0821 strategy presentation chief executive officer
TRANSCRIPT
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Commonwealth Bank StrategyPresentation
David Murray
21 August 2002
www.commbank.com.au
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The material that follows is a presentation of generalbackground information about the Banks activitiescurrent at the date of the presentation, 21 August2002. It is information given in summary form and
does not purport to be complete. It is not intended tobe relied upon as advice to investors or potentialinvestors and does not take into account theinvestment objectives, financial situation or needs of
any particular investor. These should be considered,with or without professional advice when deciding ifan investment is appropriate.
Disclaimer
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Speakers Notes
Speakers notes for this presentation are
attached below each slide.
To access them, you may need to savethe slides in PowerPoint and view/printin notes view.
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Agenda
Economic Consumer
Societal
Conditions for change
EfficiencyService
Governance
Our strategic response
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Economic conditions for change
Equity Market turmoil
Greater uncertainty in world economy
Australia not immune High household debt
Lower credit growth
Inadequate retirement income
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High household debt
Australia
France
US
Japan
Canada
UK
Household debt as % of disposable income%
Source: OECD
50
65
80
95
110
125
140
155
88 90 92 94 96 98 00
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0
10
20
30
40
50
60
70
82 84 86 88 90 92 94 96 98 00 02
Lower credit growth expected
Credit as % of GDP%
Business
Housing
Personal
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Retirement income expectations gap
0
5
10
15
20
25
3035
40k 60k
Final Year Income of Retiree
RetirementIncomep.a
($'000)
70% of workersexpect to need atleast $30,000 p.a.in retirement
Source: ASFA
GAP
GAP
LikelyRetirementIncome
Pension SuperAssumptions: 30 year contribution at 9%
with no employee contributions
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Implications for Financial Services
Competitive industry with surplus capacity
Reliant on higher growth rate than is shown in the trends
Continued pressure on margins Lower shareholder returns
Focus on efficiency
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Our response: Focus on efficiency
Remove all remaining back-office functions from branches
Streamline home loan processes
Streamline Business Banking processes Rationalise investment products & systems
Organisational design
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Economic Consumer
Societal
Conditions for change
EfficiencyService
Governance
Our strategic response
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Consumer conditions for change
Pressured with retirement planning, in an uncertainequities market
More complex financial needs, but a desire for simplicity
Technology provides access to unlimited informationenabling informed decisions
Desire for closer relationship with trusted service
providers
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Implications
Meeting customer expectations requires an organisationalupgrade through:
Our people
Service quality
Infrastructure
Relationships
Services
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Our response: Develop our people
Our people are our service Skilled
strengthen leadership, sales & service capabilities
Equipped upgrade front-end systems; re-engineer processes
Authorised
Levels of Work review; delegated authorities
Engaged strengthen the bridge between engaged employees
and engaged customers
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Our response: Improve service quality
Reduce key sources of customer frustration at all pointsof interaction
raise responsiveness
improve problem resolution
Keep branch numbers at current level
Continue to build on service quality improvements
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Our response: Upgrade our infrastructure
Continue to invest in our supporting systems andinfrastructure
Single view of customer
Branch telling system
Netbank upgrade
Streamline processes
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Our response: Focus on relationships
differentiated packages andservice
improving service to small andmedium sized businesses
building on a traditional strength
growing advice capabilities in thenetwork
simple, cost-effective personalbanking solutions
selectively build presence asopportunities arise
Premium services
Business services
Youth services
Advice services
Retail services
International services
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Our response: Continue innovation
Simplify product sets
Upgrade products for business customers
Premium product packages Manufacture innovative products
First Choice Masterfund
Corporate Superannuation
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Economic
Consumer
Societal
Conditions for change
Efficiency
Service
Governance
Our strategic response
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Societal conditions for change
Governance behaviours vary widely, between countriesand companies
Widespread loss of faith in corporate world
Reputations increasingly called into question
Break down in the relationship between institutions andthe people they serve
Strong desire on the part of the community for banks tocontribute to a stable financial system in which they canhave confidence
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Our leadership response on Governance
Recent review of corporate governance
Chairmans statement on governance
Board structure
Board processes
Audit independence
Highest standards of governance
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Strategic Outcomes
Business Driver Profile 5-Year PlanGrowth in market share Major product groups At or above market
Margins Comparable for Continuing declinebusiness mix
Sources of income Comparable financial Continued shiftinstitutions toward non-interest
Costs Reduction in cost- 3%-6% p.a.income - best practice productivity change
Capital Management Optimise regulatory Rating AA-capital & maintain rating
Total Shareholder Return Relative to peers Top Quartile
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Our vision
To be chosen and respected
as an excellent provider
of financial services
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The Corporate Strategy
David Murray
21 August 2002
www.commbank.com.au