Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — 1H21 Earnings Presentation
127 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 10, 2021
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the half year ended 31 December 2020 Commonwealth Bank of Australia | ACN 123 123 124 | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000
Slide 2: Important information
Important information The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 10 February 2021. It is information given in summary form and does not purport to be complete. Information in this presentation is
Slide 3: Contents
Contents CEO & CFO Presentations 4 Overview & Strategy 33 Financial Overview 45 Home & Consumer Lending 70 Business & Corporate Lending 85 Funding, Liquidity & Capital 95 Economic Overview 109 Sources, Glossary & Notes 120
Slide 4: Results Presentation – Matt Comyn, CEO
Results Presentation Matt Comyn, Chief Executive Officer Commonwealth Bank of Australia | ACN 123 123 124 | 10 February 2021
Slide 5: Overview: Delivering now, positioning for the future
Overview Delivering now, positioning for the future Supporting Delivering Strengthening Evolving … our customers and … balanced outcomes … our already strong … our strategy, communities with for all stakeholders balance sheet settings, building from a value-added reflecting our core underpinned by p
Slide 6: Supporting
Supporting Simply, efficiently, effectively Support Repayment deferrals1 Home lending Business lending 158k 83k Deferral Deferral Exits 92% returned to 96% returned to Exits pre-deferral terms repayment or closed or closed 133k 81k (84%) COVID-19 >6.3m support page visits Active deferrals <12mins Bi
Slide 7: Delivering: Above system volume growth
Delivering1 Above system volume growth in core businesses Home lending2 Household deposits3 Business lending4 Business deposits5 Fundings up 23% (vs 1H20) RBS transaction balances +30% Asset finance fundings +20% New transaction accounts +50% 38% fixed rate (10%, 1H20) >400k new transact
Slide 8: Delivering: Strong volume growth across the business
Delivering Strong volume growth across the business Home lending Credit cards CommSec2 Strong operational execution – Neo >one-third of all approvals1 - >230k new accounts this half3 – disciplined focus on turnaround times Digital share of approvals 85%1 70% of new customer trade via app/pocket Appr
Slide 9: Delivering: Balanced outcomes for all stakeholders
Delivering Balanced outcomes – delivering for all stakeholders Customer People Community Shareholders Net Promoter Scores Employee engagement5 Reputation score6 Total Shareholder Return7 CBA Peers Rank Period % Rank 62.1 80 Consumer1 #2 79 1yr 7% #1 Business2 #1 3yr 19% #1 71 Institutional3 #1 5yr 2
Slide 10: Strengthening: Strong balance sheet and capital
Strengthening Already strong balance sheet and capital settings Funding Provisioning Capital 75% deposit funded Total provisions of $6.8bn – increased coverage CET1 ratio of 12.6% (Level 2) Group transaction balances +37% Ongoing adjustments for economic forecasts, stress factors Pro-for
Slide 11: Evolving: Building tomorrow's bank today
Evolving Building tomorrow’s bank today for our customers Our purpose To improve the financial wellbeing of our customers and communities Our priorities Leadership in Australia’s Reimagined products Global best digital Simpler, better recovery and transition and services experiences and technology f
Slide 12: Leadership in Australia's recovery and transition
Leadership in Australia’s recovery and transition Help build Australia’s future economy Building Australia’s leading business bank Help build Australia’s future economy • Double business bankers in branches (by Jun-21) • Helped Australian clients access $159bn1 of funding in 2020 ($75bn for Federal/
Slide 13: Reimagined products and services
Reimagined products and services Innovative solutions to meeting customer needs • Differentiated customer propositions (anticipating customer needs) • CommBank Neo – driving growth in application share • CommBank AdvancePay – early access to earned but not yet paid income • Leading digital features
Slide 14: Global best digital experiences and technology
Global best digital experiences and technology Build on existing strength – target global best practice Forrester Digital Experience ReviewTM • Deliver best integrated digital experiences Global Mobile Banking Apps Summary 2020 • Build on existing strength - Australia’s #1 Mobile App, App 4.0 “ Comm
Slide 15: Simpler, better foundations
Simpler, better foundations Fundamental to sustained performance – particularly in a low interest rate environment • Consistent operational excellence Cost Approach Divestment status • Taking ownership and following up Sovereign Jul 18 • Focus on turnaround times TymeDigital Nov 18 • Simpler, more e
Slide 16: This result
This result 1 Cash earnings reflect COVID-19 impacts and low rates – large capital surplus – interim dividend of $1.50 1H21 vs 1H20 Statutory profit ($m) 4,877 (20.8%) Cash NPAT ($m) 3,886 (10.8%) CET1 (%, Level 2) 12.6% +90bpts EPS (cash, $) 2.20 (26c) Dividend per share ($) 1.50 (0.50) 1. Statutor
Slide 17: Cash NPAT
Cash NPAT 1 Responding to market challenges – investing in the franchise - earnings higher sequentially Operating Income Operating Expenses Loan Impairment Expense Cash NPAT Low rates impacting NIM Additional remediation Insulated by support measures COVID-19 + NIM pressures Continued core
Slide 18: Results Presentation – Alan Docherty, CFO
Results Presentation Alan Docherty, Chief Financial Officer
Slide 19: Result overview
Result overview Competitive advantages + disciplined execution delivering strong outcomes - notwithstanding the current environment Economic Competitive Disciplined Delivering Environment Advantages Execution Outcomes • Earnings pressure • Digital leadership • Customer support • Share gains in all c
Slide 20: Statutory vs Cash NPAT
Statutory vs Cash NPAT One-off gains on sale of wealth management businesses 1H20 2H20 1H21 $m Statutory NPAT 6,161 3,473 4,877 Less • Primarily CFS1 related Cash NPAT – discontinued operations1 138 15 89 • Improved sequentially, mainly due to higher legal, remediation and compliance expense in the
Slide 21: 1H21 result
1H21 result 1 Cash NPAT down 10.8% on lower operating performance and COVID-19 provisioning – strong sequential growth 1H21 1H21 vs 1H21 vs $m 1H20 2H20 Operating Income 11,961 (0.5%) 1.9% Operating Expenses 5,566 6.9% (2.2%) Operating Performance 6,395 (6.2%) 5.7% Loan Impairment Expens
Slide 22: Operating income
Operating income1 Lower margin and impact of COVID-19, partly offset by core volume growth Comparative Movement Sequential Movement • Lower margin • COVID-19 Impact (282) • Core volume growth - Lower credit card, retail FX and deposit fee income (158) - Lower SAF income from impairment of aircraft o
Slide 23: Group margin
Group margin1 Down 3bpts this half (-1bpt excl. impact of liquids) - lower interest rates, partly offset by reduced basis risk Cash Rate Headwinds2 This half FY21 vs FY20 7bpts (3)bpts 204 (2) (2) 1 (2) 3 201 Minimal impact on NII (1) - Home loans: Transactions (2) - Switching (3) Savings (1) - Disc
Slide 24: Operating expenses
Operating expenses1 Up 2.3% (ex remediation), due to franchise investment, higher volumes, and continued momentum in simplification Comparative Movement2 Sequential Movement Contribution to Mvt: +4.6% +2.4% -0.1% +6.9% Lower remediation provisions (2.2%) 6,000 24 77 (193) 88 123 241 5,566 5,689 5,56
Slide 25: Credit risk
Credit risk Key leading indicators remain insulated by COVID-19 support measures Loan Impairment Expense Arrears 2 TIA Loan loss rate (bpts)1 90+ days bpts 1H20 2H20 1H21 Personal Loans Credit Cards Home Loans3 % of TCE: 0.72% 0.78% 0.70% Consumer 14 38 14 $bn Corporate 24 75 45 Total 17 48 22 1.56%
Slide 26: Sector focus
Sector focus Close monitoring as COVID-19 support measures unwind – increased provisioning in sectors of concern Sector focus TCE 1 $bn Air Transport Entertainment, Commercial • Air Transport and Services and Services Leisure & Tourism Property • Facing an extended period of travel restrictions 77.5
Slide 27: Provisioning
Provisioning Strong provision coverage maintained – remain cautious notwithstanding improved economic outlook (vs Jun 20) Collective Provisions Total Provisions ($bn) Provisions/CRWA2 Provision Coverage1 1.08% 1.44% 1.58% Collective Individual Consumer Corporate 1.81% $bn Dec 20 vs 1.70% 6.8 Jun 20
Slide 28: Funding
Funding Strengthened settings - higher deposits, longer wholesale maturities, short term at historical lows Deposit funding Long term funding1 Short term funding4 Term Funding Facility % of total funding % of total wholesale funding2 % of total funding $bn $41.0bn 26% 75% 69% 69% 74% Undrawn $21.9bn
Slide 29: Capital
Capital CET1 of 12.6% after payment of 2H20 dividend Expected uplift Expected uplift (divestments) 4 (divestments) 4 Organic Capital Generation 32-42bpts 26-36bpts +43bpts 18.7% international 17 (32) 88 (13) (2) 12.6% 12.8% 11.6% 42 APRA 10.5% ‘unquestionably strong’ Regulatory 8.0% Credit Risk (7)
Slide 30: Capital and dividend considerations
Capital and dividend considerations Long term, disciplined approach supports returns and provides flexibility Sustainable returns Long term discipline Creating flexibility Long term commitment to Lower share count supports sector-leading • The Board’s long-term full year dividend sustainable returns
Slide 31: Economic outlook
Economic outlook Australia and New Zealand relatively well positioned • Recovery in global growth in 2021 – unevenly distributed • Australia and New Zealand relatively well positioned − Significant accumulated household savings − Strong recovery in labour market − High consumer and business confiden
Slide 32: Summary
Summary Delivering now – positioning for the future Volume Growth1 Employee Engagement2 • Balanced outcomes CBA vs • Customer focus + engaged people = volume growth 1H21 System Business Lending >3x • Peer leading balance sheet strength 80 Business Deposits 1.7x 79 • Leading returns Home Lending 1.5x
Slide 33: Overview & Strategy
Overview & Strategy
Slide 34: Why CBA?
Why CBA? Leading franchise - leading returns MFI share 1 (%) Home Lending share 2 (%) Household Deposits share 3 (%) Net Promoter Scores (%) Change in 1H21 (bpts) Deposit Funding Mobile App Net Promoter Score 4 22 37 Peers as at Sep 20 75% CBA 71% 66% 65% +35 28.3 -57 -42 +30 34.4% CBA Peer 3 Peer 2
Slide 35: Delivering long-term sustainable returns
Delivering long-term sustainable returns A consistent, long-term strategy - focused on the customer Strong engagement with the Strong operational execution delivers customer underpins leading market scale efficiencies and capacity for shares and satisfaction rankings long-term reinvestment Scale and
Slide 36: Reimagined products and services: franchise strength
Reimagined products and services Franchise strength supporting our customers CBA 41.1% 46.0% MFI 42.4% Dec 15 Share Dec 19 CBA MFI share1 MFI share1 32.8% Dec 20 29.2% 34.1% 35.6% 34.4% 34.4% 26.7% 16.7% 12.8% 12.0% Dec 15 Dec 19 Dec 20 CBA Peer 3 Peer 1 Peer 2 Aged 14-17 Aged 18-24 Aged 25-34 Aged
Slide 37: A ventures portfolio including new acquisitions
Reimagined products and services A ventures portfolio including new acquisitions and investments Our portfolio A dedicated vehicle for scaling new digital solutions for our customers Everyday Banking Home Buying Business With our strategic partners * * * Banking, Superannuation and Financial Service
Slide 38: Global best digital experiences: history of innovation
Global best digital experiences Building on a history of innovation Foundations Leadership Extending leadership Customer Launch of 24/7 Engagement x15ventures Engine Building a pipeline Core banking of new digital Real-time Learns from customer businesses Strengthening banking and capabilities and N
Slide 39: Market leading digital assets
Global best digital experiences Market leading digital assets – delivering brilliant customer experiences Leading customer experience Strong customer engagement Mobile banking leader Mobile App Net Promoter Score Customers Engaged with smart banking features2 Customer’s likelihood to recommend main
Slide 40: Market leading digital assets
Global best digital experiences Market leading digital assets – delivering brilliant customer experiences Benefits finder CommBank Rewards CommSec Pocket #1 Mobile App >2.9m unique visits Personalised cashback rewards Simple, low cost investing app Advance Pay – access to money before your
Slide 41: Divestment program well progressed
Simpler, better foundations Divestment program well progressed – BoCommLife completed - Aussie Home Loans / Lendi merger announced Divestment Status CET1 Impact Core Business Completed Level 2 1H21 Cash NPAT ($m) Sovereign Jul 18 Pro-forma 12.9-13.0% TymeDigital Nov 18 Remaining1 CFSGAM Aug 19 +32-4
Slide 42: Good progress on becoming a better bank
Simpler, better foundations Good progress on becoming a better bank for our customers COVID-19 support Customer Remediation Royal Commission Rapid support to customers impacted by COVID-19 Committed to remediating customers quickly Well progressed on implementing the recommendations of the Royal Com
Slide 43: Our commitment to sustainability
Our commitment to sustainability Making a positive contribution to our customers, community and our people Supporting our Investing in our Commitment to Good business customers communities our people practice • Committed to a freeze on forced sales • Enabled digital delivery of financial • Refreshed
Slide 44: Sustainable outcomes: climate change
Sustainable outcomes Managing climate change risks and opportunities Our climate commitment Sustainable finance We are committed to playing our part in limiting climate change in Supporting our customers and clients to improve their sustainability line with the goals of the Paris Agreement and suppo
Slide 45: Financial Overview
Financial Overview
Slide 46: Our profits
Our profits 80% of profits paid in tax and returned to shareholders Profit before tax $5.5bn1 approximates Tax Expense 1.6 30% • • One of Australia’s largest taxpayers PAYG of $844m2 Dividends 2.7 50% • Returned to ~880,000 shareholders + millions more via Super • Fully franked • Dividend payout rat
Slide 47: Overview – 1H21 result
Overview – 1H21 result1 Key outcomes summary Financial Balance sheet, capital & funding Statutory NPAT2 ($m) 4,877 (20.8%) Capital – CET12,6 (Int’l) 18.7% +120 bpts Cash NPAT3 ($m) 3,886 (10.8%) Capital – CET12 (APRA) 12.6% +90 bpts ROE3 % (cash) 10.5 (180)bpts Total assets ($bn) 1,058 +7.9% 3 EPS c
Slide 48: Key financial outcomes
Overview – 1H21 result Key financial outcomes Cash NPAT1 ($m) NIM1 Cost-to-income1,2 Cash ROE1 (10.8%) (10)bpts +120bpts (180)bpts (3)bpts (10bpts) +220bpts +32.2% 4,356 211 44.6% 3,886 43.3% 44.5% 12.3% 2,940 204 10.5% 201 8.3% 1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21 Cash EPS1 (
Slide 49: Cash NPAT by division
Cash NPAT by division1 Higher provisioning (COVID-19) impact across business units – earnings higher sequentially RBS2 BB IB&M NZ (NZD) vs PCP vs PCP vs PCP vs PCP • Income -1% • Income Flat • Income +3% • Income +1% • Costs +1% • Costs 2% • Costs (2%) • Costs +3% • Impairment +16% • Impairment 22%
Slide 50: Total operating income drivers
Total operating income drivers1 Lower margin and OBI partly offset by higher volumes and Funds & Insurance (0.5%) Funds & Insurance +31.5% 12,023 • Lower weather event related claims experience +47.3% 11,961 130 171 • Income foregone from sale of Aegis (NZ) ($10m) 2,543 2,419 Other Banking Income (4
Slide 51: Balance sheet
Balance sheet Continued good growth in core markets Group Lending Dec 20 vs Dec 20 vs $m Dec 19 Jun 20 Dec 20 Jun 20 Dec 19 +2.8% Home loans 535,090 542,880 559,318 3.0% 4.5% +1.8% Consumer finance 21,167 18,217 17,449 (4.2%) (17.6%) 792 Business loans 1 120,814 122,313 127,560 4.3% 5.6% 770 778 Ins
Slide 52: Volume growth
Volume growth Above system growth in core products Home Lending1 Business Lending1,2 Household Deposits3 Business Deposits4 CBA CBA (excl. IB&M) CBA CBA System CBA System System 25.8% System 14.4% 12.8% 19.0% 4.9% 6.4% 8.2% 7.8% 3.7% 9.9% 2.8% 3.7% 4.3% 5.7% 1.9% 1.0% 0.7% -1.7% 6 Months 12 Months 6
Slide 53: Market share
Market share1 Strong market share in core markets % Dec 20 Jun 20 Dec 19 Home Lending2 Household Deposits3 CBA Peers CBA Peers Home loans – RBA2 25.2 25.0 24.9 30% Break in series Break in series 3 from Jul 19 30% from Mar 19 Home loans - APRA 25.9 25.7 25.5 25.2% 27.2% Credit cards - APRA 3 27.5 26
Slide 54: Group margin
Group margin1 Down 4bpts excluding the impact of higher liquids – mainly continued pressure from lower interest rates Cash Rate Headwinds2 FY21 vs FY20 7bpts 211 (6) - (10)bpts (6) 3 3 Minimal impact on NII 201 (5) 1 Home loans: - Pricing +11 - Switching (4) - Discounting (4) Transactions (6) Higher
Slide 55: Group margin: deposits hedge
Group margin Deposits hedge +3bpts - providing partial relief in a low interest rate environment Replicating Portfolio (RP) & Equity Hedge Liquidity & Basis Risk (Deposits Earnings1: -11bpts, Deposits Hedge: +3bpts and Equity Hedge: -4bpts) Liquidity • Every additional $10bn of liquid assets3 is exp
Slide 56: Margins by division
Margins by division Lower interest rates impacting across business units RBS1 BB IB&M NZ (ASB) Lower deposit margins, increased Lower business lending and Impact of the lower interest rate Lower deposits margins and equity home loan competition and deposit margins, partly offset environment and unfa
Slide 57: Other banking income (OBI)
Other banking income (OBI)1 Impact of COVID-19, partly offset by higher Markets trading income $m Other Banking Income $m Trading Income 1H21 vs 1H20 1H21 vs 1H20 2,543 2,419 Impairment of aircraft operating 508 535 Other 231 2,294 60 leases, and lower gains from 123 Treasury liquid asset sale 432 T
Slide 58: Sequential operating income
Sequential operating income1 Higher OBI, core volume growth and 2 additional days, partly offset by lower margin • Higher Markets trading income mainly from precious metals financing +106 • Higher merchants income mainly due to the non-recurrence of COVID-19 fee waivers in 2H20, and higher volumes +
Slide 59: Sequential operating expenses
Sequential operating expenses1 Lower remediation provisions, partly offset by higher investment and higher volume related costs Sequential Movement2 Contribution to Mvt: -3.8% +0.9% +0.7% (2.2%) 6,000 (213) 75 (89) 52 56 (4) 5,689 5,566 5,000 Increased lending processing volumes and frontline busine
Slide 60: Customer remediation
Customer remediation Additional remediation provision – committed to remediating customers quickly Remediation and program costs Customer refunds Cumulative spend and provisions Cumulative customer refunds • $821m returned to customers $1,754m • $933m remaining Wealth (Aligned Advice) 765 $2,881m $2
Slide 61: Investment spend
Investment spend1,2 Investment spend up 34%, with a higher proportion of productivity & growth related spend $m Investment spend $m Investment spend 34% 7% 856 856 1H21 vs 1H20: 798 798 69 8% 46 6% 639 639 +35% Branches 49 7% 473 & Other 421 65% 553 576 72% 350 Risk & Expensed Compliance 465 73% 377
Slide 62: Strategic cost reduction
Strategic cost reduction Building momentum – long-term cost reduction remains a priority Focus Approach Progress to-date Tighten discretionary spend and Cumulative cost reduction achieved Embed better cost realise cost benefits of portfolio discipline changes $415m Simplify IT architecture and $326m
Slide 63: Loan losses and provisions
Loan losses and provisions Cautious approach to provisions Loan Loss Rate 1 Post-COVID provisions on performing loans as a bpts multiple of historical LIE3 Consumer Corporate 73 x3.9 x3.6 FY 2020 overlay4 x1.3 x1.3 41 x2.3 142 33 x1.0 x1.6 25 22 76 x1.2 FY2019 x2.6 21 20 19 50 x2.3 x0.8 x0.2 43 16 1
Slide 64: Provisioning Scenarios
Provisioning Scenarios1 Remain cautious notwithstanding some improvement in broad economic assumptions since June 20 • Macroeconomic assumptions reflect forward Key assumptions: Current3 Central Downside looking scenarios updated for current assessments of the impacts of COVID-19 CY21 CY22 CY23 CY21
Slide 65: Provisions
Provisions1 Strong provisioning coverage Provision coverage/CRWA $m Provisions by stage Performing Non-performing Credit Credit Stage 2 exposures exposures provisions by credit grade3 Non-performing Dec 19 Dec 20 1.81% 1.72% Retail Secured 5.62% 10.51% 1.71% Jun 20 Dec 20 Jun 20 Dec 20 1.64% $199bn
Slide 66: Retail Banking Services (RBS)
Retail Banking Services (RBS)1 Operational execution – volume growth above system Net Promoter Score2 MFI Share3 Volume growth 10 Consumer NPS 1H21 Volume growth Peers CBA #2 6 months to Dec 20 0 35.6% 34.4% CBA System 8.2% 7.8% -10 16.7% 2.8% 1.9% -20 Dec 19 Dec 20 Next highest peer Dec 19 Dec 20 H
Slide 67: Business Banking (BB)
Business Banking (BB) Renewed focus on service model and leveraging digital assets – improving NPS Net Promoter Score1 SME Guarantee Loan Scheme2 Volume growth Business NPS CBA has funded >50% of all SME Guarantee 1H21 Volume growth Loans issued to businesses across Australia3 0 6 months to Dec 20 P
Slide 68: Institutional Banking and Markets (IB&M)
Institutional Banking and Markets (IB&M) Combining global connectivity and capability to build a better Australia Net Promoter Score IB&M Lending Credit RWAs Institutional NPS1 Lending decrease driven by lower institutional RWA decline driven primarily by foreign exchange (Turnover $300m+ pa) lendin
Slide 69: ASB
ASB Volume growth, partly offset by COVID-19 driven impairments and higher expenses Home lending deferrals1 Business lending deferrals1 Volume growth Majority of loans that have exited deferral Majority of loans have exited deferral Sound lending and deposit volume growth have returned to pre-deferr
Slide 70: Home and Consumer Lending
Home and Consumer Lending
Slide 71: Home lending overview
Home lending overview Process efficiency – above system growth - strong risk profile Consistent market share gains1 Net growth this period a combination of Strong growth in new fundings strong new lending, redraws and run-off 2 Home Loan Fundings ($bn)3 +23% 24.6% 25.2% $bn 23.0% 65 21.6% 11 20.7% 2
Slide 72: Home loan repayment deferrals
Home loan repayment deferrals1 Majority of exits do not require further assistance Home loan deferrals Deferral exits Active deferrals 158k Customers exiting deferral with higher average • 25k loans or 1.4% of portfolio ($51bn) payments in advance • 74% with DLVR <80% • 17% with 3months+ redraw/offs
Slide 73: Serviceability assessment
Serviceability assessment1 Tighter serviceability and underwriting standards Stricter assessment criteria applied progressively from Apr 202 New Loan Assessment • All income used in application to assess serviceability is verified • Additional cap on bonus & commission income • 80% or lower cap on l
Slide 74: Borrowing capacity
Borrowing capacity1 Maintaining credit availability – lending growth within risk appetite Borrowing capacity increased over the period Driven by lower serviceability assessment floor rate Change in maximum borrowing capacity2 - Indexed Dec 16 Interest rate buffers (%) (Loans assessed based on the hi
Slide 75: Portfolio quality remains sound
Portfolio quality remains sound 1 Strong repayment buffers in place Repayment buffers Those with less than 1 month buffer (Payments in advance 2, % of accounts) include investors and new borrowers 35% 35% 35% <1 month 34% 33% 33% Dec 19 Jun 20 Dec 20 10% 10% 10% Residual 5% 6% 6% 5% 5% 6% Structural
Slide 76: Home loan portfolio – CBA
Home loan portfolio – CBA A balanced approach to portfolio quality, growth and returns Portfolio1 Dec 19 Jun 20 Dec 20 New Business1 Dec 19 Jun 20 Dec 20 Total Balances - Spot ($bn) 477 485 498 Total Funding ($bn) 53 53 65 7 Total Balances - Average ($bn) 472 482 492 Average Funding Size ($’000) 343
Slide 77: Home loan portfolio – CBA ex Bankwest
Home loan portfolio – CBA ex Bankwest A balanced approach to portfolio quality, growth and returns Portfolio1 Dec 19 Jun 20 Dec 20 New Business1 Dec 19 Jun 20 Dec 20 Total Balances - Spot ($bn) 403 411 423 Total Funding ($bn) 44 47 57 6 Total Balances - Average ($bn) 399 407 417 Average Funding Size
Slide 78: Portfolio LVRs
Portfolio LVRs1 Portfolio LVR improving in 1H21 Average Portfolio Dynamic LVR2 Dynamic LVR Bands3 % of total Portfolio Accounts Dec 19 Jun 20 60% 53% 53% Dec 20 51% 40% 20% 0% LVR LVR LVR LVR LVR LVR LVR Dec 19 Jun 20 Dec 20 ≤60% 60%- 70%- 80%- 90%- 95%- >100% 70% 80% 90% 95% 100% Negative Equity4 D
Slide 79: Interest Only (IO) home loans
Interest Only (IO) home loans1 Reducing proportion of IO home loans for total portfolio and new business flow Portfolio of IO loans reducing Augmented by a reducing proportion of total new business flows IO % of total home loans – total portfolio balance IO % of total home loans – new business flow2
Slide 80: Home loan arrears
Home loan arrears Continued to be insulated by repayment deferrals and government support initiatives Arrears by portfolio Arrears by product Arrears by repayment type Group 90+ days Group 90+ days1 Group 90+ days1 Group 0.8% 1.0% 1.0% Bankwest Owner Occupied Interest Only CBA 0.6% Investment Loans
Slide 81: Home loan impairments
Home loan impairments Home loan impairments lower - influenced by deferrals and government support measures Impaired home loans Overview 1.85 1.67 • Exits have outpaced entry into impairments over the half 1.45 • New impairment volumes reduced as a result of COVID-19 deferral take- $bn up, where arr
Slide 82: Portfolio losses and insurance
Portfolio losses and insurance 1 Portfolio losses remain historically low Losses to average gross loans 2 Portfolio Insurance Profile 3 % of Home Loan portfolio 2.5% Current Historical Avg.4 Group Total Loans 0.11% 0.30% 3% 21% CBA Home Loans 0.01% 0.02% Excess of loss Insurance with Genworth 2.0% r
Slide 83: Managing unsecured lending
Managing unsecured lending Focus on prudent acquisition and account management - healthy arrears despite balance contraction Credit Cards 1 Personal Loans 1 Group 90+ days Group 90+ days 1.38% 1.51% 1.48% 0.80% 1.23% 0.66% 6,752 6,016 11,555 9,615 5,284 9,574 118 $m 93 91 78 $m 92 64 Arrears Portfol
Slide 84: Consumer arrears
Consumer arrears Arrears remain insulated by government support initiatives Credit Cards 1 Personal Loans 1 Group 6.0% Group 30+ days Group 30+ days Bankwest CBA 5.5% ASB 4.0% 4.5% 3.5% 2.0% 2.5% 0.0% 1.5% Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Credit Cards 1 Personal
Slide 85: Business and Corporate Lending
Business and Corporate Lending
Slide 86: Portfolio quality
Portfolio quality1 ~66% investment grade – weighted to Australia/NZ Exposures by Industry1 Corporate portfolio quality2 Group TCE by geography Investment Grade AAA A+ BBB+ TCE $bn to to Other Dec 20 to BBB- Dec 19 Jun 20 Dec 20 AA- A- Gov. Admin. & Def. 125.5 22.4 1.1 0.1 149.1 Australia 79.5% 79.8%
Slide 87: Business loan repayment deferrals
Business loan repayment deferrals1 Majority of exits do not require further assistance Business loan deferrals2 Deferral exits Active deferrals3 Customers returning to repayments have an 83k arrears profile consistent with the rest of the • 2k loans or 0.3% of portfolio portfolio • 81k accounts $12.
Slide 88: Total committed exposure summary
Total committed exposure summary Close monitoring of key sectors Group TCE 1 TIA1 $m TIA % of TCE 1 % of provisions to TCE 1 Jun 20 Dec 20 Jun 20 Dec 20 Jun 20 Dec 20 Jun 20 Dec 20 Consumer 58.8% 58.7% 1,929 1,662 0.29% 0.24% 0.5% 0.5% Government, Admin., & Defence 11.8% 12.8% - - - - - - Finance &
Slide 89: Sector focus – commercial property
Sector focus – commercial property Portfolio weighted to NSW – TIAs remain low at 1.2% • Increased exposure this half primarily to office investors and Group exposure 1 Dec 19 residential developers in metropolitan Sydney and Melbourne. Jun 20 • Diversified across sectors and by counterparty with th
Slide 90: Sector focus – transport and storage
Sector focus – transport and storage Conditions remain challenging Airlines & Aircraft Lessors Group exposure 1,2 Dec 19 • Reduced exposure by ~$1bn over last 12mths (~22%) largely due to 28.1 26.9 26.8 Includes Air transport Jun 20 active portfolio management, amortisation and FX movements. and ser
Slide 91: Sector focus – entertainment, leisure & tourism
Sector focus – entertainment, leisure & tourism Conditions improving but remain challenging • Diverse industry with many sub-sectors (including Accommodation, Group exposure Dec 19 Casinos and Cinemas) impacted by government restrictions, including border closures, shutdowns and social distancing in
Slide 92: Sector focus – retail trade
Sector focus – retail trade Consumer sentiment improving • Consumer confidence has improved in recent months with external Group exposure 1 Dec 19 indices moving into optimistic territory and sales up in the half year period. Relaxation of border restrictions across the country will support Jun 20 1
Slide 93: Sector focus – mining, oil and gas
Sector focus – mining, oil and gas Exposures broadly stable, well diversified • Exposures of $9.1bn (0.8% of Group TCE), reduced by $1.8bn over the Group exposure 1 Dec 19 past 6 months mainly from stronger AUD and reduced Oil & Gas and Iron Jun 20 Ore facilities. 11.3 10.9 Dec 20 9.1 • Stable perfo
Slide 94: Sector focus – construction
Sector focus – construction Outlook is uncertain Group exposure 1 Dec 19 • As a designated essential industry, the sector has continued to operate Jun 20 through COVID-19 with some level of disruption and productivity loss due Dec 20 9.9 9.9 to lockdowns and social distancing, more materially in Vic
Slide 95: Funding, Liquidity and Capital
Funding, Liquidity and Capital
Slide 96: Funding overview
Funding overview Resilient balance sheet with significant excess liquidity Funding composition Wholesale funding Funding profile Deposit growth supporting 75% of funding Weighted to long term Balanced profile reducing refinancing risk % of total funding Long term % HY21 Maturity6 Short term 8% 8% is
Slide 97: Deposit funding
Deposit funding Highest share of stable household deposits in Australia Deposit funding Deposits vs peers1 Deposits in NSFR2 $bn As at December 2020 ($bn) 590 Peers as at September 20203 75% 464 74% Other 288 391 327 71% deposits 300 232 CBA 242 186 Household Peer 3 deposits 302 232 250 149 141 Peer
Slide 98: Wholesale funding
Wholesale funding Diversified wholesale funding across product, currency and tenor Portfolio mix1 Short term funding by product2 $bn Certificates of Deposits 56% Long term funding3 136 61% Commerical Paper 22% Term Funding Facility 19 9% FI Deposits 11% Short term funding2 Other 4 8% 71 31% MTN 4% L
Slide 99: Funding and liquidity metrics
Funding and liquidity metrics1 Strong funding and liquidity positions maintained NSFR 123% NSFR (%) 7 Dec 20 4.1 (1.7) 3.6 (0.6) (1.0) 718 (1.2) (0.9) 123% 583 Wholesale Funding & Liquids and Other Assets 2 Other 120% 0.6 Other Loans Retail/SME Deposits Residential Mortgages ≤ 35% risk weight 3 $bn
Slide 100: Capital overview
Capital overview Strong capital position maintained CET1 CET1 CET1 Dividend per Share 533% APRA International (cents) Level 2 Level 1 Level 2 Payout Ratio (cash NPAT basis) 18.7% 12.8% 17.5% Assets 198 199 200 200 200 12.6% 12.1% 140% 150 11.7% 79% 71% 70% 72% 74% 67% 2007 2008 2009 2010 2011 2012 2
Slide 101: Capital: lower share count supports returns
Capital Lower share count supports higher shareholder returns and dividends compared to peers Number of shares (m)1 Dividend per share ($)3 CBA Peers 3,669 CBA Peers 2,941 3,297 Capital raisings for strengthening during 2,504 2,846 GFC 2,096 1,776 1.50 1,516 1,774 0.59 1,506 1,518 0.58 0.35 1,260 0.
Slide 102: Capital drivers
Capital drivers Lower risk weighted assets this half CET1 Total Risk Weighted Assets (RWA) bpts $bn 455 2.7 4.5 (1.3) (7.2) 454 17 (32) 88 (13) (2) Market Risk 42 IRRBB 11 12 11 16 11.6% 12.6% Op Risk 57 50 Credit Risk (7) CommInsure Life 8 Market Risk 3 CET1 impact bpts4 377 Credit 374 BoComm 17 IR
Slide 103: CET1 (Level 1)
CET1 (Level 1) CET1 Level 11 +20 bpts above Level 22 at 12.8% CET1, bpts Impact Differences between Level 1 and Level 2 +90bpts in 1H21 Pro-forma (bpts) 13.0%-13.1% Lower RWA at Level 1 due to the exclusion of banking 125 subsidiaries (8) 13 12.8% 70 Investment in insurance subsidiaries risk weighte
Slide 104: CET1 – internationally comparable
CET1 – internationally comparable The Group’s CET1 ratio of 12.6% translates to 18.7% on an international basis Internationally comparable1 CET1 CET1 APRA 12.6% bpts Equity investments Balances below prescribed threshold risk weighted, 0.7% compared to 100% CET1 deduction under APRA Balances are ris
Slide 105: Capital strength
Capital strength Significant capital surplus, excess franking credits bpts Capital generation CET1 Significant growth in surplus capital notwithstanding sector leading COVID-19 provisioning, balance sheet growth and dividend payments 12.8% 12.1% 12.1% Lvl 1 CET1, Level 2 11.9% Lvl 2 Pro-forma 12.9-1
Slide 106: Regulatory capital changes
Regulatory capital changes Scheduled implementation of Basel III reforms in Australia deferred by one year Change Details Implementation • In December 2020, APRA released a further consultation package of the reviewed capital framework. APRA is targeting a capital outcome in dollar terms that remain
Slide 107: Regulatory expected loss
Regulatory expected loss Increase in provisions due to COVID-19 $m Dec 19 Jun 20 Dec 20 Non- Non- Non- Defaulted Defaulted Defaulted Defaulted Defaulted Defaulted Regulatory Expected Loss (EL) 1,367 3,073 1,710 3,200 1,891 3,062 Eligible Provisions (EP) Collective Provisions1 108 3,555 95 4,807 125
Slide 108: APRA's LAC requirements
APRA’s LAC requirements 3% increase in Total Capital by 2024 to increase loss absorbing capacity (LAC) T2 Capital Profile 3,4 • Based on APRA’s existing capital framework, CBA requires an additional Issuances ($bn) Maturities ($bn) $4.9bn of LAC qualifying issuance by 1 Jan 24 (excluding maturities)
Slide 109: Economic Overview
Economic Overview CBA Chief Economist
Slide 110: Key Australian economic indicators
Key Australian economic indicators (June FY) GDP % Trimmed mean CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 1.6 1.7 1.6 1.7 6.1 1.5 6.7 4.6 5.6 1.3 5.7 5.5 5.6 5.7 4.9 4.6 5.1 2.9 2.3 2.2 -0.2 0.3 1.6 0.4 2017 2018 2019 2020 2021 202
Slide 111: The global economy
The global economy A divergent global economy, vaccine hopes lift for 2021 The global economy to recover in 2021 Risk of double dip recessions in Eurozone and UK Risk to outlook is prematurely tightening fiscal policy Global Growth Forecast Evolution1 (annual % change) COVID-19 Government Response S
Slide 112: The Australian Economy
The Australian Economy Recovery underway across a range of indicators, caution warranted with recent outbreaks Consumer and business sentiment remains high Consumer spending is recovering Restrictions do impact on spending despite falls in January CBA credit& debit card spend 2 (annual % change) CBA
Slide 113: The Australian Economy: outlook looks positive
The Australian Economy The outlook from here looks positive Australian economic recovery is underway Unemployment has peaked, will keep falling in 21/22 Inflation rates troughed while wages remain soft CBA forecast: GDP1 (annual/qtr% change) Employment rate2 (qtrly average, %) CBA forecast: wages &
Slide 114: The Australian Economy: downside risks
The Australian Economy Some downside risks and areas to watch Australian economy to regain lost output by Q2 21 Some industries will take longer than others Transition in consumer spending Real GDP1 (quarterly, $bn) Payroll jobs by industry2 (index = 100 March 14) CBA credit & debit card spending3 (
Slide 115: The Australian Economy: external sector
The Australian Economy External sector in mixed shape, monetary and fiscal support helping Gov’t spending has risen sharply, but retreats quickly Gov’t debt does remain low in comparison RBA’s balance sheet lift as gov’t bond buying extended Taxes and spending1 (% of GDP) Net Government debt 2 (% of
Slide 116: Home lending
Home lending Housing market to continue its resurgence, driven by low interest rates and stimulus Residential property prices back to record high Demand by first home buyers and owner-occupiers Strong preference for fixed rate lending Dwelling prices1 (8 capital cities) Housing loan approvals 2 (exc
Slide 117: Sustainability of the Australian housing market
Sustainability of the Australian housing market Australia housing prices and households debt is aligned to other developed economies CPI-adjusted change in house prices RBA analysis1: Households debt-to-income4 300 Sustained growth 214 (Australia) 17 Post-GFC stagnation +20% 179 250 Severe GFC impac
Slide 118: Key New Zealand economic indicators
Key New Zealand economic indicators (June FY) GDP % CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 2.0 5.0 5.1 5.2 7.4 1.7 1.8 4.5 4.3 6.6 7.4 1.5 1.6 4.1 4.1 3.5 3.7 1.4 2.8 4.8 1.1 2.5 -1.8 2.0 2017 2018 2019 2020 2021 2022 2017 2018
Slide 119: New Zealand
New Zealand NZ economy swiftly recovers from COVID-19 disruption Dairy prices up after COVID-19 dip NZ economy has quickly recovered to pre-Covid NZ unemployment rate may be past its peak Global dairy trade auction results1 (USD/tonne) levels of GDP NZ unemployment rate3 NZ GDP growth (annual averag
Slide 120: Sources, Glossary & notes
Sources, Glossary & notes
Slide 121: Sources and notes
Sources and notes Delivering Slide 7 1. As reported in APRA Monthly ADI Statistics (MADIS). System multiple calculated on a non-annualised basis. CBA business lending multiple estimate is based on Business Banking growth rate (excluding Institutional Banking and Markets) over published APRA Total Bu
Slide 122: Sources and notes
Sources and notes Delivering Slide 9 1. DBM Consumer MFI *Net Promoter Score. Based on Australian population aged 14+ years old rating their Main Financial Institution. Net Promoter Score refers to customer likelihood to recommend their MFI using a scale from 0-10 (where 0 is ‘Not at all likely’ and
Slide 123: Sources and notes
Sources and notes Why CBA? Slide 34 1. MFI Share measures the proportion of Banking and Finance MFI Customers that nominated each bank as their Main Financial Institution. Main Financial Institution (MFI) definition: In the Roy Morgan Single Source Survey MFI is a customer determined response where
Slide 124: Sources and notes
Sources and notes Global best digital experiences Slide 39 1. DBM Consumer MFI Mobile Banking App *Net Promoter Score: Based on Main Financial Institution (MFI) customers rating their likelihood to recommend their MFI Mobile Banking App used in the last 4 weeks. Net Promoter Score refers to customer
Slide 125: Sources and notes: Cash Profit
Sources and notes Cash Profit The Profit Announcement discloses the net profit after tax on both a statutory and cash basis. The statutory basis is prepared in accordance with the Corporations Act and the Australian Accounting Standards, which comply with International Financial Reporting Standards
Slide 126: Glossary
Glossary Capital & Other Funding & Risk Risk Weighted Assets The value of the Group’s On and Off Balance Sheet assets are adjusted by risk Liquidity Coverage The LCR is the first quantitative liquidity measure that is part of the Basel III (RWA) weights calculated according to various APRA prudentia
Slide 127: Contact us
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 127
Commonwealth Bank of Australia — 1H21 Earnings Presentation on 6ix