Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 FY2010 Earnings Presentation
114 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 10, 2010
Slide 1: Results Presentation – Half year ended 31 December 2009
Determined to be better than we‟ve ever been. For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER Results Presentation For the half year ended 31 December 2009 10 February 2010 Commonwealth Bank of Australia ACN 123 123 124
Slide 2: Disclaimer
Disclaimer For personal use only The material that follows is a presentation of general background information about the Bank‟s activities current at the date of the presentation, 10 February 2010. It is information given in summary form and does not purport to be complete. It is not intended to be
Slide 3: Agenda
Agenda For personal use only Ralph Norris, CEO – Company Update and Outlook David Craig, CFO – Financial Overview Questions and Answers 3
Slide 4: Market shares
Market shares Dec 09 Jun 09 Dec 08 1 1 For personal use only CBA BWA Combined CBA + BWA CBA + BWA 1 Home loans 22.5% 3.5% 26.0% 25.2% 23.2% Credit cards 2 19.4% 2.5% 21.9% 21.5% 20.9% Personal lending 3 14.2% 0.9% 15.0% 15.7% 20.2% Household deposits 28.1% 3.1% 31.3% 32.3% 32.6% Retail deposits 22.7
Slide 5: Strong operating performance
Strong operating performance For personal use only Strong financial performance Dec 09 Cash NPAT $2,943m Good momentum in all businesses ROE 18.5% Strategy driven result Tier 1 Capital 9.1% Prudent business settings maintained Cash EPS (cents) 191.7 Interim Dividend (cents) 120.0 Well posi
Slide 6: Disciplined strategy execution delivering results
Disciplined strategy execution delivering results Technology and For personal use only Customer Business Trust and Profitable Operational Satisfaction Banking Team Spirit Growth Excellence Core Banking – Over 1,000 new front Dedicated Group targeting quantum Engagement now top Bankwest acquisition l
Slide 7: A clear, focussed strategy
A clear, focussed strategy For personal use only Customer Business Satisfaction Banking Australia’s finest financial services organisation Trust and Technology and Team Spirit Operational Excellence Profitable Growth 7
Slide 8: Other key information
Other key information Market Shares For personal use only Home lending Business lending 26.0% 24.1% 18.8% 19.1% 17.4% 15.5% Products per customer* 12.5% 13.2% Avg number of products held Movement* 2.6 per financial institution Peer 1: +8.7% 2.5 2.4 CBA: +19.0% 2.3 Peer 2: +9.5% CBA / Peer 1 Peer 2 P
Slide 9: Transformational change - scorecard
Transformational change - scorecard June 2006 December 2009 Progress Customer Satisfaction For personal use only Retail 1 64.9% 73.8% Business 2 56.5% 67.5% FirstChoice 3 Ranked 6th Ranked 1st Share of Ombudsman Complaints 29.8% 16.6% 5 Market Shares Home Lending 18.7% 26.0% Business Lendi
Slide 10: Notes
For personal use only Notes 10
Slide 11: Areas of strategic focus – near term
Areas of strategic focus – near term Continued drive to be Number 1 in customer satisfaction For personal use only Core Banking Modernisation; On schedule - early phases very encouraging All customer information migrated, 3 live trials underway Quantum improvements in customer service and
Slide 12: Notes
For personal use only Notes 12
Slide 13: Regulatory Reform
Regulatory Reform For personal use only Australian financial system very resilient Avoided worst of Global Financial Crisis Well capitalised, provisioned and high liquidity No government bail outs required Funding cost pressures from offshore Any regulatory changes need to recognise uniq
Slide 14: Economic Summary
Economic CBA Economists summary of key indicators Summary For personal use only As at June 2006 2007 2008 2009 2010 (f) 2011 (f) Credit Growth % – Total 14.4 15.5 12.0 3.3 5-7 8-10 Credit Growth % – Housing 13.7 12.9 9.8 7.0 9-11 9-11 Credit Growth % – Business 16.6 19.2 17.1 0.4 0-2 8-10 Credit Gro
Slide 15: Outlook
Outlook For personal use only Global outlook has improved Sustainable economic recovery under way in Australia Increased credit growth Continued funding cost pressure Impairments expected to decline gradually Some global downside risks still exist Group retains conservative financial s
Slide 16: Notes
For personal use only Notes 16
Slide 17: David Craig, Chief Financial Officer – Results Presentation
Determined to be better than we‟ve ever been. For personal use only David Craig CHIEF FINANCIAL OFFICER Results Presentation For the half year ended 31 December 2009 10 February 2010 Commonwealth Bank of Australia ACN 123 123 124
Slide 18: Notes: Reported and pro forma comparatives
Notes Reported and Pro forma comparatives For personal use only For added transparency and comparability, financial results for the prior comparable period (half year ended 31 December 2008) have been prepared on a pro forma basis, assuming the Bankwest and St Andrews acquisition was completed on 1
Slide 19: Strong operating performance
Strong operating performance For personal use only Dec 09 Dec 08 Dec 09 vs Dec 09 vs $m $m Dec 08 Jun 09 Operating income 9,550 8,660 10% 5% Operating expenses (4,268) (4,008) 6% 1% Operating performance 5,282 4,652 14% 9% Impairment expense (1,383) (1,951) (29%) (4%) Tax and Minorities (1,065) (666
Slide 20: Business unit profitability
Business unit profitability For personal use only Operating Impairment Investment Tax & Cash Cash Annual $m Performance Expense Experience Minorities NPAT NPAT Change Dec 09 Dec 08 RBS 2,191 (391) - (555) 1,245 1,119 11% IB&M 968 (321) - (102) 545 (168) Large B&PB 809 (194) - (175) 440 373 18% WM 41
Slide 21: Strong business unit contributions
Strong business unit contributions Annual For personal use only 1H10 – Operating Performance1 ($m) Change RBS 2,191 20% IB&M 968 14% B&PB 809 24% WM 410 (9%) Bankwest 405 117% South Pacific 315 (15%) Other 184 (41%) 1 Operating Income less Operating Expense. 21
Slide 22: Operating Performance - Dec vs Jun 09
Other key information Operating Performance - Dec 09 vs Jun 09 For personal use only Income Expenses 17% 12% 8% 9% 9% 6% 6% 5% 1% 1% -3% -1% -10% -8% 1 South 1 RBS IB&M B&PB WM Bankwest Group Pacific Group expense to income ratio Banking expense to income ratio 46.3% 44.7% 41.9% 40.3% Dec 08 Dec 09
Slide 23: Strong "Jaws" at Group level
Strong “Jaws” at Group level For personal use only Dec 09 vs Dec 08 38% 24% 17% 12% 13% 10% 4% 6% 2% 2% -1% -4% -8% -12% 1 South 1 RBS IB&M B&PB WM Bankwest Group Pacific Income Expenses 1 Excludes Investment Experience 23
Slide 24: Other Banking Income
Other Banking Income For personal use only 6 months Dec 09 Jun 09 Dec 08 Dec 09 vs Dec 09 vs $m $m $m Jun 09 Dec 08 Commissions 1,034 1,050 1,024 (2%) 1% Lending Fees 719 779 649 (8%) 11% Trading Income 291 293 442 (1%) (34%) Other 157 146 151 8% 4% 2,201 2,268 2,266 (3%) (3%) AIFRS reclassification
Slide 25: Operating Income
Operating Income Trading Income For personal use only Total Operating Income 10% $m 442 346 Banking Income 13% 293 291 200 454 (41) 9,608 (58) 9,550 535 8,660 1H08 2H08 1H09 2H09 1H10 Funds & Insurance Income $m $m 1,534 1,605 1,468 1,286 1,410 Dec 08 Net Interest Net Interest Other Sub-total Fu
Slide 26: Group NIM (ex Bankwest)
Other key information For personal use only Group NIM (ex Bankwest1) bpts Half Years 219 218 219 212 205 206 204 198 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 1 All periods exclude Bankwest for comparative purposes 26
Slide 27: Group NIM – movement
Group NIM – 6 month movement For personal use only bpts 2 (2) (1) 2 3 (2) 218 216 2H09 Asset Transaction Savings Investment Liquids Other 1H10 pricing Deposits Deposits Deposits & mix 27
Slide 28: Indicative Long Term Wholesale Funding Costs
Other key information For personal use only Indicative Long Term Wholesale Funding Costs bpts 140 Current 125 105 100 80 50 13 14 17 8 Jun 07 3 0 1 year 2 year 3 year 4 year 5 year 28
Slide 29: Cost of funding increasing
Cost of funding increasing For personal use only +1.18% x 58% Increased Retail Funding funding cost 1.12% Long term wholesale +1.04% x 42% funding Basis risk Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10
Slide 30: Investment Spend
Investment Spend For personal use only 12 months to Dec 09 $m Growth Projects 567 Core banking modernisation Branch transformation Productivity Projects 329 Home loans simplification Darling Park 1 Collections transformation Regulatory and Risk Projects 105 1,001 30
Slide 31: Expenses up 1% on prior half
Expenses up 1% on prior half For personal use only $m 64 (10) 32 71 103 4,008 +5% 4,214 +1% 4,268 1H09 Occupancy, Credit card Other 2H09 DB Fund Other 1H10 IT loyalty expense 31
Slide 32: Notes
For personal use only Notes 32
Slide 33: Impairment expense
Impairment expense For personal use only 6 months annualised (basis points)1 6 months ($m) 85 1,951 10 15 344 61 1,441 12 270 1,383 5 55 113 5 207 313 9 13 34 772 189 7 47 1,121 35 881 24 565 Dec 08 Jun 09 Dec 09 Dec 08 Jun 09 Dec 09 Proforma Proforma Base Single Names Overlay Bankwest 1 Basis point
Slide 34: Notes
For personal use only Notes 34
Slide 35: Provisioning levels maintained
Provisioning levels maintained For personal use only Collective provisions ($m) Individual provisions ($m) 3,452 3,225 Bankwest 1,822 1,729 Granularity 1,351 2,474 1,320 Economic 321 733 Bankwest Model and data 1,134 1,082 530 Bankwest 620 463 162 Consumer 454 115 43 667 795 Consumer 568 238 39 927
Slide 36: Exposure mix
Exposure mix For personal use only Regulatory exposure mix CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 58% 40% 39% 51% Corporate, SME & Spec Lending 28% 38% 44% 38% Bank 6% 6% 11% 5% Sovereign 5% 6% 3% 2% Qualifying Revolving 2% 4% 2% 3% Other Retail 1% 6% 1% 1% Total Advanced 1 100% 100% 100% 10
Slide 37: Strong provisioning coverage
Strong provisioning coverage Total provisions to GLAs1 Margin Individual Lending provisions to impaired assets For personal use only 2.78% 2.76% 2.59% 39.3%* 37.8% 2.18% 34.4% 28.2% 1.29% 1.17% 1.05% 1.01% CBA Dec 09 Peer 1 Sep 09 Peer 3 Sep 09 Peer 2 Sep 09 Peer 3 CBA Peer 1 Peer 2 Sep 09 Dec 09 Se
Slide 38: Arrears – first home buyers, cards, personal loans, ASB
Other key information First Home Buyers Credit card arrears For personal use only 1.0% Arrears rate - new customers 5.0% 30 days + 0.8% 0.6% 3.0% 0.4% 0.2% 0.0% 1.0% Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 FHB Portfolio Bankwest CBA Personal loan arrears ASB arrears 5.0
Slide 39: Credit quality
Credit quality Home loan arrears Total and New Impaired Assets For personal use only 3.0% 30 days + bpts 1 96 86 35 2.0% 58 28 51 49 16 30 61 1.0% 18 58 10 42 0.0% $m 683 2,714 4,210 4,823 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 08 Dec 08 Jun 09 Dec 09 Bankwest CBA (incl customer assist) CBA (excl cu
Slide 40: Retail Profits change since beginning of GFC
Retail Profits change since beginning of GFC For personal use only Total $m Change in Profit Drivers 1 $m Home Consumer Deposits Loans Finance Volume 920 500 400 Pricing (Margin & Fees) (581) 300 200 Replicating Portfolio 100 (hedge against declining 450 0 interest rates) -100 -200 Distribution 71 -
Slide 41: Retail Profits change in last 12 months
Retail Profits change in last 12 months For personal use only Total $m Change in Profit Drivers 1 $m Home Consumer Deposits Loans Finance Volume 371 500 400 Pricing (Margin & Fees) (386) 300 200 Replicating Portfolio 100 (hedge against declining 394 0 interest rates) -100 -200 Distribution 8 -300 To
Slide 42: Regulatory and other reform
Regulatory and other reform Key proposals Potential issues and implications For personal use only New measure – Tier 1 Common Increase in required capital levels Equity More stringent conditions for hybrids Reduction in hybrid issuance Capital Revised regulatory deductions Greater instan
Slide 43: Constructive dialogue on key reforms
Constructive dialogue on key reforms For personal use only Capital Tier 1 capital – qualifying assets, hybrids Deductions methodology – Tier 1 impact Leverage ratio Rating agency models changing Liquidity 1 month liquidity buffer Qualifying assets narrowed Net stable funding ratio Cons
Slide 44: Regulatory Reform – Key Proposals
Regulatory Reform – Key Proposals Key proposals Potential issues and implications For personal use only Increased scrutiny and regulation of Group already targeting best practice customer engagement and therefore Consumers consumer lending, including margin supportive of incremental industry imp
Slide 45: Dividends per Share
Dividends per Share For personal use only 87% 88% Interim Final 84% 63% 63% 84% 74% 61% 59% cents 94 130 107 149 113 153 113 115 120 2006 2007 2008 2009 2010 Payout Ratio 45
Slide 46: Funding and deposits
Other key information Wholesale Funding - Geographic Distribution Total Deposits For personal use only 2% 2% $bn 314 7% Australia 273 5% Other Asia 201 174 184 Europe 167 41% United States 121 140 28% Japan 140 62 105 60 United Kingdom Hong Kong CBA Peer 1 Peer 2 Peer 3 9% 6% Household Deposits Othe
Slide 47: Strong funding and liquidity positions
Strong funding and liquidity positions 58% retail funded Weighted Average Maturity of 3.7 yrs For personal use only Retail Funding $bn Weighted Average Maturity 18% 30 Jun 09: 3.6 years Short Term Wholesale Dec 09: 3.7 years Structured Funding with 25 1% first call <12 months 20 4% Long Term Wholesa
Slide 48: Capital Movements – 1H10
Other key information Capital Movements – 1H10 For personal use only Strong capital buffer maintained 12.4% All movements in basis points 11.63% $ 6bn buffer 66 3 (24) 99 (41) 9.10% 9.10% Tier 1 8.07% Minimum 6.83% 2 Jun 09 Cash Dividend PERLS Other IRRBB Dec 09 FSA Dec 09 Earnings (net of V 1 DRP)
Slide 49: Strong capital position
Strong capital position For personal use only International peer comparison Tier 1 ratio of 9.1% as at Dec 09 Tier 1 Capital Ratios 12.4% UK FSA equivalent 12.4% 11.0% 11.1% 10.2% 9.1% Total Capital of 11.6%, up from 8.1% 10.4% Buffer of >$6bn to board Jun 09 Dec 09 Jun 09 Dec 09 Jun 09 Dec
Slide 50: Notes
For personal use only Notes 50
Slide 51: A very good, quality result
A very good, quality result For personal use only Clear, focussed strategy Delivering results Good momentum Some headwinds Strong growth Income up 10% Careful cost management Costs up 1% this half Strong balance sheet Tier 1 Capital over 9% Conservative provisioning $1.4bn management ove
Slide 52: Supplementary Materials
Determined to be better than we‟ve ever been. For personal use only Supplementary Materials For the half year ended 31 December 2009 10 February 2010 Commonwealth Bank of Australia ACN 123 123 124
Slide 53: Index
Index For personal use only Strategy 53 Business Performance 64 Risk Management 83 Capital, Funding and Liquidity 94 Economic Overview 103 53
Slide 54: Significant gains in customer satisfaction
Significant gains in customer satisfaction 2 Retail MFI Customer Satisfaction 1 Business Customer Satisfaction For personal use only Gap to top-rated peer Gap to top-rated peer % Satisfied („Very Satisfied‟ or „Fairly Satisfied‟) 90% % Satisfied („Very Satisfied‟ or „Fairly Satisfied‟) 85% 5.9% 80%
Slide 55: Institutional Banking Customer Satisfaction
Institutional Customer Satisfaction Banking Understanding Customers’ Business For personal use only Loyalty to Relationship Lower the Score the Higher the Satisfaction Lower the Score the Higher the Satisfaction CBA CBA St George BNP Paribas NAB UBS ANZ St George UBS JP Morgan BOA / Merrill Lynch Ma
Slide 56: Online, real time secure business and corporate banking
Online, real time secure business and corporate banking... CommBiz a more responsive and simplified approach to credit For personal use only New First Rate Saver attracts $1.3bn - extending to include FirstChoice term deposits Netbank Finest Online has delivered an independently reviewed, market lea
Slide 57: Technology and Operational Excellence
Technology and Operational Excellence NetBank For personal use only Market leading online banking presence: Average Monthly Logons CommSec, NetBank, FirstChoice, 36.3m CommBiz, CommSee 29.3m 22.9m 18.5m Significant improvement in system reliability Back-office processing efficiencies FY07 FY
Slide 58: Volume Growth
Volume Growth For personal use only 12 Months 6 Months to Dec 09 to Dec 09 % Annualised % CBA CBA System System Group Group Home Lending 20.4 8.1 15.1 8.0 Household Deposits 4.3 8.7 3.4 10.2 Business Lending -4.6 -4.7 -7.4 -5.5 Business Deposits 7.1 5.6 10.6 1.1 Growth rates inclusive of Bankwest ba
Slide 59: Home Loan Growth
Home Loan Branch channel improving Growth For personal use only Balance Growth by Channel 18.5% 13.4% 13.2% 11.0% 11.3% 7.5% 6.2% 6.7% 6.4% 4.6% 4.0% 4.0% 2.8% 1.5% 1.6% Dec 08 Jun 09 Dec 09 Broker Branch Premium Total CBA Total Market Note : Width of channel columns reflects relative proportion of
Slide 60: CBA Growth vs Market
CBA Growth vs Market 12 months to December 2009 Home lending Household deposits Credit cards For personal use only 13.3% 13.0% 6.0% 20.4% 5.2% 19.1% 9.6% 4.3% 7.8% 9.2% 2.7% 1.7% CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Business lending Business deposits CBA Peer 1
Slide 61: CBA Growth vs Market
CBA Growth vs Market 6 months to December 2009 Home lending Household deposits Credit cards For personal use only 9.4% 9.7% 7.5% 5.2% 7.1% 4.3% 6.1% 6.0% 2.8% 3.7% 1.7% 0.2% CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Business lending Business deposits 0.5% 5.3% 5.5% -
Slide 62: Sustainability metrics
Sustainability metrics Metric 1H10 2009 2008 2007 For personal use only Customers Customer satisfaction Roy Morgan MFI retail customer satisfaction % 73.8 73.0 70.1 70.5 (6-month moving average) Customer satisfaction TNS Business Finance Monitor % 67.5 72.8 73.9 60.7 (12-month moving average) Custom
Slide 63: Sustainability progress
Sustainability progress People For personal use only Launched Indigenous Employment Strategy, committing to employ 350 Indigenous staff over 3 years Winner of the Special Award for Labour Relations/Human Capital Management in recognition of our cultural change and employee engagement initiatives
Slide 64: Index
Index For personal use only Strategy 53 Business Performance 64 Risk Management 83 Capital, Funding and Liquidity 94 Economic Indicators 103 64
Slide 65: Segment revenue
Segment Proportions of Total Operating Income revenue Dec 09 % For personal use only Proportion of Total Operating Income Retail deposits 1,496 16% Regional & Agribusiness, Private Home loans 1,190 12% Equities Margin Bank, 1% 2% Institutional Banking 899 9% Lending, 3% Local Business Sovereign, 1%
Slide 66: RBS
RBS – 6 month periods Dec 09 vs For personal use only Dec 09 Jun 09 Dec 08 Dec 08 Net interest income Home loans 1,091 856 719 52% Consumer finance 549 511 447 23% Retail deposits 1,248 1,146 1,246 0% 2,888 2,513 2,412 20% Other banking income Home loans 99 85 82 21% Consumer finance 212 265 218 (3%
Slide 67: Retail Banking Services
Retail Banking Services For personal use only Dec 09 Dec 09 vs $m Dec 08 Customer satisfaction gains driving Home loans 1,190 49% strong business performance Consumer finance 761 14% Good volume growth Retail deposits 1,496 (7%) Distribution 124 7% Higher funding costs and deposit competition
Slide 68: IB&M
IB&M – 6 month periods Dec 09 vs For personal use only Dec 09 Jun 09 Dec 08 Dec 08 Net interest income Institutional Banking 569 571 491 16% Global Markets 114 192 199 (43%) 683 763 690 (1%) Other banking income Institutional Banking 330 218 317 4% Markets 342 259 155 Large 672 477 472 42% Total ban
Slide 69: Institutional Banking and Markets
Institutional Banking and Markets For personal use only Strong income growth: Dec 09 Dec 09 vs Improved margins $m Dec 08 Institutional Banking 899 11% Narrowing credit spreads Markets 456 29% Growth in Institutional Equities and Debt Capital Markets products Total banking income 1,355 17%
Slide 70: B&PB
B&PB – 6 month periods Dec 09 vs For personal use only Dec 09 Jun 09 Dec 08 Dec 08 Net interest income Corporate Financial Services 279 272 273 2% Regional & Agribusiness 120 111 109 10% Local Business Banking 215 197 186 16% Private Bank 62 55 52 19% Equities Margin Lending 108 101 93 16% Other 38
Slide 71: Business and Private Banking
Business and Private Banking For personal use only Dec 09 Dec 09 vs Double digit revenue growth $m Dec 08 across all segments: Corporate Financial Services 510 13% Regional and Agribusiness 190 15% Good volume growth in Local Business Banking 331 10% lending Private Bank 119 10% Increased equi
Slide 72: WM
WM – 6 month periods Dec 09 Jun 09 Dec 08 Dec 09 vs For personal use only Dec 08 Net operating income CFS GAM 330 271 368 (10%) Colonial First State 318 263 295 8% CommInsure 364 329 393 (7%) Other (1) 1 (1) 0% 1,011 864 1,055 (4%) Operating expenses CFS GAM (170) (173) (180) (6%) Colonial First Sta
Slide 73: Wealth Management
Wealth Management CFS GAM: For personal use only Dec 09 Dec 09 vs FUM 16% to $149bn (MCSI AUD 1%; $m Dec 08 ASX200 31%) Lower performance fees and dividends CFS GAM 330 (10%) Expenses 6% Colonial First State 318 8% Colonial First State: CommInsure 364 (7%) Retail FUA 17% to $77bn
Slide 74: Wealth Management
Wealth Management Funds under Administration FirstChoice net flows improving For personal use only +17% Six Monthly Net Flows +10% $1,825m $15bn $186bn $1,502m $5bn $5bn $169bn $2bn $159bn $743m Dec 08 Net Flows Inv Jun 09 Net Flows Inv Dec 09 Returns Returns Dec 08 Jun 09 Dec 09 Solid investment pe
Slide 75: Global Asset Management
Global Asset Management For personal use only Globally: $149bn FUM1, 918 people North America Japan $1.5bn FUM $4.7bn FUM 3 People Asia ex China & Japan Middle East $13.6bn FUM $5.9bn FUM 105 People UK & Europe Australia & New Zealand $18.4bn FUM $104.8bn FUM 189 People 621 People 30% FUM raised fro
Slide 76: South Pacific
South Pacific – 6 month periods Dec 09 vs For personal use only Dec 09 Jun 09 Dec 08 Dec 08 Net interest income ASB 355 361 376 (6%) Other 5 19 33 (85%) Total NII 360 380 409 (12%) Other banking income ASB 182 206 212 (14%) Other (7) (5) (9) 22% Total OBI 175 201 203 (14%) Total banking income ASB 5
Slide 77: South Pacific
South Pacific For personal use only Dec 09 Dec 09 vs ASB Cash NPAT 33% due to: $m Dec 08 Higher funding costs ASB 563 (9%) Recession in NZ Sovereign 84 (13%) Higher impairment expense Other 5 Large Total operating income 652 (12%) Sovereign cash NPAT 50% due to: Operating expenses 337
Slide 78: Bankwest performing strongly
Bankwest performing strongly Customer Satisfaction Retail customer growth For personal use only Retail MFI Customer Satisfaction1 Number of Bankwest retail customers 85.0% 989,000 80.0% 960,000 75.0% 919,000 70.0% 65.0% Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Dec 08 Jun 09 Dec 09 Bankwest Peers Op
Slide 79: Bankwest
Bankwest For personal use only Income growth underpinned by Dec 09 Dec 081 Dec 09 vs Six Months $m $m Dec 08 strong mortgage growth and improved Group NIM% Net interest income 727 530 37% Impairment expense still at Other banking income 121 83 46% elevated levels but has Total banking income 848
Slide 80: Bankwest integration costs and synergies
Other key information - Bankwest Integration costs - composition For personal use only $313m $16m Restructuring Property $26m $103m IT $168m Operations / other Annual Expense synergies – 2012 composition $250m pa IT $28m East Coast Store Rollout $88m Operating (cessation) $65m efficiencies, other $4
Slide 81: Bankwest High level timeline
Bankwest High level timeline Acquisition of Bankwest and St Andrew‟s announced Oct-08 For personal use only By Steering committee and governance structure established December Due diligence commenced, regulatory approvals obtained Transaction completion 2008 Jon Sutton appointed BWA MD, new
Slide 82: Asia Targeted growth strategy
Asia Targeted growth strategy China For personal use only Branches Staff Qilu Bank (20%)1 72 1,806 Bank of Hangzhou (20%) 87 3,013 Beijing and Shanghai – Representative offices 7 China Life CMG – JV life insurance 87 First State Cinda Fund Management Company 71 Japan Branch India Branch to open in M
Slide 83: Index
Index For personal use only Strategy and Performance Overview 53 Group and Divisional Financials 64 Credit Quality and Risk Management 83 Capital, Funding and Liquidity 94 Economic Indicators 103 83
Slide 84: Home Lending – Strong LVR profile
Home Strong LVR profile Lending Portfolio LVR Distribution For personal use only 70% of customers paying in advance 80 % of Portfolio by LVR band 70 60 Portfolio average LVR: LVR at origination 50 1 40 LVR at current market value 52% based on original values 30 42% based on current values 20
Slide 85: Home Loan stress test
Home Loan stress test High stress scenario Unemployment 10% Expected Loss outcomes For personal use only Expected loss $m PD stress factor Unemployment 10% Property value x1 x2 x4 x6 Interest rates 14% No decrease 14.5 21.3 32.5 42.5 10% decrease 45.8 69.8 110.1 145.7 Security values 30% 20% decreas
Slide 86: Arrears
Arrears New mortgagee in Possession Cases Home loans For personal use only 160 90+ Days % 135 1.2% 140 126 113 107 1.0% 120 101 95 93 93 93 100 0.8% 80 59 0.6% 60 0.4% 40 0.2% 20 0.0% 0 Dec-07 Mar-08 Jun-08 Sep-08 Dec-09 Mar-09 Jun-09 Sep-09 Dec-09 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Ju
Slide 87: Risk-Rated Exposures and Margin Lending
Other key information Risk-Rated Exposures For personal use only 41% Other 40% 59% 16% BBB+ to BBB- 18% investment 18% A+ to A- 17% grade 25% AAA to AA- 25% Dec 09 Jun 09 Includes Bankwest. Excludes settlement exposures. Margin Lending 6 months Dec 09 Jun 09 Portfolio size $5.0bn $4.6bn Aggregated G
Slide 88: Sector exposures
Sector Portfolio remains well diversified across DRAFT exposures industry sectors For personal use only Dec 09 Jun 09 Dec 09 Jun 09 Consumer 54.1% 51.5% Agriculture 2.4% 2.4% Mining 0.7% 1.0% Manufacturing 2.4% 2.7% Energy 1.3% 1.5% Construction 1.0% 1.1% Retail & Wholesale 2.6% 2.6% Transport 1.5%
Slide 89: Sector exposures
Sector exposures 1 Sector Exposures – Dec 09 2 Top 20 Commercial Exposures For personal use only BBB+ AAA to A+ to $bn to Other Total BB- Note 1 AA- A- BBB+ BBB- BBB+ Banks 37.1 25.8 2.5 0.5 65.9 BBB+ A+ Finance Other 8.6 10.2 4.3 5.9 29.0 BBB BB+ Property 0.3 4.6 7.5 37.6 50.0 BB A Sovereign 25.9 1
Slide 90: Commercial Property market
Commercial Property market CBD Office Supply Pipeline1 CBD Vacancy Rates For personal use only Current Peak 40% % of Total Stock Market (Q4 2009) 1990’s 35% Sydney 8.2% 22.4% Perth 7.7% 31.8% 30% Melbourne 6.4% 25.8% 25% Brisbane 10.2% 14.3% 20% Adelaide 8.2% 19.8% Source : Jones Lang LaSalle Resear
Slide 91: Commercial Property
Commercial Well diversified portfolio with strong security Property cover and conservative LVR‟s CBA Commercial Property Profile For personal use only Represents 7.4% of total exposures (including Bankwest) Real Estate Investment Trust 25% Industrial 42% 3% 16% Retail Well diversified across pro
Slide 92: Historical loss rates in the last recession
Historical loss rates in the last recession 4 For personal use only Institutional Banking 3 Small Business Loss Rate (%) Business Banking 2 Personal Loans Credit cards 1 Home Loans 0 1982 1984 1986 1988 1990 1992 1994 92
Slide 93: Risk Weighted Assets
Risk Weighted Assets ■ Credit RWAs remained flat as a result of: RWA Movement (%) For personal use only Growth in residential mortgage exposure offset Total Tier 1 ratio impact (bpt) by a reduction in commercial exposure Credit Risk <1% 0 Reclassification of commercial property Traded Market Ris
Slide 94: Index
Index For personal use only Strategy and Performance Overview 53 Group and Divisional Financials 64 Credit Quality and Risk Management 83 Capital, Funding and Liquidity 94 Economic Indicators 103 94
Slide 95: UK comparison
UK comparison For personal use only The following table estimates the impact on CBA Group capital, as at December 2009, of the differences between the APRA Basel II guidelines and those of the UK regulator, Financial Services Authority (FSA) Net Tier 1 Total Fundamental Capital Capital Capital1 Dece
Slide 96: European comparison
European The Group‟s Tier 1 Capital Ratio compares favourably to comparison international peers For personal use only Basel II Tier 1 Capital 16.4% P E 16% 15.0% 14% 12.6% 12.4% P P P 12% 11.8% 11.0% 10.8% P Europe Average 10.5% 10.5% 10.3% P 10.1% 10.0% P Tier 1 : 11.1% 10% 9.7% 9.4% 9.4% 11.3% 11.
Slide 97: Interest Rate Risk in Banking Book
Interest Capital Assigned to Interest Rate Risk in Rate Risk Banking Book - APS117 For personal use only 51 bpts 0 bpts 26 bpts 54 bpts $1,286m $1,328m Optionality (retail) Optionality $716m -$70m (retail) (ie zero) Basis Risk Basis Risk Repricing and Repricing and Yield Curve Risk Yield Curve Risk
Slide 98: Cost of funding increasing
Cost of funding increasing For personal use only Additional Retail Funding cost excluding Replicating Portfolio +1.18% x 58% Increased Retail Funding funding cost 1.12% Long term wholesale +1.04% x 42% funding Basis risk Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10
Slide 99: Replicating Portfolio
Replicating Portfolio For personal use only Actual and Forecast Scenario1 8% 8% Forecast1 7% 7% Replicating Portfolio Yield 6% 6% 5% 5% 4% 4% Official Cash Rate 3% 3% 2% 2% 1% 1% 2001 Current 2011 1 Indicative forecast of the replicating portfolio in relation to hypothetical movements in the officia
Slide 100: UK and US balance sheet comparison
UK and US balance sheet comparison For personal use only United Kingdom USA Assets Liab + Equity Assets Liab + Equity Cash 4% 5% Capital Cash 7% 8% Capital Home Loans 17% Home Loans 15% 53% Deposits 49% Deposits Other Lending 38% Other Lending 49% 6% Long Term Other Fair 15% Long Term Value assets 1
Slide 101: Australian Banks – safe assets, secure funding
Australian Banks – safe assets, secure funding For personal use only Commonwealth Bank Balance sheet comparisons Assets – CBA’s assets are safer because: Assets Liab + Equity 51% of balance sheet is home loans, which are stable/long Cash 3% term 6% Capital Trading securities and other fair value
Slide 102: Regulatory Expected Loss
Regulatory Expected Loss For personal use only Dec 08 Jun 09 Dec 09 $m $m $m Regulatory Expected Loss (EL) – before tax 3,382 3,960 4,276 Eligible Provision 1 Collective provision 2 1,879 2,247 2,339 Individually assessed provisions 2 896 1,109 1,204 Other provisions 34 30 30 Subtotal 2,809 3,386 3,
Slide 103: Index
Index For personal use only Strategy and Performance Overview 53 Group and Divisional Financials 64 Credit Quality and Risk Management 83 Capital, Funding and Liquidity 94 Economic Indicators 103 103
Slide 104: Australia Relatively Well Placed
Australia Relatively Well Placed For personal use only Growth Outperformance Better Labour Market Conditions 1993 1997 2001 2005 2009 US Australia Source: RBA 104
Slide 105: Global Backdrop Supportive
Global Backdrop Supportive Key Asian Trading Partners Growing Commodity Price Correlations For personal use only COMMODITY PRICE CORRELATIONS (trailing 10-yr correlation) INDUSTRIAL PRODUCTION 1.0 1.0 I ndex (Jan'08=100) Index 120 120 with Developing Em erging Asia GDP Asia with 105 105 0.5 Advanced
Slide 106: System Credit Growth
System Credit Growth For personal use only CREDIT (annual % change) 40 % 40 % 30 30 Housing 20 20 10 10 0 0 Other Business personal -10 -10 Sep-82 Sep-88 Sep-94 Sep-00 Sep-06 Source: RBA 106
Slide 107: Australian Housing Market
Australian Housing Market Underpinned By Population Growth Demand Outstripping Supply For personal use only „000 POPULATION „000 '000 Rolling annual (rolling annualincrease increase) '000 Housing Demand HOUSING DEMAND & Supply& SUPPLY '000 '000 450 450 200 200 D em and Demand 350 350 150 150 250 250
Slide 108: Australian Housing Market
Australian Housing Market Sub-Prime Housing Market Banks’ Non-Performing Loans For personal use only SUB-PRIME HOUSING MARKETS % (share % ( share ofofoutstanding outstanding mortgages) mortgages) % Domestic books, per cent of outstandings by loan type 16 16 Sources: RBA 12 12 US 8 8 4 4 Australia (n
Slide 109: Household Deleveraging
Household Deleveraging Housing Equity Injection Principal Repayments Ahead For personal use only HOUSING EQUITY WITHDRAWAL* PRINCIPAL REPAYMENTS %% (% (%of ofh/hold h/holddisposable disposableincome) income) % $bn $bn (cumulative (cumulativeoverpayment) overpayment) $bn 10 10 30 30 Injection 5 5 20
Slide 110: Capex Backdrop
Capex Backdrop Advanced Mining Projects Construction Pipeline For personal use only ADVANCED MINING PROJECTS $bn $bn THE CONSTRUCTIO N PIPELINE $bn 120 120 $bn $bn (valueof (value ofwork work yet yetto tobe bedone) done) $bn 40 40 Source: ABARE Engineering construction 90 90 30 30 60 60 20 20 Non- R
Slide 111: Labour Market
Labour Market Labour Market Conditions Improving Hiring Intentions Lifting For personal use only CBA-ACCI BUSINESS SURVEY Index %pa LABOUR MARKET 70 5.0 % 6.0 '000 120 *Source: CBA-ACCI Employment Unemployment (rhs) rate (lhs) 3.5 61 5.5 60 52 2.0 4.9 0 Employment 44 0.5 4.4 -60 growth Employment (r
Slide 112: Funding costs
For personal use only Funding costs 112
Slide 113: Note
Note For personal use only Sources for Customer Satisfaction results outlined in this pack 1 Retail MFI - Roy Morgan Research Customer Satisfaction. Aust MFI Population 14+, % “Very" or "Fairly Satisfied“. 6 month rolling average. 2 Business Customer Satisfaction - TNS Business Finance Monitor. Cust
Slide 114: Results Presentation – Half year ended 31 December 2009
Determined to be better than we‟ve ever been. For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER Results Presentation For the half year ended 31 December 2009 10 February 2010 Commonwealth Bank of Australia ACN 123 123 124
Commonwealth Bank of Australia — H1 FY2010 Earnings Presentation on 6ix