2001 Investor Roadshow Presentation12 November 2001
www.commbank.com.au
1
The material that follows is a presentation of
general background information about the Bank’s
activities current at the date of the presentation,
12 November 2001. 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 investors or potential investors and
does not take into account the investment
objectives, financial situation or needs of any
particular investor. These should be considered,
with or without professional advice when
deciding if an investment is appropriate.
Disclaimer
2
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.”
Agenda
1. Update
2. Outlook
3. Long Term Strategic Focus
Update
5
2.75
3.00
3.25
3.50
Mar
-99
Jun-9
9
Sep
-99
Dec
-99
Mar
-00
Jun-0
0
Sep
-00
Dec
-00
Mar
-01
Jun-0
1
Sep
-01
NAB WBC ANZ Commonwealth Bank Group*
Domestic Net Interest Margins
%
* Proforma
Net interest margin for Commonwealth Bank Group refers to half-yearly reporting periods ending June
and December, except for current period which is 3 months only to September. The ANZ, NAB and
WBC net interest margin refers to the half-yearly reporting periods ending March and September.
3.08
2.95
2.98
3.00
6
Productivity
Challenges
• Bad debt
cycle
• Weak
equity
markets
• Low
interest
rates
Imperatives
• Realise
integration
synergies
• Improve
productivity
• Accelerate
strategic
initiatives
7
Life & Super
Investment Earnings
Market Returns & Group Exposure (%):
Market Key Market Index Exposure*
Movement YTD at 31/10/01
Australia (7)% 52%
US (14)% 27%
UK/Europe (16)% 14%
Other (11)% 7%
* % of total Group equity exposure
Net Earnings on Shareholders Assets
($m):
For period: 01/07/01- 31/10/01
Australia (17)
New Zealand (2)
Asia (3)
Total (22)
8
67 71 72 73 76
72 75 76 77 77
333441 42 43 42
34292518
2524242324
0
50
100
150
200
250
300
Dec 1999* Jun 2000 Dec 2000 Jun 2001 Sep 2001
Lending Assets**:
* Proforma
** Excludes securitised housing loan balances $6.2b (Sep 01), $6.8b (Jun 01), $4.7b (Dec 00),
$3.0b (Jun 00), $1.7b (Dec 99).
215235 243 251
Housing Other
Life & SuperFunds Management: Retail Wholesale
Total Lending Assets & Funds Under
Management
$75 billion
$153 billion
253
9
Australian Market Share
Dec 2000 Jun 2001 Aug 2001
Home Loans 20.8% 20.3% 20.3%
(Residentially Secured)
Credit Cards^ 19.1% 21.4% 21.1%
Retail Deposits 24.6% 24.0% 24.1%
Retail FUM 15.8% 16.3% 16.3%**
Superannuation/Annuities 16.0% 16.0% 16.0%**
Retail Broking 8.5% 8.7% 8.7%*
* September 2001
** June 2001
^ Colonial data captured as part of market share calculation from June 2001
Asset Quality
11
Dynamic Provisioning
Profit
and Loss
General
Provisions
Specific
ProvisionsImpaired
Expected Loss Bad Debt
Charge
Performing Portfolio
Consumer
Home Loans
Other Loans
Business
Individually Risk Rated
AAA/AA
A
BBB
Non Investment Grade
Not Individually Rated
Non Performing Portfolio
12
Total Individually Risk Rated Exposures by Value
Credit Risk
0%
20%
40%
60%
80%
100%
Dec 1999 Jun 2000 Dec 2000 Jun 2001 Sep 2001
Other BBB A AAA/AA
13
0
500
1000
1500
2000
2500
Dec
1993
Dec
1994
Dec
1995
Dec
1996
Dec
1997
Dec
1998
Dec
1999
Dec
2000
Sep
2001
0
6
12
18
24
30
36
%
Commowealth Bank Group (Other Countries)*
Commonwealth Bank Group (Australia)*
Net Impaired assets as % of Total Shareholder Equity* (axis on right)
Net Impaired Assets
* Excluding Colonial prior to 30 June 2000
Asian Crisis
Acquisition
of Colonial
Two
Account
s
14
Arrears
Loans Accruing past 90 days or more
30/06/00 31/12/00 30/06/01 30/09/01
$m $m $m $m
Housing Loans 211 247 218 177
Other Consumer Loans 64 66 90 68
Total 275 313 308 245
Housing Loan arrears rate
30/6/99 30/6/00* 31/12/00* 31/6/01* 30/9/01*
Housing Loans accruing
but past 90 days or more $m 182 211 247 218 177
Housing loan balances $m 52,646 70,738 71,505 73,511 75,261
Arrears rate % 0.35% 0.30% 0.35% 0.30% 0.24%
*Housing loan balances net of securitisation and includes Colonial
and home equity and similar facilities.
15
Credit Risk: Historical P&L Charge
-
5.00
10.00
15.00
20.00
25.00
30.00
Dec-9
3
Jun-
94
Dec-9
4
Jun-
95
Dec-9
5
Jun-
96
Dec-9
6
Jun-
97
Dec-9
7
Jun-
98
Dec-9
8
Jun-
99
Dec-9
9*
Jun-
00*
Dec-0
0
Jun-
01
Bad Debt Expense / RWA (bp)
* Includes Colonial on a pro forma basis
Basis
Poin
t C
harg
e P
er
Half
16
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Dec
93
Dec
94
Dec
95
Dec
96
Dec
97
Dec
98
Dec
99
Dec
00*
0
50
100
150
200
250
300
%
General Provision
Specific Provision
Total Provisions/Gross Impaired Assets (axis on right)
Aggregate Provisions
* Includes Colonial
$m
illio
ns
17
General Provision
Jun-00 Jun-01 APRA
Requirement
1,358
+385
-411
+67
1,399
990
Surplus 409
(ie 41% above
the APRA
requirement)
500
700
1500
1700
1900
2100
900
1100
1300
$mCharged
to P&L
Used for
Specific
Provisions
Other
18
Non-Accrual Loans by Size
$5m<$10m
$50m<$100m
$20m<$50m
$10m<$20m
>=$100m<$5m1
Customer
3
Customers7
Customers
4
Customers
7
Customers
As at 30 September 2001
19
Non Accruals by Industry
Mining
Manufacturing
AgricultureProperty &
Business Services
Finance
and Insurance
Transport
& Storage
Government
Other
As at 30 September 2001
20
Industry Exposures
Accomodation, cafes and
Restaurants
-
0.5
1.0
1.5
2.0
2.5
Jun-99 Jun-00 Jun-01
Ba
lan
ce
s $b
0%
2%
4%
6%
% B
ala
nce
s
Printing Publishing and Recording
Media
-
0.2
0.4
0.6
0.8
Jun-99 Jun-00 Jun-01
Ba
lan
ce
s $
b0%
5%
10%
15%
% B
ala
nce
s
Services to Agriculture, Forestry,
Fishing & Mining
-
0.2
0.4
0.6
0.8
1.0
Jun-99 Jun-00 Jun-01
Ba
lan
ce
s $
b
0%
2%
4%
6%
8%
% B
ala
nce
s
Retail Trade
-
1.0
2.0
3.0
4.0
Jun-99 Jun-00 Jun-01
Ba
lan
ce
s $
b
0%
2%
4%
6%
% B
ala
nce
s
Transport and Storage
-
1.0
2.0
3.0
4.0
Jun-99 Jun-00 Jun-01
Bala
nces $
b
0%
2%
4%
6%
% B
ala
nces
Metal Mining & Manufacturing
-
0.8
1.5
2.3
3.0
Jun-99 Jun-00 Jun-01
Ba
lan
ce
s $
b
0%
5%
10%
15%
20%
% B
ala
nce
s
Balances $m % Portfolio % Troublesome % Impaired
Exposure to high risk industries
Wealth Management
22
Funds Management
23 27 28
20 24 2731 30
19 1724
2324
24 25
18 20
1422
21
0
20
40
60
80
100
120
Dec 1999* Jun 2000* Dec 2000 Jun 2001 Sep 2001
$b
illi
on
s
Australian Retail Funds** Australian Wholesale Funds
International Funds Australian Life Assets
** Includes listed property trusts* Proforma
7689
95101 100
Capital
24
0.0%
0.2%
0.4%
0.6%
0.8%
Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02
CBA NAB
WBC ANZ
INTERNATIONAL COMPARISON*
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1996 1997 1998 1999 2000
Australia Canada
US UK
EU
Ratio of Net Write offs to Total Loans
DOMESTIC COMPARISON
Ratio of Net Write offs to Total Loans
* Average value for geographically representative group
Commonwealth Bank Risk Profile Vs DOMESTIC AND INTERNATIONAL PEERS
†
† Reflects write off of acquired Colonial impaired assets
25
36%
15%
33%
21%
44%
54%
45%
53%
20%
31%22% 26%
0%
20%
40%
60%
80%
100%
CBA NAB WBC ANZ
Retail Mortgages
Other
Corporate
RELATIVE ASSET MIX
Total Assets
Source: Analyst Reports; Financial Reports
100%
50%
95%
20%
100%
10%
65%
10%
0%
20%
40%
60%
80%
100%
120%
Corporate Retail - Mortgages
Current
Standard II
Foundation
Advanced
INDICATIVE RISK WEIGHTS UNDER
BIS II FOR AUSTRALIAN ASSETS
BIS II
Commonwealth Bank the Main Beneficiary
26
• The Group’s economic capital framework supports view that life
subsidiaries improve its capital position
– Low risk profile due to the high proportion of unit-linked business
– Risk diversification
• View is supported by rating agencies and the debt markets
– S&P moved the Group to “positive” outlook after Colonial
acquisition
– Recent return to “neutral” outlook caused by concern over the
general economy, not specific to the Group
– No effect on spreads of Group debt post Colonial acquisition
• Will continue to work with APRA to achieve a risk-sensitive treatment
of life subsidiaries
Life Insurance Subsidiaries Improve
Commonwealth Bank’s Risk Profile
Operating Environment
28
Outlook - Economic
• Domestic GDP growth of 2.75% for 2001/2002
• Low interest rate environment set to continue
• Moderate credit growth of 7-9%
• Low levels of confidence may restrain household
spending and business investment
• Unemployment expected to increase
• AUD expected to remain around current levels
• Weaker trade position as demand for exports reduces
29
Outlook - Operational
• Banking margins relatively stable
• Credit losses reflective of economic conditions with
large one-off charge for Pasminco
• Focus on costs and achieving remaining integration
synergies
• Life business investment earnings reflective of equity
market performance
• Funds management inflows recovering, but rate of
growth lower than last year
• Double digit EPS growth in the current year
Long Term Strategic Focus
31
Medium
Value
Business Mix / Cost Ratios
Low
Value
High
Value
Retail: 59% Commercial: 52%58%
Domestic: Offshore:
57% 123%67%
Normal: 55% Current: +5% 60%
Banking
Funds
Management
Life
Insurance
32
Implementation
Areas of focus
• Wealth
Management
• Services
aligned to
customers
needs
• Productivity
Business Process
Re-engineering
Technology
Customisation
Distribution
Third Party
International
33
Strategic Programmes
Business Process
Re-engineering
Technology
Customisation
Distribution
Third Party
Service Redesign
Service Redesign
Distribution Management
Premium Banking/
Financial Services
Reduce Cost to Serve
Third Party Development
Process Redesign
End-to-End Processing
On-line Data Architecture
Intranet Infrastructure
Benchmarking
Organisational Design
Continuous Improvement
Customised Sales & Service
34
Strategic Plan to June 2006
Business Driver Profile 5 Year Plan
Growth in Market Share
Funds under managementHome LoansCredit CardsLife InsuranceCredit ProductsBusiness FinancingRetail Deposits
At or above market
Margins Comparable for business mix Continuing decline
Sources of IncomeComparable FinancialInstitutions
Rebalance towardnon-interest income
Costs Reduction in cost/income –Best practice
3%-6% p.a.productivity change
Capital ManagementOptimise regulatory capitaland maintain rating.
Rating AA
Total Shareholder ReturnTop quartile Deliver top quartile
TSR.
2001 Investor Roadshow Presentation12 November 2001
www.commbank.com.au