Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — JP Morgan Australasian Conference 2008
29 slides from Commonwealth Bank Of Australia's conference presentation, Sep 18, 2008
Slide 1: JP Morgan Australasian Conference, Edinburgh
JP Morgan Australasian Conference Edinburgh For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER 18 September 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 Group’s activities current at the date of the presentation, 18 September 2008. It is information given in summary form and does not purport to be complete. It is not intended to b
Slide 3: Determined to be different
Notes 9 Determined to bedifferent
Slide 4: Strength in uncertain times
Strength in uncertain times For personal use only ► A solid operating result in a difficult environment ► Strong risk management = sound credit quality ► Prudent levels of provisioning ► Strong capital and funding positions ► Strategy on track and delivering – strong competitive position ► Continuin
Slide 5: Determined to be different
Notes 9 Determined to bedifferent
Slide 6: A solid operating result
A solid operating result For personal use only Jun 08 vs Jun 08 Jun 07 Operating Income ($m) 14,358 10% Statutory NPAT ($m) 4,791 7% Cash NPAT ($m) 4,733 5% Cash EPS (cents) 356.9 3% Return on Equity – Cash (%) 20.4 (130)bpts Dividend per Share - Fully Franked (cents) 266.0 4% 2 6
Slide 7: Strong growth in core products
Strong growth in core products For personal use only Home lending Business deposits 15 consecutive monthly increases CBA growth well above system 19.6% in market share 12 months growth 19.2% 18.8% 18.4% 18.0% Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 CBA Peer 1 Peer 2 Peer 3 Source: RBA/APRA
Slide 8: All Business Units contributing
All Business Units contributing For personal use only Jun 08 Jun 08 vs $m Jun 07 Retail Banking Services 1,904 8% Premium Business Services 1,480 2% Wealth Management 740 18% International Financial Services 589 23% Corporate Centre 255 (16%) Eliminations/Unallocated (235) Large 3 8
Slide 9: Market shares
Market shares For personal use only Jun 08 Dec 07 Jun 07 Retail Banking Services Home loans 19.3% 18.8% 18.5% Credit cards 18.2% 18.5% 18.8% Note Personal lending (APRA Other Households) 15.8% 16.7% 16.4% Household deposits 29.1% 28.9% 29.0% After adjusting for peer bank reclassifications (estimated
Slide 10: Targeted market share growth
Targeted market share growth For personal use only Market Jun 08 Share vs Jun 08 Jun 07 15 consecutive months of market Home Lending 19.3% 0.8% share gains Household Deposits* 29.7% 0.7% Strong growth in both retail and business deposits in a constrained funding environment Business Deposits 14.4% 1
Slide 11: Investing for the future
Investing for the future For personal use only Investment spend ($m) Expensed Capitalised Total Core Banking Modernisation Growth CommSec banking solutions 219 304 523 projects iPhone share trading Home loan Top Ups Product and System Rationalisation (WM) Productivity Home loan Simplific
Slide 12: Investment driven cost growth
Investment driven cost growth For personal use only Expense Movements 2008 vs 2007 ($m) 78 (100) 121 89 (64) 224 246 Investing for the future 7,021 IWL Bank ANK Indonesia 6,427 Business Banking Growth Strategy Branch redesign etc 2007 CPI Business Additional GST Other Volume IT 2008 Increase
Slide 13: Other key information
Other key information For personal use only Home loan portfolio mix New mortgagee in possession cases Jun 08 Jun 07 # Owner-Occupied 55% 55% 60 Investment 34% 34% Line-of-Credit 11% 11% 40 Variable 66% 66% Fixed 33% 29% Honeymoon 2% 4% 20 Low Doc % ~ 3.7% ~ 2.3% Originations 0 Proprietary 61% 65% Ju
Slide 14: Sound consumer credit quality
Sound consumer credit quality For personal use only Home loan arrears Home lending: 30+ Days % ¾ Portfolio quality remains sound 1.2% ¾ Arrears similar to prior years 1.0% ¾ Small up-tick in Jun Qtr 0.8% ¾ 70% paid in advance 0.6% ¾ Portfolio average LVR ~40% Jul Aug Sep Oct Nov Dec Jan Feb Mar Ap
Slide 15: Other key information: Margin Lending
Other key information Notes For personal use only Margin Lending 6 months Jun 08 Dec 07 Portfolio Size ~$8bn ~$9bn Aggregated Gearing 42% 44% Margin Calls 18,500 7,000 Forced sales < 3.5% < 0.5% Losses/Write-Offs $5.7m $137,000 Loss % of Book 0.06% 0.001% 15
Slide 16: Commercial Credit Quality
Commercial Credit Quality For personal use only Risk-Rated Exposures Cyclically higher provisioning: ¾ No new large problem accounts 29% Other 29% 17% BBB+ to BBB- Book quality remains sound: 20% 71% 18% A+ to A- 19% investment ¾ No systemic issues grade 36% AAA to AA- 32% ¾ Lower impaired asset
Slide 17: Other key information: Expected loss by Business Unit
Other key information Notes For personal use only Expected loss by Business Unit * As at Jun 08 Retail Banking Services 0.22% Premium Business Services 0.29% International Financial Services 0.21% Group 0.24% * Expected loss focuses on the anticipated longer term loss rates and is less volatile than
Slide 18: Conservative provisioning
Conservative provisioning For personal use only Gross impaired assets to GLAs Impaired Assets vs Peers CBA as at Jun 08; Peers as at Mar 08 1,600 45.0% 40 1,400 40.0% 1,200 35.0% 1,000 30.0% $m CBA 25.0% 800 20.0% bpts Peer 1 600 15.0% Peer 2 400 10.0% 20 200 5.0% Peer 3 - 0.0% CBA Peer 1 Peer 2 Pee
Slide 19: Other key information: Wholesale funding
Other key information For personal use only Wholesale Funding - Geographic Distribution Wholesale Funding by Product Australia Structured MTN 3% 2% 10% 2% 11% Vanilla MTN 4% 42% Other Asia 7% Commercial Paper Europe 7% Structured Finance Deals United States 21% 7% Debt Capital 19% Japan CDs Securiti
Slide 20: Strong funding and liquidity positions
Strong funding and liquidity positions For personal use only Source of Funding 1 AA credit rating, stable outlook 21% Globally respected borrowers – EuroWeek 2% 5% Overall MTN issuer of the year 2008 58% 11% Highly diversified wholesale funding 3% Retail Funding Long Term Wholesale maturing in
Slide 21: Notes
For personal use only Notes 21
Slide 22: A strong capital position
A strong capital position For personal use only Basel I Basel II 14% 12.08% 12% 11.58% Total 10.74% Capital 9.76% 9.82% Target 10% Range 3 8% 8.17% 8.17% Tier 1 7.58% Target 7.41% 6% 7.14% Range 4% 6.58% 6.47% 6.00% 2% 4.79% 4.77% 0% 1 1 Jun 07 Dec 07 Dec 07 Jun 08 1 Jul 08 2 Proforma Adjusted Commo
Slide 23: Notes
For personal use only Notes 23
Slide 24: Capital ratios compare favourably to peers
Capital ratios compare favourably to peers For personal use only Domestic Peer Comparison Basel II advanced accreditation Tier 1 Capital Ratios, without IRRBB1 achieved December 2007 9% 8.2% 8% APRA Basel II rules more 7.4% 7.0% 6.8% conservative than UK/Europe 7% 6.5% 6% UK/Europe treat Inter
Slide 25: Other highlights
Other highlights For personal use only Closing the gap to top rated peer IT efficiency ratio 84% World-wide best practice 80% 13-15% 76% 9.7% 7.8% 12.5% 72% 68% 16.7% 15.2% 14.5% 13.7% 64% Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Staff Satisfaction – Gallup Workplace Survey Continued strong growth in refe
Slide 26: Determined to be different
Determined to be different For personal use only X Customer Satisfaction reached 10 year highs Customer Service X Money Magazine “Bank of the Year” 2008 X New CommSec banking solutions + iPhone share trading Business Banking X Strongest customer satisfaction gains amongst peer banks Technology and X
Slide 27: Key Forecasts and Projections
Key Forecasts and Projections For personal use only 1 2005 2006 2007 2008 2009 (f) Credit Growth % – Total 13.5 14.4 15.4 11.7 9-11 Credit Growth % – Housing 14.7 13.7 12.9 9.9 9½-11½ Credit Growth % – Business 11.8 16.5 18.9 16.1 10-12 Credit Growth % – Other Personal 12.9 9.8 16.2 4.1 6-8 GDP % 2.
Slide 28: Outlook
Outlook For personal use only Challenging global conditions dominate 2009 outlook for banking sector Australian economy expected to experience modest growth Group remains cautious with conservative approach to capital, provisioning and funding Core businesses well positioned Continuing to
Slide 29: JP Morgan Australasian Conference, Edinburgh
JP Morgan Australasian Conference Edinburgh For personal use only Ralph Norris CHIEF EXECUTIVE OFFICER 18 September 2008 Commonwealth Bank of Australia ACN 123 123 124
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