1. Credit Card & Merchant Businesses Nicholas L.A. Kennett General Manager Cards & Financing Products November 2001 Credit Card & Merchant Businesses Nicholas L.A. Kennett General Manager Cards & Financing Products November 2001

2. The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 7 November 2001. 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. Outline Credit card environment in Australia Regulatory environment Profitability drivers CBA Card - Strategy and Vision Delivering the vision The future

4. Cards Environment in Australia Highly competitive Significant growth Key players and market share Consumers seeking convenience and security Sophisticated payments environment Ansett collapse Re-regulation

5. Debit CardsCredit Cards Cheques Direct Credit Debit CardsCredit Cards Direct Debit Australian Payment Trends Source: RBA

6. Regulatory Environment Worldwide focus RBA designation of the ‘Schemes’ –developing standards interchange fees access regime to the credit card systems –review expected in November 2001 –consultation period –final decisions in early 2002

7. Possible Market Impact of Regulatory Changes Reduced interchange income to issuers Reduced interchange expense to acquirers Potential risk of ‘contamination’ of payments system Potential backlash to surcharging Higher cardholder fees Unequal position with “closed” schemes Less funding for loyalty Pressure on commercial cards Less technology investment

8. Business Impact of Potential Regulatory Changes Best placed institutions will have: –large portfolio –balanced issuing and acquiring profile –high ratio of interest/interchange income –low cost rewards programme –broad portfolio of merchants

9. Profitability Drivers Card numbers Spend/spend per card Revolve rate Margin and fees Number of merchants Number of ATMs Merchant turnover MSF “On-us” transactions Loss/Fraud rates Issuing Acquiring

10. CBA Cards - Vision and Strategy Market share of profit Leverage customer base, distribution channel & scale Mono-line discipline with multi-product relationship Sustainable business model Integrated issuing, acquiring and ATM business Packaged offerings Focus on ROTE, service and alliances

11. CBA Cards - a Scale Business 10m CBA Customers #1 in cardholders #1 in merchant relationships #1 in ATM terminals True Awards Woolworth's Ezy Banking alliance Partner relationships

12. Issuing Strategy Focus on sustainable market share of profit –acquisition, retention and activation programmes –usage as a credit tool –usage as a relationship tool –NIM management –loss management –convergent business models –loyalty costs CRM/relationship packaging Service Distribution management

13. Issuing Results

14. Credit & Fraud Losses 1998-991999-002000-01 Fraud (bps) Credit (bps) Mkt. aver.

15. CBA Acquiring #1 market share –150,000 Merchants –4,000 ATMs 35% market share Growing at 25 %+ pa Key initiatives: –Mobile –E-commerce Low capital requirement

16. Acquiring Results - Market Share Loyalty programs Convenience Corporate purchasing Revolving lines of credit Online purchasing Convenience - EFTPOS Security - no cash Control - own funds Global - ATM/EFTPOS * Source : RBA 2001 reports Credit Cards 21.6 29.9 10 20 30 199619971998199920002001 % Debit Cards 24.8 46.3 20 40 199619971998199920002001 %

17. Acquiring Strategy Leverage scale Convergent opportunities Leverage relationship with corporate relationships New acquiring markets Support customer move to online acquiring Drive down losses

18. 0.20 0.40 0.60 0.80 1998-991999-002000-01 Acquiring Fraud Losses bps

19. The Future Consumer - convenience and security Merchant - convenience, security and price Regulation - ongoing Technology-Pin@POS, 3DES, 3D Secure/SPA, Chip The winner will have a sustainable business model, options, strong distribution and scale

20. Credit Card & Merchant Businesses Nicholas L.A. Kennett General Manager Cards & Financing Products November 2001 Credit Card & Merchant Businesses Nicholas L.A. Kennett General Manager Cards & Financing Products November 2001