Commonwealth Bank

Stuart Grimshaw

Group Executive

Investment and Insurance Services Division

2 November 2004

Morgan Stanley Asia Pacific Summit

2

The material that follows is a presentation of general background

information about the Bank’s activities current at the date of the

presentation, 2 November 2004. 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

3

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

4

Overview of Commonwealth Bank Group

Banking

Largest Australian retail bank with over 8 million retail customers

No.1 in retail deposits, No.1 in home lending

Over 1,000 branches, around 4,000 agencies and 3,000 ATMS

Strong positions in each segment of business banking

Funds Management

No.1 in retail FUM

No.1 in platform inflows

Insurance

No.1 in inforce premiums

International

Strong presence in NZ, and smaller scale operations in

Asia and the UK

Tier 1 ratio 7.43%

Credit ratings

- Moody’s

- S&P

- Fitch

Aa3

AA-

AA

Total assets A$306bn

Market cap A$38bn

5

Market trends shaping the Australian wealth

management industry

Funds Management:

Decline of retail and the rise of platform

Margin squeeze

Slowing, but healthy projected growth in funds management

Rising popularity of blend and model portfolios

Insurance:

Strong long-term growth

Rational approach to pricing

Underinsurance and the need for further education

Advice:

Independence of advice

Continuing consolidation of distribution

Soft dollar benefits

Quality of advice

6

The only segment with universal downward

pressure in margins is platforms / administration.

Revenue

Margins

Margin

Trends

Drivers

Asset

Management

Platform /

Marketing /

Administration

Distribution

10 – 100bps 50-120bps 40-100bps

• “perceived”

commoditisation

• high alpha providers

will maintain pricing

power – capacity is

an issue

• increasing variation in

range of fees

• commoditisation

• intense competition

• consolidation

• least commoditised

• move to fee for

service

Customer

Pays

200bps

7

We are well positioned in all the elements of the

value chain to take advantage of market conditions

IIS products and services by value chain element

Aligned

External

IIS

CBA Group

Dealer group

services

•

Research•

Compliance

Technology

Adviser Support

• Sales

effectiveness

• Training and

development

Direct

External

• IFA’s

• Brokers/Agents

• SME/Corporates

• Platforms

• Institutionals

Bank Channels

Fu

nd

Ma

na

ge

rs / B

DM

s

DistributionAdministration

Platforms

Master Trust

•FirstChoice

Wrap• Avanteos

Property

Advice/Support Services

Managed

Funds

Life

Insurance

General

Insurance

Product

Manufacturing

• Practice

management

•

Number 5

Number 1

Number 5

Number 1

Number 3

Number 7

Number 8

8

Our strategy is to foster a leading Australian

wealth management business

Efficiency

Platform

Innovation

Service

Distribution

Centre for Adviser Development

Launch of Enterprise121

Increased productivity and number of planners

IIS organisational restructure

Legacy rationalisation program on target

Cost to income ratio improvement

Market leading platform inflows through FirstChoice

Growth in Avanteos net flows since acquisition

FirstChoice enhancements

Launch of 5D

Boutique alliances

Launch of new CommInsure products

Award winning service

CommInsure service quality improvement

Performance

Strong FUM flows in First State International

CommInsure strong financial results

Fixed Interest and Credit and Global Resources fund performance

9

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

10

There remains a significant level of underinsurance

in Australia, particularly life insurance

Market Environment

Under-penetration of the

industry

Strong growth 10%pa

Increasing importance of

corporate governance

Return to rational pricing

Need for further education

Hard to differentiate in

market

Opport

unity

Opport

unity

Opport

unity

Opport

unity

Opport

unity

Opport

unity

Opport

unity

0%

20%

40%

60%

80%

100%

Motor Contents Building Health Term Life Disability Trauma

Mark

et

Pen

etr

ati

on

(%

)

Market Penetration by insurance product

Source: Roy Morgan 2004

11

We believe there is significant opportunity to

build revenues through cross-selling

8% growth in risk inforce premiums

Improved General Insurance claims

ratio

Tight expense controls – expenses

flat

Continued growth in network channel

Simplified life insurance underwriting

Claims re-engineering

Portfolio re-pricing (in particular

Disability and Wholesale Life)

Significant service improvement

CommInsure Cross Sell Penetration

December 2003

%

Source: Roy Morgan 2004

36%

17% 17%

11%

0

10

20

30

40

Home Loan Credit Card Managed Funds Savings &

Transaction

12

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

13

Across the industry investment returns have improved

and flows have responded, but not to previous levels.

Source: Investment returns: rolling annual returns based on a composite index made up of Australian Shares (50%),

International Shares (35%), Property Securities (15%)

Net flows: Plan for Life retail flows (ex-cash)

Ne

t fl

ow

s (

$b

)

1 y

ea

r Inve

stm

en

t Re

turn

-4

-2

0

2

4

6

8

Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04

-20%

-10%

0%

10%

20%

30%

40%

Industry Net Flows Industry Investment Returns

14

Our diversified asset management base

provides growth opportunities.

High

Growth

Potential

Low

Growth

Potential

Low

Margin

High

Margin

Source: CBA Internal Analysis and Market Forecasts

Australian

Property

Securities

Index

Funds

Australian

Equities

(core)

Credit

Funds

Infrastructure

Funds

Australian

Equities (GDP

Plus)

Private

Equity

Global

Equities

Hedge

Funds

Income funds

Fixed

interest

FirstChoice

(house product)

Global

Property

Securities

15

Investment performance has been generally

strong over the medium term.

Asset ClassPerformance Vs Benchmark

(1 yr)Performance Vs Benchmark (3 yr)

Fixed Interest

Global Credit

Australian Equities GDP+ Large Cap

Australian Equities GDP+ Small Cap

Australian Equities Core Large Cap

Australian Equities Core Small Cap

Global Equities

Global Resources

Australian Listed Property

Global Listed Property

Hedge Funds

Infrastructure

Private Equity

Mortgage Funds

16

17

13

9

5

1/01/1900 2/01/1900 3/01/1900 4/01/19002002 2003 2004 2005

Legacy system rationalisation is on track and

delivering savings

Source: Internal Projections. Policy Administration Systems rationalisation by calendar year end

Legacy Funds Management Systems Rationalisation

(2002 – 2005)

11 as at Oct 04

17

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

18

Platforms now capture 80% of retail funds

Market Trends

Platform success driven by:

Adviser productivity

improvements

Greater choice for investors

and advisers

More convenience

Creation of new margins

Consolidated reporting

Master funds / platforms

Total retail (excluding cash)

Retail Market Flows1998 to 2003 actuals, 2004 to 2006 forecasts

Source: Plan for Life, DEXX&R

0

50

100

150

200

250

300

350

400

450

1998 1999 2000 2001 2002 2003 2004 2005 2006

$b

illi

on

19

We are well represented in the platform market

to capitalise on this market opportunity

FirstChoice has been the fastest growing platform in

the market since its launch two years ago

Over $8 billion FUA (Oct 2004)

Competitive pricing

Award-winning service

Recent enhancements offering more functionality

and investment options

New wholesale offering

Strong growth in Avanteos business through

acquisition of new clients

Telstra Super Financial Planning

FSP Group

Symetry

$2.3 billion FUA (Oct 2004)

Improved adviser and dealer group functionality

20

The Value Proposition - FirstChoice vs

mastertrusts

MLC Masterkey Custom

Summit

Navigator

BT Essentials / Skandia / Perpetual / Asgard Elements

FirstChoice

FirstChoice vs mastertrustsTypical Australian Equities MER 0.85%

Equalised advice fee 0.6%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Account Balance

Eff

ec

tive

Fe

e

Comparison based on Australian Equities portfolio of 0.85% MER. Equalised advice fee

Assumptions: No entry fees, all competitor fees are as stated in their PDS as at April 2004. Manager rebates and

volume discounts are not accounted for.

AMP

MLC Masterkey Custom

Summit

Navigator

BT Essentials / Skandia / Perpetual / Asgard Elements

FirstChoice

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Account Balance

Eff

ec

tive

Fe

e

Comparison based on Australian Equities portfolio of 0.85% MER. Equalised advice fee

Assumptions: No entry fees, all competitor fees are as stated in their PDS as at April 2004. Manager rebates and

volume discounts are not accounted for.

AMP

21

FirstChoice: well diversified support and

healthy CFS flows.

Source: internal data; channel split based on flows for 6 months ended 31 August 2004; Manager split based

on FUA at 31 August 2004

CFS

40%

External

60%

FirstChoice Split by Channel FirstChoice Split Internal vs External

External

39%

CBA Bank

Network

44%

CBA Aligned

Advisers

17%

Inflows: Managing the FUM:

22

FirstChoice margins are attractive, albeit less

than our other retail products

Revenue - net of external manager costs

0

50

100

150

200

FirstChoice Other Retail Wholesale

bp

Manufacturing Margin Commissions

90bp

125bp

65bp

60bp

45bp

23

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

24

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

25-29 30-34 35-39 40-44 45-49 50-54 55-59

0%

2%

4%

6%

8%

10%

12%

14%

16%

Australian distribution challenges and

opportunities

Challenges/ Opportunities:

Ageing population with

inadequate savings

Choice for investors and

advisers

Growth in DIY products

Regulatory environment:

Quality of advice

Greater fee

transparency

Independence

Source: IFSA Retirement Savings Gap, August 2003;

Retirement Savings Gap by Age

Years of Age

Millio

ns

Retirement Savings Gap for Males

Additional Contribution Required

August 2003

25

We are continually strengthening our distribution

footprint

Centre for Adviser Development

Over 200 trained

Feedback very positive

Launch of Enterprise121

Opportunity in the market to offer advice, platform and dealership services to high net worth practices.

Increased productivity of network advisers

26% improvement

Recruitment of advisers

Network and aligned

26

Commonwealth Bank’s Footprint

Market Conditions and Current Trends

Our Business Model

Key Achievements

Overview of our Business Operations

Insurance

Asset Management

Platforms

Distribution

Conclusion

Discussion Outline

27

There are significant opportunities to achieve

strong growth

External/ market factors creating growth opportunities:

Improved market returns

Superannuation guarantee

Internal opportunities to drive growth:

Continuing product expansion and innovation

Distribution capacity and productivity improvements

Rationalisation and further efficiency gains

Capital efficiency improvements

Commonwealth Bank

Stuart Grimshaw

Group Executive

Investment and Insurance Services Division

2 November 2004

Morgan Stanley Asia Pacific Summit