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1 1 22 November 2007 Commonwealth Bank of Australia ACN 123 123 124 Retail Banking Services Market Update
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Page 1: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

1 122 November 2007Commonwealth Bank of Australia ACN 123 123 124

Retail Banking ServicesMarket Update

Page 2: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

2

The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 22 November 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.

Disclaimer

Page 3: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

3

Our team

Chief Financial OfficerShayne Bryant

Third Party Banking

Kathy Cummings

Group Sales & Service

Retail Products

Retail Sales

Direct Channels & Operations

Credit Cards

Grahame Carney

Vittoria Shortt

Michael Cant

Stephen Karpin

Group Executive

Ross McEwan

Fred Pollock

Chief Risk Officer

David Grafton

Chief Information

OfficerAdam

Bennett

Page 4: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

4

Notes

Page 5: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

5

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 6: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

6

Notes

Page 7: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

7

Size and potential

Largest retail bank in Australia

40% of Group NPAT

~9 million customers

Over 16,000 people

~80% customer-facing

Easily the largest and most accessible distribution network

1,010

3,242

821

2,171500

1500

2500

3500

Branches ATMs

CBA

Nearest Major *

Customer Facing Retail Operations Support Office

77%

6%17%

Our People

* Source: APRA June 07

Page 8: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

8

Notes

Page 9: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

9

Australia’s most convenient bank

Channel figures are approximate

Branches

1,010sites

ATMs

3,242terminals

EFTPOS

171,100machines

NetBank

2 millionactive

customers

Australia Post

3,800agencies

Call Centres

120 millioncalls pa

Brokers

9,300brokers

Page 10: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

10

Notes

Page 11: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

11

Clear vision and strategy

Retail Bank Strategy

Group VisionTo be Australia’s finest financial services organisation

through excelling in customer service

To make it easy for customers

To meet their needs every time

So we can do more business with them

Page 12: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

12

Notes

Page 13: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

13

On track

InternalmeasuresInternal

measuresCustomer

satisfactionmeasures

Customer satisfactionmeasures

Market share

Market share

Revenuegrowth

Revenuegrowth

Outperformmarket

Outperformmarket

The journey so far Going forward

Roy Morgan

Customer surveys

Engagement

Safety

Culture survey

Compliments

Complaints

Home loans

Deposits

Page 14: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

14

Notes

Page 15: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

15

Good progress

Extended branch tradingBranch redesign and upgradeNetBank enhancementsSimple home loans

Meeting customer needsMeeting customer needs

Making it easierMaking it easier

Doing more businessDoing more business

New network operating modelAward winning productsSpecialist capability in branches

Needs analysis mastery trainingCross-sell and referral emphasisLeverage CommSee

Page 16: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

16

Notes

Page 17: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

17

Complaints

0

0

0

0

0

0

% Customers Satisfied*

CBA

Sep 07

* Roy Morgan

Our customers are happier

Customer satisfaction* at 10 year high

Complaints down 43% in 2007 and continuing to trend lower

Compliments up 69% last 12 months

62%

72%

82%

Jun 05 Dec 05 Jun 06 Dec 06 Jun 07Dec 05 Jun 06 Dec 06 Jun 07Jun 05 Sept 07

Dec 05 Jun 06 Dec 06 Jun 07Jun 05 Sept 07

Complaints

Page 18: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

18

Notes

Page 19: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

19

Our people are more engaged

^ claims per 1 million hours worked

Safety^(Claims Frequency Rate)

5.9

4.5

Jun 06 Sept 07

Culture survey trending higher

Safety incidents falling

Turnover stable in tight

labour market

24%

% Culture Survey (CARES)

60

69 70

55

60

65

70

75

May-06 Nov-06 May-07May 06 Nov 06 May 07

Page 20: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

20

Notes

Page 21: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

21

Market share improving

Market Share* bps

Home Loans +17

Personal Loans Steady

Credit Cards –84

Deposits +19

* Source: APRA/RBA September 07

Movements since December 2006

Six consecutive monthly increasesSix consecutive monthly increases

Gaining 30% share of net system growthGaining 30% share of net system growth

Page 22: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

22

Notes

Page 23: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

23

Priorities

PeoplePeople

CustomersCustomers

RevenueRevenue

Leverage ScaleLeverage Scale

Page 24: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

24

Notes

Page 25: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

25

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 26: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

26

Notes

Page 27: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

27

Why change?

Ensure lending capability in every branch

Better leverage our distribution advantage

Greater empowerment

Enhance career progression

Page 28: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

28

Notes

Page 29: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

29

1,010 branches

One size fits all

1,010 branches

One size fits all

160

350

350

150

Branches

Tier 1 or 2 criteria not met

~22% branch revenue

~3% branch revenue

3

4

Deposit & Loan base

FTE

Strategic value

~40% branch revenue2

Flagship branches

Drive most value

Key strategic value

~35% branch revenue1

Contribution to total branch revenue

Tier

New network operating model

35%

40%

3%

22%

Tier 3

Page 30: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

30

Notes

Page 31: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

31

Early Tier 1 results encouragingHome Loan Sales

Sept 06 Quarter Sept 07 Quarter

Home Loan Balance Growth

Sept 06 Quarter Sept 07 Quarter

Insurance Cross Sell

Sept 06 Quarter Sept 07 Quarter

+ 61%

Deposit Balance Growth

Sept 06 Quarter Sept 07 Quarter

+0.8%

+1.7%

+3.4%

+4.9%

+ 20%

Home Loan Balance Growth Home Loan Sales

Insurance Cross-SellDeposit Balance Growth

Sept 06 Qtr

Sept 06 Qtr Sept 06 Qtr

Sept 06 Qtr Sept 07 Qtr

Sept 07 Qtr

Sept 07 Qtr

Sept 07 Qtr

Page 32: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

32

Notes

Page 33: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

33

Revitalising our branches

New branch design

Trial branches completed

Planned for FY08

− 70 redesigns

− 60 upgrades

Further selective expansion

Supported by specific training

Aligned to new environment

New behaviours

Customer engagement

Page 34: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

34

Notes

Page 35: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

35

Extended trading

67 sites open on Saturday

16 sites open on Sunday – more planned

Extended Christmas trading

Page 36: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

36

Notes

Page 37: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

37

Customer experience

Branch customer experience survey % advocates

Jan 07 * Sept 07

67%

71%

* New methodology implemented

Regular customer experience surveys

Conducted independently by Roy Morgan

Every branch

Every week

10 point scale (0 lowest, 10 highest)

Results part of KPIs – only 9 and 10 ratings count

71% of customers rate branch experience 9 or 10

Customers at new design branches –100% advocacy

Sept 07Jan 07*

Branch Customer Experience Survey % Advocates

Page 38: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

38

Notes

Page 39: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

39

Enhancing cross-sell

Our largest opportunity

~9 million customers

Target 20% increase on FY07

Needs analysis training

“Know it, do it, coach it”

6,700 “Masters”

Extra sales capability in branches

Converted referrals

1 2 Sept 06 Sept 07

11%

710Financial Planners

130Branch Insurance Representatives

550Personal Lenders

149Business Bankers

Specialists in Branches

Converted Referrals

Sept 06 Sept 07

Page 40: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

40

Notes

Page 41: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

41

Key messages

Revitalising our frontline – tapping our potential

Tiered branches – a more focused approach

Enhancing the customer experience

Cross-sell emphasis

Early results encouraging

Page 42: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

42

Notes

Page 43: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

43

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 44: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

44

Notes

Page 45: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

45

Total Fundings

1 2

Total Fundings ($m)

Sept 06 Qtr Sept 07 Qtr

16%

Home Loan Balance Growth*

0%

2%

4%

6%

8%

10%

12%

CBA Peer 1 Peer 2 Peer 3 Peer 4

Market

* Source: APRA Dec 06 to Sept 07 (9 months)

Home loan book in good shape

Strong growth in balances and fundings

Six consecutive months of market share growth

Improving run-off rates

High quality risk profile

Flight to quality/major banks

Process transformation offers significant upside

Home Loan Balance Growth*

Page 46: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

46

Notes

Page 47: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

47

Growth across channels

Strong fundings in both proprietary and broker channels

Proprietary

Investing in our lending capability

Branch balance growth tracking closer to market

Broker

#1 lender in broker market

Good business quality

Home Loan Branch Growth

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Sept 06 Dec 06 Mar 07 June 07 Sept 07

Branch Growth Market Growth

* Sept 07 Quarter

Home Loan Branch Growth

Dec 06 Mar 07 Jun 07Sept 06 Sept 07

Fundings by Channel Sept 07 Qtr

Broker38%

Premium13%

Branch49%

Fundings by Channel*

Page 48: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

48

Notes

Page 49: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

49

4%

20%55%

21% Short term wholesale

Long term wholesale

Securitisation

Retail

Source of Funding ^

* Source: APRA Sept 07

^ As at 30 June 2007

Relative funding advantage

Clear #1 deposit franchise - 29% share*

Diversified funding mix

Deposits 55% of Group funding

Little reliance on securitisation

Page 50: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

50

Notes

Page 51: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

51

Transaction Net Account Growth

1 2 3 4 5Sept 05 Mar 06 Sept 06 Mar 07 Sept 07

Transaction Net Account Growth

Deposit Share of New Market Growth

0%

5%

10%

15%

20%

25%

30%

35%

CBA Peer 1 Peer 2 Peer 3 Peer 4

Share of Market Balance Growth*

* Source: APRA Dec 06 – Sept 07 (9 months)

Strong deposit growth

Significant turnaround in balances and net account growth

Growing share despite aggressive price competition

More competitive products and pricing

Branch P&L driving focus on deposits

Sales and service program having an impact

Page 52: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

52

Notes

Page 53: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

53

20%

4%

38%

38%

Percentage of Total Deposit Balances

2006*

Effectively managing back book substitution

Gradual shift in portfolio mix

Modest substitution to date

Good volume of external funds

Use of segmented offers

Overall deposits margin holding up

2007*

* As at 30 June

1%

38%

34%8%

19%

Other TransactionAccounts

Investment Accounts

Savings Deposits

Netbank Saver

Business Online Saver

Page 54: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

54

Notes

Page 55: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

55

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

FY 0506 FY 0607 FY 0708 YTD

Credit Cards% change in total accounts vs Prior Year

Upside potential in consumer finance

Credit cards – upside potential

Return to net account growth

Product mix well balanced

Focus on profitable growth

Personal loans – improved profitability

Improved credit quality

2004/05 portfolio running off

Increasing margin

Platinum Awards Card

Gold Awards Card

Low Rate Card

Sept YTDFY06 FY07

Page 56: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

56

Notes

Page 57: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

57

Key messages

Reinvestment in our core franchise

Successfully managing the volume/margin trade off

Portfolio quality remains high

Momentum in our key product lines

Page 58: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

58

Notes

Page 59: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

59

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 60: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

60

Notes

Page 61: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

61* Includes all Severity 1 and 2 IT incidents

(excluding those caused by other financial institutions)

Severity 1 and 2 Incidents Repeated*June 06 – Sept 07

0

4

8

12

16

20

Jun

Jul

Aug

Sep

t

Oct

Nov

Dec Ja

n

Feb

Mar

Apr

May Jun

July

Aug

Sep

t

Sev1 Sev2

Nil

# In

cide

nts

IT stability and enhancements

IT platform stability improving

Continued investment in IT and cost optimisation

Key platform enhancements

NetBank

Call Centre IVR upgrade

Credit Card system upgrade

Page 62: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

62

Notes

Page 63: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

63

Key Metrics100,000 customer interactions per day

5m transactions per day

110m statements per year

500,000 items processed per day

5m cards issued per year

Retail Operations Support Staff

Operations Processing

Collections

Mortgage Services

Retail operations

Supporting the Bank’s retail front-line

2,700 people

Mortgage Services

Operations Processing

Collections

Focus on continuous improvement

Simple processes

Efficiency

Automation

Centres of functional excellence

Quality

19%

22%59%

Retail Operations Support Staff

Page 64: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

64

Notes

Page 65: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

65

May-07 Aug-07 TARGET

85% reduction

Simple home loans

Process and system improvement

Targeting significant reduction in lead time to fund

Significant customer and efficiency benefits

Eliminated middle office from branch network

National rollout of efficiency program

Application to ‘Ready-to-Fund’ Lead Time

Lender Support Roles

206

400

May 07 Aug 07

Middle Office Support Roles

8 day reduction8 day reduction

May 07 Aug 07 Target

May 07 Aug 07

Page 66: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

66

Notes

Page 67: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

67

Key messages

Improve customer experience

Leverage scale in systems & processes

Stability of IT systems

Enhancements and new platforms

Page 68: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

68

Notes

Page 69: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

69

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 70: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

70

Notes

Page 71: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

71

Home Loan Arrears

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

Sep-06 Dec-06 Mar-07 Jun-07 Sep-07

Days+ 30 Days+ 90

0%

10%

20%

30%

40%

50%

60%

70%

80%

0-60 60.1-75 75.1 -80 80.1 -90 90.1+

Original LVR Market LVR - Mar 07

LVR Profile*

*Australian Owner Occupied and Investment Housing only, excludes Lines of CreditLoans as at 31 Dec 06 and Market Value at March 07Market Values marked against the APM database

Home loans – portfolio quality

Portfolio credit quality remains sound

Delinquencies improving

Portfolio LVR at 50%

No ‘sub prime’ lending

Collections focus on higher risk loans

Home Loan Arrears

Days 30+ Days 90+Sept 06 Dec 06 Mar 07 Jun 07 Sept 07

Del

inqu

enci

es %

Page 72: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

72

Notes

Page 73: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

73

Home loan stress testing

Overall portfolio showing little signs of stress

Stable expected losses over past 12 months

Regular stress testing – losses under APRA extreme stress scenario $300m (~3 months home loan net interest earnings)

Policies and procedures to assist customers in difficulty

Page 74: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

74

Notes

Page 75: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

75

Consumer Finance Arrears

0.8%

0.9%

1.0%

1.1%

1.2%

1.3%

1.4%

1.5%

Sep-06 Dec-06 M ar-07 Jun-07 Sep-07

+Card 90 +PL 90

0%

1%

2%

3%

4%

5%

6%

7%

Fund Month

Months on Book 3 Months on Book 6 Months on Book 12

Note: Includes Write-Offs

Personal Loans Arrears

Dec 05 Dec 06 Sept 07

Consumer finance – portfolio quality

Credit cards

Strong credit quality maintained

Improving quality in new loan book

Personal loans

Continued improvement in credit quality

Older poorer quality book replaced by better quality accounts

New scorecard delivering higher business volumes at same level of risk

Dec 04

Dec 06 Mar 07 Jun 07Sept 06 Sept 07

Cards 90+ PL 90+

Del

inqu

enci

es %

% 3

0 D

ays+

Arr

ears

Page 76: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

76

Notes

Page 77: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

77

Responsible lending

The Australian Law Reform Commission (ALRC) recommending changes

The Bank is in favour of sharing credit stress data – responsible lending

Result in:

Better credit decisions

Opens mainstream credit to currently marginalised groups

Recommendations to government from ALRC (March 2008)

Page 78: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

78

Notes

Page 79: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

79

Key messages

Portfolio quality remains sound

Positive arrears trends

Little signs of stress in home loan book

Page 80: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

80

Notes

Page 81: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

81

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 82: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

82

Notes

Page 83: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

83

Key messages

Continuation of a clear vision and strategy

Size and scale – a unique competitive advantage

Key priorities

Engaged people

Customer satisfaction

Revenue

Leverage scale more effectively

Early results encouraging

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84

Notes

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85

Today

Our journey Ross McEwan

Revitalising our distribution Grahame Carney

Enhancing our product performance Michael Cant

Simplifying our operations Vittoria Shortt

Managing risk David Grafton

Key messages Ross McEwan

Ask us Panel

Page 86: Retail Banking Services - CommBank · Retail Banking Services Market Update . 2 The material that follows is a presentation of general background information about the Bank’s activities

86

Notes

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87

Panel

Retail Products

Retail Sales

Credit Cards

Grahame Carney

Michael Cant

Stephen Karpin

Group Executive

Ross McEwan

Chief Risk OfficerDavid

Grafton

Direct Channels & Operations

Vittoria Shortt

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888822 November 2007Commonwealth Bank of Australia ACN 123 123 124

Retail Banking ServicesMarket Update


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