Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2023 Earnings Presentation
146 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 9, 2023
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the full year ended 30 June 2023 Commonwealth Bank of Australia
Slide 2: Important information
Important information 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 2023. It is information given in summary form and does not purport to be complete. Information in this presentation is not
Slide 3: Contents
Contents CEO & CFO Presentations 4 Overview & Strategy 38 Financial Overview 56 Home & Consumer Lending 79 Business & Corporate Lending 96 Funding, Liquidity & Capital 104 Economic Overview 123 Sources, Glossary & Notes 134
Slide 4: Results Presentation (CEO)
Results Presentation Matt Comyn, Chief Executive Officer
Slide 5: Building a brighter future for all
Building a brighter future for all Supporting customers and communities • Focused on proactively supporting customers in need Helping • Engaged over 3 million customers with money management tools customers today • Prevented and recovered over $200 million in scams in FY23 • Helped more than 150,000
Slide 6: Impact of higher rates
Impact of higher rates Higher rates flowing through economy Change FY23 vs FY22 Total FY23 FY23 1.6x 1.7x 5.4x 3.9x vs FY22 +5% +11% +6% Avg FTE +5% Change in average customer rates FY23 +0.6 1.67% growth +0.6 1.47% 9.1 FY22 11.0 +0.5 9.6 6.6 Home loans Deposits $bn $bn 4.5 5.8 10.7 Mortgage Other D
Slide 7: CBA over time
CBA over time Larger, safer, lower profitability Size Strength Profitability Comparables1 Gross loans, $bn Capital (CET1), $bn Return on equity (cash), % Return on equity, % Banks in: Aust. +53% +84% -26% UK Europe US Canada 17% 15% 16% 13% 13% 10% 11% 933 57 19% 5% 7% 608 31 14% 1% Jun 14 Jun 23 Ju
Slide 8: This result
This result Customer focus, consistent execution, strength 5% Statutory NPAT Pride in CBA Cash NPAT → NPS1 #1 Consumer #1 Business 89% +6% 6% Cash NPAT #1 Institutional → of employees2 FY23 vs FY22 #1 Digital CET1 Return on equity Shareholder 45c → Cash EPS Level 2 returns 12.2% 14% $10bn 4 $9bn in
Slide 9: Financials
Financials1 Cash NPAT up 6% over the year, but down 3% in 2H23 as margins peaked Operating income2 Operating expenses2 Pre-provision profit2 Cash NPAT Margin recovery and Inflation and Strong underlying Includes normalisation in organic volume growth additional staff performance loan impairment expe
Slide 10: Strength – balance sheet
Strength – balance sheet Long-term conservative balance sheet settings further strengthened – well placed in an uncertain context Deposit funding Long-term funding Liquid assets Capital % of total funding Weighted average maturity, yrs Average, $bn CET1 ratio, % Level 2 12.2% 2 75% 5.5yrs $189bn ex
Slide 11: Strength – credit quality
Strength – credit quality Portfolio quality remains sound – strong labour market supportive - well provisioned TIA Home loan arrears1 Provisioning2 Troublesome & 90+ days, % Total provisions vs Impaired Assets (TIA) Central ECL3 June 23 $7.1bn 7.8 $6.0bn 0.68% 6.4 0.47% $2.2bn 0.49% $3.8bn $bn $bn J
Slide 12: Higher rates unevenly felt
Higher rates unevenly felt Challenging environment for many households Home loan balances 1 Deposit balances2 Change in savings3 Change in spending4 Distribution by customer age % vs. last year YoY, per active customer Last 3 months Last 4 weeks Age, years 3.2% 18-24 -6% -0.2% 1.5% 25-34 23% 11% -3%
Slide 13: Home loan portfolio
Home loan portfolio Key metrics remain sound with one third of rate increases still to be felt Balance growth1, % Home loan arrears3 % Hardship5 Jun 23 vs Jun 19 Number of cases Impact of cash rate changes on mortgage repayments4 33 ~1/3 ~2/3 not yet % experienced felt by 67 already by households %
Slide 14: Strength – core franchise
Strength – core franchise Extending leadership 1. Stronger customer relationships and frequency of engagement 2. Better understanding of customer needs and risk • Strongest financial services brand1 • Technology leader, history of innovation • Leading MFI share2 • Leading decisioning technology • Su
Slide 15: Volumes
Volumes Disciplined and deliberate volume growth vs PCP ‘000 Balance growth vs system1,2 Retail Jun 23 10,677 Jun 23 vs Jun 22 transaction +8% accounts3 Jun 22 0.8x 9,920 ex. Unloan & BW ‘000 Business Jun 23 1,138 transaction Jun 22 +9% 1,042 1.0x 0.8x 0.7x 1.4x accounts $bn IB&M FY23 73 funding +$1
Slide 16: Business Banking
Business Banking Extending leadership through strong customer relationships, continuous innovation • #1 NPS1 MFI share1 Differentiated customer • #1 Digital NPS1 proposition • #1 in Business Branch NPS1 25.4% • #1 MFI share1 Leading customer • #1 deposits market share2 franchise • >1m transaction ac
Slide 17: Global best digital experiences – CommBank app 5.0
Global best digital experiences CommBank app 5.0 – extending our market leading digital offering Examples Business profile Toggle easily between business and switching personal accounts Logins1 New investing Invest in Australian shares and Exchange functionality Traded Funds (EFTs) +11% Automatic Fa
Slide 18: Market leading digital assets
Global best digital experiences Market leading digital assets Net Promoter Score1 Monthly transactions Digitally active customers6 Digital transactions Consumer mobile app via app5 % of total - by value7 Jun 23 26.2 $78.6bn $78.6bn 8.7m 75% 8.7m Peers 70 72 61.3 8.0 7.6 18.8 48.1 15.7 14.4 CBA Jun 2
Slide 19: Supporting our customers – money management
Supporting our customers Money management – 3.2 million customers engaging1 Money Plan Bill Sense Benefits finder Spend Tracker Credit Score Money management Predict and prepare Simplified access to a Easily view and Check and understand tools in one place for upcoming bills range of benefits catego
Slide 20: Keeping our customers safe
Supporting our customers Keeping our customers safe CallerCheck NameCheck CustomerCheck Ongoing awareness Protection against Verification of calls Notification of account Fast and secure and education credit fraud from CommBank name mismatches identification ~9.5 million >140,000 >300,000 >16 millio
Slide 21: Results Presentation (CFO)
Results Presentation Alan Docherty, Chief Financial Officer
Slide 22: Result overview
Result overview Strongly positioned to support customers, the economy and shareholders as conditions tighten Macroeconomic Outcomes Group margin • Higher rates, intense competition • Margin peaked late in 2022 210 → 205 • Strong economic fundamentals • Continued low arrears 187 • Lagged effect of fi
Slide 23: Statutory vs Cash NPAT
Statutory vs Cash NPAT1 Statutory NPAT broadly in line with Cash NPAT $m FY22 FY23 Statutory NPAT – continuing operations 9,673 10,188 Non-cash items: Includes CommInsure General Insurance, – Transaction costs and gains and (losses) on disposals2 (30) 32 Count Financial, Commonwealth Financial Plann
Slide 24: FY23 result
FY23 result1 Cash NPAT up 6%, Operating performance2 up 19% FY22 FY23 FY23 vs $m $m FY22 Income 24,689 27,237 10.3% Income Gain on sale – Bank of Hangzhou3 (516) - Income (underlying) 24,173 27,237 12.6% 12.7% Operating Expenses 11,428 11,858 3.8% performance underlying Expenses Restructuring costs
Slide 25: FY23 result
FY23 result1 Income growth softer in second half as margin peaked FY23 FY23 vs 2H23 vs $m FY22 1H23 Operating income2 27,237 12.7% 0.4% → → Operating expenses2 11,646 5.5% 1.7% → → Operating performance2 15,591 18.7% (0.6%) → → → → Loan impairment expense 1,108 Large 16.8% → Cash NPAT 10,164 5.9% (2
Slide 26: Operating income
Operating income1 Margin recovery and volume growth, partly offset by lower other operating income • Impact of divestments (incl. Bank of Hangzhou and General Insurance) • Lower equity accounted profits, and • Reduced CommSec equities trading income, partly offset by • Volume growth2 +7.9% • Higher
Slide 27: Group margin
Group margin Continued competitive pressure FY24 considerations • Intensity of home loan and deposit price competition • Rate of customer deposit switching • Higher wholesale funding costs • Outlook for cash rate, replicating portfolio & equity hedge Benefit of rising rates more than offset by: Cont
Slide 28: Operating expenses
Operating expenses1 Inflation, volume & technology investment driving cost growth – other uplifts more than offset by productivity Cost to Income1 45.7% 42.8% Contribution to mvt: +4.1% +1.0% +0.9% +1.4% (1.9%) (204) 154 +5.5% 105 101 451 11,646 • Increased technology spend on cyber security, frauds
Slide 29: Credit risk
Credit risk Impairment expense normalising – increase in arrears and TIA off low base Loan impairment expense Arrears2 Troublesome and impaired assets Loan loss rate, bpts1 90+ days $bn Personal loans Credit cards Home loans3 TIA % of TCE (bpts) FY21 FY22 FY23 Historic avg: 0.91% Consumer 4 (7) 11 0
Slide 30: Provisioning
Provisioning1 Increased provisions for impact of higher rates – now 1.64% of Credit RWA Total credit provisions Provisions and scenarios $bn Jun 23 TP/CRWA: 1.29% 1.38% 1.64%2 7.9 Jun 23 $5.95bn $5.95bn 5.54 4.80 2.92 2.75 Corporate 3.8 6.9 Dec 22 5.5 Pre 2.79 3.03 Consumer 3.5 COVID-19 $bn $bn Jun
Slide 31: Provisioning through the cycle
Provisioning through the cycle Forward-looking approach – builds higher provisions in advance of credit deterioration • AASB 9 requires a forward-looking approach to loan loss Economic cycle provisioning. GDP • This is achieved through the use of forward looking adjustments (FLAs) and multiple econo
Slide 32: Funding
Funding Conservative approach to funding, providing flexibility as financial conditions tighten and TFF matures Deposit funding Long-term funding1 Short-term funding3 LCR & NSFR % of total funding % of total funding % of total funding Liquid assets NSFR 55% 74% 75% 19% 18% 18% 26% 8% 7% $191bn $189b
Slide 33: Capital
Capital Strong capital position maintained Movements in bpts Level 1 Level 1 12.5% ~12.3% 42 (26) +12.2% (6) ~(20) ~12.0% 12.1% ~$9bn ~$8bn surplus surplus 11.4% Cash NPAT 104 10.25% RWA 14 APRA minimum2 1H23 Dividend (DRP neutralised) (76) Dec 22 1 Jan 23 Organic On-market Other Jun 23 $1bn Jun 23
Slide 34: Dividends
Dividends Long-term sustainable returns Sustainable returns • Final dividend of $2.40, 14% increase on 2H22 dividend, Dividend per share (cents) driven by strong earnings and reduction in share count from buy-backs 450 • DRP with no discount and expected to be fully neutralised 385 350 • Full year p
Slide 35: Strengthened settings, supporting sustainable returns
Strengthened settings, supporting sustainable returns Resilient under a broad range of scenarios Strengthened settings Supporting sustainable returns Net interest earnings Strong organic capital Healthy franking Loan loss Improving ROE supported by generation funding account surplus – provisions wel
Slide 36: Economic outlook
Economic outlook Downside risks remain, Australia well positioned • Solid fundamentals for the Australian economy − Low unemployment, low underemployment, high participation rates − Strong exports and non-mining investment − Immigration providing a structural tailwind • Inflation and economy moderat
Slide 37: Summary
Summary Customer focus, strength and stability, consistent execution Customers People Net Promoter Score1 Engagement2 Net Promoter Scores1 Rank 79% • Supporting customers today and investing for the future Consumer #1 Business #1 Pride in CBA 67% 89% Consumer digital #1 • Strength and stability – cr
Slide 38: Overview & Strategy
Overview & Strategy
Slide 39: Why CBA?
Why CBA? Leading franchise – leading returns Consumer MFI share1 (%) Home lending share2 (%) Household deposits share3 (%) Business MFI share1 (%) Deposit funding Peers as at March 20234 75% 70% 65% 65% 34.6% 25% CBA Peer 3Peer 1Peer 2 25.4% 27% 19.9% 20% 16.4% 21% 17.0% 16.8% 12.1% 11.8% 14% 13% 14
Slide 40: Delivering
Delivering Balanced outcomes – delivering for all stakeholders Customer People Community Shareholders Net Promoter Score1 People engagement2 Reputation score3 Total Shareholder Return4 Rank Period % Rank 79% 66.3 Consumer #1 10yr 142% #1 Consumer digital #1 5yr 72% #1 67% Business #1 3yr 61% #2 53.0
Slide 41: How we contribute to Australia
How we contribute to Australia1 Supporting our customers, the community and the economy Customers & domestic investors2,3 41% Our people • Leading retail bank with > 25% share of market4 • Over 53,000 people employed • Includes ~$10bn in interest paid to Australian savers • ~90% employed in Australi
Slide 42: Our strategy
Our strategy Building tomorrow’s bank today for our customers Our purpose Building a brighter future for all Our priorities Leadership in Australia’s Reimagined products Global best digital Simpler, better foundations recovery and transition and services experiences and technology Extend retail and
Slide 43: Reimagining banking
Reimagining banking Franchise strength supporting our customers across the lifecycle CBA MFI share1 New transaction accounts – migrants2 45.5% 44.2% CBA MFI share 41.7% Dec 22 CBA MFI share1 Dec 19 Jun 20 Jun 21 Jun 22 Jun 23 Sep 20 Dec 20 Sep 21 Dec 21 Sep 22 Dec 22 Mar 20 Mar 21 Mar 22 Mar 23 1H20
Slide 44: Engaged customers
Engaged customers Strong customer engagement creating deeper relationships as the key driver of growth MFI share1 Transaction accounts Lending Retail Retail2 Home loan balances3 Jun 23 16.4% 12.1% 11.8% 34.6% Retail transaction accounts +8% vs Jun 22 Home loans attached to transaction accounts >97%
Slide 45: Reimagining banking – example initiatives
Reimagining banking Reinforcing our core proposition – example initiatives1 CommSec CommSec Pocket 2 CommBank AdvancePay Invest StepPay and CommBank Neo Home Everyday Benefits finder Bill Sense CommBank app Green loans CommBank Yello2 Carbon Connecting business & Business retail customers CommBank R
Slide 46: Reimagining banking – home buying and ownership
Reimagining banking Home buying and ownership • 16% of pre-approved customers1 • Property settlement leader • Simple, fast, digital home loans • 98% take up a CBA home loan2 • 23.9% ownership • Purchaser experience coming in FY24 > $4 billion 95% > $4 billion homes settled3 of CBA settlements in tot
Slide 47: Reimagining banking – payments
Reimagining banking Payments PayTo • Now covers 75% of servable market1 • Smart, real-time payment agreements • Flexible payments solution that reduces arrears • 15 new app integrations live (incl. Uber Eats) • Transparency and control for payers • 11 customers (government and enterprise) 4.3 millio
Slide 48: Reimagining banking – rewarding our customers
Reimagining banking Rewarding our customers CommBank Rewards CommBank Yello • +10% in merchant spend1 • Uplift in children's financial capability3 • Personalised offers, rewards and recognition • 82% reward redemptions2 • NPS4 of 36 (kids) and 33 (parents) • Scaling nationally from 1Q24 9.4 million
Slide 49: Building on a history of innovation
Global best digital experiences Building on a history of innovation Strong foundations Establishing leadership Reimagining banking Launch of Market first Partnering CommBank x15ventures offerings with industry app 5.0 ↑ leaders Building a First major bank Making pipeline of new to offer: Providing m
Slide 50: CommBank app 5.0
Global best digital experiences CommBank app 5.0 – a simpler, more personal app experience with seamless business integration Business profile switching Enhanced search Separate business and personal accounts App-wide search for features, products, transactions and toggle seamlessly between profiles
Slide 51: Focus on security and innovation
Global best digital experiences Focus on security and innovation Group priority Tech focus Recent developments/highlights Build world- • Investing in local technology talent (+82% in technology graduates in FY23) class Deliver faster • Nurturing innovation and collaboration through Tech Hubs, partne
Slide 52: Reimagining data and analytics
Global best digital experiences Reimagining data and analytics Responsible AI Partnering & collaboration • Partnered with Australian Government to develop Fairness & Best • Access to world-leading talent through strategic Australian AI Ethics Principles transparency practice partnerships with H2O.ai
Slide 53: Faster digital processing
Global best digital experiences Faster digital processing Property transactions New credit card Digital documents Proprietary applications settled digitally accounts via digital1 and signing2 auto-decisioned Consumer 95% 88% 83% 66% Loan documents Small business Deposit accounts Straight through dig
Slide 54: Home loan experience
Home loan experience1 Enhancing the customer experience with efficient, scalable and digitised processes Applications auto-decisioned (proprietary) • Insights and recommendations – enhanced guidance to help customers ~66% • Application experience – simplified/pre-populated inputs, helping customers/
Slide 55: Our commitment to sustainability
Our commitment to sustainability Building a brighter future for all Climate Engaging Supporting Strengthening Conducting strategy our people our customers our communities business responsibly • Set financed emissions targets • 79% employee engagement, • Launched CommBank Safe Hub • Launched our FY23
Slide 56: Financial Overview
Financial Overview
Slide 57: Overview – FY23 result: key outcomes summary
Overview – FY23 result1 Key outcomes summary Financial Balance sheet, capital & funding Statutory NPAT ($m) 10,188 +5.3% Capital – CET12,6 (Int’l) 19.1% +50bpts Cash NPAT ($m) 10,164 +5.9% Capital – CET12 (APRA) 12.2% +70bpts ROE % (cash) 14.0% +130bpts 1,253 +3.1% Total assets ($bn) EPS cents (cash
Slide 58: Overview – FY23 result: key financial outcomes
Overview – FY23 result Key financial outcomes Cash NPAT1 ($m) NIM1 (%) Cost-to-income1,2 Cash ROE1 +6% +17bpts (290bpts) +130bpts 45.7% 14.0% 9,595 10,164 2.07 42.8% 12.7% 1.90 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 Cash EPS1 (cents) DPS (cents) CET1 (APRA)3 CET1 (International)4 +45c +65c +70bpts
Slide 59: Cash NPAT by division
Cash NPAT By division1 RBS2 BB IB&M NZ (NZD)3 vs FY22 vs FY22 vs FY22 vs FY22 • Income +15% • Income +25% • Income +4% • Income +12% • Costs +6% • Costs flat • Costs +6% • Costs +13% • Impairment expense +$989m • Impairment expense +$381m • Impairment expense +$75m • Impairment expense +$23m +5% +32
Slide 60: Balance sheet
Balance sheet Continued growth in key markets Jun 23 vs Jun 23 vs $bn Jun 22 Dec 22 Jun 23 Dec 22 Jun 22 Group lending +5.4% Home loans 622.0 639.3 652.2 2.0% 4.9% Consumer finance 16.5 17.0 17.0 - 3.0% +2.2% Business loans1 148.9 156.5 165.4 5.7% 11.1% 910.5 930.8 Institutional loans 95.5 97.7 96.2
Slide 61: Volume growth
Volume growth Targeted growth across products Home lending1,2,3 Business lending1,2,4 Household deposits1,5 Business deposits1,6 CBA CBA (excl. IB&M) CBA CBA CBA excl. Unloan and BW CBA (incl. IB&M) System System System System (incl. Institutional lending) 2.5% 5.0% 4.9% 11.4% 7.5% 0.7% 3.7% 8.5% 8.
Slide 62: Market share
Market share1 Strong market shares Home lending2,5 Household deposits4,5 % Jun 22 Dec 22 Jun 23 40% CBA Peers 40% CBA Peers Break in series Home loans – RBA2 25.1 25.1 25.1 Break in series from Jun 21 Break in series from Jun 21 30% Break in series from Jul 19 30% from Mar 19 Home loans – APRA 4 25.
Slide 63: Group margin – 12 months
Group margin – 12 months Benefits from rising rates partly offset by ongoing competitive pressures FY24 considerations • Intensity of home loan and deposit price competition • Rate of customer deposit switching • Higher wholesale funding costs • Outlook for cash rate, replicating portfolio & equity
Slide 64: Deposit switching
Deposit switching Reduction in rate of switching in 4Q23 Domestic retail deposits1,2 Domestic business deposits1,2,3 ($bn) ($bn) Non-interest bearing mvt %4 Non-interest bearing mvt %4 1Q23 2Q23 3Q23 4Q23 1Q23 2Q23 3Q23 4Q23 (1.3%) (5.3%) (7.5%) (4.1%) (4.1%) (3.5%) (8.5%) 1.0% 189 251 256 257 185 2
Slide 65: Deposit composition
Deposit composition Increasing term deposit mix Domestic retail deposits1,2 Domestic business deposits1,2,3 ($bn) ($bn) $416bn $326bn $391bn $312bn $356bn 14% 16% $330bn $331bn 17% $267bn 20% 15% $233bn 10% 12% 18% $197bn 12% 62% 11% 57% 54% 57% 61% 62% 60% 67% 66% 62% 36% 31% 24% 27% 24% 21% 27% 21
Slide 66: Group margin – hedge earnings
Group margin Increased hedge earnings from higher rates Replicated portfolio (RP) & equity hedge Liquidity & basis risk • In FY23, RP and equity hedge earnings benefitted from higher rates Liquidity • Earnings outlook continues to improve with higher exit tractor rates • Every additional $10bn of li
Slide 67: Margins by division
Margins by division1 Benefits from rising rates partly offset by ongoing competitive pressures RBS2 BB IB&M (ex Markets)3 NZ (ASB)4 Lower margins due to increased Lower margins reflecting lower lending Higher earnings on deposits and Lower margins due to competition, competition and unfavourable mix
Slide 68: Other operating income
Other operating income1 Impacted by divestments and lower equity accounted profits, partly offset by higher trading income Other operating income Trading income FY23 vs FY22 FY23 vs FY22 • Loss of revenue from divestments 1,095 (incl. Bank of Hangzhou and 4,700 General Insurance) • Lower equity acco
Slide 69: Sequential half operating income
Sequential half operating income Higher other operating income and volume growth offset by margin pressures and three fewer days • 3 fewer days ($190m) • Higher equity accounted profits • Margin compression (5bpts) • Favourable Markets trading income, partly offset by • Volume growth1 +2.3% • Reduce
Slide 70: Sequential half operating expenses
Sequential half operating expenses1 Volume and FTE related growth driving cost uplifts Cost to income1: 42.5% 43.0% Contribution to mvt: +1.4% +1.6% (1.3%) +1.7% 92 (76) 84 5,773 5,873 Cumulative cost savings realised • Enhancements and insourcing of engineering and (last 5 years): technology capabi
Slide 71: Customer remediation
Customer remediation Additional remediation provision – committed to making things right for customers Remediation & program costs Customer refunds Cumulative spend and provisions ($m)1 Cumulative customer refunds ($m)1 • $2,276m returned to customers • $276m remaining 2,552 3,974 3,535 3,210 Wealth
Slide 72: Cost approach
Cost approach Ongoing productivity savings creating capacity for long-term investment Cost reduction Investment spend Cumulative savings Cost approach Shift to productivity & growth Capitalised software ($bn) 2.1 2.2 1.9 1.9 1.8 1.7 1.3 1.4 1.4 • Simpler, more efficient FY15 FY16 FY17 FY18 FY19 FY20
Slide 73: Loan losses
Loan losses Normalising loan impairment expense for FY23 Loan loss rate1 Loan loss rate by business unit1,2 bpts bpts 13 11 Consumer Corporate 13 17 FY22 FY23 11 12 41 1H23 2H23 22 33 25 76 12 21 20 19 50 12 43 16 16 15 15 16 12 24 7 6 6 23 13 11 20 8 10 14 4 26 26 4 15 17 19 17 18 18 18 18 18 17 16
Slide 74: Provisions
Provisions1 Provision coverage of 1.64% Provision coverage2/CRWA Provisions by stage % Credit Credit Stage 2 exposures Total exposures provisions by credit grade3 provision 1.64 1.52 $m Jun 22 Jun 23 Jun 22 Jun 23 $188bn coverage 1.45 8 Weak 1.29 Stage 1 914,883 921,565 1,313 1,709 $142bn Collective
Slide 75: Retail Banking Services (RBS)
Retail Banking Services (RBS)1 Operational execution – targeted volume growth – higher Cash NPAT Net Promoter Score2 MFI share2 Volume growth3 Jun 23 12 months to Jun 23 #1 System CBA 34.4% 34.6% 7.5% 34.6% Jun 22 Jun 23 4.9% 5.0% 5.2% 3.9 16.4% 12.1% 11.8% 1.2 (1.1) Household (2.6) CBA Peer 3 Peer
Slide 76: Business Banking (BB)
Business Banking (BB)1 Investment and continued franchise build, leveraging digital assets for strong volume growth Performance Gap to Business lending Transaction account growth nearest Spot balances ($bn) ~100k increase in total accounts in FY23, 36% via digital7 Jun 23 Rank Actual peer Business N
Slide 77: IB&M
IB&M1 Combining global connectivity and capability – supporting clients in a challenging macro environment Net Promoter Score2 IB&M lending Credit RWAs (Turnover $300m+ pa) Growth in strategic sectors and pooled facilities, Decrease in Jun 23 over the prior half driven by the Peers CBA partly offset
Slide 78: ASB
ASB1 Volume growth and higher Cash NPAT Consumer Net Promoter Score2 Business Net Promoter Score3 Volume growth4 12 months to Jun 23 Peers ASB Peers ASB System ASB 10 35 0 #1 5.3% 25 -10 #3 3.3% -20 2.5% 2.7% 15 -30 Break in series 5 -40 from 1Q23 Jun-22 Jun 22 Jun-23 Jun 23 Jun 22 Jun 23 Business l
Slide 79: Home & Consumer Lending
Home & Consumer Lending
Slide 80: Home loans – CBA
Home loans – CBA1 A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 22 Dec 22 Jun 23 New business1 Jun 22 Dec 22 Jun 23 10 Total balances – spot ($bn) 556 570 584 Total funding ($bn) 76 77 72 2,9 Total balances – average ($bn)2 546 562 577 Average funding size ($’000) 394 4
Slide 81: Home loans – CBA ex BWA
Home loans – CBA ex BWA1 A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 22 Dec 22 Jun 23 New business1 Jun 22 Dec 22 Jun 23 9 Total balances – spot ($bn) 472 483 494 Total funding ($bn) 65 65 60 2 2,8 Total balances – average ($bn) 465 477 489 Average funding size ($’000
Slide 82: Home loans – growth
Home loans – growth Strong market share position maintained in a challenging context Consistent market share performance1 Net growth driven by new fundings2 New fundings3 149 94 $bn 65 76 76 77 72 CBA CBA Peer 1 Peer 2 Peer 3 1H21 2H21 1H22 2H22 1H23 1H23 Group (ex Bankwest) 149 Internal Refinance 1
Slide 83: Home loans – mix
Home loans – mix1 Rising interest rates have driven a shift from fixed to variable loans – fixed rate expiries set to peak in 1H24 Fixed vs variable rate stock and flow2 Fixed rate expiry schedule Variable Previously expired • ~90% retention rate Fixed • 30+ arrears: segment 0.92% vs portfolio 0.92%
Slide 84: Home loans – resilience
Home loans – resilience Strong repayment and savings buffers in place Repayment buffers – 33% more than 2 years in advance1 Offset account balances ($bn) (Payments in advance 2, % of accounts) Linked to Principal and Interest Linked to Interest Only Jun 22: 34% 6% 6% 6% 11% 15% 22% 70 69 66 64 57 57
Slide 85: Home loans – resilience
Home loans – resilience1 87% of the book originated under tightened standards since FY16 Key serviceability changes by year2 New loan assessment (from FY16)3 • Increased serviceability buffer & buffers on existing debts • All income used in application to assess serviceability is verified • Removed
Slide 86: Home loans – resilience
Home loans – resilience1,2 Median minimum repayments represent 21% of pre-tax income Average minimum monthly repayment3 $494bn $1,775 $1,825 $1,850 $1,900 $1,225 Current cash rate 68% Variable rate loans 0.10% 4.10% 4.35% 4.60% 4.85% Cash rate Median monthly repayment as % of pre-tax income3 22% 23%
Slide 87: Home loans – resilience
Home loans – resilience1 Savings and repayment buffers lessen potential negative cash flow outcomes Proportion of variable rate owner occupier loans originated in the past 5 years estimated with negative cash flow at different cash rates Negative cash flow profile at 4.10% cash rate 6.0% 0.9% 5.1% 4
Slide 88: Home loans – resilience
Home loans – resilience1,2 Targeted support for those customers in the highest risk segment (~0.3% of book) Portfolio Risk profile $494bn $24.3bn4 5% $1.6bn (0.3%)5 DLVR > 90%, no LMI Exposures with the capacity to deleverage 6% $2.7bn (0.5%)5 DLVR 80-90%, no LMI or reduce expenditure3 Higher risk $
Slide 89: Home loans – resilience
Home loans – resilience1 Portfolio DLVR remains strong at 45% Negative equity2 Dynamic LVR bands3 Proportion of balances in negative equity % of total portfolio balances Average dynamic LVR4: • 56% of customers ahead of repayments 70% Jun 22 44% Jun 22 • 24% of home loans in negative equity have Len
Slide 90: Home loans – resilience
Home loans – resilience1 Portfolio continues to demonstrate resilience Customers in advance2 Average payments in advance2,3 Dynamic LVR4 % of customers # of payments Portfolio averages 80% 37 36 36 53% 78% 78% 78% 49% 44% 45% 29 Jun 20 Jun 21 Jun 22 Jun 23 Jun 20 Jun 21 Jun 22 Jun 23 Jun 20 Jun 21 J
Slide 91: Home loans – capacity
Home loans – capacity1 Higher serviceability buffers and interest rates are impacting borrowing capacity Borrowing capacity reducing2 Driven by increase in serviceability buffer and interest rates Change in maximum borrowing capacity2 – Indexed Dec 16 (Loans assessed based on the higher of the custo
Slide 92: Home loans – resilience
Home loans – resilience1 Impaired loans and portfolio losses remain low Impaired home loans2 Impaired home loans – by State3 Increased impaired home loans mainly driven by ASB impairments (+$245m) due to Other increased hardship support mainly driven by the rising rate environment and 10% NSW cyclon
Slide 93: Home loans – resilience
Home loans – resilience Arrears remain low Arrears by portfolio Bankwest Arrears by product Arrears by repayment and interest type Interest Only Group 90+ days 90+ days1 90+ days1 CBA Principal & Interest Group 0.8% 1.0% Fixed 0.8% ASB Variable 0.8% Portfolio 0.6% 0.6% 0.6% 0.4% 0.4% 0.4% Owner Occu
Slide 94: Consumer arrears
Consumer arrears Uptick from historical lows, influenced by young and low income borrowers susceptible to rising cost of living Arrears balance Credit cards Personal loans Group 90+ days Group 90+ days 0.52% 0.46% 0.55% 1.02% 0.95% 1.19% 9,191 9,648 9,560 4,810 4,987 5,279 48 44 52 49 48 63 $m $m Ar
Slide 95: Consumer arrears
Consumer arrears1 Uptick from historical lows ASB 6.0% Credit cards Personal loans CBA 5.0% Group 30+ days Group 30+ days Group 5.0% 4.0% Bankwest 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Credit cards Personal loans Group 90+
Slide 96: Business & Corporate Lending
Business & Corporate Lending
Slide 97: Portfolio quality
Portfolio quality1 Sound portfolio quality metrics Exposures by industry1 Corporate portfolio quality Group TCE by geography Investment grade AAA A+ BBB+ TCE $bn to to to Jun 22 Dec 22 Jun 23 AA- A- BBB- Other Jun 23 71.0% 69.7% 69.3% Australia 82.1% 81.9% 82.2% Gov. admin & defence 212.9 17.2 0.7 0
Slide 98: Total committed exposure
Total committed exposure Close monitoring of key sectors Provisions to total Group TCE ($bn) TIA ($bn) TIA % of TCE committed exposure % Dec 22 Jun 23 Dec 22 Jun 23 Dec 22 Jun 23 Dec 22 Jun 23 Consumer 765.6 776.8 1.9 2.0 0.2% 0.3% 0.4% 0.4% Government administration & defence 233.6 231.3 0.0 0.0 0.
Slide 99: Commercial property
Commercial property Portfolio weighted to NSW – impaired exposures low (0.03% of the portfolio) • Exposure growth has continued to moderate consistent with broader market conditions which are evidencing low commercial property sales volumes, and low levels of Group exposure Jun 22 development approv
Slide 100: Entertainment, leisure & tourism
Entertainment, leisure & tourism Improving trends evident but uncertainty remains Group exposure Jun 22 16.1 • Diverse industry with many sub-sectors with distinct challenges. 14.8 Dec 22 14.0 Jun 23 • Growth has been predominately in the accommodation and hospitality sectors, supported by well secu
Slide 101: Retail trade
Retail trade Household spending remains high despite cost of living pressures Group exposure Jun 22 Dec 22 • Household spending growth has moderated from high levels as 15.4 Jun 23 interest rate rises temper demand in discretionary segments. 13.6 14.7 32.0 29.2 29.6 • Discretionary retail segments a
Slide 102: Construction
Construction Sector remains challenged Jun 22 Group exposure Dec 22 • Building construction performance was challenged as low margin and Jun 23 in many cases non-profitable fixed-price contracts are digested. 11.2 11.8 11.8 • Labour shortages, raw material delays, weather events, rising costs 7.1 5.
Slide 103: Mining, oil & gas
Mining, oil & gas Managing sub-sector exposures in line with strategy, stable portfolio performance Group exposure Jun 22 67.3 68.0 66.3 Dec 22 7.8 7.5 7.4 Jun 23 • Exposures of $7.4bn (0.5% of Group TCE); overall exposure remained largely unchanged with further reductions in oil & gas facilities. 0
Slide 104: Funding, Liquidity & Capital
Funding, Liquidity & Capital
Slide 105: Funding overview
Funding overview Resilient balance sheet with significant excess liquidity Funding composition Wholesale funding Funding profile Deposit growth supporting 75% of funding Weighted to long term TFF refinance to be managed across FY24 – FY25 period % of total funding Maturity3 FY23 Short-term 8% 8% 7%
Slide 106: Deposit funding
Deposit funding Highest share of stable customer deposits in Australia Customer deposits vs peers1 Customer deposits by segment4 ($bn) ($bn) % of 778 800 819 total 68% 75% 65% 70% 65% 78 funding ASB & Other 73 77 9% CAGR 819 IB&M 151 153 162 20% 3% 185 649 628 570 30% 575 BB 222 227 228 28% Other de
Slide 107: Liquidity
Liquidity Disciplined approach to liquidity risk management Liquidity Coverage Ratio (LCR)1 Liquid assets1 Retail and SME deposits Jun 2023 (Qtr avg) Jun 2023 (Qtr avg) ($bn) Cash Deposits in NSFR2 ($bn) Govt, semi As at June 2023 CBA 135% 271 & other 350 Peers as at March 20231 Peer 3 202 112 186 1
Slide 108: Wholesale funding
Wholesale funding Wholesale funding is diversified across differing products, currencies and tenor Portfolio mix Short-term funding by product $bn Certificates of deposits 62% Long-term funding1 147 55% Commercial paper 12% Short-term funding2 71 26% Central Bank deposits 18% MTN 5% Term Funding Fac
Slide 109: Funding and liquidity metrics
Funding and liquidity metrics1 Conservative funding and liquidity metrics maintained NSFR NSFR (%)4 124% June 2023 861 3.5 (0.2) (3.2) 0.9 (6.0) 693 Retail/SME Residential Deposits 130 (1.0) Mortgages ≤ 80% LVR2 124 Wholesale funding Other loans & other $bn Liquids & other assets3 Capital Required S
Slide 110: Capital overview
Capital overview Strong capital position maintained CET1 CET1 Dividend per share (cents) APRA CET1 Level 2 International +532% Payout Ratio (cash NPAT basis)1 Level 1 200% Assets 431 431 450 12.5% 19.1% +185% 298 350 385 150% 12.2% 88% 80% 71% 71% 68% 74% 100% Jun 23 Jun 23 Jun 23 2007 2023 50% FY18
Slide 111: CET1 – International
CET1 – International APRA’s revised capital framework remains more conservative than Basel framework CET1 International Adjustments1 Level 2 1.8% Definition Risk weighting equity investments, deferred tax assets, capitalised expenses which are fully deducted from CET1 of Capital under APRA rules 19.
Slide 112: Capital management
Capital management Disciplined and balanced approach that optimises growth, reinvestment, shareholder returns and flexibility Capital generation Capital flexibility Reinvested in the Group Distributed to shareholders Retained Franchise growth Investment1 Dividends Capital return Surplus retained Cre
Slide 113: Capital – summary
Capital – summary Strong capital position maintained in 2H23 Key capital ratios (%) Jun 221 Dec 221 Jun 232 • CET1 ratio of 12.2% CET1 capital ratio 11.5 11.4 12.2 • 2023 interim and final dividends – DRP neutralised Additional tier 1 capital 2.1 1.9 2.3 • Completion of the previously announced $3bn
Slide 114: Capital – RWA drivers
Capital – RWA drivers Lower RWA this half driven by lower Credit and IRRBB RWA, partly offset by Market RWA growth CET1 (Level 2) Total Risk Weighted Assets (RWA) bpts $bn 504 (39.1) 12.1% 104 14 (26) (6) Market Risk 14 1.6 (1.3) 2.4 468 (76) IRRBB 48 12.2% 15 11.4% 47 Credit Risk3 15 Op Risk 41 IRR
Slide 115: Capital – share count
Capital – share count Lower share count supports higher shareholder returns and dividends compared to peers Number of shares (m)1 Dividend per share ($) CBA Peers CBA Peers 4.50 Capital raisings for 3,509 strengthening during 3,139 GFC 3,003 1.30 1.51 1,776 1.46 1,516 1,676 1.23 1.25 1,506 0.64 1,26
Slide 116: Capital – divestments/buy-backs
Capital – divestments/buy-backs Announced divestment program – $9bn returned to shareholders to date Divestments CET1 Associated ~$11bn Completed buy-back $10bn General Insurance Sep 22 On-market Bank of Hangzhou (HZB)1 Jun 22 $1bn (announced) Colonial First State (CFS)1 Dec 21 Aussie Home Loans (AH
Slide 117: CET1 – Level 1 vs Level 2
CET1 – Level 1 vs Level 2 CET1 Level 1 of 12.5%, 30bpts above Level 2 Commonwealth Bank of Level 1 12.5% Australia RWA of Level 2 banking subsidiaries (170) Offshore Branches and Extended Licensed Entities Higher reserves and retained earnings at Level 2 100 Level 1 Elimination of investments in reg
Slide 118: CET1 – Level 1
CET1 – Level 1 CET1 Level 1 of 12.5%, 30bpts above Level 2 Level 1 vs Level 2 CBA vs Peers CET1 (Level 1) 30 bpts 20 bpts bpts (20 bpts) (30 bpts) L1 vs L2: CBA Peer 3 Peer 2 Peer 1 +30bpts Jun 23 Mar 23 Mar 23 Mar 23 24 (28) (83) 105 (18) 12.5% 12.5% 12.2% 10.25% 11.7% 1.00% CCyB4 1.00% D-SIB Capit
Slide 119: Leverage ratio
Leverage ratio Well in excess of regulatory minimum Movements in Leverage ratio1 +110bpts Includes deleveraging of capital Higher capital requirements intense institutional lending for Home Loans 5.1% -0.4% 0.5% -0.6% 0.6% • 110bpts higher after taking into consideration of 5.0% changes in business
Slide 120: Capital – regulatory changes
Capital – regulatory changes Basel III reforms in Australia finalised and a number of regulatory changes in progress Change Implementation Details • Higher regulatory capital buffers, with the CCyB default level set at 100 basis points for all ADIs and the CCB increasing by an additional 125 basis p
Slide 121: Capital – total capital
Capital – total capital Well placed to meet future APRA requirements for loss-absorbing capacity (LAC) • Total capital at Jun 2023 of 20.0%, $8.4bn above 1 Jan 2026 minimum of 18.25%. • Tier 2 at Jun 2023 of 5.5% exceeds Jan 2024 requirement of 5.0%. @ 5% by @ 6.5% by $bn 20.0% 1 Jan 2024 1 Jan 2026
Slide 122: Regulatory expected loss
Regulatory expected loss1 For non-defaulted exposures, eligible provisions in excess of regulated expected losses added back to Tier 2 capital $m Jun 22 Dec 22 Jun 23 Non- Non- Non- Defaulted defaulted Defaulted defaulted defaulted defaulted Regulatory expected loss (EL) 1,560 2,886 1,361 3,122 1,25
Slide 123: Economic Overview
Economic Overview
Slide 124: Key Australian economic indicators (June FY)
Key Australian economic indicators1 (June FY) GDP % Headline CPI % Unemployment rate % Financial year average Year on year, June quarter June quarter average GDP Nominal 11.0 9.9 6.9 6.1 6.0 GDP 5.1 4.6 3.7 3.1 5.2 3.8 3.8 3.6 3.1 2.2 1.0 2.8 1.7 -0.1 2020 2021 2022 2023 2024 2020 2021 2022 2023 202
Slide 125: Key Australian economic indicators (December CY)
Key Australian economic indicators1 (December CY) GDP % Headline CPI % Unemployment rate % Calendar year average Year on year, December quarter December quarter average GDP Nominal GDP 7.8 6.8 11.0 11.9 4.7 4.2 4.5 3.5 3.8 3.5 5.2 6.0 3.0 3.7 1.8 0.9 1.4 1.4 -1.1 2020 2021 2022 2023 2024 2020 2021 2
Slide 126: The global economy
The global economy Economic growth to slow Inflation remains too high1 Official interest rates closer to the peak1 World economic growth to slow2 Core inflation (annual change) Official Interest Rates World Economic Growth Estimates (annual change) 10 Australia % % 8 UK NZ International Monetary Fun
Slide 127: The Australian economy
The Australian economy Cost of living challenges Inflation off the peak, but still too high1 Goods prices lower, services prices sticky2 Not helped by weak productivity growth2 Inflation (annual % change) Inflation (annual % change) Labour productivity (GDP per hour worked) 9 % Index Quarterly CPI 1
Slide 128: The Australian economy
The Australian economy Economy has been resilient Labour market remains tight1 Participation rate high, more people want to work1 Wages rising as well2 Labour market Participation rate Wages (annual % change) 600 8 % % 4 400 7 68 200 6 67 3 Wage Price Index 5 66 0 65 4 2 -200 64 3 Participation rate
Slide 129: The Australian economy
The Australian economy Material lift in interest rates, economy to slow from here The cash rate hiking cycle has been large1 Consumer sentiment is weak2 Consumer spend patterns shifting3 RBA cash rate (with CBA Economist forecasts) Consumer sentiment Household spending per capita (index = 100, Q1 19
Slide 130: The Australian economy
The Australian economy Interest rate impact to continue due to lags Labour demand weakening1 Unemployment to rise from here%2 GDP growth to slow – recession risks lift3 Labour demand Unemployment rate (with CBA forecast) % GDP (quarterly and annual change with forecast) % Index 8 15 250 Applicants p
Slide 131: Housing sector
Housing sector Home prices rising due to supply and demand imbalance Monthly home prices rising since March1 Driven by low stock on the market1 Home lending lower, but stabilising2 Dwelling prices (8 capital cities) CoreLogic total listings (rolling 4 weeks, combined capitals) Housing loan approvals
Slide 132: Key New Zealand economic indicators (June FY)
Key New Zealand economic indicators (June FY) GDP % CPI % Unemployment rate % Financial year average Year on year, June quarter June quarter average GDP Nominal GDP 7.3 8.2 6.0 8.1 4.8 6.0 5.9 5.6 4.0 4.1 4.0 4.9 4.0 3.6 3.2 3.3 3.0 3.3 1.2 2.3 0.1 1.7 1.5 -0.7 2019 2020 2021 2022 2023 2024 2019 202
Slide 133: New Zealand
New Zealand Global headwinds, high inflation and ongoing rate hikes are testing the NZ economy’s resilience USD Dairy prices have eased on softer demand Growth is softening as interest rates impact Worker shortages have kept the labour market tight Global dairy trade auction results1 (USD/tonne) NZ
Slide 134: Sources, Glossary & Notes
Sources, Glossary & Notes
Slide 135: Sources and notes
Sources and notes Slide 6 1. Includes consumer finance, business and corporate lending and other activities with other Financial institutions and Government agencies. 2. Includes loan capital. 3. Includes underlying costs incurred and payments made to our employees, suppliers and partners, excluding
Slide 136: Sources and notes
Sources and notes Slide 15 1. Home lending source: RBA Lending and Credit Aggregates. Business lending source: Business including select financial businesses. From April 2023 RBA Lending and Credit Aggregates excludes lending to warehouse trusts. Historical RBA data has been restated to reflect this
Slide 137: Sources and notes
Sources and notes Slide 30 1. The Group uses four alternative macro-economic scenarios to reflect a range of possible future outcomes in estimating the ECL for significant portfolios, scenarios are updated based on changes in both the macroeconomic and geopolitical environment. 2. Revised APRA capit
Slide 138: Sources and notes
Sources and notes Slide 40 1. Refer to the glossary for source information. 2. Represents results from employees who undertook the ‘CBA Your Voice’ engagement survey. 3. CBA and Major Bank Peer reputation scores. Source: RepTrak, The RepTrak Company. Data is reported on a quarterly basis. 4. Source:
Slide 139: Sources and notes
Sources and notes Slide 61 1. Percentage growth calculations are based on actual numbers prior to rounding to the nearest billion on a non-annualised basis. Balance growth calculated using rounded numbers. 2. Source: RBA Lending and Credit Aggregates. 3. Peer home lending source: APRA Monthly Author
Slide 140: Sources and notes
Sources and notes Slide 76 1. Comparative information has been restated to conform to presentation in the current period. 2. Refer to the glossary for source information. 3. Non-Financial Business Lending Source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS). 4. Represents in
Slide 141: Sources and notes
Sources and notes Slide 89 1. CBA including Bankwest. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loan, Residential Mortgage Group, and Unloan. 2. Negative equity arises when the outstanding loan (less offsets) exceeds house value. Based on outstanding balances, taking into acc
Slide 142: Sources and notes
Sources and notes Slide 105 1. Includes other short-term liabilities. 2. Represents the Weighted Average Maturity of outstanding long-term wholesale debt with a residual maturity greater than 12 months as at reporting date. WAM and long-term % includes TFF and RBNZ term lending facilities drawdowns.
Slide 143: Sources and notes
Sources and notes Slide 114 1. Under APRA’s capital framework effective up until 31 December 2022. 2. Represents the pro-forma CET1 (Level 2) ratio under APRA’s revised capital framework effective 1 January 2023. 3. Excludes impact of foreign exchange movements on credit RWA, which is included in ‘O
Slide 144: Glossary
Glossary Cash Profit The Profit Announcement (PA) discloses the net profit after tax on both a statutory and cash basis. The statutory basis is MFI Share – RFI-DBM Atlas Business MFI Share. Data on a 6 month roll weighted to the Australian business population. MFI Customer prepared in accordance wit
Slide 145: Our reporting suite
Our reporting suite We are committed to transparent reporting and align with global best practice and stakeholder feedback Global principles and policies We are signatories or members of programs We provide transparent reporting on our that align with our values and sustainability progress in line w
Slide 146: Contact us
Contact us Investor Relations Media Relations Investor Centre Melanie Kirk Danny John For more information Investor Relations Media Relations commbank.com.au/investors 02 9118 7113 02 9118 6919 CBAInvestorRelations@cba.com.au media@cba.com.au 146
Commonwealth Bank of Australia — FY2023 Earnings Presentation on 6ix