Deutsche Bank Asia Pacific Financial Institutions Conference 9 July 2001 www.commbank.com.au

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Deutsche BankAsia Pacific Financial Institutions
Conference 9 July 2001www.commbank.com.au
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Disclaimer

• The material that follows is a presentation of
  general background information about the Banks
  activities current at the date of the
  presentation, 9 July 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.

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Speakers Notes

• Speakers 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.

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Agenda

• Australian financial services environment
• Our starting position
• Recent and future developments
• Summing up

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Australian Economic Environment
Vs
Is the media overusing the R word?
Source Commonwealth Bank Group illustration
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Australian Economic Environment
AUD - "FAIR VALUE"
Vs
CURRENT ACCOUNT
( of GDP)
Source Commonwealth Bank Group illustration
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Australian Economic Environment
HOUSING AFFORDABILITY
Mar-01
Commonwealth Bank Group / Housing Industry
Association measure
8
Wealth Distribution and Ageing
Prime Savers and Dissavers - of total
population
United States
Source US Census Bureau
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Regulation

• Policy driven by populist politics
• More than 25 inquiries currently underway
• Declining understanding of industrys role and
  operation
• Increasing trend to micro regulation

Increased regulation seems inevitable and is no
different to every other developed economy
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Sector Growth
Source Salomon Smith Barney Estimates, APRA,
Commonwealth Bank
Source ABS, Commonwealth Bank
Source Salomon Smith Barney Estimates, ASSIRT,
Commonwealth Bank
Source Plan for Life, Commonwealth Bank
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Our Starting Position
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Commonwealth Bank Group
Net Profit after tax and outside equity
interest - cash basis. Excludes abnormal items,
appraisal value uplift and goodwill
amortisation Proforma
Proforma
13
Australian Market Share
Not available for March 2001
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The Integration Achievement
People Phase
Design Phase
Specifications Phase
Implementation Phase
30/6/01
31/12/00
17/7/00
30/9/00

• Product Rationalisation
• Brand economics analysed
• Systems changes to support product specification
• Back office processing specifications
• Interim process integration
• Distribution function specifications

• Interim Risk
• management framework
• Staff Customer Communications
• Email link
• Key management roles
• Corporate entity restructuring

• Product Decisions
• Brand Strategies
• Owned Distribution
• Third Party Distribution
• Managerial Functions Rationalisation
• On-line strategies

• Colonial Customers transact in CBA branches
• Brands rationalised
• Branch amalgamation
• Call Centre Back office integration
• Third party distribution alignment
• On line business model
• Property rationalisation
• Systems integration

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The Integration Experience

• Transaction bridge designed and built for testing
  within 90 days
• 279 branch amalgamations and 89 Colonial branch
  sites
• were rebadged over 7 weekends
• 1,950 staff completed Orientation workshops
• 39,600 hours of call centre staff training
• 90 new scripts prepared to respond to customer
  questions about
• the merger and product conversion
• 3.5 million Colonial ATM transactions per month
  redirected to the Commonwealth Bank ATM network
• 1 million Product conversion mailing packs sent
  to customers
• 700,000 Access cards issued to customers
• existing pins and passwords automatically
  transferred
• 1.3 million accounts converted

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Capital and Debt Management Strategy

• 3.6 billion of share buy-backs since 1996 (full
  privatisation)
• Off market share buy-back of 700 million in
  April 2001. More than 9 times oversubscribed.
• Preference Share Issue of 700 million in April
  2001
• Through ComSec 6,075 online prospectus requests
  and 2,047 online applications.
• 7.5 billion of mortgage backed securities issued
  since 1997
• Australian mortgage securitisation of 2.9
  billion in April 2001

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Group Strategy
Strategic Vision
Environment of
To be the best brands in helping customers
manage and build wealth
Low inflation
Technology shift
Competition and margin squeeze
Ageing population and rate of change
On line services and wealth creation
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Recent and Future Developments
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Technology

• Shared Applications
• Web enabled Human Resources information services
• Financial systems
• On-line eProcurement
• Data and customer relationship management
• Business Applications
• Image item processing
• End to end process re-engineering
• Infrastructure
• IPNet
• Intranet
• Outsourcing
• IT - EDS Australia
• Telecommunications - TCNZA

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People

• Upskilling of people to achieve business
  leadership skills, commercial acumen and depth of
  talent.
• Align work, business, leadership and remuneration
  systems to future Group requirements.

• Implementation of consistent
• Group wide models for attraction,
• retention, promotion and reward.

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Reconfiguration of the Proprietary Distribution
Network

• An efficient and productive network
• Face-to- Face
• Mobile Bankers
• Business Banking Centres
• Underpinned by
• effective technology and streamlined processes
• transformational change in front-line people
  systems and culture
• Aligned to customer segment needs and values

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Products, post integration

• Brands
• Proprietary and third party channels
• Best of breed product offering
• choice
• competitive
• convenience

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Superannuation
100
Platform - Administration wrap
80
Complex - Masterfunds
60
Superannuation assets
40
Simple - Discrete products
20
0
2000
2001
2002
2003
2004
2005
Source Plan for Life
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Superannuation
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Funds Under MangementColonial First State

• Operations in Australia, UK, New Zealand, Hong
  
  
  Kong, Singapore and China
• Focus on institutional, wholesale and retail
  markets.
• Investment in most asset classes

Location of FUM - by source

• Asia
• Presence in Hong Kong, Singapore Mainland China
• 84 staff

• United Kingdom
• London Edinburgh
• 188 staff

• Tactical Global Management
• 24 staff
• Domestic International clients

• Australia
• 1996,1998 1999 Australian fund manager of the
  year
• Listed, retail, wholesale and private equity
  products
• Direct property investment products
• Consistent top quartile performer
• Over 700 staff

• New Zealand

Total FUM - A 84bn
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Funds under ManagementCommonwealth Investment
Management
Composition of FUM

• Over 35bn in FUM across a diverse range of
  clients (including 10bn of cash management).
• Quantitative management and active management of
  Australian shares, bonds, credit, cash and
  infrastructure.
• Innovative product offerings such as Commonwealth
  Diversified Credit Fund.

Retail Unit Trusts 26
66
Wholesale Super Funds18
24
4
Institutional Funds16
Retail Life Ins. Super 34
7
43
Wholesale Unit Trusts 6
Investment Mix
As at 31 May 2001
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The Groups approach to Risk

• Integrated Risk Management Framework
• Risk Tolerance
• Economic Equity

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Summing up
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Summing up

• Brand and scale
• People
• Customer Service
• Revenue
• Customer segmentation
• Volume and market share growth
• Cross-offering non-traditional products to the
  Groups customer base.
• Productivity enhancement
• Process re-engineering
• Unit cost reduction
• International presence

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Deutsche BankAsia Pacific Financial Institutions
Conference 9 July 2001www.commbank.com.au