Analyst friendly zone

Commonwealth Bank CEO Ralph Norris and his chief financial officer David Craig were roughed-up by analysts at a presentation in November when, as part of a September 2008 quarter update, they surprised everyone with a forecast that the bank would report a big increase in impairment provisions when it reported on the December half.

At an analyst briefing you can usually imagine you have walked into a gathering of androids. A bunch of half-human, half-robot beings politely ask for obscure numbers to plug into their models.

But analysts don't like being taken by surprise. It throws out their models and undermines the aura of omniscience they cultivate. So in November when Norris and Craig dropped their news about the big jump in provisions, the androids fired up.

The hapless pair were challenged about their ability to provision adequately, about their understanding of the accounting rules and about the soundness of their financial management.

Yesterday's analyst briefing was an exercise in winning back the hearts and minds. A well-rehearsed CEO and CFO outdid each other in prefacing their answers to questions with such comments as: "That's a good question," "Two good questions there," and "I'm glad you asked that question."

The stroking was unrelenting and was capped off when one analyst made a goose of himself by asking a pointed question based on an obvious misreading of a slide. Craig apologised for the small, fuzzy printing of the slide and Norris jumped in to say it was printed so poorly that he would have misread it too.