Commonwealth Bank of Australia · ASX:CBA
Commonwealth Bank of Australia — H1 2001 Earnings Presentation
41 slides from Commonwealth Bank of Australia's earnings presentation, Feb 13, 2001
Slide 1: Presentation of Half Year Results
Presentation of Half Year Results 13 February 2001 www.commbank.com.au
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 13 February 2001. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice
Slide 3: Speaker's Notes
Speaker’s Notes • Speaker’s notes for this presentation are attached below each slide. • To access them, you may need to save the slides in PowerPoint and view/print in “notes view.” 3
Slide 4: Overview
Overview • Significant progress on the integration • Strong interest earnings with improved margin • Good growth in other banking income • Strong new business growth in funds management • Good inflows of insurance new business • Actions taken to address market share • Lower insurance earnings due to
Slide 5: Agenda
Agenda • Performance Highlights • Income and Expenditure • Balance Sheet • Colonial Merger • Funding and Capital 5
Slide 6: Performance Highlights Commonwealth Bank Group
Performance Highlights Commonwealth Bank Group Set out in this presentation are unaudited proforma graphs and tables which comprise the profit and loss, balance sheet and life insurance and funds management statistics for the Commonwealth Bank Group and Colonial Limited for the half years ending Dec
Slide 7: Net Operating Profit
Net Operating Profit* 1,200 1,000 1,109 1,033 1,035 800 $m 600 400 200 0 Dec 1999** Jun 2000** Dec 2000 * Net Profit after tax and outside equity interest - cash basis. Excludes abnormal items, appraisal value uplift and goodwill amortisation. * * Proforma 7
Slide 8: Lending Assets Growth
Lending Assets Growth 145.159 147,75 139,09 9 2 * Proforma ** Excludes securitised housing loan balances $4.7b (Dec’ 2000), $3b (June 2000), $1.7b (Dec’1999). 8
Slide 9: Australian Market Share
Australian Market Share Jun Dec 2000 2000 Home loans n/a 23.30%* Credit Cards 29.00% 29.00% Personal Loans 24.97% 24.93%* Retail Deposits 25.29% 24.61% Retail FUM 16.00% 16.77%** Retail Broking 9.00% 8.50% * As at 30 November 2000 ** As at 30 September 2000 9
Slide 10: Home Loan Market Share
Home Loan Market Share Commonwealth Bank Group Market Share (all lenders) January - November 2000 31.00% Owner Occupied 29.00% Approvals * 27.00% Owner Occupied 25.00% Balances 23.00% * Residentially Secured 21.00% Approvals 19.00% ** Residentially 17.00% Secured Balances 15.00% ** * Since September
Slide 11: New Zealand Market Share
New Zealand Market Share ASB Group New Zealand Jun Dec 2000 2000 Retail Lending 15% 16% Retail Deposits 18% 18.5% Credit Cards 12% 13.8% Retail Funds Management 3.75% 4.7% est. Main Bank Share 15% 16% 11
Slide 12: Domestic Net Interest Margins
Domestic Net Interest Margins % 3.50 3.25 3.00 2.75 Mar-99 Sep-99 Dec-99 Sep-00 Dec-00 Jun-99 Mar-00 Jun-00 NAB WBC ANZ Commonwealth Bank Group* * Proforma 12
Slide 13: Income and Expenditure
Income and! Expenditure
Slide 14: Operating Income
Operating Income 5,000 4,500 4,401 4,201 4,231 4,000 15% 19% 18% 3,500 7% 6% 7% 3,000 26% 26% 27% $m 2,500 2,000 1,500 1,000 49% 51% 49% 500 0 Dec 1999* Jun 2000* Dec 2000 Net Interest Income Other Banking Operating Income Funds Management Income Life Insurance Income * Proforma 14
Slide 15: Banking
Banking • Strong growth in interest income • Other Banking Operating Income – Commission and other fees, up 14% – Trading Income, up 22% – Lending Fees, up 4% 15
Slide 16: Funds Management
Funds Management 31/12/99* 30/06/00* 31/12/00 $M $M $M Operating income 255 318 340 Operating expenses 186 224 224 Operating profit before tax 69 94 116 Income tax expense 21 31 38 Operating profit after tax 48 63 78 * Proforma 16
Slide 17: Funds Management
Funds Management 140 120 115 107 12 100 92 10 8 23 24 80 $b 60 24 21 22 14 40 32 35 28 20 18 20 23 0 Dec 1999* Jun 2000 Dec 2000 Australian Retail Funds** Australian Wholesale Funds International Funds Australian Life Assets Other Life Assets * Proforma ** Includes listed property trusts 17
Slide 18: Life Insurance
Life Insurance Sources of life insurance operating profit (excluding abnormals) 31/12/99* 30/6/00* 31/12/00 $M $M $M The Margin on Services operating profit after tax is represented by : Planned profit margins 103 122 128 Experience Variation (12) (8) (33) New business / losses reversal of 11 2 (3)
Slide 19: Life Insurance
Life Insurance Investment Earnings Target investment mix is 50 : 50 growth : income As at December 2000 – 38% is directly invested in equity markets – 12% is invested in property Overall earnings were adversely impacted by poor equity returns for the period. – net earnings on shareholder assets of $
Slide 20: Appraisal Value Uplift
Appraisal Value Uplift Life Business $m Australia 62 New Zealand 12 Asia - Funds Management 115 Appraisal Value Uplift 189 As at 31 December 2000 20
Slide 21: Operating Expense Analysis
Operating Expense Analysis $m 3,000 2,585 2,500 2,473 115 46 2,000 1,500 2,349 2,427 2,470 1,000 500 0 Dec 1999* Jun 2000* Dec 2000 Existing Operations Business acquisitions and GST * Proforma 21
Slide 22: Cost Ratios
Cost Ratios 58.4 58.7 3 60 55.9 2.5 55 2.38 2.33 2.32 2 50 Cost/Income Cost/Assets 1.5 1.81 1.77 1.73 45 1 40 0.5 35 0 30 Dec 1999* Jun 2000* Dec 2000 Cost to Average Balance Sheet Assets Cost to Avg. Balance Sheet Assets & FUM Cost to Income * Proforma 22
Slide 23: Goodwill and Asset Quality
– Goodwill – Asset Quality
Slide 24: Goodwill
Goodwill Goodwill amortisation HY 31/12/00 $m Colonial Acquisition 136 ASB Group – Acquisition of Minority 3 State Bank Victoria 20 Other Group Entities 4 Total 163 24
Slide 25: Credit Risk
Credit Risk Total Risk Rated Exposures 100% % of Exposure 80% 60% 40% 20% 0% 30 June 2000 31 December 2000 Other A BBB AAA/AA 25
Slide 26: Aggregate Provisions
Aggregate Provisions 2,000 300 1,800 1,600 250 1,400 200 1,200 $m1,000 150 % 800 600 100 400 50 200 0 0 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 94 94 95 95 96 96 97 97 98 98 99 99 00* 00* General Provision Specific Provision Total Provisions/Gross Impaired Assets (axis on right) * In
Slide 27: Net Impaired Assets
Net Impaired Assets * Commonwealth Bank Group excluding Colonial 27
Slide 28: Colonial Merger
Colonial Merger
Slide 29: Integration Expenditure
Integration Expenditure Restructure Provision Expenditure Provision Half Year Ended Provision 30/06/00 31/12/00 31/12/00 $m $m $m Restructuring Costs Colonial 294 62 232 Commonwealth Bank 106 41 65 Total restructuring costs (pre tax) 400 103 297 29
Slide 30: Integration Related Staff Movements
Integration Related Staff Movements Business Merger Movement Case Jan-00 Jun-00 Dec-00 Jan to Dec Total Staff 40,018 39,575 38,028 (1,990) Total Integration Mvt (178) (1,003) (1,181) Retrenchments (129) (441) (570) Franchise Staff (56) (51) (107) Other Colonial Net Change 7 (183) (176) (853) EDS Mig
Slide 31: Retrenchment Costs and Estimated Staff Synergies
Retrenchment Costs and Estimated Staff Synergies Commonwealth Group* Total $m One-off 50 Retrenchment Costs Annualised 75 Synergies FY2000-2001 Staff 60 Synergies (estimate) * As at 31 December 2000 31
Slide 32: Funding and Capital
Funding and) Capital
Slide 33: Funding Sources
Funding Sources Retail Wholesale A$b % At 31 December 2000 $3.6b $5.5b $3.2b Total $30bn $3.2b $6.8b $6.4b $1.5b Offshore - Public Long Term Offshore - Private 54% Domestic - Public Domestic - Private Short USCP Term ECP 46% NCD 33
Slide 34: Funding Initiatives
Funding Initiatives Japanese Retail Global Mortgage “Commets” Issue Bond Issues Backed Security • A$750 m Fixed Rate • Two Global deals • A$450m of retail issues Bonds over the last 12 months totalling A$4b over • The Group’s first the last 12 months • Participation by over integrated wholesale • SE
Slide 35: Capital Adequacy
Capital Adequacy 30 Jun 00 31 Dec 00 Gross Tier I 18,265 18,409 Less Goodwill (5,905) (6,007) Preference Shares (86) (39) intangible component of investment in non- consolidated subsidiaries (2,656) (3,449) Net Tier 1 9,618 8,914 Tier 1 Ratio 7.49% 6.71% Upper Tier 2 1,292 1,346 Lower Tier 2 4,805 4
Slide 36: ROE and EPS
ROE and EPS ROE EPS 25 100 20 75 15 50 10 25 5 0 0 Dec 1999* Jun 2000* Dec 2000 ROE - Cash Basis EPS ("Cash" Earnings) * As reported in prior profit announcements (i.e. not proforma) 36
Slide 37: Annual Dividends
Annual Dividends 150 100 90 125 72 80 66 70 100 58 57 60 52 Cents 75 46 50 % 40 36 58 61 50 30 46 49 22 45 20 38 20 36 25 24 10 20 20 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 First Half Second Half Payout Ratio 37
Slide 38: Capital Management Strategy
Capital Management Strategy • $200 million on market share buy-back announced 24 October 2000 – 785,173 shares acquired for $23.4 million (weighted average buy-back price $29.86) – Programme deferred January 2001 • Off market share buy-back of up to $700 million March 2001 – Final size of the buy-ba
Slide 39: Capital Management Strategy
Capital Management Strategy • Preference Share Issue of $700 million in April 2001 – Qualifies as Tier 1 capital – Listed on the ASX – Non-cumulative floating rate dividend for the first five years based off the Bank Bill rate – Expected to be fully franked – Dividends payable quarterly – Investor f
Slide 40: Total Shareholder Return
Summary 35 40 30 Total Shareholder Return % 30 25 Share price $ 20 20 15 10 10 5 0 0 Dec Jun Dec Jun Dec Jun Dec Jun Dec 1996 1997 1997 1998 1998 1999 1999 2000 2000 Closing share price at half years ($) Total Shareholder Return for 5 years (%) Average TSR (ANZ, NAB, Westpac) 40
Slide 41: Presentation of Half Year Results
Presentation of Half Year Results 13 February 2001 www.commbank.com.au
Commonwealth Bank of Australia — H1 2001 Earnings Presentation on 6ix