Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 2017 Earnings Presentation
52 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 15, 2017
Slide 1: Results Presentation for the Half Year Ended 31 December 2016
For personal use only Results Presentation For the Half Year Ended 31 December 2016 COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 15 FEBRUARY 2017
Slide 2: Today
Today For personal use only Strategic Update Financials Outlook
Slide 3: Delivering on our Vision
Delivering on our Vision For personal use only In the last six months: $109 billion new lending to personal and business customers 140,000 new home loans, including 15,000 first home buyers $3.5 billion new loans to 12,700 small businesses $1.2 billion new lending to farmers and other rural customer
Slide 4: This Result
This Result For personal use only Dec 16 vs Dec 15 Statutory Profit 6% Cash NPAT 2% Cash Earnings per Share ($) 2.86 Flat Dividend per Share ($) 1.99 +1 cent ROE – Cash 16.0% (130) bpts
Slide 5: Long term growth focus
Long term growth focus For personal use only Income Growth (%) CBA +3% 6% (reported) +1% Peer Average +2% 3% (underlying) Jun 13 Jun 14 Jun 15 Jun 16 Dec 16 Total Operating Income growth on prior comparative period - CBA June Financial Years, Peers September
Slide 6: Productivity enabling ongoing investment
Productivity enabling ongoing investment For personal use only Cost to Income (%) Investment 43.8% $600m 42.9% 11% Branches & Other 42.2% 42.1% 36% Risk & Compliance 41.5% 53% Productivity & Growth 1H13 1H14 1H15 1H16 1H17 1H17 1H13 1H14 1H15 1H16 1H17 1H17 underlying
Slide 7: Contributing to our economy and community
Contributing to our economy and community $ billion For personal use only 13.1 3.1 2.6 Salaries ~800,000 retail 50,000+ 0.6 shareholders staff 1.9 Expenses ~5,000 LIE 1.5 SME cost partners of lending Tax 3.4 Australia’s largest Reinvested payer for growth Total Dividends Income
Slide 8: Managing for today's environment
Managing for today’s environment For personal use only Capital Management Return on Equity 4 CET1 378% 3.5 16.0% 3 2.5 2 1.5 Assets 121% 1 0.5 0 2007 2009 2011 2013 2015 1H17 2008 2010 2012 2014 2016 1H17
Slide 9: Strategic Update
Strategic Update For personal use only 1 Consumer 2 Business 3 International
Slide 10: Delivering for customers
Delivering for customers For personal use only Retail Customer Satisfaction 83.2% #1 19 consecutive months CBA Peers 66.5% Dec 06 Dec 16
Slide 11: MFI share – a strength and opportunity
MFI share – a strength and opportunity For personal use only Overall Customer lifecycle by age 33.8% 45.9% 43.0% 42.4% MFI Share 19.1% 13.7% 30.2% 11.9% Dec 12 28.5% Dec 16 26.6% CBA Peer 3 Peer 1 Peer 2 14-17 18-24 25-34 35-49 50-64 65+
Slide 12: The digital revolution
The digital revolution For personal use only 5.8m customers now using digital 53% of total transactions (by $) 25% of new account openings 3mins to open new accounts 80% of logins via mobile
Slide 13: Real time banking
Real time banking For personal use only Group Transaction Balances +41% Used by 15 million customers since 2012 +18% Originate and transact in real time: anywhere, anytime, any device Instant banking: fast and simple Driving customer satisfaction 1H15 1H16 1H17
Slide 14: On-going real time innovation
On-going real time innovation For personal use only UBIMET Warning RED: Thunderstorm from W, lightning, heavy rain, hail, damaging wind gusts 07/12 5:27pm – 07/12 6:57pm Instant Storm Receipt Alerts
Slide 15: Branches remain key
Branches remain key For personal use only Customer Relationships Efficiency 68k Customer insights each week New format – 88 locations 32k Financial Health Checks each week 50% reduction in branch space 24k Video-conferencing referrals 1H17 IDMs across network by end 2017
Slide 16: Branches remain key – home lending
Branches remain key – home lending For personal use only Proprietary % of Total Flows RBS 57% 55% Branch applications up 13% 54% Smarter analytics: o 10x increase in branch leads Market 48% 48% 46% o higher contact rate (now 95%) o higher conversion rates (3x) Extra branch lenders Dec 15 Jun 1
Slide 17: Broad customer relationships
Broad customer relationships For personal use only FirstChoice Australia’s most popular platform (7 years) CFS Trusted with >$100bn of Australia’s investments/savings CommSec One in every two retail trades (non-advised) CommInsure One in every four CBA home loan customers
Slide 18: Focus on Better Banking
Focus on Better Banking For personal use only Improving Listening Putting things right Agribusiness Customer Advocate Open Advice Review customer assistance appointed assessments completed measures introduced New Industry First phase of pre 2012 review of Financial inclusion Whistleblowe
Slide 19: Strategic Update
Strategic Update For personal use only 1 Consumer 2 Business 3 International
Slide 20: More satisfied customers - business
More satisfied customers - business For personal use only Customer Satisfaction Customer Satisfaction 4 years* (DBM) (DBM, Large) #1 Micro = #1 Small = #1 Medium = #1 CBA Peers Large #1 Dec 15 Dec 16 *Outright or equal 1st
Slide 21: Corporate – targeted growth
Corporate – targeted growth For personal use only Australian Lending Growth 6 months Supporting growth in the economy 4.0% BPB – diversified growth 3.1% IB&M (3 years): 2.0% o 129 mandate wins o Transaction balances up 59% Relationship focus + real time technology System BPB IB&M
Slide 22: Transformative technology a differentiator
Transformative technology a differentiator For personal use only Blockchain Digital & Analytics Payments First interbank open Landmark account transaction Empowering clients partnerships with with insights based on Alipay and Barclays First global real-time customer government bond trial behaviours
Slide 23: Transformative technology - Albert
Transformative technology - Albert For personal use only 70,000 64% devices new merchants to CBA 13 39 new apps last six apps in total months POS Vista POS
Slide 24: Strategic Update
Strategic Update For personal use only 1 Consumer 2 Business 3 International
Slide 25: TYME kiosk
TYME kiosk For personal use only Self service on-boarding Account creation on the spot Debit card issuance Identity and authentication Biometric capture External verification of identity
Slide 26: Innovation via partnerships
Innovation via partnerships For personal use only African Rainbow Capital Strategic retail partner Strategic BEE partner 10 year partnership Broad based local 1,000 locations ownership 10 million rewards customers 10% future shareholder in CBA South Africa 10,000 till points
Slide 27: Kiosk rollout results in South Africa
685 across South Africa, since launch May 2016 kiosks For personal use only 9 from concept to rollout months 100,000 through Pick ’n Pay and Boxer stores enrolments 4 to on-board new minutes customers on-boarding cost per $4 customer
Slide 28: SmartPOS prototype
SmartPOS prototype For personal use only Security 2x Cameras Strictest global Voucher, coupon, QR, security standards bar code scanning Connectivity 4G, Antenna & Wi-Fi, Bluetooth and GPS Payments Contactless, NFC, Wallet Touch 7” high resolution Open Apps & VAS multi-touch screen Open platform app
Slide 29: Summary
Summary For personal use only Driving strong At the consumer forefront of franchise innovation Focus on Investing long term for the growth long term
Slide 30: Results Presentation – David Craig, Chief Financial Officer
For personal use only Results Presentation For the Half Year Ended 31 December 2016 DAVID CRAIG CHIEF FINANCIAL OFFICER COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 15 FEBRUARY 2017
Slide 31: This Result
This Result For personal use only Dec 16 vs Dec 15 Statutory Profit ($m) 4,895 6% Cash NPAT ($m) 4,907 2% ROE – Cash 16.0% (130) bpts
Slide 32: Components of growth
Components of growth For personal use only 1H17 vs 1H16 $m 397 (393) 28.4% 3% 1% tax rate 367 (74) 4% 297 (75) 3% 222 (123) 2% 99 Underlying Visa Accel. Expenses Oper. LIE & Other NPBT Tax NPAT Income Amort. Perf.
Slide 33: Income – balancing volume & margins
Income – balancing volume & margins For personal use only $m Trading: FMI: ↓ 3% Volume: ↑ 5% +$104m Insurance: ↓ 19% Margin: ↓ 4bpts +6% 13,126 +7% (8%) 397 +4% 173 (122) +3% 12,729 316 12,362 Underlying Banking +5% 1H16 Net Other Funds 1H17 Visa 1H17 Interest Banking & Underlying Income Income Insu
Slide 34: Margin – down bpts on higher funding costs
Margin – down 3 bpts on higher funding costs bpts For personal use only 213 215 214 211 3 (3) deposits (2) wholesale Jun 15 Dec 15 Jun 16 Dec 16 214 (5) 2 211 (1) 209 (2) 2H16 Asset Funding Portfolio Capital & Sub Treasury 1H17 Pricing Costs Mix Other Total & Markets
Slide 35: Expenses – tightly controlled
Expenses – tightly controlled $m For personal use only +1% +9% 5,677 5,284 5,210 29 43 2 393 1H16 Staff Amortisation Other 1H17 Accelerated 1H17 Underlying Amortisation
Slide 36: Cost discipline sustains positive jaws
Cost discipline sustains positive jaws For personal use only 10% Underlying 8% 7% Operating Performance 6% 6% 5% Revenue 6% Growth 5% 4% Expense 3% Growth 3% 3% 1% 1H13 1H14 1H15 1H16 1H17
Slide 37: Divisional contributions
Divisional contributions $m For personal use only Operating Performance +9% 1H17 vs 1H16 +2% +2% +7% (1%) (35%) 3,868 1,196 940 752 552 306 RBS BPB IB&M ASB BWA WM (NZD)
Slide 38: RBS – strong growth, further efficiency gains
RBS – strong growth, further efficiency gains For personal use only Balance Growth Margin Cost-to-Income 12 months 9% 32.3% 8.2% 292 290 8.0% System 287 7% 30.8% 6.5% 7.5% 2% Home Household 1H16 2H16 1H17 Rev. Exp. NPAT 1H16 1H17 Loans Deposits
Slide 39: Corporate – targeted growth
Corporate – targeted growth For personal use only Lending Margin BPB IB&M 6 months 10% Investment in frontline bankers and technology 1H16 9% 202 198 1H16 190 12% 4.0% 4% System 3% 3.1% 2.0% 2% 2% 2% BPB IB&M 1H16 2H16 1H17 Rev. Exp. NPAT Rev. Exp. NPAT
Slide 40: Wealth – responding to challenges
Wealth – responding to challenges For personal use only Funds Income Insurance Income Costs Avg FUA +3% Loss recognition $90m Remediation costs Margins (mix) GI premiums 9% Productivity gains (3%) (33%) +3% 964 927 933 330 826 855 847 220 172 $m 1H16 2H16 1H17 1H16 2H16 1H17 1H16 2
Slide 41: Impairment expense remains low
Impairment expense remains low For personal use only CBA Group (bpts) Consumer Corporate 18 18 20 14 FY16 1H17 FY16 1H17 73 41 25 21 20 16 16 19 17 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H17 Pro Forma
Slide 42: Consumer Arrears lower this half
Consumer Arrears lower this half 90+ days 1.46% For personal use only PL Seasonally lower – still 1.09% 1.28% elevated in WA 0.99% CC Sound and seasonally 0.91% lower 0.88% 0.54% HL Continues at historically 0.52% 0.53% low levels, WA higher Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16
Slide 43: WA arrears - impacted by mining downturn
WA arrears - impacted by mining downturn For personal use only Home Loan Arrears Australian Balances WA Mining Towns 1% WA 1.00% Higher Risk Locations: Increased provisions 0.8 Rigorous stress testing Credit policy tightening Portfolio 0.53% 0.4 o LVR caps o Insurance requirements 0 Dec 13 90+
Slide 44: TIA marginally higher
TIA marginally higher For personal use only 1.34% 1.10% % of TCE 0.76% 10.5 9.5 0.60% 0.63% 0.63% 4.7 7.0 4.3 6.6 6.8 6.0 3.4 3.1 3.4 Impaired 2.9 $bn 5.8 5.2 3.6 3.1 3.5 3.4 Troublesome Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Dec 16
Slide 45: Apartment development - weighted to Sydney
Apartment development - weighted to Sydney For personal use only $5.2bn (0.5% of TCE) Strong qualifying pre-sales Perth (110.1%) Other 0.3 Perth $0.3bn Brisbane $0.3bn Portfolio LVR of 0.5 59.9% Brisbane $0.5bn Sydney Tighter underwriting Melbourne Sydney 3.1 1.0 Melbourne $3.1bn $1.0bn (60%)
Slide 46: Balance sheet strength
Balance sheet strength For personal use only Economic overlay unchanged NSFR >105% 3.7bn 3.8bn 135% 4.2 66% 66% 123% 3.9 Individual 0.9 1.0 Collective 2.8 2.8 Dec 15 Dec 16 1H16 1H17 1H16 1H17 1H16 1H17 Provisions $ LCR % Wholesale Tenor Deposit Funding (yrs)
Slide 47: Strong Capital
Strong Capital For personal use only 15.4% 10.2% 10.6% (80) 9.8% (74) 112 (28) 9.9% Dec 15 Jun 16 Higher 1 Jul 16 June 16 Cash RWA & Dec 16 Dec 16 mortgage Final Div. NPAT Other Int'l risk weight (Net of DRP)
Slide 48: Strong Capital (CET1)
For personal use only Nordea CBA 20.4 15.4 RBS UBS 15.0 14.9 ING ANZ WBC 14.7 14.5 14.4 Lloyds HSBC NAB Intesa Sanpaolo 14.1 14.0 14.0 14.0 China Construct. Bank 13.4 Standard Chartered 13.0 ICBC Credit Agricole SA Citi Mitsubishi UFJ China Merchants Bank Strong Capital (CET1) 12.6 12.6 12.5 12.5 12
Slide 49: Increased Dividend
Increased Dividend For personal use only 198 198 199 Dividend (cents per share) 183 164 71% 71% 70% 70% 70% Payout Ratio 63% 62% 62% Cash NPAT 132 137 120 1H10 1H11 1H12 1H13 1H14 1H15 1H16 1H17
Slide 50: Summary – managing for today's environment
Summary – managing for today’s environment For personal use only Positive “Jaws” Strength Returns International +1 cent Underlying 15.4% 16% 199 4% 135% 66% 3% 9.9% 1% Income Expense Operating Deposit LCR CET1 ROE Dividend Perform. funding (cash) (cents)
Slide 51: Outlook
Outlook For personal use only Globally – heightened geopolitical and market volatility Domestically – some positive trends: o Improving commodity prices, terms-of-trade o Export sector For CBA: o Focus on the long term o Supporting Australia through strength, investment and innovation
Slide 52: Results Presentation for the Half Year Ended 31 December 2016
For personal use only Results Presentation For the Half Year Ended 31 December 2016 COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 15 FEBRUARY 2017
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