Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2006 Earnings Presentation
124 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 9, 2006
Slide 1: Presentation of Full Year Results for 30 June 2006
Ralph Norris CHIEF EXECUTIVE OFFICER Gary Thursby CHIEF FINANCIAL OFFICER (ACTING) 9 August 2006 Commonwealth Bank of Australia ACN 123 123 124 PRESENTATION OF FULL YEAR RESULTS For 30 June 2006
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Bank‟s activities current at the date of the presentation, 9 August 2006. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to
Slide 3: Agenda
Agenda Full Year Results – Ralph Norris – Highlights – Outlook Full Year Results – Gary Thursby Questions 33 3
Slide 4: Notes
Notes ConmonwealthBank y
Slide 5: Highlights
Highlights Very good result – Cash NPAT of $4,053 million Good volume growth across the business Focus on profitable growth Successful delivery of WnB and good progress on new strategic initiatives 55 5
Slide 6: Other Key Information Notes
Other Key Information Notes Cash NPAT excluding Hong Kong ($m) Jun 06 Dec 05 Jun 05 Cash NPAT 1,992 2,061 1,759 Less: Profit on sale of Hong Kong 0 (145) 0 Cash NPAT (excl HK sale) 1,992 1,916 1,759 Some overall Bank indicators Jun 06 Dec 05 Jun 05 Dec 04 Jun 04 Number of branches 1,005 1,007 1,006
Slide 7: Highlights
Highlights 6 months 12 months Jun 06 vs Jun 06 vs Jun 06 Dec 05 Jun 05 Cash NPAT (excl HK) 3,908 4% 12% Cash EPS (excl HK) 304.6 4% 15% Dividend 224 – 14% Return on Equity – Cash (excl HK) 20.6% 70 bpts 180 bpts Gross impaired assets / RWA 0.15% 5 bpts 5 bpts 77 7
Slide 8: Notes
Notes ConmonwealthBank y
Slide 9: Good full year result
Good full year result 145 $4,053m Scorecard Jun 06 59 (111) 105 $3,908m 49 314 Volume Growth $3,492m Interest Margin Non Int.Income Expenses Credit Quality Tax Cash Banking Funds Insurance S/H WnB Cash Profit on Cash Cash EPS NPAT Mgt investment profit pre sale of NPAT Jun 05 return
Slide 10: Other Key Information Notes
Other Key Information Notes The payout ratio (cash basis) is calculated according to the following criteria: Payout ratio = DPS (in $) x number of shares (end of period) Cash NPAT 2.24 x 1,283 i.e. = 71% 4,053 * Payout ratio excluding HK sale = 74% 10 10 10
Slide 11: Highlights - dividend
Highlights - dividend Dividend (cents per share) 240 200 160 130 112 104 Cents 120 82 85 80 94 79 85 68 69 40 0 2002 2003 2004 2005 2006 First Half Second Half 11 11 11
Slide 12: Other Key Information Notes
Other Key Information Notes Jun 06 Dec 05 Jun 05 Dec 04 Jun 04 Banking Home loans 18.8% 18.8% 19.0% 18.9% 18.9% Credit cards 20.5% 21.4% 22.8% 22.8% 22.7% Retail deposits 22.2% 22.9% 23.0% 23.6% 23.7% (1) Personal lending 16.1% 16.0% 16.7% 16.7% 15.0% (2) Business lending 13.1% 13.5% 13.2% 13.6% 13.
Slide 13: Highlights - market position
Highlights - market position Jun 06 Dec 05 Home Loans 18.8% 18.8% Personal Lending 16.1% 16.0% Credit Cards 20.5% 21.4% Retail Deposits 22.2% 22.9% NZ Lending 23.1% 23.2% NZ Deposits 20.3% 19.9% Business Lending 13.1% 13.5% Transaction Services (corporate) 22.4% 22.1% Transaction Ser
Slide 14: Notes
Notes ConmonwealthBank y
Slide 15: Which New Bank - A Success
Which New Bank - A Success Technology transformation – Delivered ahead of schedule – Within budget Financial and Productivity Target Outcome Financial Benefit $900m $1,044m EPS Growth – CAGR 10%* 14% Banking 48% 47.1% Funds Management 0.74% 0.74% Insurance 42% 36.7% Customer Satisfaction – Tar
Slide 16: Notes
Notes ConmonwealthBank y
Slide 17: CEO Priorities & Measures
CEO Priorities & Measures Customer Service Business Banking Technology & Operational Excellence Trust & Team Spirit Superior operating and financial results Australia‟s finest financial services organisation 17 17 17
Slide 18: Notes
Notes ConmonwealthBank y
Slide 19: Customer Service
Customer Service Roll out of Sales and Service programme (SUCCESS) well underway Increased resourcing in customer facing roles Launch of new competitive products and Saturday trading Some leading indicators showing positive trends Internal measurements will track and measure customer advoc
Slide 20: Notes
Notes ConmonwealthBank y
Slide 21: Business Banking
Business Banking Management and structural changes better align business with customer needs Business bankers back into the branches CommSee for Business roll out now complete Commbiz being rolled out to key customers over next 3 months Range of metrics being measured including customer sa
Slide 22: Notes
Notes ConmonwealthBank y
Slide 23: Technology & Operational Excellence
Technology & Operational Excellence Appointment of new IT Head to lead Group wide Technology Successful renegotiation of EPS component of EDS contract Re direct spend from operational to value creation initiatives New corporate services function to drive bank-wide cost management culture O
Slide 24: Notes
Notes ConmonwealthBank y
Slide 25: Trust & Team Spirit
Trust & Team Spirit Recent management changes strengthen the leadership team while building greater collaboration across the Group Focus on developing people through investment in talent and training Introduction of a number of initiatives for our people Continuing measurement of progress us
Slide 26: Notes
Notes ConmonwealthBank y
Slide 27: 2007 outlook
2007 outlook Good result with earnings momentum going into new fiscal year Continuing real progress made with strategic initiatives Mainly positive outlook for the domestic economy Competitive environment for financial services Confident in our ability to deliver solid profitable growth 27
Slide 28: Notes
Notes ConmonwealthBank y
Slide 29: Gary Thursby - Presentation of Full Year Results
Gary Thursby CHIEF FINANCIAL OFFICER (ACTING) 9 August 2006 Commonwealth Bank of Australia ACN 123 123 124 PRESENTATION OF FULL YEAR RESULTS For 30 June 2006
Slide 30: Notes
Notes ConmonwealthBank y
Slide 31: Highlights - NPAT growth
Highlights - NPAT growth 12 months 6 months Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs $M $M Jun 05 $M $M Dec 05 NPAT (statutory) 3,928 3,400 16% 1,929 1,999 (4%) Add back AIFRS non cash 125 92 36% 63 62 - items NPAT (cash) 4,053 3,492 16% 1,992 2,061 (3%) Less profit on sale (145) - - - (145)
Slide 32: Other Key Information Notes
Other Key Information Notes 12 months 6 months Contribution to profit Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs $M $M Jun 05 $M $M Dec 05 Banking 3,227 2,913 11% 1,638 1,589 3% Funds Management 400 351 14% 217 183 19% Insurance 215 156 38% 112 103 9% NPAT (underlying) 3,842 3,420 12% 1,967 1,8
Slide 33: Highlights - underlying profit by business
Highlights - underlying profit by business 12 months 6 months Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs $M $M Jun 05 $M $M Dec 05 Banking 3,227 2,913 11% 1,638 1,589 3% Funds Management 400 351 14% 217 183 19% Insurance 215 156 38% 112 103 9% Underlying Profit 3,842 3,420 12% 1,967 1,875 5% 33
Slide 34: Other Key Information Notes
Other Key Information Notes Which New Bank estimates Benefits 2004 2005 2006 Targets (1) 200 620 900 Actual 237 724 1,044 (1) These were the original full year targets set out in the September 2003 presentation Investment 2004 2005 2006 Total spend Original 660 510 310 1,480 Actual 634 601 238 1,473
Slide 35: Which new Bank – Benefits
Which new Bank – Benefits 2005/06 $1,044m (target was $900m) 2004/05 538 506 $724m (target was $620m) 423 221 215 301 156 2003/04 $237m (target was $200m) 117 174 317 65 267 291 63 184 27 109 36 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Cost Saving Revenue Benefit 35 35 35
Slide 36: Other Key Information Notes
Other Key Information Notes Balance of capitalised software costs $million Jun 06 Dec 05 Jun 05 Dec 04 Jun 04 Capitalised software 229 188 182 163 107 Expense ratios Jun 06 Dec 05 Jun 05 Dec 04 Jun 04 Banking Expense to income 47.4 48.1 50.7 50.5 56.4 Underlying Expense to Income 47.4 48.1 48.6 50.2
Slide 37: Productivity Improvements
Productivity Improvements Expense ratios (1) WnB Target 54.7% CAGR = 4.9% 47.1%(2) 50.4% (3) 48% Banking CAGR = 10.0% 36.7% (4) 42% Insurance 0.87% CAGR = 5.3 (5) % Funds Mgt 0.74%(2) 0.74% Jun 03 Jun 06 (1) On a cash basis (3) Expense to income (5) Expense to average funds under administration (2)
Slide 38: Other Key Information Notes
Other Key Information Notes 12 months 6 months Comparable expenses Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs $M $M Jun 05 $M $M Dec 05 Staff expenses 2,823 2,673 6% 1,437 1,386 4% Occupancy and equipment 621 613 1% 311 310 - IT Services 985 956 3% 483 502 (4%) Postage and Stationery 216 220 (2
Slide 39: 2006 Operating expenses
2006 Operating expenses 187 $5,994m 40 55 $5,719m (92) 77 +3.3% 28 (20) 2005 Hong Kong Gandel acq FX Volume Unit Pricing New Underlying 2006 disposal Expenses Compliance Strategic growth (FM & Ins) Initiative Initiatives 39 39 39
Slide 40: Other Key Information Notes
Other Key Information Notes 2006 results include: Gross Cap & P&L Provision WnB initiatives 238 (117) 121 Other strategic initiatives 97 (58) 39 Compliance & other projects CMLA control environment 55 - 55 Other (incl Basel II, SOX, IFRS, etc) 35 - 35 Amortisation of Software Assets 43 - 43 Total 46
Slide 41: 2007 Expense Drivers
2007 Expense Drivers 2006 Operating Expenses $6bn 2007 Expense driver increases: CPI & general salaries +3-4% Volume related expenses +1% Additional frontline & permanent staff +1-2% Additional project expenditure +1-2% Savings targeted: Technology savings (2%) Further WnB benefit & other expense re
Slide 42: Notes
Notes ConmonwealthBank y
Slide 43: Segment Results : Banking
Segment Results : Banking 43 43 43
Slide 44: Other Key Information Notes
Other Key Information Notes Jun 06 Dec 05 Jun 05 Av interest earning assets ($m) (1) 282,553 267,169 250,357 Net int income (excl securitisation ($m) 3,202 3,218 3,028 Net interest Margin (AIFRS) (bp) 2.29% 2.39% 2.44% % of operating Income Jun 06 Dec 05 Jun 05 Net interest income 54% 56% 55% Other
Slide 45: Banking - underlying profit
Banking - underlying profit 11% underlying profit Underlying profit up 11% since Jun 05 growth 191 (178) 488 (76) (111) Strong volume growth $3,227m $2,913m Net interest income growth strong Good expense control Other Bad Tax & Jun 05 NII Expenses Jun 06 income Debts OEI Underlying credit
Slide 46: Other Key Information Notes
Other Key Information Notes 12 months 6 months Reconciliation of Net Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs Interest Margin % % Jun 05 % % Dec 05 Net Interest margin(1) 2.34 2.43 (9)bpts 2.29 2.39 (10)bpts AIFRS Volatility 0.02 - 2 bpts 0.01 - 1bpt Underlying Net 2.36 2.43 (7)bpts 2.30 2.39
Slide 47: NIM - Full Year Average
NIM - Full Year Average 7 basis points 2.45 (0.02) 2.43 (0.02) (0.03) (0.03) (0.02) 0.01 2.34 FY June '05 AIFRS FY June '05 AIFRS Pricing Non Funding Mix Asset Mix June '06 AGAAP AIFRS Volatility Lending AIFRS IEA 47 47 47
Slide 48: Notes
Notes ConmonwealthBank y
Slide 49: NIM - Half Year
NIM - Half Year 2006 Quarterly NIM 9 basis points 2.41 2.37 2.31 2.39 (0.01) (0.04) (0.05) 2.29 2.29 Dec 05 AIFRS Flow on from Second half June '06 September December March June Restated first half pricing / funding mix 49 49 49
Slide 50: Other Key Information Notes
Other Key Information Notes AIFRS Impact of hedging derivatives Jun 06 Dec 05 $M $M Net Interest Income 21 26 Other banking income (39) (40) Net Impact (18) (14) There has been a reclassification of $29m between Net Interest Income and Other Banking Income in Dec 05 half 50 50 50
Slide 51: Other Banking income – key components
Other Banking income – key components 12 months 6 months Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs $M $M Jun 05 $M $M Dec 05 Commissions & Fees 1,635 1,545 6% 820 815 1% Lending Fees 800 733 9% 411 389 6% Trading Income 505 440 15% 261 244 7% Other 175 127 38% 138 37 Large 3,115 2,845 9% 1,630
Slide 52: Notes
Notes 6 months Jun 06 vs Jun 06 Dec 05 Dec 05 Home Loans 689 701 (2%) Consumer Finance 558 537 4% Retail Deposits 1,329 1,324 - Corporate Banking 466 486 (4%) Financial Markets 475 454 5% Lending & Finance 631 561 12% Asia Pacific 537 529 2% Other 165 108 53% Total Banking Income 4,850 4,700 3% Refe
Slide 53: Banking - Revenue by product
Banking - Revenue by product 12 months Jun 06 vs Other Jun 06 Jun 05 Jun 05 Asia Pacific 3% Home Loans 11% 15% Home Loans 1,390 1,194 16% Consumer Finance 1,095 985 11% Lending & Finance 12% Retail Deposits 2,653 2,514 6% Retail Corporate Banking 952 945 1% Deposits Financial markets Financial Marke
Slide 54: Other Key Information Notes
Other Key Information Notes Jun 06 vs Jun 06 vs Jun 06 Dec 05 Jun 05 Dec 05 Jun 05 Domestic growth profile ($bn) Loan Funded* 24.8 22.9 20.5 8% 21% Reduction* 16 16.7 12.3 (4%) 30% Net Growth* 8.8 6.1 8.1 44% 9% Total Home Lending assets ($bn) Australian Home Lending assets ($bn) 144.8 136.0 130.0 7
Slide 55: Banking - Home Lending (domestic)
Banking - Home Lending (domestic) Spot Balances (including securitisation) CBA Balance Growth: $144.8bn $130.0bn $136.0bn +7% 11% in 2006 +5% 7% in 2H06 Very strong second half: Jun 05 Dec 05 Jun 06 record approval volumes Market Share market shares stabilised 25% (May 06) 21.3% 19.8% 20
Slide 56: Notes
Notes ConmonwealthBank y
Slide 57: Home Loan Growth by Channel (Half Year)
20% Home 18% Loan Growth by Channel (Half Year) (Balances sourced from each channel as a % of total CBA housing growth) 16% 14% 30% 12% 27.9% 16.3% 14.0% 14.8% 10% 7.9% 8.2% 7.8% 8% 7.1% 6.7% 6.5% 6.5% 6.2% 6.1%* 6% 4.7% 4.7% 4% 2.8% 2.8% 2% 1.5% 1.0% 0.8% 0% Dec 04 Jun 05 Dec 05 Jun 06 Brokers Bran
Slide 58: Other Key Information Notes
Other Key Information Notes Half ending Personal lending Jun 06 Dec 05 Jun 05 Jun 06 vs Jun 06 vs gross balances $M $M $M Dec 05 Jun 05 Credit cards 6,814 6,707 6,507 2% 5% Personal loans* 3,826 3,800 4,213 1% (9%) Margin loans 5,758 4,664 4,311 23% 34% Total Personal 16,398 15,171 15,031 8% 9% Lend
Slide 59: Banking – Personal Lending (domestic)
Banking – Personal Lending (domestic) Personal Lending Balances (1) CBA Balance growth $16.4bn $15.0bn $15.2bn 8% 1% +9% personal lending 5.8 4.3 4.7 +5% credit cards 4.2 3.8 3.8 6.5 6.7 6.8 Credit card market share loss to low rate cards („Yellow‟ Jun 05 Dec 05 Jun 06 launched in March 06)
Slide 60: Notes
Notes ConmonwealthBank y
Slide 61: Banking - Deposits (domestic)
Banking - Deposits (domestic) Balances CBA Balance Growth $71.8bn +6% $75.8bn +2% $77.2bn 17.1 17.0 +8% full year 16.4 +2% 2H06 34.1 36.3 38.1 2.1 2.4 2.3 20.0 19.8 Margins stable 19.2 Jun 05 Dec 05 Jun 06 Other Deposits Deposit not bearing interest Strong growth in NetBank Savings Transac
Slide 62: Notes
Notes ConmonwealthBank y
Slide 63: Banking – Business Lending
Banking – Business Lending CBA Business, Corporate and Very competitive market Institutional Lending Balances (1) $84.7bn $78.2bn +8% Growth in balance $68.4bn +14% + 24% vs Jun 05 + 8% vs Dec 05 Jun 05 Dec 05 Jun 06 Introduction of CBA Business Lending Market Share (2) new products 15% 14
Slide 64: Other Key Information Notes
Other Key Information Notes 12 months 6 months ASB : New Zealand Jun 06 Jun 05 Jun 06 vs Jun 06 Dec 05 Jun 06 vs NZ$M $M $M Jun 05 $M $M Dec 05 Net Interest Income 804 776 4% 412 392 5% Other Income 344 268 28% 169 175 (3%) Total Operating Income 1,148 1,044 10% 581 567 3% Operating Expenses (495) (
Slide 65: Banking – New Zealand (ASB)
Banking – New Zealand (ASB) Operational Lending* Balances (Spot – in NZD) Cash profit up $36.6bn +6% $38.8bn $33.3bn +10% + 16% full year + 3% 2H06 Lending balances up 17% Jun 05 Dec 05 Jun 06 * Operational lending = excludes treasury & structured finance NZ Housing Lending Market Share De
Slide 66: Other Key Information Notes
Other Key Information Notes (1) Jun 06 Dec 05 Jun 05 RWA $216,438m $202,667m $189,559m Charge for Bad Debts (6 mths) $210m $188m $176m Charge for Bad Debts to RWA (annualised) 0.19% 0.19% 0.19% (2) Gross Impaired Assets $326m $396m $395m Individually assessed provisions $171m $179m $157m Collective
Slide 67: Banking – bad debts
Banking – bad debts Bad debt expense to RWA Gross impaired assets to RWA (annualised) 1.40% 0.19% 0.19% 0.19% 0.19% 0.16% 0.15% 1.20% 210 188 1.00% 176 CBA % to RWA 150 146 0.80% ANZ 126 NAB 0.60% WBC 0.40% 0.20% 0.00% Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 03 Jun 04 Dec 04 Jun 05 Dec 0
Slide 68: Notes
Notes ConmonwealthBank y
Slide 69: Segment Results: Funds Management
Segment Results: Funds Management 69 69 69
Slide 70: Other Key Information Notes
Other Key Information Notes 6 months ended Jun 06 Dec 05 Jun 05 FUA Av. FUA ($bn) 148 130 121 Spot. FUA ($bn) 152 137 123 Margins Operating income/ av. FUA 1.14 1.10 1.08 Net income/ av. FUA 0.97 0.95 0.93 Expenses Operating expenses/ av.FUA 0.72 0.70 0.71 Market shares* Platforms (latest is Mar 06)
Slide 71: Funds Management
Funds Management Underlying profit after tax up 14% Underlying profit before tax up 295 (191) + 23% vs Jun 05 + 16% vs Dec 05 4 (59) After tax profit affected by 400 loss of transitional tax relief 351 Costs impacted by one-offs Funds under administration grew 23% to $152bn Jun 05 Operat
Slide 72: Other Key Information Notes
Other Key Information Notes Total net flows 6 months ended Jun 06 Dec 05 Jun 05 $M $M $M FirstChoice & Avanteos 9,397 3,936 2,970 Cash Mgt. (389) (255) (458) Other retail (2,138) (2,316) (1,965) Wholesale 100 1,189 (640) Property (704) (366) 79 International 2,082 583 294 Other (1) (213) (76) (674)
Slide 73: Funds Management – net funds flows
Funds Management – net funds flows Retail net flows ($m) (source Plan for Life) CBA Industry FirstChoice attracts 7000 3000 7000 record flows and 6000 5000 2000 2000 reaches $25bn 4000 industry CBA 1000 3000 2000 Significant inflows 0 1000 0 into Avanteos from -1000 -1000 GSJBW alliance Mar 04 J
Slide 74: Notes
Notes ConmonwealthBank y
Slide 75: Investment Performance
Investment Performance June 2006 Gross performance and quartile ranking 1yr % pa Quartile 3yr % pa Quartile Aust. Share – Core 29.1% 1 26.7% 1 Geared Share Fund 55.8% 1 51.9% 1 Imputation 26.2% 2 23.9% 3 Property Securities 23.7% 1 20.7% 1 Global Resources 61.2% 1 41.2% 1 Diversified 16.8% 3 14.6% 4
Slide 76: Notes
Notes ConmonwealthBank y
Slide 77: Segment Results: Insurance
Segment Results: Insurance 77 77 77
Slide 78: Key Information Notes
Key Information Notes 6 months ended Jun 06 Dec 05 Jun 05 Claims expense as % of net earned premium General Insurance 57% 51% 72% Life Insurance 41% 49% 47% Sources of profit $M $M $M Planned profit margins 77 69 60 Experience variations 29 19 28 Other (2) 2 (8) General insurance operating margin 8
Slide 79: Insurance Results - total
Insurance Results - total Underlying profit: Underlying profit (excluding HK operations) +35% on Jun 05* up 35% since June 05 +9% on Dec 05 25 (2) 206 30 Solid inforce premium & 156 153 operating margin growth in Australia and New Zealand Good expense control Largest Life insurer in Aust
Slide 80: Notes
Notes ConmonwealthBank y
Slide 81: Capital Management
Capital Management ConmonwealthBank y
Slide 82: Other Key Information Notes
Other Key Information Notes Surplus capital in Life Companies Jun 06 Dec 05 Jun 05 $M $M $M Australia Statutory Funds 191 251 102 Shareholder Funds 31 62 168 Sub-Total 222 313 270 NZ 44 51 47 Other IFS 57 58 132 Other (including CFS) 300 (244) 131 General Insurance 19 30 23 Sub-Total 421 (105) 333 T
Slide 83: Generation and use of Tier 1 capital
Generation and use of Tier 1 capital 9.5% 1.87% (1.33%) 9.0% 8.5% (0.92%) 8.0% 0.63% (0.16%) 7.56% 7.5% 7.46% 0.24% (0.23%) 7.0% (14 basis points) 6.5% 6.0% Tier 1 Jun Cash Ord. Growth in DRP Share Net issue of Currency Tier 1 Jun 2005 NPAT Dividends RWA $522m Buy-back innovative and Other 2006 $14,
Slide 84: Other Key Information Notes
Other Key Information Notes Credit Ratings Long Term Short Term Affirmed Standard & Poors' AA- A-1 + Jun 06 Moody's Investor Services Aa3 P-1 Jun 06 Fitch Ratings AA F1+ Jun 06 Jun 06 Dec 05 Jun 05 Adjusted Common Equity $M $M $M Tier One Capital 16,354 15,290 14,141 Deduct: Eligible loan capital (2
Slide 85: Capital ratios
Capital ratios New APRA regulations effective 11% 10% 9.75% 9.81% 9.66% 9.66% * 9% 8% 7% 7.46% 7.54% 7.56% 7.56%* 6% 5% 4% 3% 4.91% 5.00% 4.50% 2% 4.39% 1% 0% Jun 2005 Dec 2005 Jun 2006 Jul 2006 Adjusted Common Equity Tier one capital Tier two capital Target Range * Transitional relief granted by AP
Slide 86: Notes
Notes ConmonwealthBank y
Slide 87: Highlights
Highlights Very good result – Cash NPAT of $4,053 million Good volume growth across the business Focus on profitable growth Successful delivery of WnB and good progress on new strategic initiatives Record dividend 87 87 87
Slide 88: Presentation of Full Year Results
Ralph Norris CHIEF EXECUTIVE OFFICER Gary Thursby CHIEF FINANCIAL OFFICER (ACTING) 9 August 2006 Commonwealth Bank of Australia ACN 123 123 124 PRESENTATION OF FULL YEAR RESULTS For 30 June 2006
Slide 89: Supplementary materials
Supplementary materials 89 89 89
Slide 90: Economy
Economy ConmonwealthBank y
Slide 91: GDP, unemployment and cash rates
GDP, unemployment and cash rates 91 91 91
Slide 92: Credit growth
Credit growth Credit by Sector* Year-ended percentage change % % an Housing Pan 20 20 10 10 Personal 10) 10) Business 10 Fe a a 10 1994 1998 2002 2006 * Includes securitised loans Source: RBA Housing Loan Approvals* $b $b Total 15 rr 15 12 Ay fd 12 Me - 9 9 DN eee dwellings a sen ot ° Reo” 3 New dwe
Slide 93: Spreads
Spreads Aus. BBB Corporates US BBB Corporates ~ 35bp over swaps ~ 50bp over swaps 93 93 93
Slide 94: Banking
Banking ConmonwealthBank y
Slide 95: Summary - CBA Growth vs Market
Summary - CBA Growth vs Market 12 months to June 2006 Home Lending Credit Cards 13.0% 19.4% 15.0% 13.2% 20.0% 17.8% 12.0% 11.5% 11.6% 11.6% 12.1% 13.1%* 15.0% 9.0% 10.4% 10.0% 6.0% 7.4% 4.7% 3.0% 5.0% 0.0% 0.0% CBA W BC ANZ NAB SGB CBA W BC ANZ NAB SGB Personal Lending Household Deposits 12.0% 35.0%
Slide 96: Home Loans – LVR Profile
Home Loans – LVR Profile LVR Profile Strong LVR profile 80% % of loans at <60% LVR: 70% 60% 70% if based on 50% original security value 40% 75% if based on 30% current market values 20% The majority of loans 10% >80% LVR are 0% mortgage insured 0-60 60.1-75 75.1 -80 80.1 -90 90.1+ LVR on o
Slide 97: Home Loans - Stress Testing
Home Loans - Stress Testing Stress tested at account level = Based on Basel PD* groups = Up to 6 fold increase in PD = Up to 30% fall in security value Mortgage Portfolio Stress Testing Results . . Potential Loss ($m) = These stress factors are consistent with experience in the UK recession of the P
Slide 98: Home Loans – Portfolio Quality
Home Loans – Portfolio Quality Portfolio credit quality remains 30+ & 90+ Day Delinquencies sound 1.40% Results are in line with 1.20% seasonal expectations 1.00% Slight increase in 30+ 0.80% delinquency over last 12 0.60% months is being addressed 0.40% with a strong collections focus 0.20%
Slide 99: Low-Doc Home Loans
Low-Doc Home Loans Increasing but still very small Commonwealth Bank considers Low Doc lending Low-doc $m % of portfolio a difference in a borrower‟s proof of income rather than as a separate product Total Portfolio $1,500M (Jun 06) 1% Key product features: Self employed applicants only with a
Slide 100: Banking – Business Deposits
Banking – Business Deposits Strategy focussed around revenue growth and optimisation of group-wide Business Deposits (1) balance sheet funding 291.7 272.7 277.1 Since June 05, deposit book grew at close to market levels (6% relative to 7% 15.6% market growth) whilst maintaining 15.3% 15.2% margi
Slide 101: Banking – Bond Markets
Banking – Bond Markets 2005 – 2006 Financial Year Result Financial Year INSTO League Table Rankings PUBLIC DOMESTIC NON-GOVERNMENT BOND LEAGUE TABLE (INCLUDING SELF-LED DEALS) 1 Jul 2005 – 30 June 2006 Past Insto League Table Rankings Rank Bookrunner A$m Deals 1 National Australia Bank 10, 291 5
Slide 102: Notable PBS Transactions in 2006
Notable PBS Transactions in 2006 —— Leighton Finance International The Bear Steams Companies Inc BEAR STEARNS @ PERLSII BBI Fi i (BCT Finance Ply A$450 million Preferred Capital 96 A$200 millic tADB April 2014 Limited asegom Medium Term Notes mon A$300 million . June 2016/2021/2026 August 2013 Fixed
Slide 103: Notable PBS Transactions in 2006 (2)
Notable PBS Transactions in 2006 (2) CONNECTEAST<° BUNNINGS espreon Banker to 231 restaurants Acquisition and Term (50% of all licensed i i ; ; ; ; Sole Merchant Banker to Whole of McDonald’ restaurants Finance Facility Primary Transaction Primary Transaction Acquiring Bank — Government (WA) bank wi
Slide 104: Funds Management
Funds Management ConmonwealthBank y
Slide 105: Well diversified product mix – platforms rapidly growing share
Well diversified product mix – platforms rapidly growing share Funds Under Administration 30 Jun 2006 Total FUA = $152 billion ($137bn as at 31 Dec 05) First Internationally Choice/Avanteos sourced 19% (19% as at 31 Dec 05) 23%(18% as at 31 Dec 05) (2% as at 31 Dec 05) Other 2% Cash Mgt 2%(3% as at
Slide 106: Fund excess returns over benchmark
Fund excess returns over benchmark 1 Year Outperformance 3 Year Outperformance 10% 5% 4% 8% 3% 6% 2% 1% 4% 0% 2% -1% 0% -2% -3% -2% -4% -4% -5% Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale MIF Future Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Whole
Slide 107: Insurance
insurance ConmonwealthBank y
Slide 108: Funds Management & Insurance Investment Mandate Structure
Funds Management & Insurance Investment Mandate Structure The Bank has $1.9bn of shareholders funds across its insurance and funds management business, which is invested in: Australia New Zealand Asia Total Local equities 3% 0% 0% 2% International equities 0% 7% 0% 1% Property 20% 2% 0% 17% Growth 2
Slide 109: Capital Management
Capital Management 109 109 109
Slide 110: Hybrid Instrument information
Hybrid Instrument information Hybrid dividends Franked/ Jun 06 Dec 05 Imputed PERLS * 13 19 F PERLS II 18 17 F PERLS III 13 0 F Trust Preferred Securities 22 21 ASB Capital prefs 5 5 I ASB Capital No.2 prefs 8 9 I CBA Capital 8 8 87 79 * Redeemed 6 April 2006 Preference shares - breakdown Balance Sh
Slide 111: ACE - Major Implication 1 July 2006
ACE - Major Implication 1 July 2006 5.0% 4.50% (0.11%) 4.5% (0.02%) 0.01% 4.39% 4.0% 3.5% 3.0% ACE June Software cap Super Deficit Other ($27m) ACE 1 July 2006 expenses ($45m) 2006 $9,743m ($229m) $9,496m S&P has not granted transitional relief 111 111 111
Slide 112: Tier 1: Major Implication 1 July 2006
Tier 1: Major Implication 1 July 2006 8.0% 7.56% (0.62%) 7.56% 7.5% 7.0% (0.10%) (0.02%) (0.02%) 6.80% 6.5% 6.0% Tier 1 EMVONA Software Defined Other Tier 1 July Tier 1 July June 2006 Deduction Capitalised Benefit Deficit ($28m) 2006 2006 APRA $16,354m ($1,339m) Expenses ($45m) $14,713m Transitional
Slide 113: Credit Risk Management
Credit Risk Management 113 113 113
Slide 114: The Bank remains well provisioned
The Bank remains well provisioned 2,100 550 500 1,800 450 1,500 400 350 $millions 1,200 300% 900 250 200 600 150 100 300 50 0 0 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00* Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 1 Individually Assessed Provision (LHS) Collective Provision (LHS)1 1 General Reserve for Cred
Slide 115: Banking - Top commercial exposures
Banking - Top 20 commercial exposures ($m) A BBB- BBB- A- A- BBB- S&P Rating or Equivalent A- BBB+ AA A- A- A A- A- A- BBB+ BB+ AA- BBB BBB+ 0 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 800,000,000 900,000,000 Top 20 exposures – excludes finance and governmen
Slide 116: Banking - Quality of commercial risk-rated exposures
Banking - Quality of commercial risk- rated exposures Quality of commercial risk-rated exposures: There is security over 83% of the non-investment grade exposure 100% 80% 37 36 33 34 34 33 32 60% 15 16 16 16 17 16 17 40% 17 18 18 22 20 19 17 68% investment grade 20% 35 28 30 32 32 29 31 0% Jun 03 De
Slide 117: Banking - Total geographic exposure
Banking - Total geographic exposure* (commercial + consumer) Home loans = $154.5bn (excl securitised) Total exposure : $417bn Other Balance Sheet loans = $125.8bn Other exposure = $136.7bn International 15% New Zealand At 31 Dec 05 Total exposure = $398bn 12% Home loans = $150bn Other loans = $115bn
Slide 118: Banking - Total outstandings
Banking - Total outstandings* (commercial + consumer) Total Outstandings $341.8 bn* Agriculture 2.6% / Telecommunication 0.3% Construction 1.1% Energy 1.5% Finance 26.5% Consumer 47.0% Leasing 1.9% Motor Vehicle Manufacturing 0.1% Other C&l 17.5% “ Technology 0.1% * Represents balances actually outs
Slide 119: Banking – International commercial exposures
Banking – International commercial exposures* International exposure by Industry At 31 Dec 05 Total exposure = $61bn Total exposure : $72.1bn Finance = 85% Government = 1% Other commercial = 10% Government 2% Specific industries = 4% Other Commercial 9% Specific Industries 3% Aviation Technology Tel
Slide 120: Banking Credit Exposure - Agriculture Sector
Banking Credit Exposure - Agriculture Sector At 31 Dec 05 Total exposure: $10,152m Total exposure = $10,285m Australia = 61% New Zealand = 39% 30 Jun 31 Dec 06 05 New Rating $m $m Zealand 37% AAA to A- 333 372 BBB+ to BBB- 1,320 1,405 BB to BB- 3,022 3,094 Australia 63% < BB- 5,477 5,414 TOTAL 10,15
Slide 121: Banking Credit Exposure - Aviation Sector
Banking Credit Exposure - Aviation Sector At 31 Dec 05 Total exposure: $3,087m Total exposure = $2,430m Australia = 74% New Zealand = 14% Other = 12% Other 12% 30 Jun 31 Dec 06 05 New Rating $m $m Zealand 12% AAA to A- 1,140 757 BBB+ to BBB- 1,516 1,438 BB to BB- 313 151 < BB- 118 84 TOTAL 3,087 2,4
Slide 122: Credit Exposure - Energy Sector
Banking Credit Exposure - Energy Sector At 31 Dec 05 Total exposure = $7,462m Total exposure: $6,889m Australia = 71.6% New Zealand = 11.6% Asia = 4.0% Europe = 11.6% Americas Americas = 1.2% 30 Jun 31 Dec Europe 1.8% 06 05 15.6% Rating $m $m Asia 2.4% AAA to A- 1,601 2,661 New BBB+ to BBB- 4,588 4,
Slide 123: Banking Credit Exposure - Telcos Sector
Banking Credit Exposure - Telcos Sector At 31 Dec 05 Total exposure = $1,138m Total exposure: $1,391m Australia = 77% New Zealand = 7% Europe = 15% Asia = 1% Asia 4% 30 Jun 31 Dec Europe 7% 06 05 New Zealand Rating $m $m 12% AAA to A- 856 869 BBB+ to BBB- 277 23 BB to BB- 150 141 < BB- 108 105 TOTAL
Slide 124: Presentation of Full Year Results
Ralph Norris CHIEF EXECUTIVE OFFICER Gary Thursby CHIEF FINANCIAL OFFICER (ACTING) 9 August 2006 Commonwealth Bank of Australia ACN 123 123 124 PRESENTATION OF FULL YEAR RESULTS For 30 June 2006
Commonwealth Bank of Australia — FY2006 Earnings Presentation on 6ix