Norris 'hasn't done anything stupid'

Norris has overseen a transformation of Commonwealth Bank, taking it from a management-heavy and inward-looking institution to a focused market leader. Commonwealth is used as a reference point by banks around the world as an example of boosting shareholder returns without moving up the risk scale.

In late 2005, Commonwealth Bank was facing the loss of market share to more nimble rivals in Westpac and ANZ. Shareholder returns were in the middle of the pack, while other key measures such as staff engagement and customer satisfaction trailed rivals by a significant margin.

Norris will hand over a bank to his hand-picked successor, Ian Narev on Wednesday that is firing on all cylinders, even in the face of a tough market. With rates of return on equity of 19.5 per cent, the bank has entrenched its status as one of the most profitable in the world.

It was just a short time ago that bank executives and even regulators were saying 20 per cent-plus rates of return were unsustainable over time. But this year, as the Commonwealth delivered a 12 per cent increase in full-year cash profit to a record $6.84 billion, the power of the bank's home loan machine was proven.

The bank was able to notch solid mortgages growth even as demand across the market collapsed to the lowest level in three decades. The bank's global financial crisis-linked market-share grab has also helped momentum over recent years.

While the crisis has hammered all bank stocks over the past few years, investors have done well out of the Commonwealth Bank.

Among key reforms has been Norris's heavy investment in technology. With banks increasingly being defined by their technology as more business moves online, this has given Commonwealth an edge over rivals of at least two years. Technology also provides crucial improvements in productivity critical when managing a business with a huge cost base.

After steadily climbing in customer satisfaction ratings under Norris, the Commonwealth Bank started to close in on the top-ranked ANZ. But last year it slumped from second spot to fourth among the majors due to the backlash from lifting mortgage rates by nearly double the Reserve Bank's rise in official cash rates last Melbourne Cup day.

Before Norris joined, the bank had consistently returned the lowest customer satisfaction ratings of the big four banks. "Importantly, he hasn't done anything stupid," BBY analyst and long-time CBA watcher Brett Le Mesurier said of Norris. "You can't always say that about bankers."

Other areas include keeping a tight control on costs in the retail banking business, while giving Commonwealth a market-beating rate of shareholder returns. Total shareholder returns, a measure of share price movements plus dividends, have seen an 84 per cent return to investors during Norris's six-year tenure. This has easily outpaced Westpac at 50 per cent and ANZ at 32 per cent during the same period. NAB, meanwhile, has returned 12.4 per cent on the same time scale.

Norris kept the focus simple. "He didn't carry on with any grandiose plans that were never going to deliver shareholder value," Mr Le Mesurier said.

CLSA analyst Brian Johnson said CBA has undergone an "amazing transformation" under Norris.