposits 25.29% 24.61% 24.61%

Retail FUM 16.00% 17.07% 19.97%

Retail Broking 9.00% 8.50% 8.00%

Progress Report on IntegrationProgress Report on Integration


Integration TargetsIntegration Targets

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


Customer RetentionCustomer Retention

• Customer Retention has been a critical targetCustomer Retention has been a critical target

• Retention based upon Customer Revenues Retention based upon Customer Revenues rather than specific Customer Numbersrather than specific Customer Numbers

• Retention is on targetRetention is on target

• Early Card Product changes resulted in 97% Early Card Product changes resulted in 97% retentionretention

• Customer experience has been well managedCustomer experience has been well managed


Outcomes to DateOutcomes to Date

Retail banking operationsRetail banking operations

• Systems build completeSystems build complete

• Transaction bridge operationalTransaction bridge operational

• End to End Testing commencedEnd to End Testing commenced

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

completecomplete

• Conversion Management System operationalConversion Management System operational

• Launceston call centre operationalLaunceston call centre operational

• Colonial customer retention on trackColonial customer retention on track

• Product Conversion Mailing LodgedProduct Conversion Mailing Lodged

• Branch amalgamation program completeBranch amalgamation program complete

Forecast Forecast CompletionCompletion

Dec QtrDec Qtr Dec 00Dec 00

Mar QtrMar Qtr Jan 01Jan 01

Jun QtrJun Qtr Mar 01Mar 01

Mar Qtr Mar Qtr Jan 01Jan 01



OngoingOngoing

Jun QtrJun Qtr May 01May 01

Dec QtrDec Qtr May 01May 01


Other OutcomesOther Outcomes

• Area manager incentive scheme now Area manager incentive scheme now incorporates integration metricsincorporates integration metrics

• 1 million Product conversion mailings sent to 1 million Product conversion mailings sent to customerscustomers

• 700,000 Keycards issued to customers700,000 Keycards issued to customers

• Extensive Verification Programme Extensive Verification Programme

• Campaign Management initiated to review all Campaign Management initiated to review all customer impactscustomer impacts

• No unplanned impact on agent networkNo unplanned impact on agent network


Integration Phase 2Integration Phase 2

• Rationalisation of the Financial Services product set Rationalisation of the Financial Services product set to ensure a streamlined set of products with a to ensure a streamlined set of products with a consistent brandconsistent brand

– Life productsLife products

– Managed Funds productsManaged Funds products

• Systems Infrastructure to support the rationalised Systems Infrastructure to support the rationalised product setproduct set

• Distribution StrategyDistribution Strategy– comprehensive strategy leveraging proprietary and comprehensive strategy leveraging proprietary and

third party distribution channelsthird party distribution channels

Group Strategy and Drivers of Group Strategy and Drivers of Growth in Financial ServicesGrowth in Financial Services


Group StrategyGroup Strategy

Business Goals

To be To be

the best the best

brands in brands in

helping helping

customers customers

manage and manage and

build wealthbuild wealth

To be To be

the best the best

brands in brands 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


Progress against the StrategyProgress against the Strategy

• Attract More Customers & More Revenue per Attract More Customers & More Revenue per CustomerCustomer– 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 segmentsacross all segments• Innovation and On-line leadershipInnovation and On-line leadership

– 1.1m on-line customers as at 31/3/011.1m on-line customers as at 31/3/01• Best TeamBest Team

– Key skills and people from Colonial retainedKey skills and people from Colonial retained– All staff participate in a form of performance based All staff participate in a form of performance based

remunerationremuneration


Progress against the StrategyProgress against the Strategy

• Develop Offshore OpportunitiesDevelop Offshore Opportunities– ASB wholly ownedASB wholly owned– Entry into UK mortgage marketEntry into UK mortgage market– Integration of Stewart Ivory and CFSIntegration of Stewart Ivory and CFS– China - commenced Life Insurance businessChina - commenced Life Insurance business

• Global Best Practice CostsGlobal Best Practice Costs– Focus on technology driven productivityFocus on technology driven productivity– Leverage the increased scale from IntegrationLeverage the increased scale from Integration


Sector GrowthSector GrowthCredit 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


Financial Services DriversFinancial Services Drivers

DemographicsDemographics• Aging Aging

populationpopulation

• Increased life Increased life expectancyexpectancy

RegulationRegulation• SuperannuationSuperannuation

• TaxTax

• Clerp 6Clerp 6

TechnologyTechnology• Channel Channel

proliferationproliferation

• Rapid changeRapid change

ConsumersConsumers• SophisticatedSophisticated• ChoiceChoice• ConvenienceConvenience• Reduced loyaltyReduced loyalty

CompetitionCompetition• GlobalGlobal• ConsolidationConsolidation• Blurred Blurred

boundariesboundaries

EconomicEconomic• Poor savings Poor savings

historyhistory

• Weak $AUDWeak $AUD

Increased Increased ComplexityComplexity


Financial Services VisionFinancial Services Vision

By offering customers a comprehensive By offering customers a comprehensive product set, superior value and the product set, superior value and the

convenience of a multi channel distribution convenience of a multi channel distribution environment, we will meet customer needs in environment, we will meet customer needs in

wealth creation, protection and financial wealth creation, protection and financial management and build upon our positioning management and build upon our positioning

as the leading financial services brand.as the leading financial services brand.


Financial Services Business Financial Services Business Model Model

Product StrategyProduct Strategy

• ManufactureManufacture

• WholesaleWholesale

Multi-channel sales deliveryMulti-channel sales delivery

• leverage the CBA retail networkleverage the CBA retail network

• leverage and grow 3rd party leverage and grow 3rd party distribution channelsdistribution channels

• develop online and self fulfillment develop online and self fulfillment opportunities.opportunities.

Cross sell / life cycle strategyCross sell / life cycle strategy

• Customer segmentation and life Customer segmentation and life stage needs as the basis for targeted stage needs as the basis for targeted marketing and product bundlingmarketing and product bundling

Develop channel specific Develop channel specific offerings in line with offerings in line with customer needs to build customer needs to build balances and market sharebalances and market share

Deliver maximum sell / Deliver maximum sell / retention across the retention across the complete product rangecomplete product range

Wealth Management Wealth Management capabilitycapability

Advice Advice WrapWrap

Superior Superior Customer Customer ServiceService


Retail Funds Under ManagementRetail Funds Under Management

Market Share as at 31/12/2000Market Share as at 31/12/2000 Market Share as at 31/3/2001 Market Share as at 31/3/2001

$bn$bn share share $bn $bn share share

1. CBA1. CBA 41.441.4 19.6%19.6% 42.642.6 20.0%20.0%

2. NAB2. NAB 29.729.7 14.1%14.1% 30.430.4 14.3%14.3%

3. AMP3. AMP 25.325.3 12.0%12.0% 24.824.8 11.7%11.7%

4. BT4. BT 18.118.1 8.6% 8.6% 17.217.2 8.1% 8.1%

5. Westpac5. Westpac 13.713.7 6.5% 6.5% 13.813.8 6.5% 6.5%

6. ANZ6. ANZ 11.011.0 5.2% 5.2% 11.511.5 5.4% 5.4%

Funds under ManagementFunds under Management

Source: AssirtSource: Assirt


Total Assets Under ManagementTotal Assets Under Management

Market Share as at 31/12/2000Market Share as at 31/12/2000 Market Share as at 31/3/2001 Market Share as at 31/3/2001

$bn$bn share share $bn$bn share share

1. CBA1. CBA 90.4 90.4 14.8% 14.8% $94.5$94.5 15.1%15.1%

2. AMP2. AMP 72.2 72.2 11.8% 11.8% $72.4$72.4 11.6%11.6%

3. NAB 3. NAB 43.4 43.4 7.3% 7.3% $47.1$47.1 7.5% 7.5%

4. BT4. BT 37.1 37.1 6.2% 6.2% $35.9$35.9 5.7% 5.7%

5. Deutsche5. Deutsche 33.3 33.3 5.6% 5.6% $$33.333.3 5.3% 5.3%

6. State Street 30.36. State Street 30.3 5.1% 5.1% $30.3$30.3 4.8% 4.8%

Funds under ManagementFunds under Management

Source: AssirtSource: Assirt


Areas of Strategic FocusAreas of Strategic Focus

• Rationalisation of the Financial Services product Rationalisation of the Financial Services product setset

• Improvement in customer serviceImprovement in customer service

• Continued focus on productivity improvementContinued focus on productivity improvement

UBS Warburg Conference UBS Warburg Conference 6 June 2001 6 June 2001

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

UBS Warburg Conference UBS Warburg Conference 6 June 2001 6 June 2001

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

John Mulcahy UBS Warburg Conference 6 June 2001 .

Documents

integration slide

proforma slide

managed slide

disclaimer slide

retention customer experience

customer revenues

group strategyprogress

integration targets