Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Q1 FY2009 Earnings Presentation
36 slides from Commonwealth Bank Of Australia's earnings presentation, Nov 13, 2008
Slide 1: September Quarter 2008 Trading Update
Commonwealth Bank of Australia For personal use only September Quarter 2008 Trading Update Investor Information Pack 13 November 2008 Commonwealth Bank of Australia ACN 123 123 124
Slide 2: Disclaimer
Disclaimer For personal use only The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 13 November 2008. It is information given in summary form and does not purport to be complete. It is not intended to be
Slide 3: Challenging market conditions
Challenging market conditions Summary continuing - CBA remains well placed For personal use only Continuing dislocation in credit markets Economic conditions slowing CBA remains well placed Good volume growth and market share gains Increased provisioning Strong capital, funding and liqui
Slide 4: Strong volumes underpinning revenue
Strong volumes underpinning revenue Summary position For personal use only 12 Months 3 Months to to Sep 08 Sep 08 Annualised % % CBA System CBA System Home Lending 15.4 9.4 12.0 5.6 Household Deposits 19.0 15.2 22.4 21.2 Business Lending 10.0 16.3 6.0 13.2 Business Deposits 23.1 12.8 26.0 14.8 Figur
Slide 5: Loan Impairment Expense significantly higher
Loan Impairment Expense significantly Summary higher – underlying credit quality sound For personal use only Impaired Assets vs Peers 70% of exposures investment grade $m As at Sep 08 3,000 50.0% 2,500 40.0% 30% Other 29% 2,000 30.0% 1,500 19% BBB+ to BBB- 17% 20.0% 70% 1,000 19% A+ to A- 18% 500 10
Slide 6: Strong funding, liquidity and capital positions
Strong funding, liquidity and capital Summary positions For personal use only Well advanced with FY09 funding programme Liquid assets now total $66bn Long term funding task updated to $66bn $28bn reflect latest asset and deposit growth forecasts, inclusive of BankWest* Medallion 26 RMBS $11bn Surplu
Slide 7: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only AA Credit Rating – one of only 20 banks worldwide Tier 1 Capital ratio of 7.5% - FSA equivalent of 11.0%. Holding $66bn in liquid assets 30% share of household deposits – more than double next competitor Strongest growth in deposit bala
Slide 8: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 8
Slide 9: Strengthened competitive position
Strengthened competitive position Market Shares reflected in strong market share gains For personal use only Sep 07 Sep 08 Mvt % % % Home Lending 18.73 19.73 1.00 Household Deposits 28.48 29.39 0.91 Business Lending 14.88 14.06 0.82 Business Deposits 15.17 16.55 1.38 FirstChoice 8.39 9.65 1.26 Figur
Slide 10: Home Lending
Strong market share gains helping to Home Lending offset slowdown in system growth For personal use only CBA growth vs system 18 consecutive monthly share gains CBA 19.8% 19.7% 15.4% System 19.4% 19.2% 12.0% 19.1% 9.4% 18.9% 19.0% 18.7% 5.6% 18.7% 18.6% 18.6% 12 months 18.2% Sep 08 Qtr 12 months to
Slide 11: Deposits
Across-the-board market share gains reinforcing Deposits CBA’s competitive advantage in this key area For personal use only Total deposits growth well ahead of peers Household deposit share twice next largest $bn +34% Household Other Market share of household deposits (Sep 08) 250,000 250 29.4% +24%
Slide 12: Continued emphasis on targeted, sustainable and profitable growth
Continued emphasis on targeted, sustainable Other and profitable growth For personal use only Strong growth in new transaction accounts Business lending market share New personal transaction accounts (#) APRA loans to non-financial corporations 18.0% 181,307 17.0% 16.0% 157,494 15.0% 14.0% 13.0% Sep
Slide 13: Wealth Management
Wealth Relative performance remains strong Management in tough market conditions For personal use only FUA movements Sep 08 Quarter Net flows remain positive on key platforms $m FirstChoice & Avanteos $185bn $4bn $3bn 1,880 $178bn 1,239 950 647 Jun 08 Net Flows Investment Sep 08 Returns / Other Dec
Slide 14: NZ/ASB
ASB remains well-placed to navigate NZ/ASB tougher market conditions For personal use only Credit growth slowing, particularly housing ASB growth remains ahead of system % 25 12 months to Sep 08 20 13.4% 13.0% 15 8.9% 10 7.3% 5 0 -5 Jan 94 Jan 97 Jan 00 Jan 03 Jan 06 Retail Deposits Home Lending Hou
Slide 15: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 15
Slide 16: Funding & Liquidity
Funding & Well advanced with 2009 funding programme – Liquidity further strengthened by $66bn in liquid assets For personal use only Well advanced with FY09 funding programme Retail funding remains strong 1 Long term funding task updated to 22% $28bn reflect latest asset and deposit growth forecasts
Slide 17: Funding Impact of BankWest
Funding Impact of BankWest For personal use only BankWest funding requirement 2009* BankWest funding requirement easily $16.5bn accommodated from existing funding resources Short Term $8.5bn Funded from surplus liquids and NCD/CP Funding issuance Total funding requirement of $16.5bn Accommodated
Slide 18: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 18
Slide 19: Capital
Capital FSA (UK) Tier 1 capital ratio of 11% For personal use only Tier 1 Peer Comparison Strong capital position maintained Tier 1 Capital Ratios 11.0% Tier 1 ratio of 7.5% as at Sep 08 – 9.8% 8.8% inclusive of high IRRBB2 7.5% Discussions continuing with APRA on CBA CBA 1 Domestic 1 European
Slide 20: UK Capital Comparison – Basel II
Capital UK Capital Comparison – Basel II For personal use only The following table estimates the impact on CBA capital, as at September 2008, of the differences between the APRA Basel II guidelines and those of the UK regulator, Financial Services Authority (FSA) Net Tier 1 Total Fundamental Capital
Slide 21: European capital levels
Capital European capital levels For personal use only Basel II Tier 1 Capital 11.6% 12% 11.0% 10.4% E 10.0% Europe 10% 9.3% 9.3% 9.1% 8.8% 8.6% 8.3% 8.2% 7.7% 7.6% 7.0% 6.6% Average Tier 1 : 8.8% 8% Europe Average 6% Core Tier 1: 9.3% 7.1% 8.1% 8.6% 8.8% 6.9% 7.0% 6.3% 7.5% 6.2% 7.1% 4% 6.6% 6.3% 6.
Slide 22: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 22
Slide 23: Overview of credit quality
Provisions taken for large existing single names - Overview underlying credit quality remains sound For personal use only Total and New Impaired Assets $m Overall book quality remains sound 878 683 562 421 379 338 321 Provisions taken for pre-existing single 252 291 168 name exposures* Dec 06 Ju
Slide 24: Small uptick in home loan arrears off a low base
Small uptick in home loan arrears off a low base - Consumer unsecured arrears trending below prior years For personal use only Home loan arrears New mortgagee in possession cases 0.5% 90+ Days % # 40 0.4% 20 0.3% 0.2% 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Dec 07 Jan 08 Feb 08 Mar 08 Apr
Slide 25: Consumer: home loan arrears uptick within expectations
Home loan arrears uptick broadly consistent Consumer across States, but within expectations For personal use only Home loan arrears Home loan arrears by State 30+ Days % % 90+ Days % 1.2% 0.6 1.0% 0.4 0.2 0.8% 0 0.6% Sep 06 Dec 06 Mar 07 Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Oct Nov Dec Jan Feb
Slide 26: Consumer: credit card arrears and low doc loans
Recent credit card 30 day arrears impacted by a Consumer one-off increase in minimum payment levels For personal use only Personal loan arrears Credit card arrears 30+ Days % 30+ Days % 4.0% 3.5% 3.5% 3.0% 3.0% 2.5% 2.5% 2.0% 1.5% 2.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Slide 27: Commercial: book quality remains sound
Book quality remains sound - no Commercial systemic or sector specific issues For personal use only 70% of exposures investment grade Impaired Assets vs Peers $m As at Sep 08 3,000 50.0% Other 2,500 40.0% 30% 29% 2,000 30.0% 19% BBB+ to BBB- 17% 1,500 20.0% 70% 1,000 19% A+ to A- 18% 10.0% investmen
Slide 28: Portfolio remains well diversified
Sector Portfolio remains well diversified Exposures across industry sectors For personal use only Sep 08 Jun 08 Sep 08 Jun 08 Consumer 46.2% 46.9% Agriculture 2.3% 2.3% Mining 1.0% 1.2% Manufacturing 3.2% 2.9% Energy 1.7% 1.8% Construction 0.8% 0.8% Retail & Wholesale 2.6% 2.7% Transport 1.6% 1.7% B
Slide 29: Property: well diversified portfolio with strong security cover
Well diversified portfolio with strong Property security cover and conservative LVR’s For personal use only Represents 6.7% of total exposures Real Estate Investment Trust Industrial 29% Well diversified across property classes 35% Retail and geographies 12% 18% 6% Residential Commercial Propert
Slide 30: Pillar 3: Enhanced credit quality disclosures
Pillar 3 Enhanced credit quality disclosures For personal use only Enhanced disclosures/transparency Regulatory exposure movement ($m) Sep Quarter credit exposures up 9%; September 2008 quarter “Flight to quality” in retail lending Increased liquid assets Retail lending Liquid assets Excha
Slide 31: Counterparty & Other Exposures
Counterparty & Other Exposures For personal use only Lehman Brothers Total exposure of ~ $AUD150m, including a loan of ~$AUD115m to a Japanese subsidiary. All derivative exposures closed out . Allco Finance Exposure of approximately $AUD170m. Group Limited ABC Learning Senior debt exposure of
Slide 32: Counterparty & Other Exposures
Counterparty & Other Exposures For personal use only Lenders Mortgage Mortgage insurance is outsourced to Genworth (98%) and PMI (2%). Under “extreme stress” Insurance conditions (decrease in house prices of 30% and 6 times current default rate), expected loss demand on LMI would be ~$AUD480m. CDO
Slide 33: CBA Strength in uncertain times
CBA Strength in uncertain times For personal use only Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 33
Slide 34: Strategy on track and delivering
Strategy on track and delivering - strongest Strategy customer satisfaction gains of the peer group For personal use only Halved the gap to the top rated peer Domestically focussed strategic Roy Morgan Research Customer Satisfaction1 agenda – underscored by 84% BankWest acquisition 80% 76% 6.3%
Slide 35: BankWest: a compelling strategic growth opportunity
A compelling strategic growth opportunity at BankWest an attractive price For personal use only Home Lending 22.7% 21.6% Increased exposure to fast-growing WA 19.7% market 12.2% 13.1% 3.0% Very attractive terms Household Deposits Completion dependant on regulatory 33.1% 29.4% approvals 23.2% 1
Slide 36: Summary September 2008 Quarter
Summary September 2008 Quarter For personal use only Continuing dislocation in credit markets & economic conditions slowing Strong capital position maintained Very strong deposits growth Home loan market share gains helping to offset slowing system growth Provisions taken for pre-existing
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