Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2008 Earnings Presentation
124 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 13, 2008
Slide 1: Results Presentation
Results Presentation For the full year ended 30 June 2008 Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER 13th August 2008 Commonwealth Bank of Australia ACN 123 123 124
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, 13 August 2008. 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 Ralph Norris, CEO – Company Update and Outlook David Craig, CFO – Financial Overview Questions and Answers 3
Slide 4: Determined to be different
Notes Determined to be different
Slide 5: Strength in uncertain times
Strength in uncertain times ► A solid operating result in a difficult environment ► Strong capital and funding positions ► Strong risk management = sound credit quality ► Prudent levels of provisioning ► Strategy on track and delivering – strong competitive position ► Continuing to invest for longer
Slide 6: Market shares
Market shares Jun 08 Dec 07 Jun 07 Retail Banking Services Home loans 19.3% 18.8% 18.5% Credit cards 18.2% 18.5% 18.8% Note Personal lending (APRA Other Households) 15.8% 16.7% 16.4% Household deposits 29.1% 28.9% 29.0% After adjusting for peer bank reclassifications (estimated), Jun 08 Retail depos
Slide 7: A solid operating result
A solid operating result Jun 08 vs Jun 08 Jun 07 Operating Income ($m) 14,358 10% Statutory NPAT ($m) 4,791 7% Cash NPAT ($m) 4,733 5% Cash EPS (cents) 356.9 3% Return on Equity – Cash (%) 20.4 (130)bpts Dividend per Share - Fully Franked (cents) 266.0 4% 7
Slide 8: Strong growth in core products
Strong growth in core products Home lending Business deposits 15 consecutive monthly increases CBA growth well above system 19.6% in market share 12 months growth 19.2% 18.8% 18.4% 18.0% Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 CBA Peer 1 Peer 2 Peer 3 Source: RBA/APRA Source: APRA Market Ho
Slide 9: Targeted market share growth
Targeted market share growth Market Jun 08 Share vs Jun 08 Jun 07 15 consecutive months of market Home Lending 19.3% 0.8% share gains Household Deposits* 29.7% 0.7% Strong growth in both retail and business deposits in a constrained funding environment Business Deposits 14.4% 1.4% Positive net flows
Slide 10: Determined to be better than we have ever been
Determined to be better than we have ever been Money Magazine Awards 2008 Winner - Bank of the Year Winner - Margin Lender of the Year (Colonial Margin Lending) Winner – Banking Website of the Year CANNEX 5-Star Ratings 2008 24 of our products have received a CANNEX 5-star rating Australian
Slide 11: Determined to be different
Determined to be different Determined to offer strength in uncertain times Determined to be better than we have ever been Determined to be Australia’s finest financial services organisation Determined to continue to invest in the business 11
Slide 12: Other highlights
Other highlights IT efficiency ratio Repeat Severity 1 and 2 incidents World-wide best practice 20 13-15% 18 Substantially improved 16 system stability 14 # Incidents 12 10 8 6 4 Nil Nil Nil 16.7% 15.2% 14.5% 2 13.7% 0 Jun 06 Jun 07 Jun 08 Sep 06 Mar 07 Sep 07 Mar 08 Dec 06 Dec 07 Dec 06 Jun 07 Dec
Slide 13: Determined to be different
Determined to be different X Customer Satisfaction reached 10 year highs Customer Service X Money Magazine “Bank of the Year” 2008 X New CommSec banking solutions + iPhone share trading Business Banking X Strongest customer satisfaction gains amongst peer banks Technology and X Significant IT effici
Slide 14: Determined to be better than we have ever been
Determined to be better than we have ever been Smartinvestor Awards 2008 Online Broker of the Year – Full Featured (CommSec) Smartinvestor Awards 2007 Retail Platform of the Year – non super (FirstChoice Wholesale) Retail Superfund of the Year (FirstChoice Personal Super–Growth Option) FundD
Slide 15: Strong customer satisfaction gains
Strong customer satisfaction gains Closing the gap to top rated peer Strong gains in Business Customer Satisfaction 84% Roy Morgan Research Customer Satisfaction1 TNS Customer Satisfaction2 Strongest satisfaction 80% 13.2% gains of the peer group over last 12 months 76% 9.7% 10.5% 7.8% 72% 12.5% 6.3
Slide 16: Determined to be better than we have ever been
Determined to be better than we have ever been Wealth Insights - Service Level Survey Awards 2008 Best Fund Manager (Colonial First State) Best Master Trust/Wrap provider (FirstChoice) EuroWeek Awards 2008 Best Overall MTN Issuer Best Structured Note Issuer Best Financial Institution MTN I
Slide 17: Core Banking our next key step
Core Banking our next key step Core Banking Our Journey so far Modernisation Improving the Front-End Addressing the Back-End Sales & service training A step change in customer service Over 1,000 new frontline staff Faster systems and processes New design branches Productivity and efficie
Slide 18: Key Forecasts and Projections
Key Forecasts and Projections 1 2005 2006 2007 2008 2009 (f) Credit Growth % – Total 13.5 14.4 15.4 11.7 9-11 Credit Growth % – Housing 14.7 13.7 12.9 9.9 9½-11½ Credit Growth % – Business 11.8 16.5 18.9 16.1 10-12 Credit Growth % – Other Personal 12.9 9.8 16.2 4.1 6-8 GDP % 2.8 3.0 3.3 3.9 2.4 CPI
Slide 19: Outlook
Outlook Challenging global conditions dominate 2009 outlook for banking sector Australian economy expected to experience modest growth Group remains cautious with conservative approach to capital, provisioning and funding Core businesses well positioned Continuing to focus on driving strat
Slide 20: Forgotten your password?
Forgotten your password? Open a Cash Account for your chance to share Ta) Explore Australia's first trading platform designed for the iPhone. Available now. Earn 7.5%pa* on your cash floats and new 2A 2004 2005 2006 2007 +2008 Determined to be different
Slide 21: Results Presentation
Click to edit Master title style Results Presentation For the full year ended 30 June 2008 David Craig CHIEF FINANCIAL OFFICER 13th August 2008 Commonwealth Bank of Australia ACN 123 123 124
Slide 22: Determined to be different
Notes Determined to be different 22
Slide 23: A solid underlying result
A solid underlying result Jun 08 Jun 07 Jun 08 vs $m $m Jun 07 Operating income 14,358 13,048 10% Operating expenses 7,021 6,427 9% Loan impairment expense 930 434 Large Net profit before tax 6,407 6,187 4% Tax and Minorities 1,661 1,756 (5%) Underlying NPAT 4,746 4,431 7% Shareholder investment ret
Slide 24: Other key information
Other key information Visa IPO gain: Gain on the Visa Initial Public Offering of $295 million after tax Investment and restructuring: Amounts have been recognised for investment and restructuring of $264 million after tax, relating to the cost of implementation of Core Banking Modernisation and
Slide 25: Statutory Profit up 7%
Statutory Profit up 7% Jun 08 Jun 07 Jun 08 vs $m $m Jun 07 Cash NPAT 4,733 4,527 5% Visa IPO gain 295 - Investment and restructuring (264) - 31 Defined benefit superannuation plan 9 5 Treasury shares valuation adjustment 60 (75) Hedging and AIFRS volatility (42) 13 Statutory NPAT 4,791 4,470 7% 25
Slide 26: Other key information
Other key information 6 months % of total group operating income Jun 08 Dec 07 Jun 07 Net interest income 54% 56% 54% Other banking income 24% 22% 24% Funds Mgt. income 16% 16% 15% Insurance income 6% 6% 7% Total 100% 100% 100% Jun 08 vs Jun 07 Av interest earning assets ($m) * 400,678 370,819 343,6
Slide 27: Positive "Jaws" in all business units
Positive “Jaws” in all business units Jun 08 vs Jun 07 30% 25% 24% 22% PBS and WM exclude 20% impact of asset sales 19% 18% 15% 15% 11% 11% 10% 10% 9% 8% 7% 7% 5% 4% 2% 2% 0% * * * RBS PBS WM IFS Group Income Expenses NPAT * Excludes shareholder investment returns. 27
Slide 28: Investing for the future
Investing for the future Investment spend ($m) Expensed Capitalised Total Core Banking Modernisation Growth CommSec banking solutions 219 304 523 projects iPhone share trading Home loan Top Ups Product and System Rationalisation (WM) Productivity Home loan Simplification 270 63 333 proje
Slide 29: Investment driven cost growth
Investment driven cost growth Expense Movements 2008 vs 2007 ($m) 78 (100) 121 89 (64) 224 246 Investing for the future 7,021 IWL Bank ANK Indonesia 6,427 Business Banking Growth Strategy Branch redesign etc 2007 CPI Business Additional GST Other Volume IT 2008 Increases Investment Project C
Slide 30: Underlying NIM down 10bpts (12 months)
Underlying NIM down 10bpts (12 months) Asset pricing and mix bpts Underlying NIM È 10bpts ¾ Home Loans È 7 ¾ Business Loans È 2 208* (10) ¾ Personal Loans È 2 ¾ Mix Ç 1 4 (4) 4 202* È 10 198 Deposit pricing and mix – Ç 4 cash rate increases offsetting mix changes Jun 07 Asset Deposit Liquids Und
Slide 31: Underlying NIM down 7bpts (6 months)
Underlying NIM down 7bpts (6 months) Asset pricing and mix bpts Underlying NIM È 7bpts ¾ Home Loans È 8 ¾ Business Loans È 1 206* (9) ¾ Personal Loans Ç 1 6 (4) ¾ ASB È 1 È 9 199 (1) 198* Deposit pricing and mix – Ç 6 cash rate increases offsetting mix changes Dec 07 Asset Deposit Liquids Underl
Slide 32: Determined to be different
Notes Determined to be different 32
Slide 33: Loan impairment expense
Loan impairment expense 6 months annualised (basis points) 12 months ($m) 32 Collective 930 Collective Management Management 212 economic 11 economic overlay overlay Volume 69 53 Quality 19 3 Quality 3 434 15 Corporate 13 271 3 8 Corporate 86 3 8 Individually Individually Assessed Assessed 11 12 369
Slide 34: Other key information
Other key information Home loan portfolio mix New mortgagee in possession cases Jun 08 Jun 07 # Owner-Occupied 55% 55% 60 Investment 34% 34% Line-of-Credit 11% 11% 40 Variable 66% 66% Fixed 33% 29% Honeymoon 2% 4% 20 Low Doc % ~ 3.7% ~ 2.3% Originations 0 Proprietary 61% 65% Jun Jul Aug Sep Oct Nov
Slide 35: Sound consumer credit quality
Sound consumer credit quality Home loan arrears Home lending: 30+ Days % ¾ Portfolio quality remains sound 1.2% ¾ Arrears similar to prior years 1.0% ¾ Small up-tick in Jun Qtr 0.8% ¾ 70% paid in advance 0.6% ¾ Portfolio average LVR ~40% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2005 2006 20
Slide 36: Other key information: Margin Lending
Other key information Notes Margin Lending 6 months Jun 08 Dec 07 Portfolio Size ~$8bn ~$9bn Aggregated Gearing 42% 44% Margin Calls 18,500 7,000 Forced sales < 3.5% < 0.5% Losses/Write-Offs $5.7m $137,000 Loss % of Book 0.06% 0.001% 36
Slide 37: Commercial Credit Quality
Commercial Credit Quality Risk-Rated Exposures Cyclically higher provisioning: ¾ No new large problem accounts 29% Other 29% 17% BBB+ to BBB- Book quality remains sound: 20% 71% 18% A+ to A- 19% investment ¾ No systemic issues grade 36% AAA to AA- 32% ¾ Lower impaired assets than peers Jun 08 Ju
Slide 38: Other key information: Expected loss by Business Unit
Other key information Notes Expected loss by Business Unit * As at Jun 08 Retail Banking Services 0.22% Premium Business Services 0.29% International Financial Services 0.21% Group 0.24% * Expected loss focuses on the anticipated longer term loss rates and is less volatile than AIFRS credit loss pro
Slide 39: Conservative provisioning
Conservative provisioning Gross impaired assets to GLAs Impaired Assets vs Peers 1,600 CBA as at Jun 08; Peers as at Mar 08 45.0% 1,400 40.0% 40 35.0% 1,200 30.0% 1,000 $m CBA 25.0% 800 bpts Peer 1 20.0% 600 15.0% 20 Peer 2 400 10.0% Peer 3 200 5.0% - 0.0% CBA Peer 1 Peer 2 Peer 3 0 Gross Impaired A
Slide 40: Determined to be different
Notes Determined to be different 40
Slide 41: All Business Units contributing
All Business Units contributing Jun 08 Jun 07 Jun 08 vs $m $m Jun 07 Retail Banking Services 1,904 1,766 8% Premium Business Services 1,480 1,445 2% Wealth Management 740 627 18% International Financial Services 589 478 23% Corporate Centre 255 302 (16%) Eliminations/Unallocated (235) (91) Large Cas
Slide 42: Other key information – 6 month movements
Other key information – 6 month movements Jun 08 Dec 07 Jun 07 Jun 08 vs Jun 07 Net interest income Home loans 529 645 637 (17%) Consumer finance 406 374 374 9% Retail deposits 1,262 1,124 1,028 23% 2,197 2,143 2,039 8% Other banking income Home loans 65 69 56 16% Consumer finance 180 167 223 (19%)
Slide 43: Retail Banking Services
Retail Banking Services Strong volume growth: Jun 08 Jun 08 vs $m Jun 07 ¾ Home loans Ç 15% Home loans 1,308 (5%) Consumer finance 1,127 (3%) ¾ Deposits Ç 18% Retail deposits 3,059 12% Gaining market share Distribution 103 (1%) Total banking income 5,597 4% Home loan margin È 16 bpts - higher
Slide 44: Determined to be different
Notes Determined to be different 44
Slide 45: Retail Banking Services
Retail Banking Services Compliments Branch channel growing above system Index +60% Home Loan Balance Growth 13.5% 6 Months to Jun 08 5.0 4.0 3.0 7.7% 5.9% 2.0 4.7% 3.5% 1.0 0.0 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Broker Branch Premium Total CBA Total Market RBS CBA Note : Width of channel colu
Slide 46: Other key information – 6 month movements
Other key information – 6 month movements Jun 08 Dec 07 Jun 07 Jun 08 vs Jun 07 Net interest income Institutional Banking 511 485 433 18% Private Client Services 119 121 101 18% Corporate Financial Services 271 245 217 25% Agribusiness 85 71 65 31% Local Business Banking 184 174 161 14% Eliminations
Slide 47: Premium Business Services
Premium Business Services Jun 08 Jun 08 vs Excluding “Loy Yang”: $m Jun 07 Institutional Banking 1,882 14% ¾ Banking income Ç 18% Private Client Services 626 25% ¾ Institutional Ç 19% Business Banking Corporate Financial Services 932 14% Business Banking Ç 14% income Agribusiness 253 20% Depos
Slide 48: Determined to be different
Notes Determined to be different 48
Slide 49: Premium Business Services
Premium Business Services 6 month targeted growth vs market Customer complaints Business down >50% Deposits +5.2% Institutional & -7.4% Markets Corporate Banking +1.9% Dec 06 Jun 07 Dec 07 Jun 08 Source: APRA CommBiz customer migration CommSec growth CommSec trajectory monthly continues trade volume
Slide 50: Other key information – 6 month movements
Other key information – 6 month movements Jun 08 Dec 07 Jun 07 Jun 08 vs Jun 07 Net operating income CFS GAM 484 431 356 36% Colonial First State 316 378 354 (11%) CommInsure 362 321 327 11% Other 6 (4) 5 20% 1,168 1,126 1,042 12% Operating expenses CFS GAM 178 191 170 5% Colonial First State 205 21
Slide 51: Wealth Management
Wealth Management CFS GAM: Jun 08 Jun 08 vs $m Jun 07 ¾ FUM up 9% to $153bn CFS GAM 915 38% ¾ 84% of AWG sold down Colonial First State 694 5% Colonial First State: CommInsure 683 6% Other 2 - ¾ Positive net flows Net operating income 2,294 17% ¾ FirstChoice 2nd largest platform Operating expens
Slide 52: Determined to be different
Notes Determined to be different 52
Slide 53: Wealth Management
Wealth Management Funds under Administration FirstChoice net flows remain positive + 10% $m 1,896 2,000 $29bn ($13bn) $185bn 1,626 $169bn 1,600 1,200 979 800 426 400 0 Jun 07 Net Flows Investment Returns Jun 08 Sep 07 Dec 07 Mar 08 Jun 08 Good investment performance Insurance premiums Number of Fund
Slide 54: Other key information – 6 month movements
Other key information – 6 month movements Jun 08 vs Jun 08 Dec 07 Jun 07 Jun 07 Net interest income ASB 414 400 372 11% Other 59 42 18 Large 473 442 390 21% Other banking income ASB 160 156 118 36% Other 40 27 20 Large 200 183 138 45% Total banking income ASB 574 556 490 17% Other 99 69 38 Large 673
Slide 55: International Financial Services
International Financial Services Jun 08 Jun 08 vs $m Jun 07 ASB profit Ç 11% in NZD ASB 1,130 16% Sovereign 258 (3%) Growing Asian contribution Other 210 98% Total operating income 1,598 19% Sovereign capturing 35% share Operating expenses 825 11% of new business sales Loan impairment 43 Large
Slide 56: Other key information: Wholesale funding
Other key information Wholesale Funding - Geographic Distribution Wholesale Funding by Product Australia Structured MTN 3% 2% 10% 2% 11% Vanilla MTN 4% 42% Other Asia 7% Commercial Paper Europe 7% Structured Finance Deals United States 21% 7% Debt Capital 19% Japan CDs Securitisation United Kingdom
Slide 57: Strong funding and liquidity positions
Strong funding and liquidity positions Source of Funding 1 AA credit rating, stable outlook 21% Globally respected borrowers – EuroWeek 2% 5% Overall MTN issuer of the year 2008 58% 11% Highly diversified wholesale funding 3% Retail Funding Long Term Wholesale maturing in FY09 Short Term Whole
Slide 58: Determined to be different
Notes Determined to be different 58
Slide 59: A strong capital position
A strong capital position Basel I Basel II 14% 12.08% 12% 11.58% Total 10.74% Capital 9.76% 9.82% Target 10% Range 3 8% 8.17% 8.17% Tier 1 7.58% Target 7.41% 6% 7.14% Range 4% 6.58% 6.47% 6.00% 2% 4.79% 4.77% 0% 1 1 Jun 07 Dec 07 Dec 07 Jun 08 1 Jul 08 2 Proforma Adjusted Common Equity Total Capital
Slide 60: Determined to be different
Notes Determined to be different 60
Slide 61: Capital ratios compare favourably to peers
Capital ratios compare favourably to peers Domestic Peer Comparison Basel II advanced accreditation Tier 1 Capital Ratios, without IRRBB1 achieved December 2007 9% 8.2% 8% APRA Basel II rules more 7.4% 7.0% 6.8% conservative than UK/Europe 7% 6.5% 6% UK/Europe treat Interest Rate Risk CBA Peer
Slide 62: Determined to be different
Notes Determined to be different 62
Slide 63: Key Messages
Key Messages A solid operating result Significant progress on strategic initiatives Good market share gains, particularly deposits Sound risk management = good credit quality Conservative provisioning Strong capital, funding and liquidity Determined to offer strength in uncertain times
Slide 64: Determined to be different
Notes Determined to be different 64
Slide 65: Agenda
Agenda Ralph Norris, CEO – Company Update and Outlook David Craig, CFO – Financial Overview Questions and Answers 65
Slide 66: Supplementary materials
Supplementary materials For the full year ended 30 June 2008 13th August 2008 Commonwealth Bank of Australia ACN 123 123 124
Slide 67: Index
Index Group Results Overview…………………………………………..….…69 Banking…………………………………………………………….…......72 Wealth Management……………………………………………..…...…82 International Financial Services…………………………………..…....88 Credit Quality and Risk Management……………………………….…91 Capital, Funding and Liquidity……………………………………..….101 Susta
Slide 68: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 68
Slide 69: Fully franked dividends
Fully franked dividends Dividend (cents per share) 280 240 200 149 153 160 130 Cents 112 104 120 82 85 107 113 80 Second Half 85 94 79 68 69 First Half 40 0 2002 2003 2004 2005 2006 2007 2008 Payout Ratio Cash Basis 73.9% 73.9% 74.9% 71.0% 74.0% 75.0% 69
Slide 70: Expenses
Expenses 12 months Jun 08 Jun 07 Jun 08 vs $m $m Jun 07 Staff expenses 3,661 3,229 13% Occupancy and equipment 767 688 11% IT Services 826 883 (6%) Postage and stationery 217 213 2% Fees and commissions (largely volume related) 818 691 18% Advertising, marketing etc 348 326 7% Other 384 397 (3%) Tot
Slide 71: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 71
Slide 72: Other banking income
Other banking income 6 months Jun 08 Dec 07 Jun 07 Jun 08 vs Jun 08 vs $m $m $m Dec 07 Jun 07 Commissions 919 908 870 1% 6% Lending Fees 507 469 479 8% 6% Trading Income 346 200 249 73% 39% Other 100 128 89 (22%) 12% 1,872 1,705 1,687 10% 11% AIFRS reclassifications (101) (164) (78) (38%) 29% of net
Slide 73: Banking Revenue by Segment
Banking Revenue by Segment Jun 08 vs Jun 08 Jun 07 Jun 07 Home Loans 1,308 1,380 (5%) Other, 3% ASB, 10% Home Loans, 12% Consumer Finance 1,127 1,161 (3%) Local Business Consumer Finance, Retail Deposits 3,059 2,727 12% Banking, 5% 10% Agribusiness, 2% Institutional Banking 1,882 1,657 14% Corporate
Slide 74: Housing Credit
Housing Credit Share of housing approvals – Banks vs Non-Banks % % 95 30 B a nk s ( LH S ) 90 25 85 20 \ 80 15 75 10 N o n- ba nk s (R H S) 70 5 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 74
Slide 75: Market Share Trends
Market Share Trends Home Loans Household Deposits RBA/APRA APRA 19.6% 30.0% Adjusted for peer 29.5% reclassifications 19.2% 18.8% 29.0% 18.4% 28.5% 18.0% 28.0% Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Business Lending Business Deposits 13.6% L
Slide 76: CBA growth vs market (12 months to Jun 08)
CBA growth vs market (12 months to Jun 08) Home Lending Personal Lending 12.1% 9.0% 10.1% 4.2% 14.9% 13.4% 12.4% 10.5% 7.8% 1.3% -0.1% 2.3% 0.7% -2.8% CBA Peer 1 Peer 2 Peer 3 Peer 4 CBA Peer 1 Peer 2 Peer 3 Peer 4 Credit cards Household deposits 17.7% 13.0% 15.4% 14.8% 8.2% 18.5% 13.4% 7.6% 5.1% 10
Slide 77: CBA growth vs market (6 months to Jun 08)
CBA growth vs market (6 months to Jun 08) Home Lending Personal Lending 3.0% 3.2% 6.5% 4.7% 0.3% 7.4% 7.3% 6.3% 5.2% 5.4% -0.3% -0.6% CBA Peer 1 Peer 2 Peer 3 Peer 4 -5.6% -3.1% CBA Peer 1 Peer 2 Peer 3 Peer 4 Credit cards Household deposits 7.2% 7.0% 8.1% 5.0% 3.7% 5.0% 3.4% 2.1% 2.5% 1.6% 2.4% 1.0
Slide 78: State Summary
State Summary NSW/ACT VIC/TAS WA SA/NT QLD Total Branches 382 335 77 65 150 1,009 ATMs 1,227 1,002 275 198 599 3,301 HL Growth* 7% 16% 24% 21% 24% 15% HL % of Book 37% 29% 11% 6% 17% 100% Deposits Growth* 15% 19% 20% 19% 19% 18% Deposits % of Book 40% 32% 8% 6% 14% 100% HL arrears (30+ days) 1.28% 1
Slide 79: Home loan balance growth by channel
Home loan balance growth by channel 6 months 15.8% 13.3% 13.5% 7.0% 7.7% 6.5% 6.8% 5.9% 5.0% 5.2% 5.2% 4.7% 3.3% 3.5% -0.5% Jun 07 Dec 07 Jun 08 Broker Branch Premium Total CBA Total Market Note : Width of channel columns reflects relative proportion of total CBA balances 79
Slide 80: Replicating Portfolio
Replicating Portfolio No change Easing Scenario Replicating Portfolio Yield Replicating Portfolio Yield Target Cash Target Cash Rate Rate 2001 2011 2001 2011 80
Slide 81: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 81
Slide 82: Global Asset Management
Global Asset Management Globally: $153bn FUM*, 1,000 people North America Japan $1.6bn FUM $4.7bn FUM 4 People Middle East Asia ex China & Japan $4.6bn FUM $11.7bn FUM 112 People UK & Europe Australia & New Zealand $15.7bn FUM $114.6bn FUM 207 People 677 People 26% FUM raised from offshore clients,
Slide 83: Funds under Administration (FUA)
Funds under Administration (FUA) Full Year to Jun 08 Investment Opening income and Closing Funds Under Administration balance Inflows Outflows Netflows other 5 balance $m $m $m $m $m $m FirstChoice 39,545 17,537 (12,610) 4,927 (5,765) 38,707 Avanteos 5,875 2,365 (1,079) 1,286 (904) 6,257 Cash manage
Slide 84: Funds under Management (FUM)
Funds under Management (FUM) * Full Year Ended Half Year Ended Jun 08 Jun 07 Growth Jun 08 Dec 07 Growth $m $m % $m $m % Australian equities 23,502 31,199 (25) 23,502 29,618 (21) Global equities 35,589 33,709 6 35,589 40,945 (13) Cash and fixed interest 66,729 48,927 36 66,729 66,694 - Property and
Slide 85: Well diversified product mix
Well diversified product mix Funds Under Administration Jun 08 Total FUA = $185 bn Internationally sourced 18% FirstChoice/Avanteos (19% as at Jun 07) 24% (27% as at Jun 07) Other 2% (2% as at Jun 07) Cash management Property 1% 11% (2% as at Jun 07) (9% as at Jun 07) Other Retail 16% (21% as at Jun
Slide 86: Shareholder investment asset mix
Shareholder investment asset mix Australia New Zealand Asia Total Local equities 1% - - - International equities - 1% 12% 1% Property 21% - 32% 17% Growth 22% 1% 44% 18% Fixed Interest 26% 55% 55% 34% Cash 52% 44% 1% 48% Income 78% 99% 56% 82% Total 100% 100% 100% 100% 86
Slide 87: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 87
Slide 88: Asian Footprint
Asian Footprint China Indonesia Staff numbers 3,600 100 - CBA 1,110 PT Bank Commonwealth 3,500 - Jinan City Commercial Bank & 306 PT Commonwealth Life Bank of Hangzhou (formerly known as Hangzhou CCB) 18 First State Investments 480 China Life CMG (includes staff & sales agents) 62 First State Cinda
Slide 89: Asian Footprint
Asian Footprint China 11% Jinan City Commercial Bank (Top up to 20% subject to regulatory approval) 19.9% Bank of Hangzhou Beijing and Shanghai – Representative offices China Life CMG – JV life insurance First State Cinda Fund Management Company Japan Branch India Branch application lodged Hong Kong
Slide 90: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 90
Slide 91: Credit Quality – Key Indicators Summary
Credit Quality – Key Indicators Summary Jun 08 Dec 07 Jun 07 Risk Weighted Assets (RWA) - Basel I N/A $272,609m $245,347m Risk Weighted Assets (RWA) - Basel II $205,501m $198,228m N/A Gross Loans and Acceptances (GLA) $383,502m $366,313m $337,339m Charge for Loan Impairment Expense (LIE) - 6 mths $5
Slide 92: Home loans – LVR Profile
Home loans – LVR Profile Original LVR of Portfolio Strong average LVR profile: 100% 90% ¾ 50% based on original value 80% 70% 60% 80%+ ¾ 40% based on current values 50% 40% 60-80% 0-60% 30% ¾ 50% on new loans 20% 10% 0% % of loans at <60% LVR: Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Current Ma
Slide 93: Consumer Arrears – 90+ days
Consumer Arrears – 90+ days Home loans Credit cards 1.2% 0.5% 1.0% 0.4% 0.8% 0.3% 0.2% 0.6% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2005 2006 2007 2008 2005 2006 2007 2008 Personal loans 1.6% 1.2% 0.8% 0.4% Jul Aug Sep Oct Nov Dec Jan Feb Mar A
Slide 94: Total exposures by geography
Total exposures by geography Jun 08 Jun 07 International 16% International 13% New Zealand 11% New Zealand 14% Australia 73% Australia 73% Total exposures = balance for uncommitted facilities; greater of limit or balance for committed facilities. Includes settlement risk. 94
Slide 95: Home Loan Stress Testing
Home Loan Stress Testing Stress test scenarios modelled, based on experience of UK recession of the late 1980s / early 1990s, which saw Expected loss ¾ Up to 6 fold increase in PD $m PD stress factor Property value x1 x2 x4 x6 ¾ Unemployment of 10% No decrease 12.9 17.2 24.1 29.9 10% decrease 28.4
Slide 96: Other key information: Top Commercial Exposures
Other key information Top 20 Commercial Exposures Large Exposures % 20 largest exposures as a % 4.0% of Total Committed Exposures $m as at Jun 08 3.0% A- BBB+ 2.0% A- BB+/DDD BBB- 1.0% BBB+ BB- 0.0% A Jun 04 Jun 05 Jun 06 Jun 07 Dec 07 Jun 08 A- AA- A- A- A- BB+ A BBB A BBB BBB+ BBB+ - 200 400 600 8
Slide 97: Total exposures by sector
Total exposures* by sector Jun 08 Jun 07 Mining 1.2% Mining 1.2% Manufacturing 2.9% Manufacturing 3.1% Agriculture 2.3% Energy 1.8% Agriculture 2.3% Energy 1.4% Other 5.5% Construction 0.8% Other 6.1% Construction 1.0% Retail & Wholesale Retail & Wholesale 2.7% 2.6% Consumer 46.9% Transport 1.7% Tra
Slide 98: Exposures by sector – Top 10
Exposures* by sector – Top 10 Jun 08 Jun 07 AAA A+ to BBB+ Other Total AAA A+ to BBB+ Other Total to AA- A- to to AA- A- to $bn BBB- BBB- Banks 41.7 14.7 1.8 0.4 58.6 39.4 12.5 1.9 0.4 54.2 Finance Other 17.0 11.0 5.4 5.7 39.1 20.8 12.0 6.3 4.3 43.4 Property 0.3 6.3 8.2 22.5 37.3 0.3 3.0 7.5 17.1 27
Slide 99: Counterparty and Other Exposures
Counterparty and Other Exposures* US Debt and No exposure to foreign sub-prime or Alt-A assets. Countrywide exposure recently repaid in full. Agencies No exposure to Fannie Mae or Freddie Mac. Exposure to Sallie Mae <AUD100m. CDOs and CLOs Total exposure of ~AUD90m, of which ~AUD45m is collatera
Slide 100: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 100
Slide 101: UK Capital Comparison – Basel II
UK Capital Comparison – Basel II PricewaterhouseCoopers has worked with the Bank in identifying, in principle, the key differences between the APRA and FSA method of calculating regulatory capital. Summarised below are details of the major differences: Impact on Bank’s ratio Item Items impacting
Slide 102: UK Capital Comparison – Basel II
UK Capital Comparison – Basel II The following table estimates the impact on CBA capital of the differences between the APRA Basel II guidelines and those of the UK regulator, Financial Services Authority (FSA) Net Tier 1 Total Fundamental Capital Capital Capital1 Jun 08 Actual 6.1% 8.2% 11.6% Less:
Slide 103: European Capital Levels
European Capital Levels 11.8% 12% Basel II Tier 1 Capital 10.2% 10.1% Europe 10% 9.3% 9.3% 9.1% 9.0% 8.6% Average 8.6% 8.5% 8.3% 8.2% Tier 1: 7.8% 8.7% 8% 7.6% 7.0% 6.7% Europe 6% Average Core Tier 1: 8.5% 7.8% 6.9% 6.3% 8.1% 6.2% 6.5% 6.6% 6.6% 6.3% 6.5% 6.3% 6.1% 6.9%1 9.6% 7.0% 6.4% 4% 2% 0% Inte
Slide 104: Tier 1 movement in half year to Jun 08
Tier 1 movement in half year to Jun 08 10.0% Basel II 9.5% 1.14% (0.99%) 9.0% 0.30% (0.27%) 8.5% (0.24%) 8.17% 0.11% (0.05%) 8.17% (0.59%) 8.0% 7.58% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 3 4 5 6 1 2 Tier 1 NPAT Ord. DRP Growth Currency Innovative Other Tier 1 IRRBB Tier 1 Dec 07 $2,348m Dividends $609m in
Slide 105: Total Capital movement in half year to Jun 08
Total Capital movement in half year to Jun 08 14.0% Basel II 1.14% (0.99%) 13.0% 0.30% (0.41%) 12.08% (0.48%) 12.0% (0.05%) (0.01%) 11.58% (0.84%) 11.0% 10.74% 10.0% 9.0% Total 1 NPAT Ord. DRP 2 Growth Currency 3 EL > EP 4 Other 5 Total IRRBB 6 Total Capital $2,348m Dividends $609m in RWA Movements
Slide 106: Tier 1: Dec 07 Basel I to Basel II
Tier 1: Dec 07 Basel I to Basel II 8.5% 2.23% 8.17% 8.0% 7.5% 7.41% (0.10%) (0.20%) (0.60%) 7.0% (0.58%) 6.5% 6.0% 0.01% 5.5% 5.0% 1 2 Tier 1 Unit Expected AIFRS Ineligible Other Basel II Tier 1 Dec 07 Trusts Losses Transitional Innovative $26m Reduction Dec 07 $20,209m ($270m) ($536m) Relief Tier 1
Slide 107: Total Capital: Dec 07 Basel I to Basel II
Total Capital: Dec 07 Basel I to Basel II 12.5% 3.29% 12.08% 12.0% 11.5% 11.0% 10.5% 10.0% 9.82% (0.20%) (0.39%) 9.5% (0.29%) 9.0% (0.14%) (0.01%) 8.5% 8.0% 1 2 Total Unit Trusts Expected Provisioning AIFRS Other Basel II Total Capital ($540m) Losses ($794m) Transitional ($37m) Reduction Capital Dec
Slide 108: Regulatory Expected Loss
Regulatory Expected Loss Jun-08 Dec-07 Jun 08 v Dec 07 $m $m $m Regulatory Expected Loss (EL) - before tax 2,372 2,087 285 Eligible Provision Collective Provision 1,346 1,084 262 Individually assessed provisions 367 268 99 Other credit provisions 32 28 4 fair value credit adjustments 22 22 0 1,767 1
Slide 109: Hybrid instrument information
Hybrid instrument information Hybrid dividends paid Franked/ Jun 08 Dec 07 Jun 07 Dec 06 Imputed PERLS II 23 20 19 19 F PERLS III 35 31 31 29 F PERLS IV 1 42 23 F Trust Preferred Securities 2003 17 18 17 21 N/A Trust Preferred Securities 2006 23 25 27 27 N/A ASB Capital prefs 6 5 5 5 I ASB Capital N
Slide 110: Capital treatment – Basel II
Capital treatment – Basel II AIFRS APRA Accounting Tier 1 Tier 2 Total Shareholders' Equity Ordinary Share Capital 3 3 3 Other Equity Instruments 3 3 3 Reserves General Reserve & Capital Reserve 3 3 3 Asset Revaluation Reserve 3 3 3 Other reserve accounts 3 Retained Earnings 3 3 3 Minority Interests
Slide 111: Funding costs
Funding costs Basis Risk Long Term Funding Costs bpts bpts 100 1.00% 115 1.20% 120 105 30 Jun 08 80 0.80% 1.00% 100 90 Margin to BBSW 0.80% 80 58 60 0.60% 58 68 60 61 31 Dec 07 60 0.60% 42 42 50 0.40% 40 38 40 0.40% 30 20 14 17 0.20% 0.20% 20 23 8 13 1 Jul 07 15 Expected average 15 3 0.00% 0.00% Jun
Slide 112: A respected name in global funding markets
A respected name in global funding markets “Best Overall MTN Issuer” 2008 Credit ratings: “Best Structured Note Issuer” 2008 “Best Financial Institution MTN Issuer” 2008 S&P: AA “International Issuer of the Year” 2006 Stable “International Issuer of the Year” Runner Up 2007 Moody’s: Aa1 Outlook “A
Slide 113: Market-leading retail funding position
Market-leading retail funding position Deposit Mix - Australia CBA’s deposit portfolio is significantly more heavily weighted towards “stickier” and higher margin household deposits 250 200 Other 150 Certificates of Deposit $A bn (Mainly wholesale deposits) Deposits from Financial 100 Corporations D
Slide 114: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 114
Slide 115: Sustainability - metrics
Sustainability - metrics 2008 2007 2006 2005 2004 Customers Customer satisfaction rating – Main Financial Institution (MFI) Retail 1 70. 1 % 70. 5% 64. 9% 65. 4% 63. 2% Customer satisfaction rating – Business2 73. 9% 60. 7% 56. 5% 55. 5% 54. 0% Customer satisfaction rating – Wealth3 7. 70 7. 96 7. 5
Slide 116: Sustainability – progress
Sustainability – progress Customers Overall customer satisfaction at 10 year highs Strongest gains in Business customer satisfaction amongst peer group FirstChoice rated number one for service Environmental GHG emissions reduced by 16% per square metre of floor space between 2002 and 2007 *
Slide 117: Sustainability – focus going forward
Sustainability – focus going forward Further embedding sustainability into our business processes Enhanced reporting and disclosure Supporting diversity and financial wellbeing in the community Helping our customers to meet their sustainability goals Creating greener workplaces Creating
Slide 118: Supplementary Information
Supplementary Information Group Results Overview Banking Wealth Management International Financial Services Credit Quality and Risk Management Capital, Funding and Liquidity Sustainability Economic Indicators 118
Slide 119: Economic Growth
Economic Growth World Economic Growth GDP Growth – RBA Forecast % % (annual % change) %pa %pa 8 8 9 9 So urce: CB A , Co nsensus, IM F (f) N o n -f a rm M ajo r trading GDP 6 partners 6 6 6 4 4 3 3 2 2 0 0 USA A u g '0 8 (f ) 0 0 -3 -3 1993 1995 1997 1999 2001 2003 2005 2007 2009 S e p -8 9 S e p -9
Slide 120: Economic Indicators
Economic Indicators Migration Mining projects '000 '000 $bn $bn 60 60 180 180 Target A dvanced 08/09 To tal pro jects 120 120 40 40 Co mpleted 07/08 Skilled (e) 60 60 20 20 457 visa 0 0 0 0 1990/91 1994/95 1998/99 2002/03 2006/07 Source: ABARE 1995 1997 1999 2001 2003 2005 2007 CBA-ACCI Business Sur
Slide 121: Credit Growth
Credit Growth Total Credit Growth Housing Credit % (annual % change) % (% ch an g e ) % % 25 25 16 16 A nnual 20 20 14 14 15 15 12 12 10 10 10 10 Q u a r t e r ly 5 5 8 8 0 0 1998 2001 2004 2007 2010 S e p -9 6 S e p -9 9 S e p -0 2 S e p -0 5 S e p -0 8 Housing Demand and Supply Business Credit In
Slide 122: Housing Indicators
Housing Indicators Housing loan approvals Market share of approvals % % 95 30 B a nk s ( LH S ) 90 25 85 20 80 15 75 10 N o n- ba nk s (R H S) 70 5 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Established house prices Vacancy rates & rents $'000 $'000 %pa % 750 750 8 .0 0 .0
Slide 123: Credit quality - System
Credit quality - System Sub-prime – share of total housing System housing loan arrears System housing loan arrears by State System housing loan arrears in NSW 123
Slide 124: Results Presentation
Results Presentation For the full year ended 30 June 2008 Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER 13th August 2008 Commonwealth Bank of Australia ACN 123 123 124
Commonwealth Bank of Australia — FY2008 Earnings Presentation on 6ix