Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Debt Investor Presentation (August 2017)
82 slides from Commonwealth Bank Of Australia's debt investor presentation, Aug 9, 2017
Slide 1: Debt Investor Discussion Pack
Debt Investor Discussion Pack For the full year ended 30 June 2017 Commonwealth Bank of Australia | ACN 123 123 124 | 9 August 2017
Slide 2: Full Year Result - 30 June
Full Year Result - 30 June1 Financial Balance Sheet, Capital & Funding Statutory NPAT ($m) 9,928 7.6% Capital – CET1 (Int’l)3 15.6% 120 bpts Cash earnings ($m) 9,881 4.6% Capital – CET1 (APRA) 10.1% (50) bpts ROE % (cash) (50) bpts Total assets ($bn) 976 4.6% 16.0 Total liabilities ($bn) 913 4.6% EP
Slide 3: Divisional contributions
Divisional contributions FY17 vs FY16 Cost-to- 1 % of Group Operating Operating Operating Cash Business Unit LIE Income NPAT Income Expenses Performance NPAT FY17 Retail Banking Services (RBS) 50.2% 6.8% 2.3% 8.9% 5.4% 9.3% 30.8% Business & Private Bank (BPB) 16.6% 3.4% 4.2% 2.8% (58.0%) 7.7% 39.1%
Slide 4: RBS
RBS Volume Revenue Lower growth Margins up 6.8% cost-to-income 12 months Home loan repricing and improved deposit margins in 2H17 partially offset by mix changes2 9.3% 6.9% 32.1% System1 6.6% 292 290 291 6.8% 6.7% 30.8% 5.8% 2.3% Home Household 2H16 1H17 2H17 Rev. Exp. NPAT FY16 FY17 Loans Deposits
Slide 5: BPB and IB&M
Corporate Volume BPB - investment in IB&M – low growth Margins1 the frontline impairments 12 months BPB IB&M Favourable deposit mix in 2H17 offsetting lending competition and 9.7% shift to fee-based products BPB +5.8% 7.7% IB&M flat LIE 198 191 down 190 74.6% 4.4% 3.3% 4.2% 3.4% (1.3%) (0.9%) System
Slide 6: Wealth
Wealth Funds Insurance Profit lower Insurance Income General Insurance Offset by FX and lower margins $m Net Event Claims $m – mix and remediation (12.7%) +9.5% Includes higher +4.2% loss recognition 502 (+$78m) 206 +5.0% 438 2nd Half 43 141 76 1st 30 $bn Half Rev. Exp. NPAT 4 AUM FUA FY16 FY17 FY16
Slide 7: Managing costs whilst investing through the cycle
Managing costs whilst investing through the cycle $m FY17 vs FY16 $m 2H17 vs 1H17 Investment Spend ($m) 600 679 Underlying Positive jaws Capitalised 323 306 +2.4% Expensed 277 373 +34.7% +6.2% 1H17 2H17 46 10,685 393 11,078 +0.4% 10,434 123 82 +2.2% 5,284 5,401 51 (30) 96 +34.7% FY16 Staff Tech. & I
Slide 8: Over 12 months, Group NIM down 3 bpts
Over 12 months, Group NIM down 3 bpts bpts 214 5 (4) (2) 211 (2) Wholesale (4) FY16 Asset Funding NZ Capital & FY17 pricing costs Other 8
Slide 9: Margin flat this half or +2 bpts ex Treasury & Markets
Margin flat this half or +2 bpts ex Treasury & Markets bpts Group NIM Down 3 bpts over 12 months 215 214 211 212 213 209 ex Treasury +2 bpts & Markets FY15 FY16 FY17 1 (1) 213 211 (2) 3 211 (1) Deposits Liquids (3) Business lending competition offsetting home loan repricing 1H17 Asset Funding Portfo
Slide 10: Strategic approach to costs: positive jaws + continuing to invest
Strategic approach to costs: positive jaws + continuing to invest Cost to Income Gross investment spend Investment spend (%) $m % of total 42.8% 1,373 1,246 1,279 10% Branches 12% 12% & Other 42.4% 692 30% 37% 37% Risk & 651 679 2nd Half Compliance underlying1 41.8% 58% 53% Productivity 681 51% & Gr
Slide 11: Increased risk & compliance spend
Increased risk & compliance spend ($m) Spend over FY13-17 Cumulative 5 years CAGR 29% 3,645 Examples • AML (Anti-Money Laundering) • FATCA (Foreign Account Tax Compliance Act) 2,752 • Stronger Super • Future Of Financial Advice • Common Reporting Standard 1,939 AML • Invested more than $230m in our
Slide 12: Impairment expense remains low
Impairment expense remains low 142 CBA Group Corporate (bpts)1 Group 73 41 29 25 21 Consumer 20 16 16 19 18 15 8 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Pro Forma 1. Cash LIE as a percentage of average GLAA (bpts). FY09 includes Bankwest on a pro-forma basis and is based on LIE for the year. St
Slide 13: TIAs relatively low and stable
TIAs relatively low and stable $bn Troublesome & Impaired 0.76% % of TCE Impaired 3.4 3.1 3.2 2.9 0.60% 0.63% 0.60% Troublesome 3.6 3.1 3.5 3.3 Jun 14 Jun 15 Jun 16 Jun 17 % of book rated investment grade 69.9% 69.2% 7.0 68.3% 68.7% 6.6 6.5 6.0 Jun 14 Jun 15 Jun 16 Jun 17 $bn Jun 14 Jun 15 Jun 16 Ju
Slide 14: Consumer arrears
Consumer arrears 90+ days 1.46% 1.41% Personal Loans • Improving profile 1.20% • Remains elevated in WA 1.03% 1.01% 0.99% Credit Cards • Seasonally higher 2nd half 0.60% WA Home Loans 0.50% 0.54% Home Loans1 0.49% • Increased provisions • Remains low • Elevated in WA • Rigorous stress testing 2 Ex W
Slide 15: Total provisions of $3.7bn
Total provisions of $3.7bn $m $bn Total Provisions 3.7 3.7 Individual provisions Collective provisions IP 0.9 1.0 2.8 2.7 CP 2,818 2,747 Jun 16 Jun 17 Overlay 695 711 980 Economic overlay 944 unchanged Bankwest 187 184 209 198 169 211 Consumer 1,077 1,112 566 571 Corporate 859 740 Jun 16 Jun 17 Jun
Slide 16: Funding & Capital
Funding & Capital ConmonwealthBank 7,
Slide 17: Further strengthening our balance sheet
Further strengthening our balance sheet Deposit funding 67% NSFR 107% target range 108 - 110% (FY19) Wholesale funding tenor – portfolio 4.1 yrs Wholesale funding tenor – new 5.2 yrs Wholesale funding – long term 60% LCR 129% target range 115-130% RWA optimisation +25 bpts RWA1 contribution to CET1
Slide 18: Funding overview
Funding overview 12 months to June 2017 $bn Source of funds Use of funds Core Funding Gap ($8bn) New 5.2 yrs NSFR Portfolio 4.1 yrs 107% 67% Deposit (35) (29) Funded 43 LCR 129% 43 (4) (2) (18) 3 (1) Equity Long Term Long Term Short Term Collateral Customer Lending HQLA Other Issuances 1 Maturities
Slide 19: Deposit funding – transactions
Deposit funding – transactions Group Transaction Balances1 Growth across divisions FY17 v FY16 +38.0% 142,916 27.0% 126,780 103,528 Group 17.9% 12.7% $m 1.7% 4.9% 3.7% FY15 FY16 FY17 RBS BPB IB&M 2 BWA NZ 3 RBS New Transaction Accounts4 Retail Deposit Mix # ‘000 +5.7% 248,915 +22.4% 235,446 43,422 5
Slide 20: Deposit funding
Deposit funding Deposits vs Peers1 Deposits in LCR calculation2 June 2017 ($bn) As at 31 March 2017 ($bn) 160 CBA 140 Peer 1 CBA overweight more Peer 2 stable deposits Peer 3 120 482 408 100 Other deposits 239 316 80 212 264 60 196 150 40 Household deposits 243 196 20 120 114 - CBA Peer 3 Peer 2 Pee
Slide 21: Wholesale Funding – overview
Wholesale Funding – overview Funding composition Average long term funding costs Margin to BBSW (bpts) Customer Deposits 67% 2.00 1 1.75 Predicted LT funding costs ST Wholesale Funding 13% if current market rates 1.50 remain unchanged LT Wholesale Funding > 12 months 10% 1.25 LT Wholesale Funding ≤
Slide 22: Wholesale Funding – portfolio
Wholesale Funding – portfolio Term Wholesale Funding profile – issuance and maturity $bn Issuance Maturity 50 Weighted average maturity 4.1 years 40 30 20 10 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 > Jun 23 Long Term Wholesale Debt Covered Bond Securitisation Term Whole
Slide 23: Liquidity Coverage Ratio (LCR)
Liquidity Coverage Ratio (LCR) • LCR 129% at 30 Jun 2017 • Committed Liquidity Facility reduced by $10.2bn on 1 Jan 2017 to $48.3bn • The Group’s Net Stable Funding Ratio (NSFR) is 107% 120% 135% 129% 154.7 141.7 133.6 111.4 114.8 110.1 18.7 96.2 21.9 15.3 Net Cash Outflows 75.1 93.4 Liquid Assets 2
Slide 24: Leverage ratio – above Basel minimum
Leverage ratio – above Basel minimum CBA Leverage Ratio well above prescribed Basel Committee minimum Leverage ratio introduced to constrain the build-up of leverage in $m Jun 17 the banking system. Tier 1 Capital 52,684 Scheduled to be introduced as a minimum requirement from 1 January 2018. Total
Slide 25: CET1 of 10.1% – organic growth +72 bpts
CET1 of 10.1% – organic growth +72 bpts 20.4% 2.4 2.4 International 14.2% Organic Growth +72 bpts 15.6% 2.1 Tier 2 11.5% 25 2.0 Tier 1 > 10.5% (67) 114 (23) (29) 10.1% 2.0 9.9% Surplus in anticipation of 2.5 Unquestionably 1.5 Strong 2021 15.6 15 bpts remaining 1 3.5 (FY18) 10.1 CET1 Includes (34 bp
Slide 26: Dividend
Dividend cents per share Cash NPAT Payout Ratio 429 Up 420 420 2.1% Payout Ratio Net of DRP 401 364 334 320 290 256 266 228 75% 74% 73% 76% 76% 75% 75% 77% 75% 78% 74% 76%1 67%1 64% 61%1 62% 2 53% 53% 55% 55% 52% 47% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1. DRP Neutralised: 2H10, 1H
Slide 27: CET1 – Internationally comparable
CET1 – Internationally comparable (bpts) Internationally Comparable1 CET1 impacted by APRA increase in risk weights for Australian residential mortgages implemented effective 30 June 2017 28 5 (10) 6 (70) 150 15.4% (89) 15.6% Dec 16 Dec 16 Cash Underlying Market Colonial Other Mortgage Jun 17 Int'l
Slide 28: International CET1 ratios
International CET1 ratios 20.0 G-SIBs in dark grey 15.6 15.3 15.2 APRA top quartile 1 14.9 14.7 14.5 14.2 14.1 14.0 14.0 14.0 13.5 13.4 13.2 13.0 13.0 13.0 12.9 12.8 12.5 12.4 12.4 12.1 12.0 11.9 11.6 11.5 11.3 11.3 11.2 11.2 10.9 3 10.8 10.7 10.6 10.5 3 Intesa Sanpaolo 3 China Construct. Bank Stand
Slide 29: APRA and International comparison
APRA and International comparison The following table provides details on the differences, as at 30 June 2017, between the APRA Basel III capital requirements and internationally comparable capital ratio1. CET1 APRA 10.1% Equity investments Balances below prescribed threshold are risk weighted, comp
Slide 30: Residential mortgage risk weights
Residential mortgage risk weights Residential mortgage risk weights by country Group IRB residential mortgage risk weights 25% 25% 25% 22% Includes Australian performing residential 24.7% mortgages at 25.25%4 17% 16% 16% 16.3% 16.1% 12% 11% 10% 7% 1 2 3 3 3 France Sweden Canada Hong Kong Norway Spai
Slide 31: Banking levy
Banking levy1 $m Total liabilities 898,722 • Applicable to ADIs with liabilities >A$100bn, i.e. major banks and Macquarie Bank Exclusions: Financial Claims Scheme deposits (238,500) • Effective from 1 Jul 17 with the first report due Feb 18 & first payment due Derivatives (32,094) Mar 18 Tier 1 capi
Slide 32: Regulatory change timetable
Regulatory change timetable APRA 2017 2018 2019 2020 2021 Competition Unquestionably strong1 Financial System Increase in ADIs to target unquestionably strong capital ratios, which will also Release of final prudential Implementation Inquiry mortgage cover “Basel IV” proposals. Discussion papers, dr
Slide 33: Strategy
Strategy ConmonwealthBank 7,
Slide 34: Customer focus
Customer focus Our Vision Our Values Strategic Capabilities People Technology To excel at securing and Integrity enhancing the financial Accountability wellbeing of Collaboration Productivity Strength people, businesses and Excellence communities Service Our “One CommBank” Growth Continued growth in
Slide 35: CBA overview
CBA overview Our people Technology Financial and and strength customers innovation • 51,800 people serving 16.6m customers • 1st Australian bank to go real-time, 24x7 • ~800,000 shareholders • #1 in retail customer satisfaction • 15m customers using real time banking • Total assets of $976bn • =#1 i
Slide 36: Our customer franchise
Our customer franchise Customer lifecycle by age 46.5% Serving 16.6 million customers 44.4% MFI for 1 in 3 Australians 41.3% MFI Share Jun 17 Jun 12 Leading market shares in home lending 30.0% 25.2% and household deposits 28.8% 34.2% 28.5% 18.8% 13.8% 11.9% Highest share-of-wallet amongst peer 27.4%
Slide 37: Delivering for our customers – One CommBank
Delivering for our customers – One CommBank Smarter Proprietary % of Total Flows 62,000 customer insights each week analytics Home lending (RBS) More 62% 43,000 video-conferencing referrals in FY17 leads More 57% 93 new branch lenders in FY17 lenders 54% Insurance 8% growth in home & contents insura
Slide 38: Australia’s leading technology bank
Australia’s leading technology bank More satisfied customers Leader in real-time Forefront of innovation Group transaction balances 97% Internet Banking +38.0% 95% 94.0% +12.7% 93% 91% 89% CBA 87% Peers 85% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 FY15 FY16 FY17 • 6.2 million active online c
Slide 39: Delivering for customers – real time, digital banking
Delivering for customers – real time, digital banking Digital - transactions Digital - sales Repositioning branches 54% of all transactions by 26% of retail product 50% smaller footprint value now digital sales now digital – 226 locations Digital transactions by value 54% Digital contribution to tot
Slide 40: The digital revolution – customer take-up
The digital revolution – customer take-up CommBank app users1 CommBank app CommBank app Monthly unique customers (m) Logons per week (m) Transactions per week ($bn)2 30 6.1 27 4.4 24 5.5 4.1 21 4.6 3.7 3.4 18 3.8 3.0 15 2.7 3.0 2.5 2.0 10 1.5 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 D
Slide 41: The digital revolution – customer experience & security
The digital revolution – customer experience & security Cardless Cash Tap & Pay Lock, Block & Limit Cumulative volume of unique transactions (m)1 Volume of transactions per quarter (m)2 Number of accounts enrolled (k)3 17.3 3.7 716 635 3.3 541 12.6 2.7 465 363 8.5 1.8 5.3 1.2 215 0.6 0.7 2.7 0.1 1.2
Slide 42: Supporting the transition to a low carbon economy
Supporting the transition to a low carbon economy LOW ENERGY – WIND CARBON POWER At A$650 million, our climate bond is BUILDINGS Australia’s largest $A climate bond issued by a bank LOW CARBON TRANSPORT Our lending exposure to renewable energy generation has grown to $2.8 billion $1.4 billion $2.2 b
Slide 43: CBA in Asia and South Africa
CBA in Asia and South Africa China Bank of Hangzhou (18%): 196 branches Qilu Bank (20%): 128 branches County Banking (Henan & Hebei)1: - 15 branches (10 @ 100% holding, 5 @ 80% holding) - 8 sub-branches (2 @ 100% holding, 6 @ 80% holding) CBA Beijing, Shanghai and Hong Kong branches BoComm
Slide 44: Market share
Market share1 % Jun 17 Dec 16 Jun 16 Home loans2 25.2 25.2 25.2 Credit cards – RBA3 24.3 24.4 24.4 Other household lending4 17.0 16.9 16.8 Household deposits 28.8 29.0 29.2 Business lending – RBA 16.5 16.6 16.9 Business lending – APRA 18.6 18.6 18.8 Business deposits – APRA 20.3 19.8 20.2 Asset fina
Slide 45: Credit quality & home loans
Credit quality & home loans ConmonwealthBank 7,
Slide 46: Credit exposures by industry
Credit exposures by industry Group TCE TIA $m TIA % of TCE Corporate Portfolio Quality Dec 16 Jun 17 Dec 16 Jun 17 Dec 16 Jun 17 % of book rated investment grade Consumer 54.8% 55.4% 1,409 1,578 0.24% 0.26% TCE ($bn) 68.7 68.7 69.2 Sovereign 9.5% 9.7% - - - - 500 Property 6.7% 6.5% 630 693 0.87% 0.9
Slide 47: Sector exposures
Sector exposures Exposures by Industry Top 20 Commercial Exposures AAA A+ BBB+ TCE $bn Other Jun 17 A- to AA- to A- to BBB- BBB AAA Sovereign 98.8 6.2 0.5 0.1 105.6 A+ Property 2.1 6.0 15.3 47.1 70.5 A- BBB+ Banks 30.3 26.7 6.7 2.3 66.0 BBB AA- Finance - Other 22.9 22.2 7.3 2.4 54.8 BBB- Retail & Wh
Slide 48: Mining, oil & gas – lower exposure
Mining, oil & gas – lower exposure Overview Group Exposure Exposure of $14.7bn (1.4% of Group TCE), $0.2bn 70 73 70 Jun 16 reduction on prior half due to ongoing active portfolio Dec 16 management and repayments. Jun 17 Relatively stable performance over the past 12 months: 16.0 14.9 14.7 70%
Slide 49: Commercial property – lower exposure
Commercial property – lower exposure Overview Group Exposure 72.0 70.5 Jun 16 Exposure has reduced in the half year, though remains diversified 69.2 Dec 16 across sectors and by counterparties. Jun 17 86.3% of Commercial Property exposure to investors and REITS, 13.7% to developments (down from
Slide 50: Residential apartments – weighted to Sydney
Residential apartments – weighted to Sydney Overview1 Profile (Jun 17) Total Residential Apartment Development1 Apartment Development exposure reduced $12.3bn (17% of CP) $4.5bn (0.4% of TCE) $0.7bn (-14%) for the half Other Perth $0.3bn Facilities being repaid on time from pre-sale $0.2bn Inves
Slide 51: Retail trade
Retail trade Overview Group Exposure Exposure of $12.2bn (1.1% of Group TCE), $0.4bn reduction on 35 31 Jun 16 prior half. 29 Dec 16 Personal and household good retailing accounts for $6.3bn 11.6 12.6 12.2 Jun 17 (0.6% of Group TCE) Increased online retailing will present additional challenges
Slide 52: Agriculture – NZ Dairy portfolio quality improving
Agriculture – NZ Dairy portfolio quality improving Overview Group Exposure Jun 16 Exposure of $21.7bn (2.0% of Group TCE) is well diversified 21.2 21.7 by geography, sector and client base. 19.7 Dec 16 Australian agriculture portfolio performing well. Jun 17 14 NZ dairy portfolio: 12 12 Repr
Slide 53: Home loan portfolio – Australia
Home loan portfolio – Australia Portfolio1 Jun 16 Dec 16 Jun 17 New Business1 Jun 16 Dec 16 Jun 17 Total Balances - Spot ($bn) 409 423 436 Total Funding ($bn) 51 53 49 Total Balances - Average ($bn) 395 416 423 Average Funding Size ($’000)6 299 311 309 Total Accounts (m) 1.8 1.8 1.8 Serviceability B
Slide 54: Australian home loans – portfolio growth profile
Australian home loans – portfolio growth profile $bn Balance Growth State Profile FY17 FY17 Balance Growth % of Portfolio 33 (92) 6% 102 16% 34% 18% (16) 10.5% 26% 436 409 8.1% 6.4% 2.6% 2.0% Jun 16 New Redraw & Repayments / External Jun 17 NSW/ACT VIC/TAS QLD WA SA/NT Fundings Interest Other Refina
Slide 55: Investor lending
Investor lending Growth1 Income Profile2 Arrears2 Year on year (%) Applicant Gross Income Band 16% 50% 1.00% 90+ days Fundings (6 Months to Jun 17) 45% 12% 40% 0.80% Owner Occupied 35% Investment Loans 7.5% 8% 30% 0.60% 6.3% 25% 4% 5.7% 20% 0.40% 5.1% 15% Owner Occupied 0% Portfolio 10% 0.20% Invest
Slide 56: Interest only
Interest only Arrears Payments in Advance 90+ days (Jun 17) 1.00% Maximum LVR of 80% at Portfolio Portfolio origination Interest Only Interest Only Interest Only – Owner Occupied Assessed on a P&I basis over 0.80% the residual term of the loan 66 Borrower profile skewed toward 0.60% higher inc
Slide 57: Retail Banking Services - Payments in advance
Retail Banking Services - Payments in advance1 Payments in advance (% of accounts) Residual: have less than 1 month 6% repayment buffer Structural: loans that structurally 9% restrict payments in advance e.g. fixed rate loans etc 4% New Accounts: loans that are less than one year on book 29% 16% Inv
Slide 58: Serviceability
Serviceability Across the system, whilst gross household debt has risen, net Key Origination Interest rate buffers built into debt has remained stable Requirements1 serviceability tests 2 RBS % of annual household Serviceability 10% disposable income 80% cap on less certain income sources % (e.g.
Slide 59: CBA home loan portfolio arrears
CBA home loan portfolio arrears Arrears by BU Arrears by Year Arrears by Vintage Group 90+ days1 Group 90+ days1 Australia2 90+ days 1.8% 1.8% 2.0% Group Bankwest RBS ASB 2013 2014 2015 2016 2017 1.5% 1.2% 1.2% FY07-FY10 FY13 FY12 1.0% FY14 0.6% 0.6% FY11 0.5% FY15 Excluding WA FY16 FY17 0.0% 0.0% 0
Slide 60: Portfolio arrears – Australian Home Loans by State
Portfolio arrears – Australian Home Loans by State Home loan arrears Western Australia 90+ days 1.50% % of Portfolio Rigorous stress testing 16% 34% WA 18% Credit policy tightening eg LVR caps, insurance 6% 1.00% 26% QLD requirements SA/NT Tailored treatments by segment National 0.50% National
Slide 61: WA economic overview
WA economic overview Unemployment Employment Jobs by Sector Unemployment rates (%) WA Employment Growth WA Jobs by sector (% of total) (annual % change) 0 2 4 6 8 10 12 7.0 12 Health Construct AUSTRALIA Retail Education Part-time Mining Prof serv 5.3 6 Accomm Gov admin WA Manufact Transp Pers 3.7 0
Slide 62: CBA home loan portfolio - overview and historical losses
CBA home loan portfolio - overview and historical losses Losses to average gross loans 2.5% FY17 losses of 3 bpts CBA Home Loans1 Group Total Loan Losses 2 Portfolio dynamic LVR3 of 50% 2.0% Maximum LVR of 95% all loans4 1.5% Limited low doc lending (with LMI)5 Servicing buffer +2.25% or m
Slide 63: Loan to Value Ratio (LVR) and portfolio insurance
Loan to Value Ratio (LVR) and portfolio insurance Home Loan Dynamic LVR1 Portfolio Insurance Profile2 % of Australian Home Loan portfolio 70% Insurance with Genworth or QBE for higher risk loans above 80% New excess of loss 60% Average LVR re-insurance Dynamic LVR 22% 50% % of Total Portfolio Accoun
Slide 64: Home loans stress test – Australia
Home loans stress test – Australia Assumptions and Outcomes Summary Assumptions (%) Base Year 1 Year 2 Year 3 3 year scenario of cumulative 31% house price decline, peak 11% unemployment and a reduction Cash Rate 1.5 1.0 0.5 0.5 in the cash rate to 0.5%. Unemployment 5.8 7.5 9.5 11.0 Total net l
Slide 65: Consumer arrears
Consumer arrears Credit Cards Personal Loans 1.8% Group 90+ days 1.8% Group 90+ days 1.2% Group 1.2% Bankwest RBS 0.6% 0.6% ASB 0.0% 0.0% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Credit Cards Personal Loans 3.0% 4.0% Group 30+ days Group 30+ d
Slide 66: Economics
Economics ConmonwealthBank 7,
Slide 67: Key economic indicators (June FY)
Key economic indicators (June FY) 2013 2014 2015 2016 2017 2018 2019 World GDP 3.3 3.4 3.2 3.1 3.2 3.5 3.5 Australia Credit Growth % – Total 3.1 5.0 5.9 6.1 5.4 4½ - 6½ 4½ - 6½ Credit Growth % – Housing 4.6 6.4 7.3 6.7 6.6 4½ - 6½ 4½ - 6½ Credit Growth % – Business 1.2 3.4 4.4 6.5 4.4 5-7 5-7 Credit
Slide 68: The global backdrop is improving
The global backdrop is improving Global Growth1 Global Policy Settings2 (average annual % change) Official Interest Rates (%) 8 8 6 6 Australia 4 4 NZ 2 2 Euro Canada US 0 0 UK Japan -2 -2 2004-07 2008-16 2017-19 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17 Policy makers are becoming increasingly confi
Slide 69: The global backdrop is improving
The global backdrop is improving Labour Markets1 Commodity Prices2 Unemployment rate (%) CBA commodity price index 12 Euro zone 400 8 UK Australia 300 4 US 200 Japan 0 100 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17 Sep 04 Sep 07 Sep 10 Sep 13 Sep 16 Global growth is generating job gains and Co
Slide 70: Rising debt levels are a significant global risk
Rising debt levels are a significant global risk Global Debt1 Global Debt1 % of GDP % of GDP 100 300 Mature market government debt 75 240 Emerging market non- financial corporates 180 50 Mar 99 Mar 03 Mar 07 Mar 11 Mar 15 Mar 99 Mar 03 Mar 07 Mar 11 Mar 15 Global debt continues to rise and now stand
Slide 71: Australia remains well placed
Australia remains well placed The longest expansion Favourable momentum1 Years of continuous growth Composite PMI (index) 59 Finland (1992-07) UK (1991-08) 56 Australia France (1975-92) Global US (1991-08) 53 China Canada (1991-08) 50 Netherlands (1983-08) Australia (1991-) 47 0 10 20 30 May 16 Sep
Slide 72: Growth positives
Growth positives Resources Infrastructure Mining output by sector (index, QIII’12=100) State public capex (index, trend, Dec’12=100) 130 130 175 VIC 150 110 110 Iron ore NSW TAS Coal WA 125 90 90 Oil & gas SA 100 Other QLD 75 70 70 Sep 12 Sep 14 Sep 16 Dec 12 Dec 14 Dec 16 Mar 14 Mar 16 New capacity
Slide 73: Growth positives
Growth positives Asian income growth1 Labour market2 Asian income growth proxy (%) (Australian GDP exposed to Asian income growth, % pa) 2.0 7.0 Unemployment rate 1.5 6.4 (rhs) 6 1.0 5.8 3 0.5 5.2 0 0.0 4.6 Employment (qtly % ch) -0.5 (lhs) 4.0 -3 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Sep 00 Sep
Slide 74: Growth disappointments
Growth disappointments Residential construction Business capex Dwelling construction (rolling annual total, ‘000) Business investment (% of GDP) 16 Non- Mining 12 200 Dwelling commencements 8 150 Mining 4 Building approvals 100 0 Sep 86 Sep 95 Sep 04 Sep 13 Sep 00 Sep 03 Sep 06 Sep 09 Sep 12 Sep 15
Slide 75: Growth risks
Growth risks Household debt1 Household income2 Australia: Debt (% of GDP) H/hold disposable income per capita (annual % change) 12 120 Households 9 Non-financial 80 corporates 6 Financial corporates 3 40 0 Government 0 -3 Mar 99 Mar 03 Mar 07 Mar 11 Mar 15 Mar 04 Mar 07 Mar 10 Mar 13 Mar 16 Governme
Slide 76: Growth risks
Growth risks Savings ratio Wages growth (%) Wage measures (annual % change) 20 15 6 AWE 10 4 5 2 WPI 0 0 -5 Dec 97 Dec 01 Dec 05 Dec 09 Dec 13 Dec 17 Sep 72 Sep 80 Sep 88 Sep 96 Sep 04 Sep 12 The decline in the savings ratio has supported consumer Wages growth has continued to slow due to elevated l
Slide 77: Housing fundamentals suggest price growth should slow
Housing fundamentals suggest price growth should slow Credit growth1 Housing supply and demand2 Sales activity3 Credit growth (three months ended annualised rate, %) CBA: Housing demand & supply (‘000) Dwelling turnover (‘000) 12 % '000 Investor Supply 9 600 200 housing % of dwelling stock 8 Demand
Slide 78: Dwelling price momentum has eased
Dwelling price momentum has eased Dwelling prices1 Dwelling price momentum2 (annual change %) Dwelling prices (annual % change) 50 24 8 capital cities 40 30 12 Melbourne 20 Sydney 0 10 0 -12 Price -10 momentum Brisbane Perth -24 -20 Jan 98 Jan 02 Jan 06 Jan 10 Jan 14 Jan 06 Jan 08 Jan 10 Jan 12 Jan
Slide 79: New Zealand
New Zealand Global dairy trade auction results1 NZ short term arrivals2 (USD/tonne) (monthly, seasonally adjusted) 6,000 Whole Milk Powder 340 Lions tour 5,000 320 300 Masters Games 4,000 280 CWC 260 RWC 3,000 240 220 Lions tour 2,000 GDT overall price 200 180 1,000 160 08 09 10 11 12 13 14 15 16 05
Slide 80: New Zealand
New Zealand NZ CPI inflation1 OCR forecasts2 (%) (ASB forecast and implied market pricing, %) 6 4.0 (f) 5 Annual % 3.5 4 3 3.0 2 OCR implied by current 2.5 market pricing 1 2.0 0 ASB Economics Forecast (peak of 3.5% in 2020) quarterly change -1 1.5 Jun 00 Jun 03 Jun 06 Jun 09 Jun 12 Jun 15 Sep 13 Ju
Slide 81: New Zealand
New Zealand NZ household lending growth1 NZ median house price2 (annual % change) (3 month moving average, $’000) 1000 20 900 15 800 Auckland Mortgage lending 10 700 600 5 NZ 500 Wellington 0 400 -5 Consumer Credit 300 Canterbury/Westland 200 -10 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15 Jan 17 Mar
Slide 82: Disclaimer
Disclaimer Disclaimer The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 9 August 2017. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as
Commonwealth Bank of Australia — Debt Investor Presentation (August 2017) on 6ix