Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 2022 Earnings Presentation
131 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 9, 2022
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the half year ended 31 December 2021
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, 09 February 2022. It is information given in summary form and does not purport to be complete. Information in this presentation is
Slide 3: Contents
Contents CEO & CFO Presentations 4 Overview & Strategy 36 Financial Overview 55 Home & Consumer Lending 78 Business & Corporate Lending 93 Funding, Liquidity & Capital 102 Economic Overview 117 Sources, Glossary & Notes 128
Slide 4: Results Presentation - Matt Comyn, CEO
Results Presentation Matt Comyn, Chief Executive Officer
Slide 5: Overview
Overview Delivering now, building for the future • Continuing support for our customers and communities • Strong financial performance in a low rate environment • Above system volume growth driven by customer focus and disciplined execution • Capital and balance sheet strength – $3bn in dividends, $
Slide 6: This result
This result 1 Cash earnings higher, strong operational performance 1H22 vs 1H21 Statutory NPAT ($m) 4,741 26% Cash NPAT ($m) 4,746 23% Operating Performance2 ($m) 6,617 4% EPS (cash, $) 2.73 54c Dividend per share ($) 1.75 25c 1. Statutory NPAT, Cash NPAT, Operating Performance and EPS are
Slide 7: Cash NPAT
Cash NPAT 1 Higher income, flat costs (reduced remediation), low loan impairment Operating Income Operating Expenses Loan Impairment Expense Cash NPAT • Continued core volume growth • Volume & investment driven growth • Improved economic outlook • Margin pressures • Lower remediation costs • Cautiou
Slide 8: Delivering: strong volume growth across the business
Delivering Strong volume growth across the business1 Home Loan Fundings2 Transaction Balances3 Dec 21 vs Dec 20 Funding $bn Balances $bn 3 yrs 45% 68% 1.7x 94 317 76 286 1.4x 65 189 1.2x 1.1x 1H21 2H21 1H22 1H19 2H21 1H22 system Consumer Finance CommSec Credit Card StepPay Active Accounts (‘000) App
Slide 9: Delivering: customer focus, operational execution
Delivering Through customer focus, operational execution Net Promoter Scores1 Operational execution CBA 30 50 Home Loan Fundings ($bn)2 #1 94 76 • ~65% of proprietary applications 65 53 53 auto-decisioned same day3 49 45 49 43 #1 • ~80% of referred applications decisioned within 1 day3 #3 1H18 2H18
Slide 10: Strength
Strength Strong balance sheet – provisioned for economic uncertainty - excess capital returned to shareholders Funding Provisioning Capital 73% deposit funded Improved portfolio credit quality (TIA lower) $6bn buy-back completed, CFS divestment Transaction balances +22% Improved economic o
Slide 11: 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 recovery and transition and services experiences and technology foundations Build Australia’s
Slide 12: Leadership in Australia's recovery and transition
Leadership in Australia’s recovery and transition Supporting our customers and communities – helping to build Australia’s future economy Supporting our customers and communities1 • 7m visits to COVID support page (1.8m personalised reminders) • 6 vaccination hubs across Australia • 250k loan repayme
Slide 13: Reimagined products and services
Reimagined products and services Reinforcing our core proposition – example initiatives CommSec CommSec Pocket * Trading Crypto Simple investing AdvancePay Conveyancing Income smoothing Property management StepPay and Neo Expense smoothing Broadband Invest Benefits Finder Entitlements * Digital mort
Slide 14: Reimagined products and services: recent examples
Reimagined products and services Some recent examples StepPay SMART more than just a payment device Aug 21 Jan 21 Oct 21 • ~150,000 accounts • Doubled customer base in 2021 • Touch screen, fully mobile • >2 million transactions1 • >170m orders facilitated • >2,200 customers • Originate/activate in m
Slide 15: Reimagined products and services: investing for the future
Reimagined products and services Investing for the future Crypto Property management Settlement Rent to own Minority stake Sep 21 Nov 21 Pilot Dec 21 Nov 18 • Property settlement leader • Leading machine learning platform • Crypto exchange & custody provider • Australian property market innovators •
Slide 16: Global best digital experiences and technology
Global best digital experiences and technology Personalised, differentiated, value-added Net Promoter Score6 • >1.8m Benefits Finder claims started1 Mobile App CommBank app users 6.6m 30.7 • +23% increase in use of Profile features2 5.9 4.7 • >20% increase in customer visits to For You3 Dec 17 Dec 1
Slide 17: Simpler, better foundations
Simpler, better foundations Disciplined execution - embedding the right behaviours Remedial Action Plan • Completed sale of 55% interest in Colonial First State Milestones Delivered 100% • Embedding Remedial Action Plan 177 139 • Focused operational execution 82 18 1H19 1H20 1H21 1H22 • Cumulative c
Slide 18: Results Presentation - Alan Docherty, CFO
Results Presentation Alan Docherty, Chief Financial Officer
Slide 19: Result overview
Result overview Result reflects a long-term, disciplined approach Domestic cash rate bpts 150 Navigating the • Supporting economic recovery current environment • Margin pressure from low rates 10 1H19 1H22 CBA share count (m) Through • Consistent operational execution 1,770 1,706 disciplined executi
Slide 20: Statutory vs Cash NPAT
Statutory vs Cash NPAT Statutory NPAT up 26% - broadly in line with Cash NPAT growth 1H21 2H21 1H22 $m Statutory NPAT – continuing operations 3,759 5,084 4,741 Non-cash items: • Includes Aussie Home Loans, AUSIEX, Commonwealth – Transaction costs and gain on disposals1 (101) 284 11 Financial Plannin
Slide 21: 1H22 result
1H22 result 1 Cash NPAT up 23% on lower loan provisions, pre-provision operating performance up 4% 1H22 1H22 vs 1H22 vs $m 1H21 2H21 Operating Income 12,205 2.0% 0.1% Operating Expenses 5,588 (0.1%) (3.1%) Operating Performance 6,617 3.9% 3.0% Loan Impairment Expense/(Benefit) (75) (
Slide 22: Operating income
Operating income1 Strong core volume growth & higher OBI, partly offset by lower margin & reduced insurance income • Improved volume related lending and deposit fees • Non-recurrence of aircraft impairments in 1H21 & higher profits from minority investments • Partly offset by lower Global Market & e
Slide 23: Group margin - last 6 months
Group margin1 – last 6 months Impacted by continued fixed rate switching and home loan competition This Half -9bpts 209 (2) 3 -17bpts (4) (3) (3) 200 Swap rates (8) 192 increased faster Customer than fixed rate switching to Replicating portfolio (1) repricing in 1H22 lower margin Equity hedge (1) +$
Slide 24: Group margin - last 3 years
Group margin1 – last 3 years Significant impact of falling cash rate on at-call deposits; customer switching to fixed rates and home loan competition -15bpts NIM compression on low-rate deposits (net of hedging) from 140bpts in cash rate cuts Deposits mix +7 -9bpts Lower consumer finance balances (2
Slide 25: Group margin - future considerations
Group margin – future considerations Margins to remain under pressure until we see a rising cash rate environment Expected changes in driver impacts Neutral Expected impact to Negative Group 2H22 Medium term Positive NIM Key drivers Outlook: Unchanged Cash Rate & Rising Swap Rates Outlook: Rising Ca
Slide 26: Operating expenses
Operating expenses1 Lower remediation costs & business simplification benefits offsetting higher investment spend, volume and staff costs +2.7% ex remediation Contribution to Mvt3: -2.8% +0.5% +1.4% +0.8% -0.1% 137 (92) (149) 24 77 5,591 5,588 • Support for increased lending processing & Cumulative
Slide 27: Credit risk
Credit risk Leading indicators reflect continued improvement in economic conditions and outlook Loan Impairment Expense Arrears 2 TIA Loan loss rate (bpts)1 90+ days $bn bpts 1H21 2H21 1H22 Personal Loans Credit Cards Home Loans3 % of TCE: 0.70% 0.61% 0.53% Consumer 14 -6 0 Corporate 44 -13 -7 1.51%
Slide 28: Provisioning
Provisioning Further reductions in modelled collective provisions and overlays for emerging risks Total Provisions ($m) Provisions vs Central Economic Scenario ($m) Provision Coverage1 1.81% 1.63% 1.50% Total Provisions Central Scenario ECL2,3 Dec 21 6,815 vs Jun 21 Individually 6,211 6,815 Assessed
Slide 29: Funding
Funding Conservative funding position maintained Deposit funding Long term funding1 Short term funding3 LCR and NSFR % of total funding Weighted Average Maturity2 % of total funding LCR4 NSFR % of total funding 19% 19% 18% 73% 6.5yrs 9% 134% 131% ex. TFF 26% 73% 129% 129% 55% 6.4 6.5 5.1 ex. TFF 5.0
Slide 30: Capital
Capital Strong capital position retained post off-market buy-back and dividends Expected uplift Expected uplift Movements in bpts (divestment) 5 (divestment & APS111) 5,6 +9bpts +26bpts 18.4% international 13.1% (133) (54) 11.8% 12.0% 32 (79) 98 11.8% 6 Regulatory prudential 8.0% Credit Risk4 (21) m
Slide 31: Capital management
Capital management A disciplined and balanced approach that optimises growth, reinvestment, shareholder returns and flexibility Organically Generated Capital Released1 Capital Flexibility2 Reinvested in the Group Distributed to shareholders Retained Franchise Growth Investment3 Dividend Paid Capital
Slide 32: Dividend
Dividend Long term sustainable returns Sustainable returns • Interim dividend of $1.75 Dividend per share (cents) • DRP no discount and neutralised Cash NPAT1 Half year payout ratio Cash NPAT2 Half year payout ratio (Normalised) • Payout ratio of 62%, or ~70% normalising for long run loan loss rates
Slide 33: Capital: $2bn on-market buy-back
Capital Continued capital management with $2bn on-market buy-back Surplus1 • CBA’s strong capital position creates flexibility to continue to support our ($bn) 11.5 ~6 ~4 customers and manage ongoing uncertainties, while returning a portion of surplus capital to shareholders. • Capital management in
Slide 34: Economic outlook
Economic outlook • Upbeat on the outlook – strong momentum in the Australian economy − Low unemployment, low underemployment, high participation − Significant accumulated household savings − Solid exports, infrastructure pipeline and non-mining investment • New Zealand economy in a strong position –
Slide 35: Summary
Summary Delivering now – building for the future Customers Net Promoter 12 months • Strong financial performance in a low rate environment Scores1 Rank Volume Growth2 CBA vs System Consumer #3 Home Lending 1.2x Business #1 Business Lending 1.7x • Above system volume growth driven by customer focus,
Slide 36: Overview & Strategy
Overview & Strategy
Slide 37: Why CBA?
Why CBA? Leading franchise - leading returns MFI share1 (%) Home Lending share2 (%) Household Deposits share3 (%) Business Banking share Change in 1H22 (bpts) Deposit Funding Peers as at Sep 21 20 15 73% 71% 68% 65% Lending share (%)2 Deposits share (%)3 -37 -61 34.4% CBA Peer 2 Peer 3 Peer 1 CBA Pe
Slide 38: Delivering: balanced outcomes for all stakeholders
Delivering Balanced outcomes – delivering for all stakeholders Customer People Community Shareholders Net Promoter Scores1 People engagement2 Reputation score3 Total Shareholder Return4 CBA Rank 63.4 Period % Rank Pride in CBA 89% Consumer #3 80% 1yr 28% #2 80% Business #1 3yr 59% #1 71% CBA Institu
Slide 39: Delivering long-term sustainable returns
Delivering long-term sustainable returns A consistent, long-term strategy - focused on the customer Strong engagement with the Strong operational execution customer underpins leading market delivers scale efficiencies and shares and satisfaction rankings capacity for long-term reinvestment Scale and
Slide 40: Franchise strength across the customer lifecycle
Reimagined products and services Franchise strength supporting our customers across the lifecycle Customer Spending Paying Wealth Youth Starting out Pre-retirees Retirees Lifecycle or saving off debt accumulators Dec 16 46.2% 44.4% Dec 20 CBA MFI Dec 21 Share CBA MFI share1 40.4% 32.8% 29.9% 28.1% 3
Slide 41: CBA's venture scaler
Reimagined products and services CBA’s venture scaler – solving how to scale ventures within CBA’s ecosystem A venture portfolio and platform enabling services to seamlessly scale services built, acquired or invested in, to CBA customers Businesses launched, invested in or acquired by x15ventures in
Slide 42: Coming soon: carbon and green loans
Coming soon Reimagined products and services Grow Australia’s Carbon voluntary carbon market Green Loans Sustainability linked loans Energy Efficient Equipment Finance Carbon bonds and loans May 21 Oct 21 Ongoing Ongoing • Carbon neutral energy1 • Data partnership to underpin transition • Developmen
Slide 43: In pilot: reimagining business banking
In pilot Reimagined products and services Stream Working Capital Reimagining business banking Digital working capital solution CommBank Health Healthcare 100% Acquisition Joint Venture 100% Acquisition Hospitality Jan 21 Data insights May 21 Healthcare Jul 21 • Doubled customer base in 2021 • Joint
Slide 44: Reimagining home buying and ownership
Coming soon Reimagined products and services Minority investment Reimagining home buying and ownership Rent to own Proprietary CBA Stake 25% Minority stake Proprietary Feb 20 Jul 21 Sep 21 In testing • Home-buying assistant • Premium NBN services • Digital property-management • Digital home loan bus
Slide 45: Reimagining the shopping experience
Coming soon Reimagined products and services Simplify the gifting Reimagining the shopping experience experience StepPay Jan 20 Aug 21 Aug 21 Nov 21 • 1.2m downloads • ~600k merchant referrals • ~150k new accounts AI-powered brand & deal • BNPL at all merchants via • 1.4m website visits • >2m transa
Slide 46: Reimagining merchant proposition
Coming soon Reimagined products and services Digital, real time direct debit payments Reimagining merchant proposition SMART SMART Mini Pay more than just a payment device Tap and Pay Reader Oct 21 In Pilot • Touch screen, fully mobile, SIM/wi-fi enabled • Compact, fully mobile, Bluetooth • Native f
Slide 47: Building on a history of innovation
Global best digital experiences Building on a history of innovation Strong Foundations Establishing Leadership Broadening Ecosystem Launch of Open Partnerships Further X15 Banking with expanding ↑ Ventures industry CBA’s digital First major Building a bank leaders ecosystem pipeline of new accredite
Slide 48: Market leading digital assets
Global best digital experiences Market leading digital assets – delivering brilliant customer experiences Leading customer experience Strong customer engagement Mobile banking leader Mobile app CommBank app users1 Digital transactions #1 Net Promoter Score5 % of total - by value2 71.5% 6.6m Online b
Slide 49: Investing in technology and capability
Global best digital experiences and technology Investing in technology and capability • Digitising and automating key processes (ID, KYC, lending documentation etc) Modernised • Customer Engagement Engine – 157bn data points processed in real time systems, digitised • H20.ai (minority stake) – AI cl
Slide 50: Reimagining data and analytics
Global best digital experiences Reimagining data and analytics Data First H2O.ai Customer Engagement Engine Internally Generated Minority stake Internally Generated • Single, secure, trusted data platform • AI cloud platform • Personalised AI customer experience platform • Enables a data driven orga
Slide 51: Disciplined execution - sale of 55% interest in CFS completed
Simpler, better foundations Disciplined execution – sale of 55% interest in CFS completed Divestments Simpler Financial Wisdom and PT Expected completion of Commonwealth Life CommInsure Life General Insurance TymeDigital Count Financial CFP BoCommLife Commonwealth Financial Planning (CFP) Pathways A
Slide 52: Our commitment to sustainability
Our commitment to sustainability Making a positive contribution to our customers, community and our people Supporting our Supporting our Good business Engaging our people customers community practices • Continued to supported small and • Partnered with industry and • Refreshed our purpose ‘Building
Slide 53: Our approach to climate
Our approach to climate Building a brighter future for all Our priority Leadership in Australia’s transition to a low carbon economy Our shared ambition Protect our wellbeing & biodiversity Build Australia’s future economy Support an inclusive transition Our objectives & Reduce our operational Align
Slide 54: Climate outcomes
Climate outcomes Driving action to manage our climate change risks and opportunities Reduce our operational Align our portfolio to Help our customers Manage our exposures Contribute to national emissions Paris Agreement transition to climate risk capability • As part of our ongoing • Lifted temperat
Slide 55: Financial Overview
Financial Overview
Slide 56: How we contribute to Australia
How we contribute to Australia1 Income earned Expenses and payments Dividends and reinvestment In FY21, Commonwealth $ 15.5bn FY21 was spent on: From the profit4 of $8.7bn, three quarters Bank earned income of goes to shareholders and the rest is reinvested Staff related2 Dividends $24.2bn $6.0bn FY
Slide 57: Overview - 1H22 result
Overview – 1H22 result1 Key outcomes summary Financial Balance sheet, capital & funding Statutory NPAT2 ($m) 4,741 +26.1% Capital – CET13,6 (Int’l) 18.4% (30bpts) Cash NPAT2 ($m) 4,746 +22.7% Capital – CET13 (APRA) 11.8% (80bpts) ROE2 % (cash) 12.3 +180bpts Total assets ($bn) 1,150 +8.6% 2 EPS cents
Slide 58: Overview - 1H22 result: key financial outcomes
Overview – 1H22 result Key financial outcomes Cash NPAT1 ($m) NIM1 Cost-to-income1,2 Cash ROE1 +22.7% -14bpts +30bpts +180bpts -0.8% -17bpts +40bpts -30bpts 4,785 4,746 206 209 12.6% 12.3% 44.7% 44.6% 45.0% 3,868 10.5% 192 1H21 2H21 1H22 1H21 2H21 1H22 1H21 2H21 1H22 1H21 2H21 1H22 Cash EPS1 (cents)
Slide 59: Cash NPAT by division
Cash NPAT by division1 Cash NPAT growth across all core businesses RBS2 BB IB&M NZ (NZD) vs PCP vs PCP vs PCP vs PCP • Income +2% • Income +1% • Income (7%) • Income +12% • Costs +3% • Costs +7% • Costs +2% • Costs +5% • Impairment (Lge) • Impairment (85%) • Impairment ($302m) • Impairment ($43m) +1
Slide 60: Total operating income drivers
Total operating income drivers1 Core volume growth and higher lending and deposit fees, partly offset by lower insurance income +2.0% 11,961 12,205 98 Funds & Insurance (42.7%) 171 • Lower insurance income from higher weather event claims ($73m) 2,359 Other Banking Income +7.7% 2,190 • Higher lendin
Slide 61: Balance sheet
Balance sheet Continued strong growth in core markets Dec 21 vs Dec 21 vs Group Lending $bn Dec 20 Jun 21 Dec 21 Jun 21 Dec 20 +7.1% Home loans 559.3 579.8 605.9 4.5% 8.3% Consumer finance 17.4 17.0 16.7 (1.8%) (4.0%) +3.9% 1 Business loans 128.0 135.2 141.5 4.7% 10.5% 849 816 Institutional loans 87
Slide 62: Volume growth
Volume growth Above system growth in all core products Home Lending1,2 Business Lending1,2,3 Household Deposits1,4 Business Deposits1,5 CBA CBA (excl. IB&M) CBA CBA System CBA System System System 14.1% 12.5% 13.3% 12.2% 10.7% 10.4% 8.5% 8.5% 9.5% 9.0% 7.0% 4.6% 3.8% 7.4% 5.4% 6.2% 5.9% 5.2% 6 Month
Slide 63: Market share
Market share1 Market share gains in core products Household Lending2 Household Deposits3 CBA Peers % Dec 21 Jun 21 Dec 20 30% CBA Peers 30% 2 25.5% 27.6% Home loans – RBA 25.5 25.3 25.2 21.1% Home loans - APRA3 26.2 26.0 25.9 20% Break in series from Jul 19 20% Break in series 20.6% from Mar 19 Cred
Slide 64: Group margin - last 12 months
Group margin1 – last 12 months Impacted by continued switching to fixed rate loans and home loan competition -5bpts (1) (2) -14bpts 206 (2) (3) -3bpts NIM compression (6) 9 201 (9) on low-rate deposits (net (5) 3 Impact of falling 2 192 of hedging) from 15bpts swap rates in cash rate cuts Customer D
Slide 65: Group margin: hedge earnings
Group margin Hedge earnings continue to decline due to low interest rates Replicating Portfolio (RP) & Equity Hedge Liquidity & Basis Risk Liquidity In FY22 the hedge earnings decline is expected to be neutralised by the benefit of • Every additional $10bn of liquid assets is expected to reduce Grou
Slide 66: Margins by division
Margins by division1 Impacted by a low interest rate environment RBS2 BB IB&M NZ (ASB)3 Increased home loan competition and Lower home lending and deposit Higher Institutional lending and Unfavourable lending margins and switching, lower earnings on equity margins partly offset by favourable leasing
Slide 67: Other banking income (OBI)
Other banking income (OBI)1 Higher volume driven fees and non-recurrence of aircraft impairment, lower CommSec equities and merchants income $m Other Banking Income $m Trading Income 1H22 vs 1H21 1H22 vs 1H21 2,354 2,359 2,190 Other 60 403 • Non-recurrence of impairment 535 438 of aircraft operating
Slide 68: Sequential operating income
Sequential operating income1 Strong core volume growth, 3 additional days helping to offset continued margin pressures, lower insurance income • Higher Global Markets sales and trading income • Reduced CommSec equities trading volumes • Lower merchants income including COVID-19 fee waiver • 3 additi
Slide 69: Sequential operating expenses
Sequential operating expenses1 Lower remediation costs and further business simplification benefits, partly offset by higher volume and staff costs +1.1% ex remediation Contribution to Mvt: -4.2% -0.4% +1.1% +0.4% -3.1% 5,768 (240) 77 (53) (24) 60 5,588 Cumulative cost savings • Support for increase
Slide 70: Customer remediation
Customer remediation Additional remediation provision – committed to making things right for customers Remediation and program costs Customer refunds Cumulative spend and provisions ($m) Cumulative customer refunds ($m) • $1,064m returned to customers 2,098 • $1,034m remaining Wealth (Aligned Advice
Slide 71: Cost approach supporting investment spend
Cost approach supporting investment spend Long term cost reduction creating capacity for long term investment Cost Reduction Investment Spend1,2 $m $m Cumulative savings Cost approach Shift to Productivity & Growth • Simpler, more efficient business for our customers and 953 945 953 945 people 856 8
Slide 72: Loan losses
Loan losses Lower provisions on improved economic outlook Loan Loss Rate1 Loan Loss Rate by business unit1 bpts bpts 22 73 44 -6 Consumer Corporate 14 -8 -13 41 1H21 2H21 142 33 38 25 31 76 21 20 19 50 16 16 15 16 22 43 24 15 7 14 23 20 13 11 8 10 14 0 4 6 29 26 17 19 17 18 18 18 18 18 17 26 16 0 -3
Slide 73: Provisions
Provisions1 Strong provision coverage maintained Provision coverage/CRWA Provisions by stage Performing Non-performing Credit Credit Stage 2 exposures exposures3 provisions by credit grade4 Total Dec 20 Dec 21 1.50 1.50 Retail secured 1.31% 1.04% 1.43 1.40 $179bn $m Dec 20 Dec 21 Dec 20 Dec 21 Retai
Slide 74: Retail Banking Services (RBS)
Retail Banking Services (RBS)1 Operational execution – volume growth above system – income and earnings higher Net Promoter Score2 MFI Share3 Volume growth4 10 Consumer NPS 1H22 Volume growth 6 months to Dec 21 #3 System CBA 34.3% 34.4% 0 9.5% 9.0% 16.3% 4.6% 3.8% -10 Dec 20 Dec 21 Next highest peer
Slide 75: Business Banking (BB)
Business Banking (BB)1 Investment and continued focus on service model, leveraging digital assets - strong volume growth Performance Business Lending Transaction account growth Gap to Rank Actual nearest Spot balances ($bn) >100k new accounts in 1H22, 34% via digital Dec 21 peer +13% +11% Business N
Slide 76: Institutional Banking and Markets (IB&M)
Institutional Banking and Markets (IB&M)1 Combining global connectivity and capability – contributing to Australian economic recovery Net Promoter Score IB&M Lending Credit RWAs Institutional NPS2 Lending decrease driven by a reduction in pooled Decline in Dec 21 driven primarily by improvement (Tur
Slide 77: ASB
ASB1 Strong volume growth Consumer Net Promoter Score2 Business Net Promoter Score3 Volume Growth4 12 months to Dec 21 Peers ASB Peers ASB 40 10 #1 10.1% System 0 #2 8.5% 8.3% ASB 30 -10 -20 5.8% 20 -30 10 -40 Dec-20 Dec 20 Dec-21 Dec 21 Dec 20 Dec 21 Business lending Home lending Margin5 Carded fix
Slide 78: Home and Consumer Lending
Home and Consumer Lending
Slide 79: Home lending overview
Home lending overview Process efficiency – above system growth - strong risk profile Consistent market share gains1 Net growth driven by new fundings2 New fundings up 45%3 $bn 94 $bn 24.6% 25.5% +45% 23.0% 21.6% Internal Refinance 11 (11) (20) 94 (40) 76 20.7% 21.1% 83 65 539 49 45 49 43 53 53 14.9%
Slide 80: Home loan process efficiency
Home loan process efficiency Ensuring strong volume growth can be processed quickly and efficiently Focus Areas Operational execution1 Focus on turnaround times • Digital Servicing Tool - qualify servicing capacity for customers. Applications auto-decisioned Referred applications decisioned ~65% sa
Slide 81: Serviceability assessment
Serviceability assessment1 Majority of loans originated under tightened standards to assist customers with repayment shock ~80% of the book originated under tightened standards since FY16 New Loan Assessment • All income used in application to assess serviceability is verified • 80% or lower cap on
Slide 82: Borrowing capacity
Borrowing capacity1 Maintaining credit availability – lending growth within risk appetite Borrowing capacity reducing Driven by increase in serviceability assessment buffer rate to 3% (Loans assessed based on the higher of the customer rate3 + buffer, or minimum floor rate) 140% Change in maximum bo
Slide 83: Portfolio quality remains sound
Portfolio quality remains sound 1 Strong repayment buffers in place Repayment buffers Those with less than 1 month buffer include investors and (Payments in advance 2, % of accounts) new borrowers 37% 36% <1 month 35% 34% 35% 35% Dec 20 Jun 21 Dec 21 9% 8% 10% 7% 7% 6% Residual 6% 8% 9% Structural:
Slide 84: Home loan portfolio - CBA
Home loan portfolio – CBA1 A balanced approach to portfolio quality, growth and returns Portfolio1 Dec 20 Jun 21 Dec 21 New Business1 Dec 20 Jun 21 Dec 21 Total Balances - Spot ($bn) 498 516 539 Total Funding ($bn) 65 76 94 7 Total Balances - Average ($bn) 492 507 528 Average Funding Size ($’000) 34
Slide 85: Home loan portfolio - CBA ex Bankwest
Home loan portfolio – CBA ex Bankwest A balanced approach to portfolio quality, growth and returns Portfolio1 Dec 20 Jun 21 Dec 21 New Business1 Dec 20 Jun 21 Dec 21 Total Balances - Spot ($bn) 423 439 459 Total Funding ($bn) 57 66 80 6 Total Balances - Average ($bn) 417 431 450 Average Funding Size
Slide 86: Home Loan (HL) portfolio profile
Home Loan (HL) portfolio profile1 Low interest rate environment promotes growth in fixed rate home loans Fixed vs Variable Rate HL Stock and Flow2 Variable Fixed Rate HL Expiry Schedule ($bn)3 Increase in fixed rate HL flow since start of 2020 Fixed 53 38 62% 62% 53% 77% 73% 67% 25 25 19 22 47% 12 3
Slide 87: Home Loan portfolio profile
Home Loan portfolio profile1 Improving Portfolio LVR, Negative Equity and Offset balances reflective of strong economy and property market Negative Equity2 Dynamic LVR Bands3 Proportion of balances in negative equity % of total Portfolio Accounts Dec 20 Jun 21 • 44% of negative equity is from WA. 64
Slide 88: Home loan arrears
Home loan arrears Reflect low interest rates, government stimulus, strong property market, sound origination quality and balance growth Arrears by portfolio Arrears by product Arrears by repayment type Group 90+ days Group 90+ days1 Group 90+ days1 1.0% 1.0% 0.8% Bankwest 0.8% 0.8% 0.6% CBA 0.6% 0.6
Slide 89: Home loan impairments
Home loan impairments Impaired home loans remain low with modest growth due to ASB restructured home loans (COVID-19)1 Impaired home loans Overview 1.90 1.75 • Relatively stable Australian Home Loan impairments (HoH +$29m), offset by 1.45 0.66 0.54 increase in ASB impairments reflecting a conservati
Slide 90: Portfolio losses and insurance
Portfolio losses and insurance 1 Portfolio losses remain historically low Losses to average gross loans 2 Portfolio Insurance Profile4 % of Home Loan portfolio 2.5% Current Historical Avg.3 Group Total Loans 0.08% 0.30% 2% 20% CBA Home Loans 0.01% 0.02% Excess of loss Insurance with Genworth 2.0% re
Slide 91: Managing unsecured lending
Managing unsecured lending Sound credit quality with historically low 90+ arrears rate Credit Cards1 Personal Loans1 Group 90+ days Group 90+ days 0.66% 0.61% 0.49% 1.48% 1.09% 0.97% 9,615 9,237 9,267 5,284 5,091 4,782 $m $m 64 56 45 78 55 46 Dec 20 Arrears Portfolio Jun 21 Arrears Portfolio Arrears
Slide 92: Consumer arrears
Consumer arrears Reflect sound origination quality, customer deleveraging supported by government stimulus and low unemployment levels Credit Cards 1 Personal Loans 1 ASB 6.0% Group 30+ days 6.0% Group 30+ days CBA Group 4.0% 4.0% Bankwest 2.0% 2.0% 0.0% 0.0% Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Dec 1
Slide 93: Business and Corporate Lending
Business and Corporate Lending
Slide 94: Portfolio quality
Portfolio quality1 Improvement in portfolio quality metrics – TIA 0.53% Exposures by Industry1 Corporate portfolio quality Group TCE by geography Investment Grade AAA A+ BBB+ TCE $bn to to to Other Dec 21 Dec 20 Jun 21 Dec 21 AA- A- BBB- 68.3% 69.0% 69.0% Australia 80.3% 81.8% 81.6% Gov. Admin & Def
Slide 95: Total committed exposure summary
Total committed exposure summary Close monitoring of key sectors Provisions to total Group TCE ($bn) TIA ($bn) TIA % of TCE committed exposure % Jun 21 Dec 21 Jun 21 Dec 21 Jun 21 Dec 21 Jun 21 Dec 21 Consumer 710.5 737.3 2.0 2.1 0.3% 0.3% 0.4% 0.4% Government Administration & Defence 189.2 205.9 0.
Slide 96: Sector focus - commercial property
Sector focus – commercial property Portfolio weighted to NSW – TIAs remain low at 0.6% • Exposure diversified across sectors and by counterparty, with the top Group exposure Dec 20 20 counterparties representing 15% of the portfolio and having a Jun 21 weighted average rating of BBB equivalent. 77.5
Slide 97: Sector focus - transport & storage
Sector focus – transport & storage Conditions remain challenging Airlines & Aircraft Lessors 1 Group exposure Dec 20 • Exposure reduced by ~$700m over the last year largely due to active Jun 21 portfolio management and amortisation. 26.8 26.5 58 58 25.6 55 Dec 21 • Over 70% of our airline portfolio
Slide 98: Sector focus - entertainment, leisure & tourism
Sector focus – entertainment, leisure & tourism Improving trends evident but uncertain conditions remain Group exposure Dec 20 • Diverse industry with many sub-sectors impacted by government Jun 21 restrictions, including border closures, shutdowns and social distancing 14.0 Dec 21 12.9 13.0 12 init
Slide 99: Sector focus - retail trade
Sector focus – retail trade Consumer sentiment improving post lockdown but some headwinds remain Group exposure Dec 20 • Despite a further period of lockdowns in NSW and Vic through to Jun 21 November 2021, the sector has remained resilient due to a 13.4 30 28 Dec 21 strong housing market and redire
Slide 100: Sector focus - construction
Sector focus – construction Outlook is uncertain • Designated an essential industry up until the NSW lockdown in July, Group exposure Dec 20 the sector was able to operate through COVID-19 with some level of Jun 21 disruption and productivity loss due to lockdowns and social 13 Dec 21 10.8 12 12 9.9
Slide 101: Sector focus - mining, oil & gas
Sector focus – mining, oil & gas Declining exposures in-line with strategy, stable portfolio performance Group exposure Dec 20 • Exposures of $7.7bn (0.6% of Group TCE), reduced by $1.0bn over Jun 21 the past 6 months mainly from reduced Oil & Gas facilities. Dec 21 69 68 67 9.1 8.7 7.7 • Stable per
Slide 102: Funding, Liquidity and Capital
Funding, Liquidity and Capital
Slide 103: Funding overview
Funding overview Resilient balance sheet with significant excess liquidity Funding composition Wholesale funding Funding profile Deposit growth supporting 73% of funding Weighted to long term TFF refinance to be managed across FY23-FY25 period % of total funding Long term % 1H22 Maturity5 8% 8% 9% i
Slide 104: Deposit funding
Deposit funding Highest share of stable household deposits in Australia Deposit funding Deposits vs peers1 Deposits in NSFR2 $bn As at December 2021 ($bn) 644 Peers as at September 20213 75% Other 509 73% 73% 304 431 deposits 352 255 267 300 CBA Household 198 340 Peer 3 deposits 254 164 154 250 Peer
Slide 105: Wholesale funding
Wholesale funding Diversified wholesale funding across product, currency and tenor Portfolio mix Short term funding by product $bn Certificates of Deposits 56% Long term funding1 127 48% Commercial Paper 26% Short term funding2 33% FI Deposits 15% 87 MTN 2% Term Funding Facility 51 19% Other 1% Long
Slide 106: Funding and liquidity metrics
Funding and liquidity metrics1 Strong funding and liquidity positions maintained 131% NSFR NSFR (%)4 December 2021 813 619 2.3 (4.7) 131 Residential Retail/SME 129 6.1 (0.5) (0.4) Mortgages ≤ 35% Deposits (0.8) risk weight2 Other Loans Wholesale Funding & Other $bn Capital Liquids and Other Assets3
Slide 107: Capital overview
Capital overview Strong capital position maintained CET1 CET1 CET1 Impact of $6bn off-market 511% Dividend per Share share buyback APRA International (cents) Level 2 Level 1 Level 2 Payout Ratio (cash NPAT basis) Payout Ratio (Normalised cash NPAT basis) Assets 12.8% 18.7% 200 12.6% 18.4% 161% 199 2
Slide 108: Capital: lower share count supports shareholder returns
Capital Lower share count supports higher shareholder returns and dividends compared to peers Number of shares (m)1 Dividend per share ($)3 CBA Peers CBA Peers 3,669 Capital raisings for 3,282 strengthening during 1.75 2,824 GFC 0.72 1,776 0.59 0.67 1,516 1,706 0.58 0.60 1,506 0.29 1,260 0.26 Increa
Slide 109: Capital drivers
Capital drivers Total risk weighted assets (RWA) higher this half – driven by Credit RWA volume growth & IRRBB CET1 Total Risk Weighted Assets (RWA) bpts $bn 451 9.7 (0.1) 472 32 (79) (54) 9.1 2.5 (133) 98 6 Market Risk 11 24 IRRBB 15 8 13.1% 11.8% Op Risk 46 46 Credit Risk3 (21) IRRBB (27) CET1 imp
Slide 110: CET1 (Level 1)
CET1 (Level 1) CET1 Level 11 of 12.0%, 20 bpts above Level 2 Expected uplift (divestments & APS111) 2,3 CET1 (Level 1) Impact 26 bpts Differences between Level 1 and Level 2 bpts (bpts) Lower RWA at Level 1 due to the exclusion of 140 banking subsidiaries 13.3% (135) Investment in insurance subsidia
Slide 111: Capital
Capital Strong capital position maintained in 1H22 Key Capital ratios (%) Dec 20 Jun 21 Dec 21 • CET1 ratio of 11.8%. • 2021 interim & final dividend - DRP neutralised. CET1 capital ratio 12.6 13.1 11.8 • $2bn on-market buy-back announced. Additional Tier 1 capital 2.4 2.6 2.2 • $6bn off-market shar
Slide 112: CET1 - internationally comparable
CET1 – internationally comparable Group’s CET1 ratio of 11.8% translates to 18.4% on an international basis CET1 APRA 11.8% Internationally comparable1 CET1 Balances below prescribed threshold risk weighted, bpts Equity investments compared to 100% CET1 deduction under APRA 0.8% Balances are risk we
Slide 113: Regulatory capital changes
Regulatory capital 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 poi
Slide 114: Regulatory expected loss
Regulatory expected loss1 Lower provisions in 1H22 $m Dec 20 Jun 21 Dec 21 Non- Non- Non- Defaulted Defaulted Defaulted Defaulted Defaulted Defaulted Regulatory Expected Loss (EL) 1,891 3,062 1,931 2,956 1,676 2,888 Eligible Provisions (EP) Collective Provisions2 125 5,149 131 4,552 105 4,462 Specif
Slide 115: Basel III Reforms
Basel III Reforms Basel III regulatory reform finalised, with new revised minimum CET1 ratio of 10.25% effective from Jan 2023 10.50% Revised APRA Minimum (incl. of Capital Buffers) 10.25% • Revisions to capital framework finalised in November 2021. Countercyclical Capital Buffer 1.00% Unquestionabl
Slide 116: APRA's LAC requirements
APRA’s LAC requirements 3% increase in Total Capital by 2024, rising to 4.5% by 2026 to meet loss absorbing capacity (LAC) requirement • Based on the Dec 2021 RWA, CBA requires an additional $4.7bn and $11.8bn of @ 5% by @ 6.5% by LAC qualifying issuance (excluding maturities) by 1 Jan 2024 and 1 Ja
Slide 117: Economic Overview
Economic Overview
Slide 118: Key Australian economic indicators (June FY)
Key Australian economic indicators1 (June FY) GDP % Trimmed mean CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 3.0 3.2 7.4 6.1 6.2 5.6 5.5 5.1 5.6 5.2 4.7 4.4 4.5 1.7 1.6 1.5 3.9 2.9 3.4 1.3 2.1 1.8 1.5 0.0 2018 2019 2020 2021 2022 202
Slide 119: Key Australian economic indicators (December CY)
Key Australian economic indicators1 (December CY*) GDP % Trimmed mean CPI % Unemployment rate % Calendar year average Calendar year average Calendar year average GDP Nominal GDP 10.2 3.3 2.8 6.5 5.1 5.3 5.5 5.3 5.2 5.1 4.4 4.8 1.9 2.8 1.6 4.1 2.0 0.8 -1.4 -2.2 2018 2019 2020 2021 2022 2018 2019 2020
Slide 120: The global economy
The global economy Global economic growth to moderate in 2022 Global economic growth to moderate in 20221 China and US growth rate to slow2 Economic outcomes impacted by vaccination3 rates Global growth (annual % change) CBA GDP Forecasts (Index = 100 on Dec 19) % Index Booster shots (doses administ
Slide 121: The Australian Economy
The Australian Economy Post Delta recovery was strong, but caution over the near term impact from Omicron GDP fell less than expected in Q3 211 Labour market recovered swiftly2 Including participation rate and unemployment rate3 Real GDP Employment $bn Labour market CBA (f) '000 mil % 580 % 400 10.8
Slide 122: The Australian Economy
The Australian Economy Some caution over the impact from Omicron while inflation pressures build High frequency CBA card spend data holding up1 Household Spending Intentions strong in December2 CBA card spend recovering for services during late January3 Total spending - CBA Tracker (January 2020 = 1
Slide 123: The Australian Economy
The Australian Economy Economic recovery is broad based across consumer, businesses and agriculture Inflation to rise faster than RBA expects1 Further evidence that wages growth is accelerating2 Household savings are elevated3 Inflation (annual % change) Wages (annual % change) Saving (rate & deviat
Slide 124: The Australian Economy
The Australian Economy External sector in good shape, fiscal policy still expansionary, higher official interest rates to come Trade surplus remains large but has peaked1 Fiscal settings remain expansionary for longer2 RBA to stop asset purchases, first rate hike August 20223 Trade balance ($bn) Tax
Slide 125: Housing sector
Housing sector Housing market to moderate after rapid price gains and interest rate hikes Pace of monthly price gains are moderating1 New lending remains elevated2 Strong preference for fixed rate lending3 Dwelling prices (8 capital cities) CBA: Fixed rate lending (% of total) % Housing loan approva
Slide 126: Key New Zealand economic indicators (June FY)
Key New Zealand economic indicators (June FY) GDP % CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 7.9 5.8 4.7 7.3 4.1 4.1 5.4 3.5 3.7 5.0 3.1 4.9 4.9 3.8 3.1 4.8 2.7 2.7 1.9 1.7 1.8 1.9 2.8 -1.0 2019 2020 2021 2022 2023 2024 2019 2020
Slide 127: New Zealand
New Zealand NZ economy swiftly recovers from 2020-21 COVID-19 disruption Dairy prices up following higher global commodity NZ economy quickly recovered to pre-Covid levels NZ unemployment rate at multi-decade low as economy prices of GDP recovers Global dairy trade auction results1 (USD/tonne) NZ GD
Slide 128: Sources, glossary & notes
Sources, glossary & notes
Slide 129: Sources, glossary and notes
Sources, glossary and notes Slide 8 1. Home lending source: RBA Lending and Credit Aggregates. Household deposits source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS). CBA Business Lending multiple estimate is based on Business Banking growth rate (excluding Institutional Ba
Slide 130: Sources, glossary and notes
Sources, glossary and notes Cash Profit, Capital & Other Customer Metrics Funding & Risk Cash Profit The Profit Announcement (PA) discloses the net profit after tax on both Net For the major banks, NPS is reported for main brand only. Liquidity The LCR is the first quantitative liquidity measure tha
Slide 131: 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 131
Commonwealth Bank of Australia — H1 2022 Earnings Presentation on 6ix