John Mulcahy UBS Warburg Conference 6 June 2001
John Mulcahy UBS Warburg Conference 6 June 2001 www. commbank. com. au 0
Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 6 June 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. www. commbank. com. au 1
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 Power. Point and view/print in “notes view. ” www. commbank. com. au 2
Agenda • Group Performance • Progress Report on Integration and Group Strategy • Drivers of growth in Financial Services www. commbank. com. au 3
Group Performance Net Profit after tax and outside equity interest - cash basis. Excludes abnormal items, appraisal value uplift and goodwill amortisation ** Proforma * www. commbank. com. au * Proforma 4
Group Performance Mar 2001 www. commbank. com. au 5
www. commbank. com. au Robeco Group 94. 4 94. 3 Great West Lifeco Mellon 94. 9 94. 6 Skandia American Express 95. 2 Swiss Re 95. 6 95. 5 95. 4 95. 3 Power Finl. AIG Bank of New York Providian Finl. BBVA 95. 9 Charles Schwab 96. 6 Capital One 97. 0 96. 8 Fortis Northern Trust Mediolanum 100. 0 99. 3 CBA Aegon Ideal Firm SPI through December 2000. Index of Top Consistent Performers 98. 7 93. 8 92. 7 Source : Oliver, Wyman & Company Report Number 3 Volume 11 March 2001 6
Australian Market Share www. commbank. com. au 7
Progress Report on Integration www. commbank. com. au 8
Integration Targets • Expect majority of cost synergies to be achieved by end of year two whilst revenue synergies will progressively be realised over the next few years • Funding benefits from anticipated improved ratings and capital management • Maintain & improve service levels • Maintain the momentum of Colonial First State Investments • Continue strong relationships with independent distributors www. commbank. com. au 9
Customer Retention • Customer Retention has been a critical target • Retention based upon Customer Revenues rather than specific Customer Numbers • Retention is on target • Early Card Product changes resulted in 97% retention • Customer experience has been well managed www. commbank. com. au 10
Outcomes to Date Retail banking operations Forecast Completion • Systems build complete Dec Qtr Dec 00 • Transaction bridge operational Mar Qtr Jan 01 • End to End Testing commenced Jun Qtr Mar 01 • Launceston call centre site build (stage 1) complete Mar Qtr Jan 01 • Conversion Management System operational Jun Qtr Mar 01 • Launceston call centre operational Jun Qtr Mar 01 • Colonial customer retention on track Ongoing • Product Conversion Mailing Lodged Jun Qtr May 01 • Branch amalgamation program complete Dec Qtr May 01 www. commbank. com. au 11
Other Outcomes • Area manager incentive scheme now incorporates integration metrics • 1 million Product conversion mailings sent to customers • 700, 000 Keycards issued to customers • Extensive Verification Programme • Campaign Management initiated to review all customer impacts • No unplanned impact on agent network www. commbank. com. au 12
Integration Phase 2 • Rationalisation of the Financial Services product set to ensure a streamlined set of products with a consistent brand – – Life products Managed Funds products • Systems Infrastructure to support the rationalised product set • Distribution Strategy – comprehensive strategy leveraging proprietary and third party distribution channels www. commbank. com. au 13
Group Strategy and Drivers of Growth in Financial Services www. commbank. com. au 14
Group Strategy Strategic Vision To be the best brands in helping Financial Goal Top Quartile TSR customers manage and build wealth Business Goals Attract more customers & more revenue per customer Best value service through innovation & on-line leadership Growth with low inflation Major technology shift Best Team Pace of change Develop offshore opportunities Limited longer term domestic scope Global best-practice costs www. commbank. com. au WHY? Margin squeeze 15
Progress against the Strategy • Attract More Customers & More Revenue per Customer – Approximately 10 million personal customers – Growth in customer numbers and/or revenue across all segments • Innovation and On-line leadership – 1. 1 m on-line customers as at 31/3/01 • Best Team – Key skills and people from Colonial retained – All staff participate in a form of performance based remuneration www. commbank. com. au 16
Progress against the Strategy • Develop Offshore Opportunities – ASB wholly owned – Entry into UK mortgage market – Integration of Stewart Ivory and CFS – China - commenced Life Insurance business • Global Best Practice Costs – Focus on technology driven productivity – Leverage the increased scale from Integration www. commbank. com. au 17
Sector Growth Source: ABS, Commonwealth Bank Source: Salomon Smith Barney Estimates, APRA, Commonwealth Bank Source: Salomon Smith Barney Estimates, ASSIRT, Commonwealth Bank www. commbank. com. au Source: Plan for Life, Commonwealth Bank 18
Financial Services Drivers Demographics Consumers • • • Aging population Increased life expectancy Regulation • • • Superannuation Tax Clerp 6 Increased Complexity Competition • • • Technology • • Channel proliferation Rapid change Global Consolidation Blurred boundaries Economic • • www. commbank. com. au Sophisticated Choice Convenience Reduced loyalty Poor savings history Weak $AUD 19
Financial Services Vision By offering customers a comprehensive product set, superior value and the convenience of a multi channel distribution environment, we will meet customer needs in wealth creation, protection and financial management and build upon our positioning as the leading financial services brand. www. commbank. com. au 20
Financial Services Business Model Product Strategy • Manufacture • Wholesale Advice Wrap Superior Customer Service Wealth Management capability Multi-channel sales delivery • leverage the CBA retail network • leverage and grow 3 rd party distribution channels • develop online and self fulfillment opportunities. Develop channel specific offerings in line with customer needs to build balances and market share Cross sell / life cycle strategy • Customer segmentation and life stage needs as the basis for targeted marketing and product bundling Deliver maximum sell / retention across the complete product range www. commbank. com. au 21
Funds under Management Retail Funds Under Management Market Share as at 31/12/2000 Market Share as at 31/3/2001 $bn share 1. CBA 41. 4 19. 6% 42. 6 20. 0% 2. NAB 29. 7 14. 1% 30. 4 14. 3% 3. AMP 25. 3 12. 0% 24. 8 11. 7% 4. BT 18. 1 8. 6% 17. 2 8. 1% 5. Westpac 13. 7 6. 5% 13. 8 6. 5% 6. ANZ 11. 0 5. 2% 11. 5 5. 4% Source: Assirt www. commbank. com. au 22
Funds under Management Total Assets Under Management Market Share as at 31/12/2000 Market Share as at 31/3/2001 $bn share $bn 1. CBA 90. 4 14. 8% $94. 5 15. 1% 2. AMP 72. 2 11. 8% $72. 4 11. 6% 3. NAB 43. 4 7. 3% $47. 1 7. 5% 4. BT 37. 1 6. 2% $35. 9 5. 7% 5. Deutsche 33. 3 5. 6% $33. 3 5. 3% 6. State Street 30. 3 5. 1% $30. 3 4. 8% www. commbank. com. au Source: Assirt share 23
Areas of Strategic Focus • Rationalisation of the Financial Services product set • Improvement in customer service • Continued focus on productivity improvement www. commbank. com. au 24
UBS Warburg Conference 6 June 2001 www. commbank. com. au 25
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