Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2009 Earnings Presentation
125 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 12, 2009
Slide 1: Results Presentation for the full year ended 30 June 2009
Determined to offer strength in uncertain times. For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER Results Presentation For the full year ended 30 June 2009 12 August 2009 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, 12 August 2009. It is information given in summary form and does not purport to be complete. It is not intended to be re
Slide 3: Agenda
Agenda For personal use only Ralph Norris, CEO – Company Update and Outlook David Craig, CFO – Financial Overview Questions and Answers 3
Slide 4: Market shares
Market shares For personal use only Jun 09 Dec 08 Jun 08 1 1 CBA BWA Combined CBA + BWA CBA Home loans 21.9% 3.2% 25.1% 23.3% 19.3% Credit cards 18.7% 3.1% 21.8% 20.9% 18.1% Personal lending 2 13.6% 2.1% 15.7% 20.3% 15.8% Household deposits 28.8% 3.4% 32.3% 32.6% 29.1% Retail deposits 22.6% 4.0% 26.
Slide 5: A good operating result
A good operating result For personal use only CBA Group Jun 09 vs Jun 09 Jun 08 Operating Income ($m) 17,085 14%* Operating Expense ($m) 7,765 4%* Cash NPAT ($m) 4,415 (7%) Statutory NPAT ($m) 4,723 (1%) Cash EPS (cents) 305.6 (14%) Return on Equity – Cash (%) 15.8 (460)bpts Dividend per Share – Ful
Slide 6: Strength in uncertain times
Strength in uncertain times For personal use only Global Safest Banks* Credit Ratings of Largest 100 Banks Bank Rank 250 Commonwealth Bank 12 ASB Bank 18 150 HSBC 19 Market Cap US$bn Wells Fargo 21 100 CBA Deutsche Bank 30 Societe Generale 31 50 Barclays 45 Credit Suisse 40 0 AA AA- A+ A A- BBB+ NR
Slide 7: Strength in uncertain times
Strength in uncertain times For personal use only Financial X Good income growth + cost discipline performance X Focus on profitable growth X One of the world’s safest banks Risk X Strong risk management culture X Tier 1 capital ratio of 8.07% - FSA equivalent 11% Capital X Prudent approach to divid
Slide 8: Notes
For personal use only Notes 8
Slide 9: Risk management
Risk management For personal use only Strong risk management culture Further strengthened for uncertain times Lower-risk portfolio mix Policy framework benchmarked to international best practice Conservative lending approach Extensive portfolio reviews and stress testing Historically lower
Slide 10: Balance growth – months to Jun
Balance growth – 12 months to Jun 09 For personal use only Home lending Household deposits Credit cards 24.5% 20.3% 5.5% 5.6% 15.8% 18.0% 14.4% 14.4% 12.2% 3.8% 4.9% 1.6% CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Personal lending Business lending Business deposits 2.
Slide 11: Significant gains in customer satisfaction
Significant gains in customer satisfaction For personal use only 2 Retail MFI Customer Satisfaction 1 Business Customer Satisfaction Gap to top-rated peer Gap to top-rated peer % Satisfied (‘Very Satisfied’ or ‘Fairly Satisfied’) % Satisfied (‘Very Satisfied’ or ‘Fairly Satisfied’) 90% 80% 3.1% 80%
Slide 12: Leading position in Online Banking
Leading position in Online Banking For personal use only CommBiz – online, real time secure business and corporate banking...a more responsive and simplified approach to credit Netbank – Finest Online has delivered an independently reviewed, market leading customer experience on Netbank platform, wi
Slide 13: Strategy on track and delivering
Strategy on track and delivering For personal use only Home loan balance growth Retail bank transformation: % annualised 25% ¾ Reduced complaints 20% CBA Branches System ¾ Home loan share growth 15% 10% ¾ Branch channel growing above system 5% ¾ Improved efficiency 0% Group wide process excellen
Slide 14: Bankwest – final merger metrics
Bankwest – final merger metrics For personal use only Comparable price-to-book values (Acquiror / Target) Bendigo / Adelaide 2.6x Bank of Queensland / Bendigo 2.5x St George / Advance 2.1x 1 HBOS / Bankwest 1.9x Westpac / St George 1.7x Suncorp / Metway 1.7x Westpac / Bank of Melbourne 1.7x CBA / Co
Slide 15: Bankwest and St Andrew’s
Bankwest and St Andrew’s For personal use only Retail customer growth Great businesses acquired on attractive terms Number of retail customers (Bankwest) 960,000 Strong strategic fit 939,000 919,000 905,000 Smooth integration Well positioned for next phase: Sep 08 Dec 08 Mar 09 Jun 09 ¾ Stan
Slide 16: Notes
For personal use only Notes 16
Slide 17: Outlook
Outlook For personal use only Challenging year – outlook remains uncertain Signs of improvement in global environment and domestic economy Credit growth expected to slow further and unemployment increase Will continue to be difficult for our customers Conservative business settings retaine
Slide 18: Notes
For personal use only Notes 18
Slide 19: Results Presentation – David Craig, CFO
Determined to offer strength in uncertain times. Results Presentation For personal use only For the half year ended 30 June 2009 David Craig CHIEF FINANCIAL OFFICER Results Presentation For the full year ended 30 June 2009 12 12 August August 2009 2009 Commonwealth CommonwealthBank Bankof of Austral
Slide 20: Notes
For personal use only Notes 20
Slide 21: A good operating result
A good operating result For personal use only Jun 09 Jun 08 Jun 09 vs CBA + $m $m Jun 08 BWA Operating income 16,326 14,358 14% 17,085 Operating expenses 7,282 7,021 4% 7,765 Operating performance 9,044 7,337 23% 9,320 Impairment expense 2,935 930 Large 3,048 Tax and Minorities 1,611 1,661 (3%) 1,66
Slide 22: Non-cash items
Non-cash items For personal use only Bankwest – gain on acquisition Other non-cash items $m Hedging and AIFRS volatility Net assets acquired 3,318 Unrealised accounting gains and losses arising from the application of Add: Assets at fair value – intangibles 719 “AASB 139 Financial Instruments: Rec
Slide 23: Statutory profit down 1%
Statutory profit down 1% For personal use only Jun 09 Jun 08 Jun 09 vs $m $m Jun 07 Cash NPAT 4,415 4,733 (7%) Gain on Bankwest acquisition 612 Amortisation of assets acquired 80 Integration expenses (78) Hedging AIFRS volatility (245) (42) Other non cash items (61) 100 Statutory NPAT 4,723 4,791 (1
Slide 24: Other key information - Bankwest
Other key information - Bankwest For personal use only Integration costs - composition $313m Restructuring $16m Property $57m $103m IT Operations / other $137m Expense synergies – 2012 composition $250m IT $28m East Coast Store Rollout $88m Operating (cessation) $65m efficiencies, other $48m $21m Re
Slide 25: Bankwest – costs and synergies
Bankwest – costs and synergies For personal use only Integration costs * Annual synergies by 2012 $313m $340m (FY12 run rate) 112 Other 5 103 91 90 Revenue & Funding IT 60 250 Expense synergies Operations 24 Property 7 7 Restructuring 16 FY09 FY10 FY11 FY12 FY12 * P&L expense Increased from original
Slide 26: Business unit profitability
Business unit profitability For personal use only Operating Impairment Investment Tax & Cash Annual $m Performance Expense Experience Minorities NPAT Change RBS 3,695 699 - 889 2,107 10% IB&M 1,723 1,708 - (151) 166 (78%) B&PB 1,333 309 - 288 736 2% WM 719 - (317) 116 286 (61%) IFS 821 202 8 157 470
Slide 27: Strong business unit contributions
Strong business unit contributions For personal use only Annual FY09 – Operating Performance1 ($m) Change RBS 3,695 21% IB&M 1,723 49% B&PB 1,333 13% WM 719 (33%) IFS 821 8% 2 2 Bankwest 276 52% Corporate Centre 885 Large 1 Operating Income less Operating Expense. 2 Bankwest results represent the pe
Slide 28: Declining expense to income ratio
Declining expense to income ratio For personal use only Group expense to income ratio Banking expense to income ratio 49.3% 48.9% 45.8% 45.3% 44.6% 39.7% Jun 07 Jun 08 Jun 09 Jun 07 Jun 08 Jun 09 Excludes Bankwest 28
Slide 29: Strong “Jaws” at Group level
Strong “Jaws” at Group level For personal use only Jun 09 vs Jun 08 37% 19% 14% 14% 14% 9% 6% 6% 5% 6% 4% 2% -2% -17% 1 1 1,2 RBS IB&M B&PB WM IFS Group Bankwest Income Expenses 1 Excludes Investment Experience 2 Excludes Bankwest 29
Slide 30: Other Banking Income
Other Banking Income For personal use only 6 months Jun 09 Dec 08 Jun 08 Jun 09 vs Jun 09 vs $m $m $m Dec 08 Jun 08 Commissions 984 977 919 1.0% 7.1% Lending Fees 731 617 507 18.5% 44.2% Trading Income 272 448 346 (39.3%) (21.4%) Other 113 141 100 (20.0%) 13.0% 2,100 2,183 1,872 (3.8%) 12.2% AIFRS r
Slide 31: Banking Income up 21%
Banking Income up 21% For personal use only È Total Operating Income 14% È Banking Income 21% Trading Income 522 16,742 416 $m 546 720 174 16,326 1,688 14,358 448 346 272 200 $m 1H08 2H08 1H09 2H09 FY08 Net Interest Trading Other Sub-total Funds & FY09 Income Income Banking Insurance Income* Income
Slide 32: Group NIM – month movement
Group NIM – 6 month movement For personal use only È 4bpts 3 (2) 2 216 Net of 4 9 (11) Replicating Portfolio impact of +17bpts 9 204 (2) bpts 200 Dec 08 Asset Cash rate Liquids Underlying Balance Equity Funding Higher Bankwest Jun 09 pricing and & Sheet raised Mix Liquid mix Dep price Positioning Yi
Slide 33: Group NIM – month movement
Group NIM – 12 month movement For personal use only Domestic Pricing +13 -24 Personal Lending +6 -9 Transactions +24 +2 Business Lending +3 Balance Sheet +4 positioning Home Loans +4 -9 Savings +4 Capital bpts 202 -6 Investment 210 Replicating +16 Portfolio -7 Jun 08 Assets Deposits Mix & Liquids Tr
Slide 34: Group NIM stable over years
Group NIM stable over 2 years For personal use only 208 210 Key Movements (2 yrs) bpts 202 Home loan margins -4 Deposit margins gross -17 Deposit margins – RP1 offset +13 bpts Business & Corporate margins +2 Other 2 +8 Total Movement +2 Jun 07 Jun 08 Jun 09 1 Replicating portfolio 2 Includes AIFRS r
Slide 35: Impact of GFC on product profits (2 yrs)
Impact of GFC on product profits (2 yrs) For personal use only $m Home Business Personal Deposits Loans Lending Lending 750 250 -250 -750 Intense competition for -1250 retail deposits -1750 +$150m -$1,000m +$100m +$550m Volume Margin Impairment Expense Replicating Portfolio Chart shows change in pro
Slide 36: Continuing to invest
Continuing to invest For personal use only Internal Investments External Investments FY09 FY09 Total Expensed Capitalised $m $m Growth Bankwest 2,163 210 357 567 projects Productivity Aussie Home Loans 71 181 216 397 projects Compliance First State Media 22 65 46 111 projects Jinan / Qilu (11% to 20
Slide 37: Strong cost discipline
Strong cost discipline For personal use only Jun 09 Jun 09 vs Expense Growth $m Jun 08 (year-on-year) Staff expenses 3,707 1% Underlying expense growth of Occupancy 856 12% 9% 2.5%, ex one-off loyalty costs* IT Services 823 - 7% Postage and stationery 209 (4%) 4% Fees and commissions 801 (2%) 1.5% 2
Slide 38: Notes
For personal use only Notes 38
Slide 39: Impairment expense
Impairment expense For personal use only 6 months annualised (basis points) 6 months ($m) 81 1,607 14 1,441 270 61 113 207 10 39 772 32 597 $1.3bn 10 51 1,121 195 19 333 17 28 565 22 402 17 316 -88* Dec 07 Jun 08 Dec 08 Jun 09 Dec 07 Jun 08 Dec 08 Jun 09 Base Single Names Overlay Bankwest * Mark to
Slide 40: Notes
For personal use only Notes 40
Slide 41: Further prudent increase in provisions
Further prudent increase in provisions For personal use only Collective provisions ($m) Individual provisions ($m) 3,225 Bankwest Granularity 1,729 2,474 1,320 Economic 321 Single Names Model and data 1,082 1,134 1,466 463 Bankwest 620 Bankwest 359 115 454 667 Consumer 43 Consumer 568 502 238 279 39
Slide 42: Historical loss rates in the last recession
Historical loss rates in the last recession 4 For personal use only Institutional Banking 3 Small Business Loss Rate (%) Business Banking 2 Personal Loans Credit cards 1 Home Loans 0 1982 1984 1986 1988 1990 1992 1994 42
Slide 43: Exposure mix
Exposure mix For personal use only Regulatory exposure mix CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 56% 37% 37% 48% Corporate, SME & Spec Lending 31% 41% 47% 42% Bank 6% 9% 13% 5% Sovereign 4% 4% - 1% Qualifying Revolving 2% 4% 2% 3% Other Retail 1% 5% 1% 1% Total Advanced * 100% 100% 100% 100
Slide 44: Key Indicators summary
Key Indicators summary For personal use only CBA ex CBA + Bankwest Bankwest Gross loans and acceptances (GLA) ($m) 430,650 488,500 Gross impaired assets ($m) 2,844 4,210 Gross impaired assets as % of GLA 0.66 0.86 Collective provision as a % of Credit RWA – Basel II 1.04 1.25 Individually assessed p
Slide 45: Good coverage ratios maintained
Good coverage ratios maintained For personal use only Total provisions to GLAs* Individual provisions to impaired assets 2.52% 2.35% 2.29% 48.4%* 2.00% 41.1% 36.1% 33.5% 1.01% 1.13% 1.10% 0.99% CBA Jun 09 Peer 3 Mar 09 Peer 1 Mar 09 Peer 2 Mar 09 Peer 3 CBA Peer 1 Peer 2 Mar 09 Jun 09 Mar 09 Mar 09
Slide 46: Arrears
Arrears For personal use only Home loans Credit cards % 90+ Days % 90+ Days % 1.2% 0.8 0.6 1.0% 0.4 0.8% 0.2 0.6% 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 2005/06 2006/07 2007/08 2008/09 National NSW/ACT Qld SA/NT Vic/Tas WA Per
Slide 47: Credit quality – consumer
Credit quality – consumer For personal use only Arrears trends consistent with slowdown Home loan arrears 30+ Days % Strong home loan portfolio: 1.7% ¾ >90% of SVR customers paying in 1.3% advance 0.9% ¾ Average LVR 40% on current values 0.5% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun ¾ Mor
Slide 48: Other key information
Other key information For personal use only Total and New Impaired Assets Margin Lending 86 6 months bpts 28 Jun 09 Jun 08 58 Portfolio size $5.4bn ~$8bn 16 30 35 Aggregated Gearing 41% 42% 58 18 Margin calls 18,200 18,548 10 42 Forced sales 4.5% <3.5% $m 683 2,714 4,210 Losses / Write-Offs $5m $5.7
Slide 49: Credit quality - commercial
Credit quality - commercial For personal use only Risk-Rated Exposures Book quality remains sound: ¾ No systemic issues 34% Other 31% ¾ 66% investment grade BBB+ to BBB- 21% 19% 66% ¾ Credit criteria strengthened investment 19% A+ to A- 19% grade 28% AAA to AA- 29% ■ Some signs of stress emerging
Slide 50: Strong capital position
Strong capital position For personal use only International peer comparison Tier 1 ratio of 8.07% as at Jun 09 Tier 1 Capital Ratios 11.0% 10.1% 10.2% 8.1% 8.7% UK FSA equivalent 11.0%, well above 7.6% Europe Bank average of 10.2% 1 Jul 081 Jun 09 Jun 08 Jun 09 Jun 08 Jun 09 Buffer of >$3bn to
Slide 51: Capital movements
Capital movements For personal use only All movements in basis points 11.0% È 2bpts ex IRRBB 72 (43) 8.75% (40) (15) (15) (26) 8.35% (1) 8.33% 8.07% Credit RWA – Volume & Mix 22 Credit RWA – Migration (29) Other 6 Net (1) 2 5 Dec 08 Bankwest Dec 08 Profit Dividend 3 Currency Other RWA Jun 09 IRRBB J
Slide 52: Other key information
Other key information For personal use only Wholesale Funding - Geographic Distribution 2% 1% 8% Australia 7% Other Asia Europe United States 40% Japan 24% United Kingdom Hong Kong Misc 10% 8% Wholesale Funding by Product Structured MTN 7% 4% 5% Vanilla MTN 6% Commercial Paper 4% Structured Finance
Slide 53: Strong funding and liquidity positions
Strong funding and liquidity positions For personal use only 58% retail funded Weighted Average Maturity of 3.6 yrs $bn Weighted Average Maturity 21% Retail Funding 25 Jun 08: 1 3.5 years Short Term Wholesale Current : 3.6 years 20 Structured Funding with 15 1% first call <12 months 10 58% 4% Long T
Slide 54: Significant progress on strategic initiatives
Significant progress on strategic initiatives For personal use only Customer ¾ Gap to top rated peer more than halved in 2 years Satisfaction ¾ Strongest gains in products-per-customer of peer group Business ¾ Dedicated Group Executive appointed Banking ¾ Bankwest acquisition added ~6% of market sha
Slide 55: Key messages
Key messages For personal use only Significant progress on strategic initiatives Strong income growth Banking income up 21% Careful cost management underlying costs up 2.5% Cost-to-income further improved down 430bpts to 44.6% Strong balance sheet Tier 1 Capital over 8% Conservative prov
Slide 56: Notes
For personal use only Notes 56
Slide 57: Supplementary Materials
Determined to offer strength in uncertain times. For personal use only Supplementary Materials For the full year ended 30 June 2009 12 August 2009 Commonwealth Bank of Australia ACN 123 123 124 57
Slide 58: Notes
For personal use only Notes 58
Slide 59: Index
Index For personal use only Strategy and Performance Overview 59 Group and Divisional Financials 75 Credit Quality and Risk Management 91 Capital, Funding and Liquidity 103 Economic Indicators 115 59
Slide 60: Brand attributes
Brand attributes For personal use only Brand Attributes - 30% Percentage of Number One Rankings* 25% 20% 15% 10% 5% 0% Caring Transparency Competitive Service Innovative Approachable Professionalism Comprehensive Safety and fair and honesty pricing focused offering and and product and Security exper
Slide 61: Technology and Operational Excellence
Technology and Operational Excellence For personal use only NetBank 7th most accessed website Average Monthly Logons 29.3m 22.9m 18.5m FY07 FY08 FY09 Severity 1 Incidents Total Incidents Repeat Incidents 48 42 27 Zero Zero 6 FY07 FY08 FY09 FY07 FY08 FY09 Source: hitwise.com, 4 July 2009 61
Slide 62: Strong market share positions
For investor Strong market share positions pack only For personal use only Home Lending Business Lending Household Deposits 25.1% 32.2% 23.1% 19.4% 19.0% 16.7% 15.5% 23.4% 12.5% 12.8% 13.6% 12.9% CBA / Peer 1 Peer 2 Peer 3 CBA / Peer 1 Peer 2 Peer 3 CBA / Peer 1 Peer 2 Peer 3 Bankwest Bankwest Bankw
Slide 63: Volume Growth
Volume Growth For personal use only 12 Months 6 Months to June 09 to June 09 % Annualised % CBA CBA System System Group Group Home Lending 20.3 7.0 24.2 7.8 Household Deposits 14.4 16.9 5.5 7.1 Business Lending 4.5 4.0 -0.3 -3.7 Business Deposits 10.5 15.1 3.5 10.1 Growth rates inclusive of Bankwest
Slide 64: CBA Growth vs Market
CBA Growth Six months to June 2009 vs Market For personal use only Home lending Household deposits Credit cards 12.1% 5.8% 2.3% 1.8% 8.8% 3.0% 3.5% 4.0% 2.7% 0.4% 2.9% -0.7% CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Personal lending Business lending Business deposits
Slide 65: Home Loan Growth: Branch channel improving
Home Loan Branch channel improving Growth For personal use only Balance Growth by Channel - 12 months 34.3% 31.5% 26.5% 20.3% 17.7% 15.0% 11.6% 12.6% 11.6% 10.5% 8.9% 7% 6.2% 2.8% 2.4% Jun 07 Jun 08 Jun 09 Broker Branch Premium Total CBA Total Market Note : Width of channel columns reflects relative
Slide 66: Wealth Management
Wealth Management For personal use only Funds under Administration FirstChoice net flows solid -9% FirstChoice +7% ($12bn) $1,069m $185bn ($15bn) $5bn $169bn $979m $158bn $6bn $416m $433m $327m Jun 08 Net Flows Inv Dec 08 Net Flows Inv Jun 09 Returns Returns Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Good i
Slide 67: Global Asset Management
Global Asset Management For personal use only Globally: $138bn FUM*, 952 people North America Japan $1.4bn FUM $3.2bn FUM 2 People Asia ex China & Japan Middle East $11.4bn FUM $5.3bn FUM 107 People UK & Europe Australia & New Zealand $15.6bn FUM $101.2bn FUM 184 People 659 People 27% FUM raised fro
Slide 68: Bankwest
Bankwest For personal use only WA East Coast RETAIL RETAIL Stores: 87 Stores: 48 Bank-branded ATMs: 252 Bank-branded ATMs: 465 Colleagues: 1937 Colleagues: 671 Loans & advances: $14.9b Loans & advances: $15.9b Customer Deposits: $10.8b Customer Deposits: $6.1b Customers: 522,00
Slide 69: Bankwest High level timeline
Bankwest High level timeline For personal use only Acquisition of Bankwest and St Andrew’s announced Oct-08 By Steering committee and governance structure established December Due diligence commenced, regulatory approvals obtained Transaction completion 2008 Jon Sutton appointed BWA MD, new
Slide 70: Institutional Banking Customer Satisfaction
Institutional Customer Satisfaction Banking For personal use only Loyalty to Relationship Understanding Customers’ Business Lower the Score the Higher the Satisfaction Lower the Score the Higher the Satisfaction CBA CBA St George BNP Paribas ANZ St George NAB UBS UBS JP Morgan Deutsche Macquarie HSB
Slide 71: ASB well-placed to navigate tougher market conditions
ASB ASB well-placed to navigate tougher market conditions For personal use only System credit growth ASB growth remains ahead of system % 25 25 12 months Agriculture A griculture 7.6 20 20 6.2 HHousehold o useho ld 15 15 3 2.8 10 10 5 5 Business B usiness 0 0 Retail Deposits Home Lending 1994 1997 2
Slide 72: Sustainability metrics
Sustainability metrics For personal use only Metric 2009 2008 2007 Customers Customer satisfaction Roy Morgan MFI retail customer satisfaction % 73.0 70.1 70.5 (6-month moving average) (ranked 4th) (ranked 4th) (ranked 5th) Customer satisfaction TNS Business Finance Monitor % 72.8 73.9 60.7 (12-mont
Slide 73: Sustainability progress
Sustainability progress For personal use only Environmental Updated and embedded our Group Environment Policy across the organisation Established a target to reduce carbon emissions by 20 per cent by June 2013, from 2008-2009 levels, in Australian operations Increased paper savings through mor
Slide 74: Asia Targeted growth strategy
Asia Targeted growth strategy For personal use only China Branches Staff Qilu Bank (20%)* 70 1,762 Bank of Hangzhou (19.9%) 79 2,448 Beijing and Shanghai – Representative offices China Life CMG – JV life insurance 103 First State Cinda Fund Management Company 65 Japan Branch India Bank license grant
Slide 75: Index
Index For personal use only Strategy and Performance Overview 59 Group and Divisional Financials 75 Credit Quality and Risk Management 91 Capital, Funding and Liquidity 103 Economic Indicators 115 75
Slide 76: Segment revenue
Segment Proportions of total banking income revenue For personal use only Jun 09 vs Jun 09 Jun 08 Jun 08 Proportion of Total Banking Income Home Loans 1,742 1,319 32% Consumer Finance 1,441 1,125 28% Bankwest, 5% Other, 9% Home Retail Deposits 3,069 3,060 - Loans, 12% Institutional Banking 1,536 1,1
Slide 77: Dividends
Dividends For personal use only Dividend (cents per share) 280 240 200 149 153 Second Half 115 First Half Cents 160 130 112 104 120 82 85 113 113 80 107 85 94 79 68 69 40 0 2002 2003 2004 2005 2006 2007 2008 2009 Payout Ratio Cash Basis 75.9% 73.9%* 74.9% 70.5% 74.2% 75.0% 78.2% * Which new Bank cos
Slide 78: RBS – month movements
RBS – 6 month movements For personal use only Jun 09 vs Jun 09 Dec 08 Jun 08 Jun 08 Net interest income Home loans 856 719 527 62% Consumer finance 511 447 403 27% Retail deposits 1,146 1,246 1,258 (9%) 2,513 2,412 2,188 15% Other banking income Home loans 85 82 70 21% Consumer finance 265 218 181 4
Slide 79: Retail Banking Services
Retail Banking Services For personal use only Jun 09 Jun 09 vs Customer satisfaction gains driving $m Jun 08 strong business performance Home loans 1,742 32% Good volume growth: Consumer finance 1,441 28% ¾ Home loans Ç 21% Retail deposits 3,069 - ¾ Deposits Ç 16% Distribution 224 29% Higher f
Slide 80: IB&M – month movements
IB&M – 6 month movements For personal use only Jun 09 Dec 08 Jun 08 Jun 09 vs Jun 08 Net interest income Institutional Banking 547 473 435 26% Markets 216 217 75 Large 763 690 510 50% Other banking income Institutional Banking 208 308 206 1% Markets 269 164 196 37% 477 472 402 19% Total banking inco
Slide 81: Institutional Banking and Markets
Institutional Banking and Markets For personal use only Strong income growth: Jun 09 Jun 09 vs ¾ Improved margins $m Jun 08 ¾ Targeted volume growth Institutional Banking 1,536 31% Strong customer satisfaction rating Markets 866 50% in East & Partners survey Total banking income 2,402 37% Expe
Slide 82: B&PB – month movements
B&PB – 6 month movements For personal use only Jun 09 Dec 08 Jun 08 Jun 09 vs Jun 08 Net interest income Corporate Financial Services 298 292 252 18% Regional and Agribusiness 106 99 94 13% Local Business Banking 200 189 145 38% Private Bank 53 55 48 10% Equities Margin Lending 85 92 75 13% Other 35
Slide 83: Business and Private Banking
Business and Private Banking For personal use only Jun 09 Jun 09 vs Strong income growth: $m Jun 08 Corporate Financial Services 951 11% ¾ Business lending growth 10% Regional and Agribusiness 307 10% Local Business Banking 613 15% ¾ Improved lending margins Private Bank 208 14% Focus on profita
Slide 84: WM – month movements
WM – 6 month movements For personal use only Jun 09 Dec 08 Jun 08 Jun 09 vs Jun 08 Net operating income CFS GAM 271 368 484 (44%) Colonial First State 257 287 313 (18%) CommInsure 314 376 358 (12%) Other 22 (1) 6 Large 864 1,030 1,161 (26%) Operating expenses CFS GAM 173 180 178 (3%) Colonial First
Slide 85: Wealth Management
Wealth Management For personal use only CFS GAM: Jun 09 Jun 09 vs ¾ FUM È 10% (ASX 200 È24%) $m Jun 08 ¾ Expenses È 4% CFS GAM 639 (30%) Colonial First State: Colonial First State 544 (21%) ¾ FUA È 9% to $169bn CommInsure 690 3% ¾ FirstChoice remains 2nd largest platform Other 21 Large CommIns
Slide 86: IFS – month movements
IFS – 6 month movements For personal use only Jun 09 vs Jun 09 Dec 08 Jun 08 Jun 08 Net interest income ASB 361 376 402 (10%) Other 56 55 69 (19%) 417 431 471 (11%) Other banking income ASB 206 212 160 29% Other 53 35 40 33% 259 247 200 30% Total banking income ASB 567 588 562 1% Other 109 90 109 -
Slide 87: International Financial Services
International Financial Services For personal use only Jun 09 Jun 09 vs ASB Cash NPAT È 9% in NZD $m Jun 08 due to increased impairments ASB 1,208 4% Sovereign 219 2% Growing Asian contribution: Other Asia 237 11% ¾ China $70m Total operating income 1,664 5% Operating expenses 843 2% ¾ Indonesia
Slide 88: Bankwest loan loss provisions
Bankwest loan loss provisions ($m) For personal use only 1,532 1,567 484 Overlay 864 463 Collective 267 213 620 Individual 110 401 103 Jun 08 Acquisition Jun 09 Accounting Individual Collective Overlay 88
Slide 89: Bankwest
Bankwest For personal use only Strong operating performance Jun 09 Jun 08* Jun 09 vs Six Months $m $m Jun 08 Good income growth underpinned Net interest income 591 487 21% by strong volumes Other banking income 168 152 11% Renewed emphasis on profitable Total banking income 759 639 19% growth:
Slide 90: Bankwest Fair value adjustments and capital
Bankwest Fair value adjustments and capital $m For personal use only Bankwest net assets acquired 3,318 Total additional provisions (903) Includes FV credit provision Other Fair Value Adjustments – Tangibles (138) Amortising over expected lives of Fair Value Adjustments – Intangibles fixed inter
Slide 91: Index
Index For personal use only Strategy and Performance Overview 59 Group and Divisional Financials 75 Credit Quality and Risk Management 91 Capital, Funding and Liquidity 103 Economic Indicators 115 91
Slide 92: Home Loans LVR
Home Strong LVR profile Loans LVR For personal use only Portfolio LVR Distribution Portfolio average LVR: % % of Portfolio by LVR band ¾ 52% based on original values 80 70 ¾ 40% based on current values 60 LVR at origination 50 1 LVR at current market value 40 Average LVR of 70% on new home loans
Slide 93: Home Loan stress test
Home Loan Even under highly stressed conditions, portfolio stress test losses would remain modest and manageable For personal use only High stress scenario Unemployment 10% Expected Loss outcomes Expected loss Unemployment 10% $m PD stress factor Property value x1 x2 x4 x6 Interest rates 14% No decr
Slide 94: Bankwest Consumer arrears
Bankwest Consumer arrears For personal use only Credit card arrears Personal loan arrears 5.0% 30 days + 5.0% 30 days + 3.0% 3.0% 1.0% 1.0% Jul 07 Jan 08 Jul 08 Jan 09 Jun 09 Jul 07 Jan 08 Jul 08 Jan 09 Jun 09 Bankwest CBA Bankwest CBA Home loan arrears 3.0% 30 days + 2.0% 1.0% 0.0% Jul 07 Jan 08 Ju
Slide 95: Sector exposures
Sector Portfolio remains well diversified across exposures industry sectors For personal use only Jun 09 Dec 08 Jun 09 Dec 08 Consumer 51.5% 48.6% Agriculture 2.4% 2.4% Mining 1.0% 1.3% Manufacturing 2.7% 3.1% Energy 1.5% 1.7% Construction 1.1% 1.0% Retail & Wholesale 2.6% 2.8% Transport 1.5% 1.7% B
Slide 96: Sector exposures
Sector exposures * For personal use only Jun 09 Dec 08 AAA to A+ to BBB+ Other Total AAA A+ to BBB+ Other Total AA- A- to to AA- A- to $bn BBB- BBB- Banks 37.6 24.7 2.6 0.6 65.5 46.9 18.8 2.2 0.7 68.6 Finance Other 12.9 7.2 4.9 7.1 32.1 15.1 11.3 5.7 7.4 39.5 Property 0.3 4.6 9.0 37.9 51.9 0.3 5.7 1
Slide 97: Large exposures
Large exposures For personal use only Top 20 Commercial Exposures * Large Exposures % 20 largest exposures as a % BBB+ of Total Committed Exposures BBB Note 1 4.0% A- BB+ 3.0% BB 2.0% BBB+ BBB+ 1.0% A+ BB- Note 2 0.0% A- Jun-05 Jun-06 Jun-07 Jun-08 Dec-08* Jun-09* BBB A- * Includes ASB and Bankwest
Slide 98: Commercial Property market
Commercial Property market For personal use only CBD Office Supply Pipeline CBD Vacancy Rates Current Peak 40% % of Total Stock Market (Q2 2009) 1990’s 35% Sydney 8.8% 22.4% Perth 6.6% 31.8% 30% Melbourne 5.9% 25.8% 25% Brisbane 7.5% 14.3% 20% Adelaide 5.3% 19.8% Source : Jones Lang LaSalle Research
Slide 99: Commercial Property
Commercial Well diversified portfolio with strong security cover Property and conservative LVR’s For personal use only CBA Commercial Property Profile Represents 7.8% of total exposures (including Bankwest) Real Estate Investment Trust 27% Industrial 41% 3% Retail 15% Well diversified across pro
Slide 100: Historical loss rates
Historical loss rates For personal use only Early 1990’s Recession Dec 89 Current Economy GDP 4.25% 0.4% Unemployment 5.7% 5.8% (peaking at 10.8% in Dec 92) CPI 7.83% 1.5% Cash Rate 17.0%* 3.0% Vacancy Rates 4% 5-9% (peaking at 22% in Dec 92) CBA (including Bankwest) Commercial Lending % of GLA 67%
Slide 101: Historical loss rates
Historical loss rates For personal use only bpts Impairment Expense - Percentage of Gross Loans & Acceptances 350 Average Impairment Expense / Average GLAA 300 CBA Peer Average 1988 – 2009 0.44% 0.58% 250 1996 – 2009 0.23% 0.33% 1999 – 2009 0.24% 0.35% 200 150 100 50 CBA Peers Note: 2009 numbers - 1
Slide 102: Risk Weighted Assets
Risk Weighted Six months to June 2009 Assets For personal use only ■ Credit RWA eased by 1% (ex Bankwest), driven by: RWA Movement (%) Total Tier 1 ratio ¾ A reduction in Corporate, Bank and Sovereign impact (bpt) exposure aided by currency appreciation Credit Risk (1%) 7 Traded Market Risk (23%) 3
Slide 103: Index
Index For personal use only Strategy and Performance Overview 59 Group and Divisional Financials 75 Credit Quality and Risk Management 91 Capital, Funding and Liquidity 103 Economic Indicators 115 103
Slide 104: UK comparison
UK comparison For personal use only The following table estimates the impact on CBA Group capital, as at June 2009, 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 Capital Capital1 June 200
Slide 105: European comparison
European The Group’s Tier 1 Capital Ratio compares favourably to comparison international peers For personal use only Basel II Tier 1 Capital 16% 15.5% 14% 13.2% P P Europe 12% 11.7% 11.5% 11.0% 11.0% P Average P 10.1% 9.9% Tier 1 : 10.2% 10% 9.5% 9.4% 9.3% 9.0% 9.0% Europe 8.2% 8.2% 7.7% 8% Average
Slide 106: Regulatory Expected Loss
Regulatory Expected Loss For personal use only Jun 08 Dec 08 Jun 09 $m $m $m Regulatory Expected Loss (EL) – before tax 2,372 3,382 3,960 Eligible Provision 1 Collective provision 1,346 1,879 2,247 Individually assessed provisions 367 896 1,109 Other provisions 54 34 30 Subtotal 1,767 2,809 3,386 le
Slide 107: Capital treatment
Capital treatment For personal use only AIFRS APRA Accounting Tier 1 Tier 2 Total Shareholders' Equity Ordinary Share Capital 3 3 3 Other Equity Instruments 3 3 3 Reserves General Reserve & Capital Reserve 3 3 3 Asset Revaluation Reserve 3 3 3 Other reserve accounts 3 Retained Earnings 3 3 3 Minorit
Slide 108: Interest Rate Risk
Interest Capital Assigned to Interest Rate Risk in Rate Risk Banking Book - APS117 For personal use only Embedded gain reduces due to increase in 3 year swap rates, and pre- payment of fixed rate mortgages $1,286m Optionality (retail) $716m -$70m (ie zero) Optionality Basis Risk (retail) Basis Risk
Slide 109: Strong retail funding position
Strong retail funding position For personal use only Household Deposits – Market Share Household deposits – balance growth Balance Growth ($m) 32.3% 17,400 12 months to June 2009 23.4% 15,266 11,425 13.6% 12.9% 7,485 CBA / Peer 1 Peer 2 Peer 3 CBA / Peer 1 Peer 2 Peer 3 Bankwest Bankwest Retail Depo
Slide 110: Funding costs
Funding costs For personal use only Indicative Long Term Wholesale Funding Costs bpts 120 0.01 115 30 Jun 2008 Government Guaranteed 105 Current 100 110 100 0.01 Unguaranteed 90 80 0.01 70 60 0.01 60 40 0.00 30 20 0.00 14 17 30 Jun 2007 13 8 3 0 0.00 1 year 2 years 3 years 4 years 5 years 110
Slide 111: Funding costs
Funding Variable Rate Home Loans costs For personal use only 9.0% Forecast Long Term Wholesale Funding Costs (assumes rates unchanged) 8.0% Funding Cost: 7.0% Jun 2007 (A) = 20bpts Jun 2009 (A) = 112bpts Jun 2010 (F) = ~136bpts 6.0% 20bpts Basis Risk 5.0% 4.0% Official Cash Rate ~136bpts 112bpts 3.0
Slide 112: UK and US balance sheet comparison
UK and US balance sheet comparison For personal use only United Kingdom USA Assets Liab + Equity Assets Liab + Equity Cash 4% 5% Capital Cash 7% 8% Capital Home Loans 17% Home Loans 15% 53% Deposits 49% Deposits Other Lending 38% Other Lending 49% 6% Long Term Other Fair 15% Long Term Value assets 1
Slide 113: CBA – safe assets and secure funding
CBA – safe assets and secure funding For personal use only Commonwealth Bank Balance sheet comparisons Assets – CBA’s assets are safer because: Assets Liab + Equity 49% of balance sheet is home loans, which are stable, long Cash term and can be “repoed” readily 4% 5% Capital Trading securities a
Slide 114: Replicating Portfolio
Replicating Portfolio For personal use only Actual and Forecast Scenario* Forecast* 8% 7% Replicating portfolio impact on Replicating Portfolio 6% Group NIM 2H09 17 bpts 5% FY09 16 bpts 4% Official Cash 3% 2% 1% 2001 Current 2011 * Indicative forecast of the replicating portfolio in relation to hypo
Slide 115: Index
Index For personal use only Strategy and Performance Overview 59 Group and Divisional Financials 75 Credit Quality and Risk Management 91 Capital, Funding and Liquidity 103 Economic Indicators 115 115
Slide 116: Economic Summary
Economic CBA Economists summary of key indicators Summary For personal use only Year ended 30 June 2006 2007 2008 2009 2010 (f) 2011 (f) Credit Growth % – Total 14.4 15.5 12.0 3.4 6-8 8-10 Credit Growth % – Housing 13.7 12.9 9.9 7.1 9 -11 9-11 Credit Growth % – Business 16.6 19.1 17.0 0.5 3-5 8-10 C
Slide 117: Economic overview
Economic overview For personal use only China & Exports Australian economy outperforming (% of a country's exports that remain in China) 90 Q1 2009 GDP Growth % Source: HKMA 1.0% (% change) 0.0% 60 -1.0% -2.0% 30 -3.0% -4.0% 0 Aus. Can. US UK EU Japan Phil. Thai. Mal. Sing. Kor. Jap. NZ Indo. Aus. H
Slide 118: Australia relatively well-placed
Australia relatively well-placed For personal use only 140 Government Net Debt as % of GDP 2000-2010 (F) 120 100 80 % 60 40 20 0 Year -20 Australia UK US EU Japan Source: OECD, Budget Papers 2009/10. Lighter shading indicates forecasts 118
Slide 119: Australia relatively well-placed
Australia relatively well-placed For personal use only Consumer Confidence Retail Sales Growth Annual Growth % 130 15.0 120 10.0 110 100 5.0 90 0.0 80 -5.0 70 60 -10.0 50 -15.0 1993 1997 2001 2005 2009 1993 1997 2001 2005 2009 US Australia US Australia Source: Bloomberg 119
Slide 120: System credit growth
System credit growth For personal use only 35.0 30.0 25.0 20.0 15.0 12 month growth 10.0 Housing Lending +7.1% 5.0 Total Credit +3.4% Business +0.5% 0.0 -5.0 Other Personal -7.0% -10.0 1980 1985 1990 1995 2000 2005 Current Source: RBA 120
Slide 121: Australian housing market
Australian housing market For personal use only Underpinned by population growth Demand outstripping supply ‘000 ‘000 Rolling annual increase 450 200 Demand 400 350 300 250 150 200 150 Supply 100 50 100 0 1982 1988 1994 2000 2006 1990 1994 1998 2002 2006 Current Orderly house price correction Improv
Slide 122: Australian housing market
Australian housing market For personal use only Sub-Prime Housing Market Banks’ Non-Performing Loans % (share of outstanding mortgages) % 16 16 Sources: RBA 12 12 US 8 8 4 4 Australia (non-conforming loans) 0 0 2001 2002 2003 2004 2005 2006 2007 Dwelling Prices Vacancy Rates & Rents C C S & S %pa %
Slide 123: Household deleveraging
Household deleveraging For personal use only Housing Equity Withdrawal Principal Repayments $bn (cumulative overpayment) $bn % (% of h/hold disposable income) % 10 10 30 30 Injection 5 5 20 20 0 0 10 10 -5 -5 *CBA Estimates Withdrawal -10 -10 0 0 Sep-88 Sep-92 Sep-96 Sep-00 Sep-04 Sep-08 Sep-97 Sep-
Slide 124: Other key indicators
Other key indicators For personal use only Lending Spreads Share of housing loan approvals (value) 6 6 Banks (LHS) Non Banks (RHS) Source: RBA BBB corporates (spread to CGS) 100.0 % % 30 Small business 4 (to cash) 4 25 90.0 20 Large 2 business 2 15 (to cash) 80.0 10 0 0 70.0 5 Sep-99 Sep-02 Sep-05 S
Slide 125: Results Presentation for the full year ended 30 June 2009
Determined to offer strength in uncertain times. For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER David Craig CHIEF FINANCIAL OFFICER Results Presentation For the full year ended 30 June 2009 12 August 2009 Commonwealth Bank of Australia ACN 123 123 124
Commonwealth Bank of Australia — FY2009 Earnings Presentation on 6ix