2001 Investor Roadshow Presentation 12 November

Transcription

1 2001 Investor Roadshow Presentation 12 November

2 Disclaimer 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 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. 1

3 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. 2

4 Agenda 1. Update 2. Outlook 3. Long Term Strategic Focus

5 Update

6 Domestic Net Interest Margins % Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 NAB WBC ANZ Commonwealth Bank Group* 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. * Proforma 5

7 Productivity Challenges Bad debt cycle Weak equity markets Low interest rates Imperatives Realise integration synergies Improve productivity Accelerate strategic initiatives 6

8 Life & Super Investment Earnings Net Earnings on Shareholders Assets ($m): For period: 01/07/01-31/10/01 Australia (17) New Zealand (2) Asia (3) Total (22) 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 7

9 Total Lending Assets & Funds Under Management Dec 1999* Jun 2000 Dec 2000 Jun 2001 Sep 2001 $75 billion $153 billion Lending Assets**: Housing Other Funds Management: Retail Wholesale Life & Super * 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). 8

10 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

11 Asset Quality

12 Dynamic Provisioning Performing Portfolio Consumer Home Loans Other Loans Business Individually Risk Rated AAA/AA Expected Loss General Provisions Bad Debt Charge Profit and Loss A BBB Non Investment Grade Not Individually Rated Non Performing Portfolio Impaired Specific Provisions 11

13 Credit Risk Total Individually Risk Rated Exposures by Value 100% 80% 60% 40% 20% 0% Dec 1999 Jun 2000 Dec 2000 Jun 2001 Sep 2001 Other BBB A AAA/AA 12

14 Net Impaired Assets Asian Crisis Acquisition of Colonial % Two Account s 0 Dec 1993 Dec 1994 Dec 1995 Dec 1996 Dec 1997 Dec 1998 Dec 1999 Dec 2000 Sep Commowealth Bank Group (Other Countries)* Commonwealth Bank Group (Australia)* Net Impaired assets as % of Total Shareholder Equity* (axis on right) * Excluding Colonial prior to 30 June

15 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 Other Consumer Loans Total 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 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. 14

16 Basis Point Charge Per Half Credit Risk: Historical P&L Charge * Includes Colonial on a pro forma basis Dec-93 Jun-94 Dec-94 Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99* Jun-00* Bad Debt Expense / RWA (bp) Dec-00 Jun-01 15

17 $millions Aggregate Provisions 2, ,800 1, ,400 1, , % Dec 93 Dec 94 Dec 95 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00* General Provision Specific Provision Total Provisions/Gross Impaired Assets (axis on right) * Includes Colonial 16

18 General Provision $m 2100 Charged to P&L Other ,358 Used for Specific Provisions 1, Surplus 409 (ie 41% above the APRA requirement) Jun-00 Jun-01 APRA Requirement 17

19 Non-Accrual Loans by Size As at 30 September 2001 <$5m 1 Customer >=$100m $5m<$10m $10m<$20m 7 Customers 4 Customers 7 Customers 3 Customers $50m<$100m $20m<$50m 18

20 Non Accruals by Industry As at 30 September 2001 Other Government Mining Transport & Storage Finance and Insurance Manufacturing Property & Business Services Agriculture 19

21 Balances $b % Balances Balances $b % Balances Balances $b % Balances Balances $b % Balances Balances $b % Balances Balances $b % Balances Industry Exposures Exposure to high risk industries 2.5 Accomodation, cafes and Restaurants 6% Printing Publishing and Recording Media % 4.0 Transport and Storage 6% Jun-99 Jun-00 Jun-01 4% 2% 0% Jun-99 Jun-00 Jun-01 10% 5% 0% Jun-99 Jun-00 Jun-01 4% 2% 0% 4.0 Retail Trade 6% 1.0 Services to Agriculture, Forestry, Fishing & Mining 8% Metal Mining & Manufacturing % % 2% % 4% 2% % 10% 5% - Jun-99 Jun-00 Jun-01 0% - Jun-99 Jun-00 Jun-01 0% - Jun-99 Jun-00 Jun-01 0% Balances $m % Portfolio % Troublesome % Impaired 20

22 Wealth Management

23 $billions Funds Management Dec 1999* Jun 2000* Dec 2000 Jun 2001 Sep 2001 Australian Retail Funds** International Funds Australian Wholesale Funds Australian Life Assets * Proforma ** Includes listed property trusts 22

24 Capital

25 Commonwealth Bank Risk Profile Vs DOMESTIC AND INTERNATIONAL PEERS DOMESTIC COMPARISON INTERNATIONAL COMPARISON* 0.8% Ratio of Net Write offs to Total Loans 1.0% Ratio of Net Write offs to Total Loans 0.6% 0.8% 0.4% 0.6% 0.4% 0.2% 0.2% 0.0% Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun % CBA WBC NAB ANZ Australia US EU Canada UK Reflects write off of acquired Colonial impaired assets * Average value for geographically representative group 24

26 BIS II Commonwealth Bank the Main Beneficiary INDICATIVE RISK WEIGHTS UNDER BIS II FOR AUSTRALIAN ASSETS RELATIVE ASSET MIX Total Assets 120% 100% 100% 100% 95% 100% Current 80% 20% 31% 22% 26% Other 80% 60% 65% 50% Standard II Foundation Advanced 60% 40% 44% 54% 45% 53% Corporate 40% 20% 20% 10% 10% 20% 36% 15% 33% 21% Retail Mortgages 0% Corporate Retail - Mortgages 0% CBA NAB WBC ANZ Source: Analyst Reports; Financial Reports 25

27 Life Insurance Subsidiaries Improve Commonwealth Bank s Risk Profile 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 26

28 Operating Environment

29 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 28

30 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 29

31 Long Term Strategic Focus

32 Business Mix / Cost Ratios Banking Low Value Retail: 59% Commercial: 52% Medium Value High Value 58% Funds Management Domestic: Offshore: 57% 123% 67% Life Insurance Normal: 55% Current: +5% 60% 31

33 Implementation Areas of focus Wealth Management Services aligned to customers needs Customisation Distribution Third Party International Technology Productivity Business Process Re-engineering 32

34 Strategic Programmes Customisation Distribution Third Party Service Redesign Service Redesign Distribution Management Premium Banking/ Financial Services Reduce Cost to Serve Third Party Development Customised Sales & Service Technology Business Process Re-engineering Process Redesign Continuous Improvement End-to-End Processing On-line Data Architecture Intranet Infrastructure Benchmarking Organisational Design 33

35 Strategic Plan to June 2006 Business Driver Profile 5 Year Plan Growth in Market Share Funds under management Home Loans Credit Cards Life Insurance Credit Products Business Financing Retail Deposits At or above market Margins Comparable for business mix Continuing decline Sources of Income Comparable Financial Institutions Costs Reduction in cost/income Best practice Rebalance toward non-interest income 3%-6% p.a. productivity change Capital Management Total Shareholder Return Optimise regulatory capital and maintain rating. Top quartile Rating AA Deliver top quartile TSR. 34

36 2001 Investor Roadshow Presentation 12 November