Commonwealth Bank of Australia · ASX:CBA
Commonwealth Bank of Australia — H1 2002 Earnings Presentation
52 slides from Commonwealth Bank of Australia's earnings presentation, Feb 13, 2002
Slide 1: Presentation of Half Year Results
Presentation of Half Year Results 13 February 2002 www.commbank.com.au
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 February 2002. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice t
Slide 3: Speaker's Notes
Speaker’s Notes Speaker’s notes for this presentation are attached below each slide. To access them, you may need to save the slides in PowerPoint and view/print in “notes view.” Half Year Results 13 3
Slide 4: Overview
Overview Underlying Group performance up 14% Reflects a strong banking result up 16% (before bad debts) driven by a steady net interest margin and growth in other banking income Funds under management result is up 23% with strong momentum in funds inflow maintained through September 11 Austr
Slide 5: Agenda
Agenda Performance Highlights Income and Expenditure Segment Results Balance Sheet Integration of Colonial Funding and Capital Half Year Results 13 5
Slide 6: Performance Highlights
Performance Highlights Set out in this presentation are unaudited proforma graphs and tables which include the profit and loss, balance sheet and life insurance and funds management statistics for the Commonwealth Bank and Colonial Limited for the half year ending June 2000. These have been prepared
Slide 7: Net Profit
Net Profit* 1,200 1,153 1,192 1,109 96 1,035 78 71 121 1,000 63 164 156 170 800 600 918 975 400 802 875 200 0 Jun 2000** Dec 2000 Jun 2001 Dec 2001 Banking Life & Super Funds Management * Net Profit after tax and outside equity interest - cash basis. Excludes abnormal items, appraisal value uplift a
Slide 8: Lending Assets and Funds under Management
Lending Assets and Funds under Management 300 251 261 250 233 241 24 26 23 23 43 45 200 41 41 $80 billion 35 24 29 34 150 12 11 12 12 22 24 24 24 100 32 31 32 32 9 8 8 8 $155 billion 50 71 72 74 80 0 Jun 2000* Dec 2000 Jun 2001 Dec 2001 Lending Assets**: Housing Personal Business Corporate Bank Acce
Slide 9: Australian Market Share
Australian Market Share Dec 2000 Jun 2001 Dec 2001 Home Loans 20.8% 20.4% 20.2%* (Residentially Secured) Credit Cards^ 21.9% 21.4% 21.3%* Retail Deposits 24.6% 24.0% 24.1% Retail FUM (Plan for Life) 16.0% 16.5% 16.6%** Retail FUM (ASSIRT) 19.6% 20.4% 19.8%** Superannuation/Annuities 15.7% 15.8% 16.3
Slide 10: Home Loan Market Share Continues to Stabilise
Home Loan Market Share Continues to Stabilise Initiatives to recapture momentum have included: - Increasing use of mortgage brokers - Cross-sell campaigns in the proprietary channels Strong volume growth in both proprietary & mortgage broker channels Half Year Results 13 10
Slide 11: Home Loan Market Share
Home Loan Market Share Market Share (all lenders) Jan 2001 - Nov 2001 27.00% Residentially Secured 25.00% Approvals Residentially 23.00% Secured Balances * 21.00% Owner Occupied 19.00% Approvals Owner 17.00% Occupied Balances 15.00% 1 1 1 1 1 01 1 1 1 01 1 0 r-0 -0 l- 0 -0 0 -0 -0 -0 g- n- n- b- ct
Slide 12: Home Loan Market Share
Home Loan Market Share Third Party Brokers Funded Approvals Market Share 12.0% 10.0% 8.0% 6.0% * 4.0% 2.0% 0.0% 00 01 01 01 c ar n p De Ju Se M CBA Share $ Value % Source: Market Intelligence Strategy Centre Half Year Results 13 12
Slide 13: New Zealand Market Share ASB Group
New Zealand Market Share ASB Group Dec 2000 Jun 2001 Dec 2001 Retail Lending 14.9% 15.3% 15.1% Retail Deposits 14.5% 14.5% 14.7% Credit Cards 13.8% 14.1% 13.5% Retail Funds Management 4.6% 5.9% 6.1% Main Bank Share 16.4% 16.4% 16.2% Half Year Results 13 13
Slide 14: Domestic Net Interest Margins
Domestic Net Interest Margins 3.50 3.25 % 3.08 3.00 3.00 2.95 2.81 2.75 * 9 0 1 99 00 01 9 0 1 99 00 01 -9 -0 -0 -9 -0 -0 n- n- n- p- p- p- ar ar ar ec ec ec Ju Ju Ju Se Se Se M M M D D D NAB WBC ANZ Commonwealth Bank Group Net interest margin for Commonwealth Bank refers to half-yearly reporting pe
Slide 15: Normalised Earnings
Normalised Earnings 31/12/01 31/12/00 30/06/01 31/12/01 v 31/12/00 $m $m $m % Net Interest Income 2,221 2,253 2,349 6% Other Banking Operating Income 1,196 1,185 1,278 7% Total Banking Income 3,417 3,438 3,627 6% Underlying Life Insurance operating income 506 482 466 -8% Normalised Shareholder Inves
Slide 16: Income and Expenditure
Income and Expenditure Conmonwealth Bank V4
Slide 17: Operating Income
Operating Income 5,000 4,443 4,546 4,500 4,381 4,231 15% 14% 11% 4,000 9% 18% 7% 3,500 7% 8% $millions 3,000 27% 27% 28% 2,500 26% 2,000 1,500 51% 51% 52% 1,000 49% 500 0 Jun 2000* Dec 2000 Jun 2001 Dec 2001 Net Interest Income Other Banking Operating Income Funds Management Income Life & Super Inco
Slide 18: Operating Expense Analysis
Operating Expense Analysis 3,000 2,500 2,000 $millions 1,500 2,473 2,585 2,585 2,594 1,000 500 0 Jun 2000* Dec 2000 Jun 2001 Dec 2001 * Proforma Half Year Results 13 18
Slide 19: Cost Ratios
Cost Ratios 65 3.5 58.8 58.1 60 57.4 3 54.2 55 2.5 50 2.11 2.11 2.10 1.99 2 45 1.83 1.78 1.5 40 1.73 1.64 35 1 Jun 2000* Dec 2000 Jun 2001 Dec 2001 Banking Cost to Income Banking Cost to Avg. Balance Sheet Assets Total Cost to Total Controllable Assets** * Proforma ** Costs to assets held and funds
Slide 20: Segment Results
Segment Results Conmonwealth Bank V4
Slide 21: Banking
Banking 31/12/01 30/06/00* 31/12/00 30/06/01 31/12/01 vs 31/12/00 $M $M $M $M % Interest income 5,513 6,024 5,876 5,369 (11) Interest expense 3,427 3,803 3,623 3,020 (21) Net interest income 2,086 2,221 2,253 2,349 6 Other operating income 1,106 1,196 1,185 1,278 7 Total operating income 3,192 3,417
Slide 22: Funds Management
Funds Management 31/12/01 30/06/00* 31/12/00 30/06/01 31/12/01 vs 31/12/00 $M $M $M $M % Operating income 318 340 399 404 19 Operating expenses 224 224 272 276 23 Operating profit before tax 94 116 127 128 10 Income tax expense 31 38 56 32 (16) Operating profit after tax 63 78 71 96 23 Funds Managem
Slide 23: Funds Under Management
Funds Under Management 120 106 101 100 88 93 24 26 80 22 23 $billions 18 19 60 21 22 31 33 40 27 24 20 20 22 27 29 0 Jun 2000* Dec 2000 Jun 2001 Dec 2001 Australian Retail Funds** Australian Wholesale Funds International Funds Australian Life Assets * Proforma ** Includes listed property trusts Half
Slide 24: Life and Super
Life and Super 31/12/01 30/06/00* 31/12/00 30/06/01 31/12/01 vs 31/12/00 $M $M $M $M % Operating margins Australia 108 92 98 112 22 New Zealand 9 14 9 6 (57) Asia (1) (14) (7) (33) large Total 116 92 100 85 (8) Investment earnings on assets in excess of policyholder liabilities (1) 52 68 58 36 (47)
Slide 25: Life and Super: Investment Earnings
Life and Super Investment Earnings Net Earnings on Shareholders Assets Group Exposure & Market Returns (%): ($m): Market Exposure* Key Market Index For period: 01/07/01- 31/12/01 at 31/12/01 Movement YTD Australia 15 Australia 52% (1.9)% New Zealand 3 US 22% (5.8)% Asia 18 UK/Europe 13% (9.7)% Total
Slide 26: Business Value: Movement analysis
Business Value : Movement analysis $m Business Value as at 30 June 2001 8,003 Analysis of Movement since 30 June 2001 MoS / Cash Profits 217 Net Capital Movements 295 Disposals of Business (46) Change in Shareholders NTA 466 Disposals of Business (15) Net Appraisal Value Uplift 174 Increase to 31 De
Slide 27: Balance Sheet
Balance Sheet Conmonwealth Bank V4
Slide 28: Asset Quality
Asset Quality Conmonwealth Bank V4
Slide 29: Credit Risk
Credit Risk Total Risk Rated Exposures 100% 80% 37 37 37 36 60% 19 17 15 15 40% 19 21 20 64% 18 Investment 20% Grade 26 27 27 29 0% June 2000 Dec 2000 June 2001 Dec 2001 AAA/AA A BBB Other Half Year Results 13 29
Slide 30: Net Impaired Assets
Net Impaired Assets 900 2 800 700 1.5 600 500 1 % $ million 400 % 300 200 0.5 100 0 0 Dec 1999* Jun 2000 Dec 2000 Jun 2001 Dec 2001 Commowealth Bank Group (Other Countries) Commonwealth Bank Group (Australia) Net Impaired assets as % of Risk Weighted Assets (axis on right) * Commonwealth Bank Group
Slide 31: Net Impaired Assets
Net Impaired Assets 2500 36 2000 30 24 1500 Acquisition of Colonial 18 % % 1000 Asian Crisis 12 Two Accounts 500 6 0 0 Dec Dec Dec Dec Dec Dec Dec Dec Dec 1993 1994 1995 1996 1997 1998 1999 2000 2001 Commowealth Bank Group (Other Countries)* Commonwealth Bank Group (Australia)* Net Impaired assets a
Slide 32: Arrears
Arrears Loans Accruing past 90 days or more 30/06/00 31/12/00 30/06/01 31/12/01 $m $m $m $m Housing Loans 211 247 218 168 Other Loans 64 66 90 79 Total 275 313 308 247 Housing loans arrears rate 30/6/99 30/6/00* 31/12/00* 30/06/01 31/12/01 Housing Loans accruing but past 90 days or more $m 182 211 2
Slide 33: Credit Risk: Historical P&L Charge
Credit Risk: Historical P&L Charge 0.25% 0.20% % Charge Per Half 0.15% 0.10% 0.05% 0.00% Dec-98* Jun-99* Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Bad Debt Expense / RWA * Excludes Colonial Half Year Results 13 33
Slide 34: Aggregate Provisions
Aggregate Provisions 2,000 300 1,800 1,600 250 1,400 200 1,200 $millions 1,000 150 % 800 600 100 400 50 200 0 0 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 94 94 95 95 96 96 97 97 98 98 99 99 00* 00* 01* 01 General Provision Specific Provision Total Provisions/Gross Impaired Asse
Slide 35: General Provision
General Provision $m 2100 Charged 1900 to P&L +290 -356 1700 Other 1500 1,399 +1 1,334 1300 Surplus 360 (37% above 1100 Used for 974 APRA Specific 900 Provisions requirement) 700 500 Jun 01 Dec 01 APRA Requirement Half Year Results 13 35
Slide 36: Non-Accrual Loans by Size
Non-Accrual Loans by Size As at 31 December 2001 >=$100m <$5m 1 Loan 339 Loans $50m<$100m $5m<$10m 2 Loans 7 Loans $10m<$20m $20m<$50m 6 Loans 6 loans Half Year Results 13 36
Slide 37: Specific Provisions by Size
Specific Provisions by Size As at 31 December 2001 $50m<$100m 1 Loan <$5m 141 Loans $20m<$50m 2 Loans $10m<$20m $5m<$10m 3 Loans 3 Loans Half Year Results 13 37
Slide 38: Non Accruals by Industry
Non Accruals by Industry As at 31 December 2001 Other Mining Government Transport and Storage Manufacturing Finance and Agriculture Insurance Property and Business services Half Year Results 13 38
Slide 39: Specific Provisions by Industry
Specific Provisions by Industry As at 31 December 2001 Mining Other Manufacturing Agriculture Government Property and Business Transport Finance and Services and Storage Insurance Half Year Results 13 39
Slide 40: Industry Exposures
Industry Exposures Exposure to selected industries Accomodation, cafes and Printing Publishing and Recording Transport and Storage Restaurants Media 3.0 10% 1.2 15% Balances $b % Balances 5.0 6% Balances $b Balances $b % Balances % Balances 2.5 1.0 2.0 0.8 10% 4.0 3.0 4% 1.5 5% 0.6 1.0 0.4 5% 2.0 2%
Slide 41: Integration of Colonial
Integration of Colonial Conmonwealth Bank V4
Slide 42: Integration Synergies
Integration Synergies June 2003 31/12/00 30/06/01 31/12/01 Forecast $M $M $M Recognised Synergies Cost 20 100 150 Revenue 5 17 20 Annualised Synergies Cost 380 80 275 320 Revenue 70 10 40 45 Total 450 90 315 365 Half Year Results 13 42
Slide 43: Integration Expenditure
Integration Expenditure Expenditure Adjustments Full Year to Opening Closing Closing Provision Ended Balance Balance Balance 30/06/00 30/06/01 30/6/01 30/06/01 31/12/01 $m $m $m $m $m Total Restructuring 400 344 145 201 108 Costs (pre tax) Net of Tax 330 275 87 142 77 Half Year Results 13 43
Slide 44: Funding and Capital
Funding and Capital Conmonwealth Bank V4
Slide 45: Funding Sources
Funding Sources A$b Retail % 100 100 80 75 60 50 40 25 20 0 0 Jun 2000* Dec 2000 Jun 2001 Nov 2001 Total Retail Deposits (LHS) Market Share of Retail Deposits (RHS) Retail Funding % (RHS) *Proforma Half Year Results 13 45
Slide 46: Capital Adequacy
Capital Adequacy 30/06/00 31/12/00 30/06/01 31/12/01 $M $M $M $M Total Tier One Capital 9,618 8,914 9,015 9,336 Total Tier Two Capital 6,097 5,802 5,784 5,911 Tier One and Tier Two Capital 15,715 14,716 14,799 15,247 Deductions (3,197) (2,278) (2,119) (2,366) Total Regulatory Capital 12,518 12,438 1
Slide 47: Capital Management
Capital Management Hybrid capital On-market buy-back of the dividend reinvestment plan shares in respect of the interim dividend payable in March 2002 BIS II Half Year Results 13 47
Slide 48: ROE and EPS
ROE and EPS* 100 94 25% 91 91 88 20% 75 15% EPS 50 ROE 13.10% 13.13% 12.47% 12.48% 10% 25 5% 0 0% Jun 00 Dec 00 Jun 01 Dec 01 Earnings per share - cash basis ROE - cash basis * As reported in prior profit announcements (i.e. not proforma) Half Year Results 13 48
Slide 49: Annual Dividends
Annual Dividends 150 100 90 75 125 72 80 66 70 100 58 57 60 52 Cents 75 46 50 % 68 40 36 58 61 50 49 30 45 46 20 22 36 38 20 25 24 10 20 20 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 First Half Second Half Payout Ratio Half Year Results 13 49
Slide 50: Overview
Overview Conmonwealth Bank V4
Slide 51: Overview
Overview Sound Banking performance Significant reduction in banking cost to income ratio Increase in bad and doubtful debt expense, driven by two large corporate exposures Exceptional Funds Management result given the slowing of business in September and softer global equity markets Austra
Slide 52: Presentation of Half Year Results
Presentation of Half Year Results 13 February 2002 www.commbank.com.au
Commonwealth Bank of Australia — H1 2002 Earnings Presentation on 6ix