Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2022 Earnings Presentation
136 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 10, 2022
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the full year ended 30 June 2022
Slide 2: Important notice and forward-looking statements
The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 10 August 2022. It is information given in summary form and does not purport to be complete. Information in this presentation is not intended to be relie
Slide 3: Contents
CEO & CFO Presentations 4 Overview & Strategy 36 Financial Overview 58 Home & Consumer Lending 80 Business & Corporate Lending 96 Funding, Liquidity & Capital 105 Economic Overview 121 Sources, Glossary & Notes 132
Slide 4: Results Presentation - Matt Comyn, CEO
Results Presentation Matt Comyn, Chief Executive Officer
Slide 5: Cash NPAT and Net Promoter Scores
Cash NPAT Net Promoter Scores1 Consumer #2 +11% Business #1 • Supporting our customers through challenging times FY22 vs FY21 Consumer Digital #1 Business Digital #1 • Strong financial and operational outcomes Volume Growth2 • Customer engagement driving volume growth Home Lending lending $170bn Bus
Slide 6: FY22 vs FY21 headline results
FY22 vs FY21 Statutory NPAT ($m) 9,673 9% Cash NPAT ($m) 9,595 11% Operating Performance2 ($m) 13,190 3% EPS (cash, $) 5.57 69c Dividend per share ($) 3.85 35c 1. Statutory NPAT, Cash NPAT, Operating Performance and EPS are on a continuing operations basis. 2. Operating income less operati
Slide 7: Operating income, expenses, pre-provision profit and Cash NPAT
Operating Income2 Operating Expenses2 Pre-Provision Profit2 Cash NPAT • Continued core volume growth • Lower remediation costs Up 3.6%, or Includes lower loan • Margin pressure • Higher staff costs +3.1% ex one-offs impairment expense +0.9% -1.5% +3.1% +10.9% Ex one-offs Ex one-offs Ex one-offs Ex R
Slide 8: Volume growth versus system
‘000 Migrant accounts New Retail FY22 1,120 Balance Growth vs System1 now back to ~90% Transaction +24% of pre-COVID Jun 22 vs Jun 21 Accounts2 FY21 902 levels3 ‘000 Disciplined Business FY22 1,042 approach to Transaction +10% Accounts FY21 943 volume/margin trade-off 1.4x 1.3x ‘000 Jun 22 232 StepP
Slide 9: Customer engagement, deposit and lending growth
Customer Engagement Deposit Growth Lending Growth Leading MFI of 34.4% (gap to nearest peer +17.7pp)1 27.5% mkt share (gap to nearest peer +7.2pp)2 60% via proprietary channel in 2H223 Overall Net Promoter Score Total Deposits (Households)2 New Home Lending (fundings)4 Mvt vs +7.4 +$41bn +21% Jun 20
Slide 10: High quality home lending business
High quality Rapidly changing Our priorities home lending business market context going forward • 98% attached to CBA • Rising rates, lower growth • Grow through core customer transaction accounts1 relationships • Fewer first home buyers, • 60% proprietary mix2 more investors • Maintain MFI and NPS
Slide 11: Funding, liquidity and capital strength
Deposit funding Long-term funding Liquid Assets Capital % of total funding Weighted Average Maturity, yrs Average $bn CET1 Ratio (%), Level 2 74% 6.3yrs $191bn 11.5% ex. TFF 10.7% 69% -$0.5bn 5.1 55% 137 3.5 5.0%1 Pre- Pre- 50 Pre- Pre- GFC COVID GFC COVID GFC COVID GFC COVID Jun 08 Jun 19 Jun 22 Ju
Slide 12: Arrears and provisioning
TIA Home Loan Arrears1 Provisioning2 Troublesome & 90+ days Total Provisions vs Impaired Assets (TIA) % Central Scenario ECL3 -$0.9bn $5.35bn $6.4bn 0.68% 7.8 7.5 0.64% 0.49% $1.8bn $3.60bn $bn $bn Jun 19 Jun 21 Jun 22 Jun 19 Jun 21 Jun 22 Central Scenario Total ECL Provisions 1. Group including New
Slide 13: Our purpose and priorities
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 leading Anticipate changing Deliver the best integrated Delive
Slide 14: Supporting our customers and communities
Supporting our customers and communities Climate Report 2022 • 2.7m customers reached and offered natural disaster support assistance • $4.3bn in SME Guarantee Scheme lending1 • ~5m customers contacted about government benefits and rebates • >2.1m claims initiated in Benefits finder since inception
Slide 15: Smart terminals and business deposits
SMART Fast-growing app marketplace Growing Share Business Deposits Smart Standalone Market Share2 22.6% • Launched Private Health claiming Smart Integrated • Real time payments and claims • ~600 businesses enrolled 20.3% CBA Smart Mini 18.7% • Pay@Table, Tipping, Split Bill • POS integration via Dos
Slide 16: Product and app initiatives
• Manage your investments • Kid’s earning-and-learning money app • Digital home loan business • >230,000 new accounts • Integrated in the App • Improving children’s financial capability • Simple, fast, fully digital experience • 2 new accounts for every 1 credit card • ~670,000 customers engaged1 •
Slide 17: Consumer and business digital NPS
Consumer – Digital NPS1 Business - Digital NPS1 Consumer Mobile App Net Promoter Score Business Digital Net Promoter Score CBA CBA 30.7 20.2 Peers 25.6 Peers 7.7 18.1 2.1 17.9 -2.8 Jun 21 Jun 22 Jun 21 Jun 22 • #1 Canstar Bank of the Year – Digital Banking 13 years in a row2 • #1 Forrester overall d
Slide 18: Our priorities and people engagement
People Engagement1 Our Priorities 80% • Embedding Remedial Action Plan for sustained cultural change 78% • Driving an aspirational culture built on strengthened risk culture foundations 71% • Extend operational execution advantage through continuous improvement • Continue to strengthen engagement th
Slide 19: Stronger customer relationships and superior experience
Stronger customer relationships and frequency of engagement • Strongest and most trusted brand • Leading MFI1 share • Superior deposits and data franchise • Focus on NPS1 improvement Superior Better understanding of customer experience customer needs and risk • Disciplined operational execution • Te
Slide 20: Results Presentation - Alan Docherty, CFO
Results Presentation Alan Docherty, Chief Financial Officer
Slide 21: Performance drivers
Performance Drivers Domestic cash rate bpts 185 • Navigated period of ultra-low rates 100 Macroeconomic • Strong economy & rates already well above pre-COVID • Financial tightening convergence risk Jul 19 Aug 22 Operating performance1 • Customer focus, operational execution, digital leadership ($m)
Slide 22: Statutory NPAT to Cash NPAT
FY21 FY22 $m Statutory NPAT – continuing operations 8,843 9,673 Non-cash items: • Includes Aussie Home Loans, AUSIEX, Commonwealth – Transaction costs and gain on disposals2 183 (30) Financial Planning, CommInsure General Insurance and other previously announced divestments and closures – Hedging &
Slide 23: Income and expenses
$m FY21 FY22 % Income 24,156 24,896 3.1% Income Gain on sale – Bank of Hangzhou2 516 Income ex one-off 24,156 24,380 0.9% Operating Expenses 11,359 11,635 2.4% Performance ex one-offs Accelerated amortisation & other 445 +3.1% Expenses Expenses ex one-offs 11,359 11,190 (1.5%) Cash NPAT Cash NPAT 8,
Slide 24: Operating income movement
• Higher retail and business lending fees reflecting volume growth • Improved volume related FX, deposits and cards income • Core volume growth2 +6.8% • Partly offset by lower CommSec equities trading and merchant income +0.9% • Underlying margin decline (10)bpts3 155 171 (102) 24,380 24,156 • Lower
Slide 25: Net interest margin 2H22 vs 1H22
Average cash rate Average cash rate (day-weighted) (day-weighted) 1H22 2H22 0.10% 0.24% -5bpts 4 192 (1) (4) (1) 187 (3) Strong December Margin accretion quarter volumes 1-5 year swap rates (net of replicating Continued and funding lag saw increased more than portfolio) due to competitive fixed rate
Slide 26: Operating expenses and FY23 considerations
FY23 Considerations • Inflationary pressures on wages & other costs • Full year impact of higher FTE • Normalisation of discretionary spend • Software amortisation profile broadly flat • Ongoing business simplification Contribution to Mvt: -2.9% +1.4% Flat -1.5% +1.4% ex remediation (324) 192 (197)
Slide 27: Loan impairment expense and arrears
Loan Impairment Expense Arrears2 TIA Loan loss rate (bpts)1 90+ days $bn FY20 FY21 FY22 Personal Loans Credit Cards Home Loans3 % of TCE: 0.61% 0.53% 0.48% Consumer 26 4 -7 Corporate 50 16 4 1.51% 7.5 Total 33 7 -4 6.8 6.4 6.4 Gross 1.23% impaired 2,518 1.09% 3.4 1.02% 3.5 3.0 554 -4bpts Corporate $
Slide 28: Loan loss provisions
COVID-19 deflationary risks across retail & corporate portfolios Loan Loss Provisions Difference between Recognised Provisions and Provisions for consumer stress as rates rise + supply chain disruptions/ Central Scenario2,4 inflationary pressures in construction, manufacturing & retail/wholesale tra
Slide 29: Funding and liquidity
Deposit funding Long-term funding1 Short-term funding4 LCR and NSFR % of total funding Weighted Average Maturity2 % of total funding Liquidity Net Stable Coverage Ratio5 Funding Ratio % of total funding 19% 19% 18% 74% 6.5yrs 6.3 yrs 8% 130% 130% ex. TFF3 ex.TFF 26% 73% 129% 129% 55% 6.4 6.3 5.1 ex.
Slide 30: CET1 capital movements
Expected changes Expected changes Divestment8: + 9bpts Divestment8: + 6bpts Movements in bpts Buy-Back3: - 31bpts Buy-Back3: - 33bpts 18.6% International 11.5% 11.8% 11.8% (66) 93 (10) (12) 35 (9) (61) Regulatory prudential 8.0% minimum 2 Dec 21 IRRBB Bank of On-market 1H22 Cash Credit Other 7 Jun 2
Slide 31: IRRBB RWAs and FY23-25 outlook
IRRBB RWAs +$33bn • Represents >$4bn of additional capital1 FY23-25 Outlook Component Key driver of capital requirement (assuming stable swap rates & credit spreads) 48 Optionality Absorb changes in customer behaviour vs expectations 8 Likely neutral and basis risk (e.g. propensity to prepay) Credit
Slide 32: New prudential capital framework
Expected post-dividend • The new prudential capital framework, effective 1 January CET1 ratio 2023, will result in changes to the calculation and presentation of capital ratios – APRA has stated that the >11.0% 10.50% Management buffer new framework does not require the banking system to raise 10.25
Slide 33: Sustainable returns
Sustainable returns Dividend per share (cents) • Final dividend of $2.10: FY $3.85 Cash NPAT1 Full year payout ratio • DRP no discount and expected to be fully Cash NPAT2 Full year payout ratio (normalised) neutralised • Full year payout ratio of 68%, or ~75% normalising for long run loan loss rates
Slide 34: Economic outlook
• Strong fundamentals for Australian economy Low unemployment, lower underemployment, high participation rates Strong non-mining investment Inflation challenge and fiscal position favourable vs many other countries • Tightening cycle already having a significant impact Consumer confidence down subst
Slide 35: Summary
Customers Net Promoter 12 months CBA vs Scores1 Rank Volume Growth2 System • Strong result highlighted by volume growth driven by customer engagement Consumer #2 Home Lending 0.9x Business #1 Business Lending 1.3x Consumer Digital #1 Business Deposits 1.4x • Underpinned by consistent, multi-year dis
Slide 36: Overview & Strategy
Overview & Strategy
Slide 37: Market share and peer comparison
MFI share1 (%) Home Lending share2 (%) Household Deposits share3 (%) Business Banking share Deposit Funding Including institutional Peers as at Jun 22 74% 71% 67% 65% Lending share (%)2 Deposits share (%)3 34.4% CBA Peer 3Peer 1Peer 2 25.1% 22.6% 21.8% 22.1% 20.6% 27.5% 15.8% 15.6% 15.6% 16.7% 14.3%
Slide 38: People, customer and shareholder metrics
Customer People Community Shareholders Net Promoter Scores1 People engagement2 Reputation score3 Total Shareholder Return4 Pride in CBA Rank 90% Period % Rank Consumer #2 63.3 1yr -6% #2 80% 80% 61.6 78% Consumer Digital #1 3yr 24% #1 Business #1 5yr 38% #1 CBA Peers Institutional #2 10yr 180% #1 Ma
Slide 39: Where our income goes
In FY22, Commonwealth $ 14.5bn FY22 was spent on: From the profit3 of $9.7bn, approximately 70% Bank earned income of goes to shareholders and the rest is reinvested Staff related4 $6.5bn $24.4bn $3.2bn 2H22 • We employ over 53,000 people • 90% are employed in Australia/NZ Dividends $6.6bn $3.6bn 2H
Slide 40: Business banking leadership
• #1 Net Promoter Score1 Business MFI Share1 • #1 Net Promoter Score in business digital1 • #1 MFI share (+5.7% vs nearest competitor)1 23.3 • #1 Merchant acquiring share1 CBA 21.4 • #1 Business deposits share2 Peers • 1.3x system growth in Business Lending3 17.3 17.6 16.4 16.0 • 1.4x system growth
Slide 41: Migrant accounts and MFI share
New transaction accounts – migrant1 Migrant accounts now back to ~90% of pre- 43.7% 46.5% COVID levels CBA MFI Share 41.1% 2H19 2H22 CBA MFI share2 33.0% Dec 21 34.2% 34.4% 34.4% 34.4% Jun 22 16.7% 12.4% 12.4% 30.0% 27.3% Jun 17 Dec 21 Jun 22 CBA Peer 3 Peer 1 Peer 2 Aged Aged Aged Aged Aged Aged 14
Slide 42: Product ecosystem across retail and business
CommSec CommSec Pocket * AdvancePay StepPay and Neo Invest Benefits finder Home Everyday Bill Sense CommBank App Green loans CommBank Yello* Carbon Connecting business & retail customers Business CommBank Rewards Smart Terminals Stream Working Capital * Initiatives in pilot/launching in 2022
Slide 43: StepPay and Little Birdie
• Used in >25k stores1 • ~920k merchant referrals2 • AI shopping cashback platform • 8.9m offers activated1 • >730k active app customers • 2.2M website visits2 • >80% Gen Z and Millennials • +129% in merchant leads1 • Pay in 4, delivery, rewards & more • >1000 merchants partners2 • >35% monthly acti
Slide 44: Home-in, property and settlement
Settlement • Home-in simplifies home buying • Digital property management • Property settlement leader • 15% of pre-approved customers1,2 • Unique tech and operations platform • ~$200m invested in FY22 • >2x CBA loan conversion rate1 • Discounts for CBA property investors • 23.9% ownership • 67 NPS,
Slide 45: Unloan
• One low rate • Apply in minutes • A discount that gets better. And better. And better1 • Built by CommBank 1. The Unloan discount that grows by 0.01% p.a. every year for the life of the loan, up to 30 years.
Slide 46: Kit children's money app
Literature review and feature mapping against research Young People’s Financial Capability Outcomes Framework • Customisable controls in Boss Mode • Personalised savings Stacks • Connect jobs to PayDay Measurement and evaluation • Bite-size in-app education protocol to demonstrate impact Kit Advisor
Slide 47: CommBank Yello recognition program
• New recognition program to reward existing customers • Specific, personalised benefits and offers • Recognising achievements and milestones • Available to > 6m retail customers with a banking account • Monthly cashback on home insurance • Exclusive shopping offers • Tailored property reports • Dis
Slide 48: xStack
xStack A platform of technical and non-technical services provided to ventures, so that they can: • Move at the pace of a start-up - retaining agility and the ability to pivot rapidly • Stay safe through automation with bank- grade security and controls, keeping customers safe • Scale leveraging CBA
Slide 49: Digital evolution and X15 Ventures
Strong Foundations Establishing Leadership Broadening Ecosystem Launch of Open Partnerships Connecting X15 Banking with CBA’s digital Ventures First major industry ecosystem Building a bank leaders Integration of pipeline of new accredited to CommSec into digital ingest the CommBank CommBank Custome
Slide 50: Digital engagement and leadership
Growing user base Record digital engagement Market leader Consumer Mobile App Net Promoter Score5 Digitally active customers1 Digital transactions % of total - by value3 8.0m CBA 30.7 72% 7.4 7.6 70 66 25.6 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Peers 18.1 CommBank App Average monthly logins 17.9
Slide 51: Digital features and customer usage
Money management Manage investments Hyper-personalised Access money before Simplified access to a Personalised mobile tools in one place via CommBank App products & offers feed pay day range of benefits App experience ~460,000 ~670,000 >2.8m ~60k >2.1m ~1 in 5 customers engaging1 customers used2 cus
Slide 52: Modernised systems and world-class engineering
Modernised • Digitising and automating key processes (ID, KYC, lending documentation, E2E tech delivery processes) systems, digitised • Embedding world-class software development supported by integrated tools, practices and technology end-to-end • Implementing public cloud strategy (“Platform-as-a-S
Slide 53: Operational digitisation for consumer and business
Consumer1 Business 85% of all proprietary applications decisioned within 1 day 35% of new transaction accounts via digital 62% of proprietary applications auto-decisioned >60% of Small Business funding via BizExpress2 92% of settlements via PEXA >90% of loan documents executed digitally ~50m decisio
Slide 54: AI and Customer Engagement Engine
Powerful Analytics1 Connecting Retail and Business Customers Customer AI First Engagement Engine Platforms (CEE) 1.4m Unique activating customers2 $118m Gross Merchant Value up 113%3,4 Reward redemptions for everyday > 70% purchases5 • Powerful recommendation engine integrated with CEE • Connecting
Slide 55: Supporting customers, community, people and governance
Supporting our Caring for our Engaging our people Good governance customers community • Provided emergency assistance to • Partnered with Rural Aid and • Refreshed our purpose ‘Building a • Completed our Remedial Action over 700 Business Customers donated $500,000 to enable them to brighter future f
Slide 56: Building a brighter future for all
Building a brighter future for all Leadership in Simpler, better Reimagining banking Australia’s transition foundations Building Australia’s future economy Reimagined products and services Building our climate foundations • Supporting Australia’s transition through • Helping our customers participat
Slide 57: Climate and financed emissions progress
Financed Our foundations Portfolio alignment 2023 onwards… emissions2 • Approve our evolved E&S Framework and Policy in 2023. Reduced our Scope 1 and 2 Reduced our financed emissions Provided • Continue to expand our sustainability product suite, operational emissions by in upstream oil extraction b
Slide 58: Financial Overview
% Financial Overview
Slide 59: Financial, balance sheet, capital and funding summary
Financial Balance sheet, capital & funding Statutory NPAT ($m) 9,673 +9.4% Capital – CET13,6 (Int’l) 18.6% (80bpts) Cash NPAT ($m) 9,595 +10.9% Capital – CET13 (APRA) 11.5% (160bpts) ROE % (cash) 12.7 +120bpts Total assets ($bn) 1,215 +11.3% EPS cents (cash) 557 +69c Total liabilities ($bn) 1,142 +1
Slide 60: Cash NPAT, NIM, cost-to-income, ROE, EPS, DPS and CET1
Cash NPAT1 ($m) NIM1 Cost-to-income1,2 Cash ROE1 (18bpts) (110bpts) +120bpts +10.9% (10bpts) excl. 208 impact of liquids 47.0 12.7% 9,595 11.5% 45.9 190 8,653 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 Cash EPS1 (cents) DPS (cents) CET1 (APRA) CET1 (International)3 +87c (10bpts) +120bpts +69c +35c (160
Slide 61: Divisional results: RBS, BB, IB&M, NZ
RBS2 BB IB&M NZ (NZD) vs PCP vs PCP vs PCP vs PCP • Income (1%) • Income +2% • Income - • Income +8% • Costs +1% • Costs +2% • Costs +1% • Costs +3% • Impairment ($540m) • Impairment ($118m) • Impairment ($207m) • Impairment +$46m +7% +6% +13% +9% 4,963 4,652 2,840 3,001 1,353 1,239 1,050 926 $m FY2
Slide 62: Operating income by component
+0.9% 24,156 24,380 208 Funds & Insurance (32.9%) 310 • Lower insurance income from higher weather related claims ($72m) 4,544 4,699 Other Banking Income +3.4% • Higher FX, deposits and cards income +$132m • Higher lending fees reflecting volume growth +10.7% • Lower equities trading2 income (14.4%)
Slide 63: Group lending, assets and deposits
Jun 22 vs Jun 22 vs Group Lending $bn Jun 21 Dec 21 Jun 22 Dec 21 Jun 21 +8.1% Home loans 579.8 605.9 622.0 2.7% 7.3% Consumer finance 17.0 16.7 16.5 (1.2%) (2.9%) +4.0% 1 Business loans 135.2 141.5 149.5 5.7% 10.6% 882.9 848.6 Institutional loans 84.4 84.5 94.9 12.3% 12.4% 816.4 $bn Total Group Len
Slide 64: Lending and deposit growth vs system
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 15.1% 13.6% 15.2%13.2% 13.2% 12.8% 10.8% 8.2% 7.9% 8.4% 6.9% 7.6% 7.4% 5.1% 2.6% 3.9% 3.3% 3.6% 6 Months 12 Months 6 Months 12 Months 6 Months 12 Months 6 Mon
Slide 65: Market share trends
Home Lending2,6 Household Deposits3,6 % Jun 22 Dec 21 Jun 21 CBA Peers CBA Peers 30% Break in series Break in series from Mar 19 30% Home loans – RBA 2,6 25.1 25.4 25.3 from Jul 19 25.1% 27.5% Home loans - APRA3,6 25.8 26.1 26.0 20.6% 20% Break in 20% 20.3% series from Break in 3,6 Credit cards - AP
Slide 66: Net interest margin FY22 vs FY21
-10bpts 208 (5) -18bpts (6) 1 (6) 6 198 (8) Portfolio mix +3 190 • Net benefit of rising Equity hedge (1) +$43bn increase in interest rates on liquid assets with deposits Markets (1) minimal impact on NII • Lower wholesale funding costs bpts FY21 Impact of swap Fixed home Impact of price Funding cos
Slide 67: Replicating portfolio, liquidity and basis risk
Replicating Portfolio (RP) & Equity Hedge1 Liquidity & Basis Risk Liquidity • In FY22 the hedge earnings decline was neutralised by the benefit of lower funding costs including the utilisation of Term Funding Facility • Every additional $10bn of liquid assets is expected to reduce Group NIM by ~2bpt
Slide 68: Net interest margin by division
RBS2 BB IB&M NZ (ASB)3 Lower home loan margins from the impact Improved deposit margins and Lower income from the High Grade Higher deposit margins partly offset of swap and cash rates, unfavourable favourable portfolio mix, partly offset Bonds portfolio due to wider spreads by unfavourable home len
Slide 69: Other banking and trading income
$m Other Banking Income $m Trading Income FY22 vs FY21 4,699 • Higher Treasury income 852 FY22 vs FY21 4,544 Derivative • Reversal of impairment of 13 806 Valuation Favourable XVA Other 463 848 aircraft operating leases Adjustment 25 • Lower net profits from minority Trading investments 852 337 221
Slide 70: Operating income 2H22 vs 1H22
• Non-recurrence of AIA milestone payment • 3 fewer days ($159m) • Partly offset by higher volume driven FX and merchant income • Underlying margin decline2 (4)bpts • Core lending growth3 +3.3% (0.2%) 12 12,205 (23) (19) 12,175 • Lower net losses post re-insurance Avg. Volume Growth recoveries from
Slide 71: Operating expenses 2H22 vs 1H22
-0.9% ex remediation Contribution to Mvt: +1.2% +0.6% -0.6% -0.9% +0.3% 35 (34) 65 (52) 5,588 5,602 • Support for increased financial crime Cumulative cost savings assessment volumes realised: • Additional frontline resources • 2H22 $559m • 1H22 $507m • 3 fewer days • Higher annual leave usage $m 1H
Slide 72: Remediation and customer refunds
Remediation and program costs Customer refunds Cumulative spend and provisions ($m)1 Cumulative customer refunds ($m)1 • $1,311m returned to customers 2,211 • $900m remaining 3,535 Wealth (Aligned Advice)2 923 Salaried Aligned Advice 3,210 Period FY09 - FY18 FY09 – FY19 2,653 1,311 Refunds made Esti
Slide 73: Cost reduction and investment spend
Cost Reduction Investment Spend1,2 $m $m Cumulative savings Cost approach Shift to Productivity & Growth $m 1,809 1,878 1,878 • Simpler, more efficient 1,809 1,066 987 Expensed business for our customers and 1,026 people 869 31% 41% Productivity & • Continue to invest in the Growth 891 Capitalised 7
Slide 74: Loan loss rate
Loan Loss Rate1 Loan Loss Rate by business unit1,2 bpts bpts 0 16 -7 -15 Consumer Corporate -2 -7 1H22 2H22 12 11 41 7 5 3 4 33 25 76 21 20 19 50 -1 43 16 16 15 15 16 -4 24 23 20 7 13 11 8 10 14 26 26 16 -4 4 -9 17 19 17 18 18 18 18 18 17 -13 4 RBS BB IB&M ASB Group FY10 FY11 FY12 FY13 FY14 FY15 FY1
Slide 75: Provision coverage and provisions by stage
Provision coverage4/CRWA Provisions by stage Performing Non-performing Credit Credit Stage 2 exposures exposures provisions by credit grade3 Total Jun 21 Jun 22 Retail secured 1.16% 0.82% 1.37 $140bn $142bn 1.36 $m Jun 21 Jun 22 Jun 21 Jun 22 1.30 7 Retail unsecured 7.34% 7.30% 1.22 10 Weak Non-Reta
Slide 76: Retail Banking Services
Net Promoter Score2 MFI Share2 Volume growth3 10 Consumer NPS 12 months to Jun 22 System CBA #2 34.4% 34.4% 12.8% 13.2% 0 8.2% 7.4% 16.7% -10 Peers CBA Jun 21 Jun 22 Next highest peer Dec 21 Jun 22 Home Household Loans 4 Deposits 5 Margin Carded fixed and swap rates6 Financials Lower home loan margi
Slide 77: Business Banking
Performance Gap to Business Lending Transaction account growth nearest Spot balances ($bn) >200k new accounts in FY22, 35% via digital Jun 22 Rank Actual peer • Health +29% Business NPS2 #1 -3.2 +4.2 • Wholesale +23% • Agriculture +17% Business Digital NPS #1 20.2 +12.5 +10% • Business Services +17%
Slide 78: Institutional Banking and Markets
Net Promoter Score IB&M Lending Credit RWAs Institutional NPS2 Growth across warehouse facilities, corporate Decline in Jun 22 driven primarily by improvement in (Turnover $300m+ pa) lending, and funds financing portfolios credit quality and methodology changes 80 Peers CBA Spot $bn +12% 40 #2 95 72
Slide 79: New Zealand (ASB)
Consumer Net Promoter Score2 Business Net Promoter Score3 Volume Growth4 12 months to Jun 22 Peers ASB Peers ASB 10 System ASB 40 0 #1 8.6% 30 #3 -10 6.1% 6.5% 6.3% -20 20 -30 10 -40 Jun-21 Jun-22 Jun-21 Jun 21 Jun-22 Jun 22 Jun 21 Jun 22 Business lending Home lending Margin5 Carded fixed and swap r
Slide 80: Home and Consumer Lending
Home and Consumer Lending
Slide 81: Home lending market share, fundings and arrears
Consistent market share performance1 Net growth driven by new fundings2 New fundings up 21%3 $bn 170 $bn 24.6% 25.1% 23.0% Internal Refinance 20 (20) (36) 21.3% 20.7% 20.6% 150 (74) 141 170 14.9% 556 14.3% 516 106 14.6% 12.5% Dec 17 Jun 22 Jun 21 New Fundings Internal Repayments Property Jun 22 FY20
Slide 82: Home lending operational execution
Focus Areas Operational execution1 Focus on turnaround times • Making it Easy - surfacing key insights & recommendations for customers. • Digital Servicing Tool - qualify servicing capacity for customers. ~85% Applications decisioned within 1 day (proprietary) • Enhanced application platform - righ
Slide 83: Borrowing capacity
Borrowing capacity reducing Driven by increase in serviceability buffer and interest rates (Loans assessed based on the higher of the customer rate3 + buffer, or minimum floor rate) Change in maximum borrowing capacity2 - Indexed Dec 16 120% 8.30% 7.30% 7.05% 7.05% 7.05% 7.55% 100% 3.00% 2.50% 2.50%
Slide 84: Repayment and savings buffers
Repayment buffers – 34% more than 2 years in advance1 Savings buffers1 (Payments in advance 2, % of accounts) Offset Account Balances ($bn) 64 4% Residual 34% 57 4% Structural e.g. fixed 50 5% New loans < 12mths 45 42 15% 11% Investment loans 6% 6% 9% (negative gearing/tax benefits) 6% > 2 years 1-2
Slide 85: Lending tightening measures and assessment
Key tightening measures by year New loan assessment (from FY16) • Increased serviceability buffer & buffers on existing debts FY16-19 • Removed Low doc and EQFS products • All income used in application to assess serviceability is verified • Tightened lending requirements for non residents and use o
Slide 86: Rate exposure and minimum repayments
Approximately 75% of the book exposed to rate Increases in minimum monthly repayments reflect the net impact of a increases between now and June 2023 higher interest component and lower principal payments (with more of the principal paid off in outer years) $472bn % of loans with a direct debit abov
Slide 87: Home loan portfolio and new business - Australia
Portfolio1 Jun 21 Dec 21 Jun 22 New Business1 Jun 21 Dec 21 Jun 22 Total Balances - Spot ($bn) 516 539 556 Total Funding ($bn) 76 94 76 Total Balances - Average ($bn) 507 528 548 Average Funding Size ($’000) 7 359 382 384 8 Total Accounts (m) 2.0 2.0 2.0 Serviceability Buffer (%) 2.5 3.0 3.0 Variabl
Slide 88: Home loan portfolio and new business - CBA
Portfolio1 Jun 21 Dec 21 Jun 22 New Business1 Jun 21 Dec 21 Jun 22 Total Balances - Spot ($bn) 439 459 472 Total Funding ($bn) 66 80 65 Total Balances - Average ($bn) 431 450 466 Average Funding Size ($’000) 6 356 379 375 7 Total Accounts (m) 1.7 1.7 1.7 Serviceability Buffer (%) 2.5 3.0 3.0 Variabl
Slide 89: Fixed vs variable and interest-only
Fixed vs Variable Rate HL Stock and Flow2 Variable Fixed Rate HL Expiry Schedule ($bn)3 Increase in fixed rate HL flow since start of 2020, slowing in last half Fixed 51 44 62% 62% 56% 73% 67% 75% 29 24 25 44% 22 33% 38% 38% 27% $34B 25% 6 1 $168B $206B $209B 1 2 $135B $19B Dec 20 Jun 21 Dec 21 Jun
Slide 90: Negative equity and dynamic LVR
Negative Equity2 Dynamic LVR Bands3 Proportion of balances in negative equity % of total Portfolio Accounts Jun 21 80% Dec 21 • 39% of negative equity is from WA. 64% of customers ahead of repayments. Jun 22 • 46% of home loans in negative equity have Lenders Mortgage Insurance. 60% 1.2% Negative eq
Slide 91: Home loan arrears analysis
Arrears by portfolio Arrears by product Arrears by repayment type Group 90+ days 90+ days1 90+ days1 1.0% 1.0% Interest Only 0.8% Bankwest Principal & Interest 0.8% 0.8% 0.6% CBA 0.6% 0.6% Group 0.4% 0.4% 0.4% ASB 0.2% Owner Occupied 0.2% 0.2% Investment Loans 0.0% 0.0% 0.0% Jun 20 Dec 20 Jun 21 Dec
Slide 92: Impaired home loans
Impaired home loans Overview 1.90 1.75 • Lower impaired home loans over the half driven by ASB (-$144m) due to 1.71 normalisation of ASB restructured home loans (COVID-19), assisted by ASB 0.54 0.66 0.52 improvement in Australian Home Loan impairments (HoH -$45m). CBA 1.21 1.24 1.19 $bn Jun 21 Dec 2
Slide 93: Home loan losses and insurance profile
Losses to average gross loans 2 Portfolio Insurance Profile4 % of Home Loan portfolio Current Historical Avg.3 2.5% (June 2022) Group Total Loans 0.07% 0.30% 19% 2.0% CBA Home Loans 0.01% 0.02% 2% Insurance with Genworth or QBE for higher risk Excess of loss loans above 80% LVR re-insurance 1.5% 4%
Slide 94: Credit cards and personal loans
Credit Cards1 Personal Loans1 Group 90+ days Group 90+ days 0.61% 0.49% 0.52% 1.09% 0.97% 1.02% 9,237 9,267 9,191 5,091 4,782 4,810 $m $m 55 46 49 56 45 48 Arrears Arrears Arrears Portfolio ArrearsJun 21 Portfolio Arrears Dec Portfolio 21 Jun Portfolio 22 Jun Portfolio 21 Arrears Dec Portfolio 21 Ju
Slide 95: Credit cards and personal loans arrears
Credit Cards 1 Personal Loans 1 ASB 4.0% Group 30+ days 6.0% Group 30+ days CBA Group 4.0% Bankwest 2.0% 2.0% 0.0% 0.0% Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Credit Cards 1 Personal Loans1 Group 90+ days Group 90+ days 1.5% 2.0% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% 0.0% Jun
Slide 96: Business and Corporate Lending
Business and Corporate Lending
Slide 97: Exposures by industry and portfolio quality
Exposures by Industry1 Corporate portfolio quality Group TCE by geography Investment Grade AAA A+ BBB+ TCE $bn to to to Other Jun 22 69.7% Jun 21 Dec 21 Jun 22 AA- A- BBB- 69.0% 68.3% Australia 81.8% 81.6% 82.1% Gov. Admin & Defence 210.5 15.7 1.3 0.1 227.6 New Zealand 10.2% 10.2% 9.8% Finance & Ins
Slide 98: Group TCE and TIA by sector
Provisions to total Group TCE ($bn) TIA ($bn) TIA % of TCE committed exposure % Dec 21 Jun 22 Dec 21 Jun 22 Dec 21 Jun 22 Dec 21 Jun 22 Consumer 737.3 748.5 2.1 1.9 0.3% 0.3% 0.4% 0.3% Government Administration & Defence 205.9 227.6 0.0 0.0 0.0% 0.0% 0.0% 0.0% Finance & Insurance 87.1 91.1 0.0 0.1 0
Slide 99: Commercial property exposure
• Exposure diversified across sectors and by counterparty, with the top 20 counterparties representing 14% of the portfolio and having a weighted average rating of BBB- equivalent. Group exposure Jun 21 • Stable credit quality with weighting to investment grade steady and 90% of sub- Dec 21 87.3 inv
Slide 100: Airlines and aircraft lessors
Airlines & Aircraft Lessors 1 • Opening up of domestic and international travel is supporting recovery of Group exposure Jun 21 airlines across the industry. Portfolio amortisation has been partially offset Dec 21 by select transactions to strong counterparties or flag carriers. 26.5 25.6 Jun 22 58
Slide 101: Entertainment, leisure and tourism exposure
Group exposure Jun 21 • Diverse industry with many sub-sectors impacted by government Dec 21 restrictions, including border closures, shutdowns and social 14.0 14.0 Jun 22 13.0 distancing initiatives. • Pubs, Clubs and Restaurants were trading particularly well prior to 9 7.1 7 6 5.0 Omicron, which
Slide 102: Retail trade exposure
Group exposure • Retail trade has recovered from COVID-19 induced weakness, Jun 21 buoyed by strong housing market, high household savings and Dec 21 redirection of travel spend. 13.4 13.6 Jun 22 12.4 28 30 29 • CBA’s data shows household spending remains elevated, though trajectory has started to e
Slide 103: Construction exposure
• Through earlier phases of COVID-19, demand for construction was Group exposure Jun 21 stimulated with government infrastructure spending and housing Dec 21 grants. However, competition and margins remained tight, leaving the Jun 22 sector vulnerable to input cost rises. 11.2 13 10.3 10.8 12 • Weat
Slide 104: Resources and energy exposure
Group exposure Jun 21 • Exposures of $7.8bn (0.6% of Group TCE); overall exposure remained Dec 21 largely unchanged with further reductions in Oil & Gas facilities. Jun 22 68 67 67 • Stable performance over the past 6 months: 8.7 7.7 7.8 • Investment grade stable at 67% of portfolio; 0.7 0.6 0.6 0.8
Slide 105: Funding, Liquidity and Capital
Funding, Liquidity and Capital
Slide 106: Funding composition and profile
Funding composition Wholesale funding Funding profile Deposit growth supporting 74% of funding Weighted to long term TFF refinance to be managed across FY23-FY25 period % of total funding Long term % FY22 Maturity3 issuance Short term 8% 8% 8% 74% 69% 65 66 wholesale1 26% 18% 19% 18% Long term 19% 5
Slide 107: Deposit funding
Deposit funding Deposits vs peers1 Deposits in NSFR2 $bn 686 As at June 2022 ($bn) Peers as at March 20223 Other 520 74% 74% 335 464 73% deposits 362 261 288 CBA 206 300 Household Thousands 351 Peer 3 deposits 259 176 156 250 Peer 1 Jun 20 Jun 21 Jun 22 CBA Peer 3 Peer 2 Peer 1 Peer 2 200 Group tran
Slide 108: Short and long term funding mix
Portfolio mix Short term funding by product $bn Certificates of Deposits 54% Long term funding1 49% 129 Commercial Paper 25% Short term funding2 83 31% Central Bank Deposits 20% Term Funding Facility 51 20% MTN 1% Long term funding by currency Long term funding by product TFF 28% Jun 22 3 Senior Bon
Slide 109: NSFR and LCR
130% NSFR NSFR (%)4 June 2022 639 833 3.8 (1.2) Retail/SME (6.5) Residential 6.8 130 Mortgages ≤ 35% Deposits 129 (1.7) 1.0 risk weight2 (0.8) Wholesale Funding Other Loans & Other $bn 3 Capital Liquids & Other Assets Jun 21 Capital Retail/SME Wholesale Committed Residential Other Loans Liquids and
Slide 110: CET1, dividends and international capital comparison
CET1 Impact of share +534% CET1 CET1 buy-backs Dividend per Share APRA International (cents) Level 2 Level 1 Payout Ratio (cash NPAT basis)5 Payout Ratio (Normalised cash NPAT basis)6 Assets 13.1% 13.3% 19.4% 18.6% 176% 450 429 431 431 350 385 ~75% 11.5% 11.8% 350 75% 80% 88% 298 71% 68% 250 71% FY1
Slide 111: Capital released and capital flexibility
Organically Generated Capital Released1 Capital Flexibility2 Reinvested in the Group Distributed to shareholders Retained Franchise Growth Investment3 Dividend Paid Capital Return Surplus Retained Credit RWA volume growth ($bn) Investment ($bn) Total Dividends Number of shares (bn) CET1 Level 2 (%)
Slide 112: Divestments and share buy-backs
Divestments CET1 Associated Divestments Completed +239bpts Buy-back General Insurance 1H23 $2bn on-market Bank of Hangzhou Jun 22 share buy-back1 Cumulative Colonial First State Dec 21 share buy-backs to date (142bpts), (~$6.5bn) Aussie Home Loans May 21 AUSIEX May 21 CommInsure Life Apr 21 13.1% Bo
Slide 113: Share count, dividends, NTA and TSR vs peers
Number of shares (m)1 Dividend per share ($)3 CBA Peers CBA Peers 3,501 Capital raisings for 3,190 2.10 strengthening during 2,794 GFC 1,776 0.73 1,516 1,702 0.59 0.72 1,506 0.58 1,260 0.61 0.29 Increase due to acquisitions 0.26 FY00 FY222 1H00 2H222,4 Net tangible assets per share ($)5 Total shareh
Slide 114: CET1 and risk weighted assets
CET1 Total Risk Weighted Assets (RWA) bpts $bn 3.0 (0.1) 23.3 (0.2) 498 35 (9) (61) 93 (76) (12) Market Risk 472 11 48 IRRBB 24 11 11.8% 11.5% Op Risk 46 46 Credit Risk4 (10) IRRBB5 (66) Credit 394 391 Market Risk flat Risk Op Risk flat 6 7 7 Dec 21 Bank of On-market 1H22 Cash RWA Other Jun 22 Dec 2
Slide 115: Level 1 vs Level 2 CET1
Impact Differences between Level 1 and Level 2 (bpts) CET1 (Level 1) Lower RWA at Level 1 due to the exclusion of 130 bpts banking subsidiaries Expected changes Divestment4: + 6bpts Investment in insurance subsidiaries risk Buy-Back2: - 33bpts weighted at 250% at Level 1 - full deduction at 5 Level
Slide 116: Key capital ratios and CET1 movements
Key Capital ratios (%) Jun 21 Dec 21 Jun 22 • CET1 ratio of 11.5%. CET1 capital ratio 13.1 11.8 11.5 • 2021 final & 2022 interim dividend – DRP neutralised. Additional Tier 1 capital 2.6 2.2 2.1 • $6bn off-market share buy-back completed in 1H22. Tier 1 capital ratio 15.7 14.0 13.6 • $468m of $2bn o
Slide 117: Shareholders' equity required
Translates to CET1 ratio of Shareholders’ equity required1 ($bn) 11.5% under APRA As at 30 June 2022 20.1 68.0 11.5% standards 0.3 Absorbs $25bn of 19.8 25.0 7.1% Australia’s additional capital required 4.5 47.9 1.1 6.9 3.4 1.6 5.3 18.6% Translates to CET1 ratio of 5.7 2.3 24.7 18.6% under internati
Slide 118: APRA capital framework changes
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 points for IRB ADIs such as CBA; • Implementing more risk sensitive risk weights, particularly for residential mortgag
Slide 119: Regulatory expected loss and eligible provisions
$m Jun 21 Dec 21 Jun 22 Non- Non- Non- Defaulted Defaulted Defaulted Defaulted Defaulted Defaulted Regulatory Expected Loss (EL) 1,931 2,956 1,676 2,888 1,560 2,886 Eligible Provisions (EP) Collective Provisions2 131 4,552 105 4,462 127 3,907 Specific Provisions2,3 1,907 - 1,643 - 1,525 - Less: inel
Slide 120: Loss absorbing capacity and Tier 2 requirement
Jun 22 • Based on the June 2022 RWA, CBA requires an additional $4.9bn and $12.4bn @ 5% by @ 6.5% by $bn of LAC qualifying issuance (excluding maturities) by 1 Jan 2024 and 1 Jan 2026 $bn 1@ 5%2024 Jan by @Jan 1 6.5% by 2026 respectively. 1 Jan 2024 1 Jan 2026 Risk Weighted Assets at June 2022 471.9
Slide 121: Economic Overview
% Economic Overview
Slide 122: Australian economic forecasts - financial year
GDP % Headline CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 5.8 9.8 6.2 4.4 5.5 5.1 5.6 3.7 2.9 2.9 4.3 2.1 4.7 5.6 3.6 4.4 4.3 1.9 1.6 1.6 1.6 1.3 1.8 0.0 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 2018 2019 2020 202
Slide 123: Australian economic forecasts - calendar year
GDP % Headline CPI % Unemployment rate % Calendar year average Calendar year average Calendar year average GDP Nominal GDP 10.5 6.2 8.0 6.5 4.0 5.3 5.2 5.1 4.8 5.1 5.3 2.8 2.0 3.5 2.1 2.9 3.7 4.0 2.2 1.9 1.6 0.8 -1.4 -2.1 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 2018 2019 2020 202
Slide 124: Global inflation and growth
Inflation is the number one issue1 But concentrated in western economies2 Driven by demand given supply constraints everywhere3 Core inflation (annual change) Headline inflation (annual % change) Supply chain pressure index (standard deviation from average ) % Middle High income 10 High income 4 8 N
Slide 125: GDP, labour market and retail trade
GDP 4.5% higher than Q4 191 Labour market is tight1 On every metric including underemployment rate1 Real GDP Employment Labour market % $bn '000 CBA (f) % Underemployment rate 580 400 Participation rate 12 66 200 540 0 9 63 Full time 500 -200 -400 Part time 6 60 460 Employment to-population -600 Une
Slide 126: Inflation and consumer sentiment
Inflation accelerating1 Non-discretionary inflation rising faster1 Consumer sentiment is deeply pessimistic2 Inflation (annual % change) Inflation (annual % change) Consumer sentiment CBA(f) 7 Non- 140 6 Trimmed Mean CPI 8 discretionary 7 5 6 120 35-year average 4 5 Discretionary 4 3 100 Headline CP
Slide 127: Jobs, wages and household buffers
Job ads remain very high1 Largest minimum wage lift since 20062 Wages growth expected to accelerate to 3.25%3 Job advertisements versus unemployment (number) Minium wages (% change) Wages (annual % change) 000s Unemployed persons 6 5 1000 5 Minimum wage 900 decision 4 WPI 800 CBA(f) 4 700 600 3 3 50
Slide 128: Cash rate and fiscal settings
RBA lifting the cash rate quickly to control CPI1 Fiscal settings need to help2 Rate hikes to slow economy and lift unemployment3 RBA cash rate (with CBA Economist forecasts) Underlying budget deficit ($Abn) GDP and Unemployment rate ($bn and %) % 0 8 560 Thousands 5.0 Cash rate -10 Unemployment rat
Slide 129: Home prices, lending and population
Monthly home prices now falling quickly1 Divergence between capital cities still evident1 Home lending appears to have peaked at high level2 Dwelling prices (8 capital cities) CoreLogic Dwelling Prices (3mth change) Housing loan approvals (excluding refinancing) % $bn % % 12 Sydney Brisbane 20 10 6
Slide 130: New Zealand economic forecasts
GDP % CPI %1 Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 6.3 4.7 5.2 7.4 7.1 5.4 4.2 4.1 4.2 3.3 3.5 3.1 4.9 5.4 4.7 3.5 1.9 1.0 1.2 2.7 1.7 1.8 1.9 -1.0 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023
Slide 131: New Zealand dairy, GDP and housing
Tight supply will provide some support to dairy prices NZ economy remains resilient, but growth is set to NZ unemployment rate remains near multi-decade lows slow over 2022 Global dairy trade auction results1 (USD/tonne) NZ GDP growth (annual average)2 NZ unemployment rate3 (f) (f) 6,000 % 8 5 7 5,0
Slide 132: Sources, glossary & notes
Sources, glossary & notes
Slide 133: Sources and notes
Slide 5 1. Refer to the glossary for source information. 2. Home Lending - Includes RBS internal refinancing, excludes Viridian Line of Credit (VLOC), includes Bankwest fixed splits of existing variable loans and excludes all other Bankwest internal refinancing. Business Lending - Business Bank Comm
Slide 134: Sources and notes (continued)
Slide 35 1. Refer to the glossary for source information. 2. Home lending source: RBA Lending and Credit Aggregates. Household deposits source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS). CBA Business Lending multiple is based on Business Banking growth rate (excluding Ins
Slide 135: Glossary
Cash Profit, Capital & Other Customer Metrics Funding & Risk Cash Profit The Profit Announcement (PA) discloses the net profit after tax on Main Financial MFI Share measures the proportion of Banking and Finance MFI Customers that nominated Committed Given the limited amount of Commonwealth governme
Slide 136: Contact us
Ne [7 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 136
Commonwealth Bank of Australia — FY2022 Earnings Presentation on 6ix