Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Investor Day (October 2004)
14 slides from Commonwealth Bank Of Australia's investor day presentation, Oct 19, 2004
Slide 1: Investor Half Day: IFRS Financial and Business Impacts
Investor Half Day IFRS Financial and Business Impacts Geoff Steel Executive Manager, Group Finance 19 October 2004 Which Bank ConmonwealthBank
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 19 October 2004. It is information given in summary form and does not purport to be complete. It is not financial product advice and is not in
Slide 3: Agenda
Agenda x IFRS Project Overview » Technical Accounting Environment » Key Financial and Business Impacts Non-Financial Impacts ee Which Bank ConmonwealthBark
Slide 4: IFRS Project Overview
IFRS Project Overview « Project on track for 1 July 2005 implementation date » Involves over 100 employees worldwide » Currently in Implementation Phase « The Bank is adopting a conservative and pragmatic approach to conversion
Slide 5: Technical Accounting Environment
Technical Accounting Environment « IFRS is a move to US GAAP principles, but with simpler rules. « Australia following a ‘pure’ approach to adoption. » European Union — heavy political effort for dilution of IAS 39: Financial Instruments (ability to macro-hedge core deposits; and removal of fair val
Slide 6: Technical Accounting Environment (cont'd)
Technical Accounting Environment (cont’d) « Interpretations on some key issues are still fluid e.g. loan provisioning and treasury shares. « Global accounting firms still to arrive at ‘firm-wide’ views. ConmonwealthGark
Slide 7: Impacts for CBA
Key Financial Impacts for CBA COMPLEXITY HIGH MEDIUM LOW FINANCIAL IMPACT Low MEDIUM HIGH ype Which Bank ConmonweailthBak
Slide 8: Key Financial and Business Impacts
Key Financial and Business Impacts Hedge Accounting* High # Significant equity volatility through ‘cash flow hedge reserve’. «Some hedge ineffectiveness through profit. High » Refinement of in-house hedging system ~ not a significant spend. Simplified hedging products. Employee Benefits High » Large
Slide 9: Key Financial and Business Impacts
Key Financial and Business Impacts Consolidation of Special Purpose Vehicles Medium = Probable consolidation of all ‘own-asset’ securitisation SPVs. # Minimal profit impact. Low # Provided APRA continue capital relief. Hybrid Financial Medium Low & Instruments « Reclassified from equity fo debt. Pro
Slide 10: Key Financial and Business Impacts
Key Financial and Business Impacts Appraisal Value Accounting* High # This accounting ceases and internally generated AV uplift is reversed against General Reserve. Acquired AV reclassified as goodwill. Low ‘Non-cash’ item. AV calculation will continue to be performed to support the goodwill carryin
Slide 11: Key Financial and Business Impacts
Key Financial and Business Impacts Funds Management (corporate)* Low «Introduction of deferred acquisition costs for responsibie entities. Low # No significant impact. Taxation* Medium « Flow on tax effects of above changes. » Move to balance sheet approach. Low # No change to tax legislation. * No
Slide 12: Key Non-Financial Impacts
Key Non-Financial Impacts » Operational / Business Changes « New processes for credit ‘breach mediation’ given likelihood for increases in client technical breaches of loan covenants; « Simplified products for clients e.g. hedging; « Capital management implications — still awaiting formal APRA guida
Slide 13: Summary
Summary « IFRS accounting is LIVE for the Bank from 1 July 2005. » Potential significant volatility in profits and reserves: « Cash Flow Hedge Reserves « Defined Benefit Pension Plan Surplus » Loan Impairment Provisions » Downstream effects on client loan covenants and capital management. « Educatio
Slide 14: Investor Half Day: IFRS Financial and Business Impacts
Investor Half Day IFRS Financial and Business Impacts Geoff Steel Executive Manager, Group Finance 19 October 2004 Which Bank ConmonwealthBank
Commonwealth Bank of Australia — Investor Day (October 2004) on 6ix