Ralph Norris CHIEF EXECUTIVE OFFICER 27 September 2007 Commonwealth Bank of Australia ACN 123 123 124 JP MORGAN ASIA PACIFIC AUSTRALASIAN CONFERENCE 2007 EDINBURGH
Disclaimer Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 27 September 2007. 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. 2
Overview Overview � Good result - all businesses delivered double digit profit growth � Continued investment in the business to drive future growth � Substantial progress on our five strategic priorities � Credit quality maintained � Good momentum going into new year 3
Strong financial results Strong financial results Jun 07 vs Jun 07 Jun 06 Cash NPAT ($m) * 4,604 18% Cash EPS (cents) * 353.0 16% Return on Equity – Cash (%) 22.1 80 bpts Income ($m) 13,159 11% Expense ($m) 6,427 7% Final Dividend ($ per share) 1.49 15% * Excludes profit on sale of Hong Kong Insurance business in half year ended December 2005 4
Revenue grow th outstrips costs Revenue grow th outstrips costs Jun 07 vs Jun 06 30% 25% 24% 23% 23% 20% 19% 20% 18% 17% 16% 15% 15% Investment 11% 10% 10% 10% 10% 10% Spend 7% 10% 2% 5% 5% 4% 5% 5% 2% 1% 0% a a b c d Australian BCI Asia Pacific Banking Funds Insurance Group b Retail Management Income Expenses NPAT Investment Spend a Excludes hedging volatility b Income is net of volume related expenses c Excludes Hong Kong disposal and the operating result of the business d Excludes Hong Kong disposal 5
All brands performing strongly All brands performing strongly Banking Funds Mgt Insurance 6
Credit – Credit – maintained high standards aintained high standards � Loan impairment expense as % of Gross impaired assets to RWA RWA down on last year at 0.19% 1.20% (06: 0.20%) 1.00% � 0.80% CBA Limited private equity participation ANZ 0.60% NAB � 67% of commercial loans WBC 0.40% investment grade 0.20% � 0.00% Security over 82% of the non- Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun 01 02 02 03 03 04 04 05 05 06 06 07 investment grade exposure Individually assessed provisions � Improving unsecured retail lending as a % of advances risk profile 25 � 20 Low doc loans (2.3% of home 15 loans) bpts 10 � On market value, 75% of home 5 loans < 60% LVR and most > 80% 0 LVR insured FY03 FY04 FY05 FY06 FY07 Consumer Commercial 7
Funding & Liquidity Funding & Liquidity � No exposure to CLOs / CDOs or Source of funding as at 30 June 07 material direct exposure to US subprime 21% � 2 sponsored ABCP conduits with Short term wholesale standby facilities totalling $2.5bn – Long term wholesale 55% currently drawndown to $1.3bn, highly Securitisation 20% rated assets Retail 4% � $1.5bn standby facilities to other Wholesale funding as at 30 June 07 conduits currently drawndown to $50m Structured MTN 5% � Should all facilities be drawdown Tier 1 15% Vanilla MTN 9% Commercial Paper impact approx 11bp 8% Structured Finance Deals Debt Capital � High proportion of retail funding and 21% CDs 11% wholesale funding very diversified Securitisation Bank Acceptance 6% � Approx 95% of liquid assets eligible for 13% Deposits from other financial institutions 6% 6% repo with a central bank Repo, short sell liabilitiess & other 8
CEO priorities & measures CEO priorities & measures Customer Service � Business Banking � Technology & Operational Excellence � Trust & Team Spirit � Profitable Growth � Superior operating and financial results � Australia’s finest financial services organisation � 9
Customer Service Customer Service % customers satisfied (Roy Morgan Research – 6 month average) � Continued focus on embedding Sales & 82% Services culture � 4,000 front line staff trained in how to 72% better identify customer needs CBA � 1,100 new customer facing roles across 62% the Group Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 � New branch operating model to better Indexed # of retail customer complaints 1.0 meet customer needs 0.8 43% decline � Continued improvement in customer since 05/06 0.6 satisfaction scores 0.4 � Complaints reduced; compliments 0.2 increased 0.0 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 10
On a journey...Australian Retail Banking On a journey...Australian Retail Banking � Introduction of � Management KPI’s CommSee linked to customer � Branch satisfaction � Sales & Service refurbishment � Introduction of Program � Saturday trading initiatives for our � Measurement of people customer advocacy Revenue Operations Customers Market Share growth � New branch � > 600 new front � Improvements operating model line staff emerging � New generation � Competitive product � Strong upturn in retail branch layout offerings network sales � Rollout of Needs � Home loans in all segments � 8bpts in 2 nd half � Reduction in Analysis mastery � Taking ownership � Deposits � 21bpts customer complaints in 2 nd half � Flexible opening and following up training hours 11
Business Banking Business Banking � Local Business Banking (LBB) Growth in Lending to Non-Financial � 85 new Bankers in branches Corporations 2005-2007* 160% � 78 new associates providing 24/7 150% access 140% � Product and process simplification 130% 120% � Corporate Financial Services 110% � 100% 72 new staff in 8 new centres 90% � Simpler faster processes Jun-05 Jun-06 Jun-07 Sep-05 Dec-05 Mar-06 Sep-06 Dec-06 Mar-07 � Improved customer satisfaction CBA Market � Agribusiness * APRA � 53 new Bankers in 15 new locations LBB Quarterly gross fundings FY07 � Agriline launched with 24/7 customer access � Technology � CommBiz rolled out to over 10,000 business customers � Continued enhancements to CommSee Q1 Q2 Q3 Q4 12
CommBiz – online, real time secure business and corporate banking FirstChoice – chosen by 50% of IFA’s Netbank – 2m active customers CommSec CommSee – 95% visibility of customer 13
Technology & Operational Excellence Technology & Operational Excellence IT Efficiency Ratio * 20% � Saved over $100m of IT expense � Successfully delivering large 20.3% 15% 17.3% portfolio of IT projects across the 16.5% 15.5% 15.0% business 10% 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 � Significant improvements in Severity 1 and 2 Incidents June 06 – June 07 system stability, resilience and 60 50 security # Incidents 40 30 � 429 staff trained in CommWay, 20 10 taking total to 1,512 0 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Severity 1 and 2 * Efficiency Ratio = Total IT Expense (excluding strategic initiative spend) / Total bank Op Expenses 14
Trust & Team Spirit improving Trust & Team Spirit improving Index CARES Survey � Continued improvement in the 1.5 culture: 1.4 � Increasing focus on customer 1.3 � Positive momentum in people 1.2 engagement scores 1.1 � Improved employee benefits 1.0 � Increasing sense of pride 0.9 Nov 03 Nov 04 May 05 Nov 05 May 06 Nov 06 May 07 Source: Culture Survey � Reflected in our people measures: LTIFR � LTIFR down approx 30% in 15 Incidents last 12 months Claims (Industry standard) � Absenteeism down 7% 10 � Voluntary turnover down 13% 6.5 5 2.9 � Continued support for our community 0 Sep 05 Dec 05 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 Jun 07 15
Opportunities for Profitable Grow th Opportunities for Profitable Grow th � Asian expansion plans progressing well: � Indonesia - ANK acquisition - acquired JV partner stake in CMG Astra � China - Further capital investment in Hangzhou - Cinda/CFS fund management JV launched � Vietnam - Branch licence applied for � CFS Global Asset Management launched 20 new funds in 2007 � Global Markets growth strategy � Cross business unit referrals increasing 16
Outlook Outlook Economic outlook for Australia remains positive � Housing credit growth expected to remain at similar levels to 2007 � Some slowing expected in business and personal credit growth � Financial services industry will remain competitive � Given outlook and business mix, expect EPS growth to meet or � exceed average of peers 17
Ralph Norris CHIEF EXECUTIVE OFFICER 27 September 2007 Commonwealth Bank of Australia ACN 123 123 124 JP MORGAN ASIA PACIFIC AUSTRALASIAN CONFERENCE 2007 EDINBURGH
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