Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 FY2011 Earnings Presentation
113 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 9, 2011
Slide 1: Results Presentation – Half Year Ended 31 December 2010
For personal use only Results Presentation For the half year ended 31 December 2009 10 February Commonwealth Bank of Australia ACN 123 123 124 2010
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, 9 February 2011. It is information given in summary form and does not purport to be complete. It is not intended to be
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: Notes
For personal use only Notes 4
Slide 5: Overview
Overview For personal use only Another solid financial result Challenging operating environment Disciplined strategy execution continuing to deliver Investing for the future Cautiously optimistic for calendar 2011 5
Slide 6: Snapshot – 1H11 Results
Snapshot – 1H11 Results* Financial Operating Performance by Division For personal use only Cash earnings ($m) 3,335 +13% RBS ($m) 2,227 +2% ROE (Cash) 19.2% +70bpts IB&M ($m) 865 (12%) Cash EPS ($) 2.14 +12% BPB ($m) 858 +6% DPS ($) 1.32 +10% Bankwest ($m) 369 +10% Cost-to-Income 45.4% 70bpts Wealth
Slide 7: Another solid financial result
Another solid financial result For personal use only Dec 10 vs Dec 09 Cash NPAT ($m) 3,335 13% Statutory NPAT ($m) 3,052 5% ROE 19.2% 70bpts Cash EPS ($) 2.14 12% Dividend per Share ($) 1.32 10% 7
Slide 8: Return on Equity (Cash)
Return on Equity (Cash) For personal use only 21.5% 21.7% 20.4% 18.8% 18.7% 19.2% 15.8% 2005 2006 2007 2008 2009 2010 1H11 8
Slide 9: Return on Assets
Return on Assets For personal use only Assets ($bn) 700 2 Cash NPAT ($bn) 646 650 620 Group ROA (%) 2 600 Banking ROA 1 500 488 6.1 0.9% 440 1 1.1% 400 383 4.7 1.0% 352 4.5 4.4 1 4.1 300 3.5 3.3 1 1 200 0 100 0 0 - 2005 2006 2007 2008 2009 2010 1H11 Half Year 9
Slide 10: A clear, focussed strategy
A clear, focussed strategy For personal use only Customer Business Satisfaction Banking Australia’s finest financial services organisation Trust and Technology and Team Spirit Operational Excellence Profitable Growth 10
Slide 11: Strategy continues to deliver
Strategy continues to deliver Retail MFI Customer Satisfaction 1 Products per customer 2 For personal use only 75.6% 75.4% 72.5% 73.8% 2.64 Average number of products 70.5% at the Financial Institution 65.2% 66.5% 2.17 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10DecDec 10 10 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09
Slide 12: Notes
For personal use only Notes 12
Slide 13: Continuing to invest
Continuing to invest For personal use only Investment Spend Investment Spend Profile % of Total Investment Spend (12 months to Dec 10) $m 1,075 1,020 1,036 783 Core 538 Productivity Banking 1st Half 583 561 & Growth 30% 2nd Half 40% 434 4% Other 8% 18% Branch 537 541 refurbishment 437 475 Risk / 349
Slide 14: Notes
For personal use only Notes 14
Slide 15: Targeted expansion in Asia
Targeted expansion in Asia Key developments – 12 months to Dec 10 For personal use only Launch of BoCommLife Joint Venture in China Opening of CBA branch in Shanghai Beijing Opening of the first CBA branch in India Jinan Tokyo Acquisition of a 15% shareholding in Vietnam International Bank Shanghai
Slide 16: Leading position in online and mobile banking
Leading position in online and mobile banking For personal use only NetBank + 14% of NetBank Innovative Property Core Banking Modernisation logins now via Guide = mobile devices iPhone “app” Real-time Banking 16
Slide 17: Core Banking Modernisation
Core Banking Modernisation For personal use only 10 million retail deposit and transaction Timetable Status Customer Records Completed accounts migrated successfully: Retail Deposits Completed Retail Transactions Completed Largest in Australian history Business Deposits and Transactions
Slide 18: Supporting Australia
Supporting Australia Where does our net income go? For personal use only Employing 45,000 people FY10 Expenses Serving 11 million Australian customers $bn Impairment 4.0 2.1 $100 billion in new lending in FY10 Salaries for 4.6 2.9 Taxes 45,000 staff Paid $2.9 billion in taxes in FY10 1.6 4.5
Slide 19: Supporting our Community - Floods
Supporting our Community - Floods For personal use only Flood Assistance initiatives totalling $65m: Compassionate Assistance Fund of up to $50m CommInsure ex gratia payments of $8m Community Group Flood Assistance Fund of $5m Cash donations of ~$2m to flood relief appeals $1bn set aside
Slide 20: Key Earnings Drivers - FY11
Key Earnings Drivers - FY11 Driver FY11 Outlook For personal use only ► Total Credit (%): 4½-6½ System ► Housing Credit (%): 7-9 Credit Growth* ► Business Credit (%): 1-3 ► Elevated funding costs Margins ► Many variables – specific outlook hard to predict Other Banking Income ► Likely subdued overal
Slide 21: Outlook
Outlook For personal use only Operating conditions remain challenging: Subdued credit growth Competitive pressures Elevated funding costs Nevertheless, cautiously optimistic about calendar 2011: Global outlook improving, albeit gradually Outlook for domestic economy positive Well pla
Slide 22: Notes
For personal use only Notes 22
Slide 23: Results Presentation – Half Year Ended 31 December 2010
For personal use only Results Presentation For the half year ended 31 December 2009 10 February Commonwealth Bank of Australia ACN 123 123 124 2010
Slide 24: Notes
For personal use only Notes 24
Slide 25: Solid profit growth
Solid profit growth For personal use only Dec 10 Dec 09 Dec 10 vs Dec 10 vs $m $m Dec 09 Jun 10 Operating income 9,704 9,550 2% 5% Operating expenses (4,408) (4,268) 3% 2% Operating performance 5,296 5,282 - 7% Investment experience 35 142 (75%) (63%) Impairment expense (722) (1,383) (48%) 4% Tax an
Slide 26: Non-cash items
Non-cash items For personal use only Dec 10 Dec 09 $m $m Bankwest Merger related amortisation (35) 62 Integration expenses (13) (14) (48) 48 Hedging and AIFRS volatility Unrealised accounting gains and losses arising from the application of “AASB 139 Financial Instruments: Recognition and Meas
Slide 27: Statutory Profit
Statutory Profit For personal use only Dec 10 Dec 09 $m $m Cash NPAT 3,335 2,943 13% Bankwest non-cash items (48) 48 Hedging and AIFRS volatility (216) 177 NZ tax expense - (171) Other non-cash items (19) (83) Statutory NPAT 3,052 2,914 5% 27
Slide 28: Business unit profitability
Business unit profitability For personal use only Operating Impairment Investment Tax & non- Cash Cash Mvt Mvt $m Performance Expense Experience controlling NPAT NPAT Cash Operating interests Dec 10 Dec 09 NPAT Performance RBS 2,227 (253) - (591) 1,383 1,237 12% 2% IB&M 865 (193) - (160) 512 553 (7%
Slide 29: Business unit operating performance
Business unit operating performance 1 For personal use only Margins 10 bpts Business Banking revenue 10% Income 13% Deposit balances 11% Costs 3% Margins improved Cost:Income now 39% Cash NPAT 15% Cash NPAT 58% +2% Income 8% FUA 7% vs 2H10 Margins 10 bpts
Slide 30: Other Banking Income
Other Banking Income For personal use only 6 months Dec 10 Jun 10 Dec 09 Dec 10 Dec 10 $m $m $m vs Jun 10 vs Dec 09 Commissions 985 972 1,034 1% (5%) Lending Fees 707 716 719 (1%) (2%) Other 168 176 157 (5%) 7% Sub-total 1,860 1,864 1,910 - (3%) Trading Income 426 306 291 39% 46% AIFRS reclassificat
Slide 31: Operating Income up 2%
Operating Income up 2% +2% For personal use only $m 9,550 9,704 Funds & Average FUA balances 5% +5% Insurance Trading Income +46% Change in mix of Treasury earnings (OBI vs NII)1 Other Banking Income (3%) Commissions ($49m) (5%) Lending Fees ($12m) (2%) Net Interest Income +2% Volume $287m 5
Slide 32: Market Shares
Market Shares Home Lending Business Lending For personal use only 25.9% 24.2% 22.2% 18.6% 17.1% 14.8% 13.1% 13.6% CBA / Peer 1 Peer 2 Peer 3 CBA / Peer 1 Peer 2 Peer 3 Bankwest Bankwest Household Deposits Business Deposits 30.5% 23.2% 21.3% 23.5% 20.0% 16.9% 14.1% 13.9% CBA / Peer 1 Peer 2 Peer 3 CB
Slide 33: Volumes
Volumes Home Loan Fundings Business Lending For personal use only Monthly fundings Six month balance growth to Dec 10 $m +16% 8.8% (annualised) 4,890 5,082 4,651 0.6% 4,502 4,341 4,388 4,367 -6.1% -9.9% -18.2% 2H10* Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 BPB IB&M BWA Total CBA Market * Monthly av
Slide 34: Margins remain below pre-GFC levels
Margins remain below pre-GFC levels For personal use only NIM recovery as pricing NIM under bpts NIM decline as GFC adjusted for higher pressure from drives term funding funding costs and higher funding costs higher increased risk costs 219 218 216 212 208 205 218 213 211 198 203 204 200 193 Jun 06
Slide 35: Group Margin
Group Margin For personal use only -2 bpts bpts 7 (9) 3 3 218 212 208 209 1H10 2H10 Asset pricing Funding NZ Group AIFRS 1H11 and mix costs Underlying Volatility Liquids, funding mix and other net to nil 35
Slide 36: Other key information
Other key information RBS Margin Average Funding Costs - Group For personal use only bpts 269 256 239 234 233 223 Increased 219 Deposit +1.46% funding Funding x 60% cost +1.25% Wholesale +0.94% Funding* x 40% Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 1H06 1H07 1H08 1H09 1H10 2H10 1H11
Slide 37: Margin trends
Margin trends For personal use only bpts Group Australia 229 218 218 219 AIFRS AIFRS 212 208 224 213 213 211 203 204 Dec 09 Jun 10 Dec 10 Dec 09 Jun 10 Dec 10 37
Slide 38: Notes
For personal use only Notes 38
Slide 39: Tight cost control: Continuing to invest
Tight cost control: Continuing to invest +3.3% For personal use only $m +1.4% 81 39 20 Includes 4% salary increase 4,408 4,268 from July Dec 09 Defined Benefits Business Investment Dec 10 Fund as Usual 39
Slide 40: Impairment expense
Impairment expense For personal use only 6 months annualised (basis points)* 6 months ($m) 61 1,441 1,383 5 55 113 9 207 313 13 28 189 692 7 28 722 2 441 49 47 18 1,121 155 6 35 881 17 20 428 518 -7 -177 Jun 09 Dec 09 Jun 10 Dec 10 Jun 09 Dec 09 Jun 10 Dec 10 cash earnings cash earnings Base Overlay
Slide 41: Impairment Expense to Gross Loans
Impairment Expense to Gross Loans CBA Group 1 Lending 2 MarginConsumer For personal use only bpts bpts 37 28 85 23 20 20 18 15 13 1 14 61 55 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 pro forma 40 Corporate 3 32 28 bpts 19 4 185 15 28 24 96 98 90 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 0
Slide 42: Additional Information – Individual Provisions
Additional Information Individual Individual Provisions Provisions ($m) ($m) For personal use only 2,169 1,992 1,822 1,729 922 Bankwest 956 620 733 139 Consumer 43 162 116 1,066 1,108 Commercial 927 920 Jun 09 Dec 09 Jun 10 Dec 10 42
Slide 43: Balance Sheet Provisioning
Balance Sheet Provisioning Collective Provisions ($m) Total Provisions to Credit RWA1 For personal use only 2.25% 2.15% 2.15% 3,452 3,461 3,225 3,327 Bankwest 1.63% Granularity 1,351 1,192 2,474 1,211 Economic 1,320 Floods Model and data CBA Peer 1 Peer 3 Peer 2 1,082 758 CBA as at Dec 10. Peers as
Slide 44: Troublesome Exposures by Sector
Additional Information For personal use only Troublesome Exposures by Sector Agriculture Construction 18% Energy 24% Finance - Bank 9% Finance - Other 6% Manufacturing 3% Mining 29% Property 5% Retail & Wholesale Trade 5% Transport & Storage 1% Other 44
Slide 45: Improving credit quality
Improving credit quality Consumer Arrears Risk Rated Portfolio Migrations For personal use only Risk-Rated Portfolios 5.0% 30 days + 10,000 5,000 4.0% Exposure ($m) 0 3.0% CBA Personal Loans -5,000 CBA Credit Cards -10,000 2.0% CBA Home Loans* Total Upgrades -15,000 BWA Home Loans Total Downgrades 1
Slide 46: Conservative funding and liquidity
Conservative funding and liquidity Term maturity profile1 Funding tenor2 For personal use only $bn Years Weighted Average Maturity 3.6yrs 5.0 4.4 4.4 3.5 3.6 3.7 3.8 3.6 27 23 18 19 19 21 FY11 FY12 FY13 FY14 FY15 FY16+ Jun 09 Dec 09 Jun 10 Dec 10 Long Term Wholesale Debt New Issuance Portfolio Liqui
Slide 47: Deposit funded
Deposit funded For personal use only Funded Deposits Wholesale Funded AIFRS & Total assets Funding assets FX on funded Jun 10 Dec 10 debt issues assets $bn Short term Long term 60% Deposit Funded 12 2 (5) (10) 1% 1% 14% 5% 60% 19% 593 602 592 Customer Deposits ST Wholesale Funding LT Wholesale matur
Slide 48: Notes
For personal use only Notes 48
Slide 49: Strong capital position
Strong capital position Tier 1 capital movement For personal use only Tier 1 Capital 9.71% 13.5% 0.73% (0.17%) 9.71% 9.15% UK FSA equivalent of 13.5% 7.4% Well placed for Basel III: Jun 10 Organic Other1 Dec 10 Dec 10 growth UK FSA Common equity Strong organic growth Basel III Common Custome
Slide 50: Snapshot – 1H11 Results
Snapshot – 1H11 Results* Financial Cash NPAT by division For personal use only Cash earnings ($m) 3,335 +13% RBS ($m) 1,383 +12% ROE (Cash) 19.2% +70bpts IB&M ($m) 512 (7%) Cash EPS ($) 2.14 +12% BPB ($m) 506 +15% DPS ($) 1.32 +10% Bankwest ($m) 224 Large Cost-to-Income 45.4% 70bpts Wealth Managemen
Slide 51: Good progress...well placed for growth
Good progress...well placed for growth For personal use only A solid profit result Funding costs impacting margins Cash NPAT bpts NIM (ex AIFRS) Australia +13% Group 3.3% 224 3,335 213 213 211 2,943 203 204 Investment $m 1.6% 1.4% Dec 09 Dec 10 Income Expenses Dec 09 Jun 10 Dec 10 Impairment expense
Slide 52: Notes
For personal use only Notes 52
Slide 53: Results Presentation – Half Year Ended 31 December 2010
For personal use only Results Presentation For the half year ended 31 December 2009 10 February Commonwealth Bank of Australia ACN 123 123 124 2010
Slide 54: Index
Index For personal use only Overview and Strategy 54 Business Performance 66 Risk Management 84 Capital, Funding and Liquidity 93 Economic Overview 104 54
Slide 55: CBA Overview
CBA Overview For personal use only Largest Australian Bank by market capitalisation and 2nd largest listed company AA Credit Rating Tier 1 Capital Ratio of 9.71%; or 13.5% on UK FSA basis Total Assets of $650bn 13 million customers; large distribution footprint #1 in household deposits –
Slide 56: Transformational change - scorecard
Transformational change - scorecard Jun 06 Dec 10 Progress For personal use only Customer Satisfaction Retail 1 64.9% 75.4% 3 Business - DBM n/a Ranked equal 1st FirstChoice 4 Ranked 2nd Ranked 1st Share of Ombudsman Complaints 29.8% 15.1% 5 Market Shares Home Lending 18.7% 25.9% Business
Slide 57: Delivering for Shareholders
Delivering for Shareholders For personal use only Interim Final 84% Payout Ratio 87% 88% 84% 62% 63% 63% 84% 74% 61% 59% cents per share 94 130 107 149 113 153 113 115 120 170 132 2006 2007 2008 2009 2010 2011 57
Slide 58: Products per Customer
Products per Customer Average Product Composition between Commonwealth Bank, For personal use only the 4 Major Banking Groups and Bankwest 2.64 2.64 2.45 2.46 0.34 0.33 Insurance 0.25 0.28 2.17 0.20 0.27 0.09 Personal Lending 0.20 0.24 0.31 0.54 0.70 Home loan 0.60 0.58 0.49 Credit Cards Managed fun
Slide 59: Institutional Banking
Institutional Banking Understanding Customers’ Business For personal use only Loyalty to Relationship Lower the Score the Higher the Satisfaction Lower the Score the Higher the Satisfaction Ranked Ranked CBA CBA No. 1 No. 1 Peer 1 Peer 1 Peer 2 Peer 2 Peer 3 Peer 3 More Less More Less Satisfied Sati
Slide 60: Market shares
Market shares Dec 10 Jun 10 Dec 09 For personal use only CBA BWA Combined CBA + BWA 1 CBA + BWA 1 Home loans 22.3% 3.6% 25.9% 26.1% 26.0% Credit cards 2 19.7% 2.8% 22.5% 22.5% 22.3% Personal lending 13.8% 0.8% 14.6% 14.6% 15.0% Household deposits 27.5% 3.0% 30.5% 31.3% 31.3% Retail deposits 23.1% 3.
Slide 61: Australian Volume Growth
Australian Volume Growth For personal use only 6 mths to Jun 10 6 mths to Dec 10 12 mths to Dec 10 (Annualised) (Annualised) % % % CBA System CBA System CBA System Home Lending 9.2 8.4 4.3 6.3 6.9 7.4 Household Deposits 6.1 5.7 12.2 12.2 9.3 9.1 Business Lending - APRA 3.4 -1.5 -6.1 0.6 -1.4 -0.4 Bu
Slide 62: Home Loan Growth by Channel
Home Loan Growth by Channel Balance Growth by Channel - 6 months For personal use only 11% 7% 7% 5% 4% 4% 4% 4% 3% 3% 3% 2% 2% 2% 2% Dec 09 Jun 10 Dec 10 Broker Branch Premium Total CBA Total Market Note : Width of channel columns reflects relative proportion of total CBA balances Total CBA and Mark
Slide 63: Australia's leading bank for deposits
Australia’s leading bank for deposits Total Deposits Balance Growth For personal use only $bn 343 Combined Household & Business Deposits 282 13.9% 216 214 11.3% 11.7% 194 11.2% 169 6.6% 147 146 149 113 69 68 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Household Deposits Other Deposits Source :
Slide 64: Sustainability scorecard
Sustainability scorecard Metric 1H11 2010 2009 2008 For personal use only Customers Customer satisfaction Roy Morgan MFI retail customer satisfaction % (1) 75.4 75.6 73.0 70.1 (6-month moving average) (ranked 3rd) (ranked 2nd) (ranked 3rd) (ranked equal 3rd) Customer satisfaction DBM Business Financ
Slide 65: Sustainability progress
Sustainability progress People For personal use only Significant progress on our Indigenous School Based Trainee Program, with 21 School Based Trainees completing their traineeship while 47 new trainees commenced with the Group in December 2010. Launched the Group’s updated Disability Action Pla
Slide 66: Index
Index For personal use only Overview and Strategy 54 Business Performance 66 Risk Management 84 Capital, Funding and Liquidity 93 Economic Overview 104 66
Slide 67: Volume-driven income growth
Volume-driven income growth Trading Income For personal use only $m Total Operating Income 2% 442 426 293 291 306 287 (165) 9,704 (47) 14 65 9,550 1H09 2H09 1H10 2H10 1H11 Funds & Insurance Income $m $m 1,468 1,475 1,433 1,410 1,286 Net Interest Net Interest Fee Other Funds & Dec 09 Dec 10 Income
Slide 68: RBS – six month periods
RBS – 6 month periods Dec 10 vs For personal use only Dec 10 Jun 10 Dec 09 Dec 09 Net interest income Home loans 1,265 1,122 1,091 16% Consumer finance 621 594 549 13% Retail deposits 1,107 1,092 1,248 (11%) 2,993 2,808 2,888 4% Other banking income Home loans 100 93 99 1% Consumer finance 215 205 2
Slide 69: Retail Banking Services
Retail Banking Services For personal use only Strong business performance Dec 10 Dec 10 vs $m Dec 09 supported by customer focus and cost efficiency Home loans 1,365 15% Consumer finance 836 10% Solid volume growth in Home Loans and Deposits Retail deposits 1,307 (13%) Distribution 144 27% Str
Slide 70: IB&M – six month periods
IB&M – 6 month periods For personal use only Dec 10 vs Dec 10 Jun 10 Dec 09 Dec 09 Net interest income Institutional Banking 545 558 569 (4%) Markets 105 93 114 (8%) 650 651 683 (5%) Other banking income Institutional Banking 345 401 341 1% Markets 265 173 342 (23%) 610 574 683 (11%) Total banking i
Slide 71: Institutional Banking and Markets
Institutional Banking and Markets For personal use only IB&M Cash NPAT down 7% due to: Dec 10 Dec 10 vs $m Dec 09 ► Operating income decreased by 8% due to lower markets trading Institutional Banking 890 (2%) income as a result of lower volatility and the effect of a decline in lending Markets 370
Slide 72: BPB – six month periods
BPB – 6 month periods Dec 10 vs For personal use only Dec 10 Jun 10 Dec 09 Dec 09 Net interest income Corporate Financial Services 264 262 267 (1%) Regional & Agribusiness 126 121 120 5% Local Business Banking 258 245 222 16% Private Bank 60 60 63 (5%) Equities and Margin Lending 105 107 108 (3%) Ot
Slide 73: Business and Private Banking
Business and Private Banking For personal use only Dec 10 Dec 10 vs $m Dec 09 Solid performance in business banking segments Corporate Financial Services 560 15% Regional and Agribusiness 204 7% Cash net profit after tax 15% Local Business Banking 378 10% reflecting: Private Bank 120 - ► Growt
Slide 74: New Zealand – six month periods
New Zealand – 6 month periods Dec 10 vs For personal use only Dec 10 Jun 10 Dec 09 NZ$M Dec 09 Net interest income ASB 538 468 440 22% Other 2 (5) (4) Large Total NII 540 463 436 24% Other banking income ASB 178 135 207 (14%) Other (13) (16) (15) (13%) Total OBI 165 119 192 (14%) Total banking incom
Slide 75: New Zealand
New Zealand For personal use only Dec 10 Dec 10 vs ASB NZD Cash NPAT 57% NZ$m Dec 09 due to: ASB 743 9% ► Improving home loan margins ► Lower impairment expense due Sovereign 131 30% to improving arrears across all Other (8) 47% portfolios Total operating income 866 13% Operating expenses Sove
Slide 76: WM – six month periods
WM – 6 month periods Dec 10 vs For personal use only Dec 10 Jun 10 Dec 09 Dec 09 Net operating income CFSGAM 378 333 330 15% Colonial First State 342 333 318 8% CommInsure 352 322 347 1% Other - (2) (1) Large St Andrew's Insurance - 15 17 Large 1,072 1,001 1,011 6% Operating expenses CFSGAM (190) (1
Slide 77: Wealth Management
Wealth Management For personal use only CFSGAM: Dec 10 Dec 10 vs $m Dec 09 ► FUM 3% to $153bn ► Strong investment performance - 81% CFSGAM 378 15% of funds outperforming over 5 years Colonial First State 342 8% Colonial First State: CommInsure 352 1% ► Retail FUA 2% to $78bn Other - (Large) ►
Slide 78: Wealth Management
Wealth Management Funds under Administration FirstChoice net flows solid For personal use only $bn +3% $m Quarterly Net Flows +7% 935 872 186 (5) 8 191 702 (1) 180 3 603 513 Dec 09 Net Inv Jun 10 Net Inv Dec 10 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 flows Returns flows Returns Strong investment performa
Slide 79: CFS Global Asset Management
CFS Global Asset Management For personal use only Globally: $153bn FUM1, 896 people North America Japan $1.7bn FUM $3.7bn FUM 4 People 2 people Asia ex Japan Middle East $18.1bn FUM $6.9bn FUM 112 People UK & Europe Australia & New Zealand $23.2bn FUM $99.2bn FUM 174 People 604 People 37% FUM raised
Slide 80: Bankwest – six month periods
Bankwest – 6 month periods For personal use only Dec 10 vs Dec 10 Jun 10 Dec 09 Dec 09 Net interest income 679 679 657 3% Other banking income 118 112 121 (2%) Total banking income 797 791 778 2% Operating expenses (428) (437) (443) (3%) Impairment expense (49) (441) (313) (84%) Net profit before ta
Slide 81: Bankwest
Bankwest For personal use only Income up 2%: Dec 10 Dec 10 vs ► Higher Home Loan volumes $m Dec 09 ► Higher Deposit margins Net interest income 679 3% ► Offset by lower Retail Lending margins Other banking income 118 (2%) Disciplined cost management – Total banking income 797 2% expenses down ev
Slide 82: Bankwest integration
Bankwest integration For personal use only Integration costs - composition Timetable $250m Acquisition announced Oct 08 By Governance structure established Property $18m Restructuring Due diligence commenced, $24m December Regulatory approvals obtained 2008 New CEO, CFO and CRO appointed $
Slide 83: Asia
Asia 1 Cash NPAT China For personal use only Branches Staff 1H11 Qilu Bank (20%) - 2004 80 >2,000 2 Bank of Hangzhou (20%) - 2005 101 3,055 $76m Shanghai Branch - 2010 15 Beijing Representative office - 1992 / 1994 6 Beijing BoCommLife JV - 2010 145 Jinan Japan (Branch), Singapore (Branch, First Sta
Slide 84: Index
Index For personal use only Overview and Strategy 54 Business Performance 66 Risk Management 84 Capital, Funding and Liquidity 93 Economic Overview 104 84
Slide 85: Credit Exposure Mix
Credit Exposure Mix For personal use only Regulatory exposure mix 1 CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 60% 42% 40% 57% Corporate, SME & Spec Lending 27% 36% 42% 33% Bank 5% 6% 11% 3% Sovereign 5% 7% 4% 3% Qualifying Revolving 2% 4% 2% 3% Other Retail 1% 5% 1% 1% Total Advanced 2 100% 100
Slide 86: Sector exposures
Sector exposures1 For personal use only Dec 10 Jun 10 Dec 10 Jun 10 Consumer 54.9% 54.8% Agriculture 2.3% 2.4% Mining 0.8% 0.7% Manufacturing 2.1% 2.3% Energy 1.1% 1.1% Construction 1.0% 1.0% Retail & Wholesale 2.5% 2.4% Transport 1.4% 1.4% Banks 10.8% 10.2% Finance – other 3.9% 4.1% Business Servic
Slide 87: Sector exposures
Sector exposures 1 2 Sector Exposures – Dec 10 Top 20 Commercial Exposures – Dec 10 For personal use only BBB+ AAA to A+ to $bn to Other Total AA- A- BBB- Banks 44.0 27.5 3.0 0.4 74.9 Note 1 Finance Other 9.8 8.6 3.5 5.3 27.2 Note 2 Property 0.3 5.5 7.1 34.3 47.2 Sovereign 31.0 1.2 0.4 0.2 32.8 Manu
Slide 88: Commercial Property Market
Commercial Property Market CBD Office Supply Pipeline* CBD Vacancy Rates For personal use only Current Previous Peak 40% % of Total Stock Market (Q4 2010) (Q2 2010) 1990s 35% Sydney 7.8% 7.9% 22.4% Perth 7.1% 8.6% 31.8% 30% Melbourne 6.3% 6.3% 25.8% 25% Brisbane 8.3% 10.6% 14.3% 20% Adelaide 7.3% 7.
Slide 89: 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 89
Slide 90: Risk Weighted Assets – Dec 2010 Half
Risk Weighted Assets – Dec 2010 Half ■ Credit RWAs reduced by $12.2b primarily as a result of: RWA Movement (%) For personal use only Improvement in credit quality Tier 1 ratio Total impact (bpts) Growth primarily from lower risk retail portfolios with Credit Risk (5)% 40 subdued demand in highe
Slide 91: Home Lending Summary
Home Lending Summary Home loan portfolio mix For personal use only Dec 10 Jun 10 69% of customers paying in advance Owner-Occupied 58% 58% (average 8 payments) Investment 32% 32% Line-of-Credit 10% 10% Variable 86% 85% Portfolio average LVR of 45% (current values) Fixed 14% 15% Low Doc % 3.6% 3.
Slide 92: Home Loan sensitivity test
Home Loan sensitivity test Expected Loss outcomes Loss mitigants For personal use only Expected loss $m PD stress factor Loans >80% LVR mortgage insured (additional insured Property value x1 x2 x4 x6 losses of $1,322m (previously $1,515m) in high stress scenario) No decrease 7 11 17 21 10% decreas
Slide 93: Index
Index For personal use only Overview and Strategy 54 Business Performance 66 Risk Management 84 Capital, Funding and Liquidity 93 Economic Overview 104 93
Slide 94: Regulatory Change: Liquidity, funding, capital
Regulatory Change: Liquidity, funding, capital Final proposals & QIS CBA Position For personal use only Timing (Dec 10) Liquidity Coverage Ratio (LCR) Expect APRA to release Regulatory minimums Definition of liquid assets widened to include “Level 2” draft standards in 2011 expected to double
Slide 95: 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 18% 16.7% 16.7% E 16% 13.5% Europe 14% 13.2% 12.5% 12.3% Average 12.1% 11.2% 11.2% 12% Tier 1 : 11.7% 10.5% 10.4% 10.3% 10.0% 9.8% 9.7% 8.9% Europe 10% Averag
Slide 96: UK Comparison
UK Comparison For personal use only The following table estimates the impact on CBA Group capital, as at December 2010, of the differences between the APRA Basel II guidelines and those of the UK regulator, Financial Services Authority (FSA) Common Tier One Total Equity Capital Capital Capital1 Dece
Slide 97: UK Comparison
UK Comparison Key differences between the APRA and FSA method of calculating regulatory capital. For personal use only Impact on Bank’s Item Items impacting published total capital adequacy ratio ratio if FSA rules applied Under APRA rules, the minimum Loss Given Default (LGD) for residential real
Slide 98: Regulatory Expected Loss
Regulatory Expected Loss Dec 09 Jun 10 Dec 10 For personal use only $m $m $m CBA (ex Bankwest) Regulatory Expected Loss (EL) – before tax 4,276 4,332 4,293 Eligible Provision 1 Collective provision 2 2,339 2,036 2,029 Individually assessed provisions 2 1,204 1,172 1,343 Other provisions 30 25 25 Sub
Slide 99: Funding
Funding Wholesale Funding by Product 60% Deposit Funded For personal use only 6% 3% 5% Structured MTN 1% 1% 14% Customer Deposits 4% Vanilla MTN 4% Commercial Paper ST Wholesale Funding Structured Finance 5% LT Wholesale maturing <12m 16% 42% Debt Capital CDs 60% LT Wholesale maturing >=12m Securiti
Slide 100: Interest Rate Risk in Banking Book
Interest Capital Assigned to Interest Rate Risk in Rate Risk Banking Book - APS117 For personal use only 0 bpts 26 bpts 54 bpts 33 bpts 62 bpts $1,328m $1,363m Optionality -$70m $716m (ie zero) Basis Risk $822m Optionality Basis Risk Repricing and Yield Curve Risk Repricing and Yield Curve Risk Embe
Slide 101: Replicating Portfolio
Replicating Portfolio For personal use only Actual and Forecast Scenario* Forecast* 8% 7% Replicating Portfolio Yield 6% 5% 4% Official Cash Rate 3% 2% 1% 2001 Current 2012 * Indicative forecast of the replicating portfolio in relation to hypothetical movements in the official cash rate 101
Slide 102: 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 6% 6% Capital Cash 6% Capital 9% Home Loans 18% Home Loans 15% 48% Deposits 48% Deposits Other Lending 37% Other Lending 46% 12% Long Term Other Fair 16% Long Term 17% Value ass
Slide 103: Australian Banks – safe assets, secure funding
Australian Banks – safe assets, secure funding For personal use only Commonwealth Bank Balance sheet comparisons Assets – CBA’s assets are safer because: Assets Liab + Equity 53% of balance sheet is home loans, which are stable/long Cash 3% term 6% Capital Trading securities and other fair value
Slide 104: Index
Index For personal use only Overview and Strategy 54 Business Performance 66 Risk Management 84 Capital, Funding and Liquidity 93 Economic Overview 104 104
Slide 105: Economic Summary
Economic CBA Economists summary of key indicators Summary For personal use only As at June 2007 2008 2009 2010 2011 (f) 2012 (f) Credit Growth % – Total 15.5 11.4 2.9 3.3 4½-6½ 7-9 Credit Growth % – Housing 12.9 9.5 7.2 8.2 7-9 7-9 Credit Growth % – Business 19.2 16.0 -0.9 -4.0 1-3 7-9 Credit Growth
Slide 106: Australia in Perspective
Australian in Perspective For personal use only Growth outperformance Stronger labour market Index REAL GDP Index % UNEMPLOYMENT RATE % (Sep'08= 100) 105 105 12 12 Lehman Australia United collapse States Euro US zone NZ 100 100 8 UK 8 Europe Australia UK 95 95 4 4 Japan Japan Source: CEIC 90 90 0 0
Slide 107: Global Backdrop
Global Backdrop Global growth back to trend Asian outperformance supports commodities For personal use only WORLD GROWTH WORLD GROWTH IN 2011-2012 % % (% deviation from normal*) (annual % change) 8 8 World *1998-07 average Source: IMF Advanced economies Long-run 6 average 6 Euro area United States 4
Slide 108: Domestic Drivers
Domestic Drivers High commodity prices A capex boom For personal use only THE TERMS OF TRADE THE CAPEX PIPELINE Index Index $bn $bn (value of work yet to be done) 125 125 150 150 100 100 100 100 75 75 50 50 50 50 0 0 1984 1989 1994 1999 2004 2009 Sep-84 Sep-89 Sep-94 Sep-99 Sep-04 Sep-09 Mining the
Slide 109: Consumer Drivers
Consumer Drivers Consumer Caution Consumer Caution For personal use only %pa CONSUMER INDICATORS HOUSING EQUITY WITHDRAWAL % $bn $bn 12 12 2700 2700 Consumer Cumulative increase spending in dwelling wealth (lhs) 6 6 1800 1800 Cumulative rise in housing debt Cumulative housing equity withdrawal 0 0 9
Slide 110: Housing Drivers
Housing Drivers Population Migration For personal use only POPULATION DRIVERS MIGRATION PROGRAM '000 '000 '000 '000 210 210 450 450 Total Net Target migration 140 10/11 140 300 300 70 70 150 150 Skilled Natural 457 increase visa 0 0 0 0 1990/91 1995/96 2000/01 2005/06 2010/11 1990/91 1995/96 2000/01
Slide 111: Business Drivers
Business Drivers High capacity utilisation Business sentiment For personal use only RATE OF RETURN CBA-ACCI BUSINESS SURVEY % (GOS as % of capital stock) % Index (index>50 indicates improvement) Index 12 12 70 70 60 60 10 10 50 50 8 8 40 Expected 40 capex lhs) 6 6 30 30 1959/60 1969/70 1979/80 1989/
Slide 112: Note
Note For personal use only Sources for Customer Satisfaction results outlined in this pack 1 Retail MFI Customer Satisfaction – Roy Morgan Research. Australian Population 14+, % “Very Satisfied” or “Fairly Satisfied” with relationship with that main financial institution. 6 month rolling average. 2
Slide 113: Results Presentation – Half Year Ended 31 December 2010
For personal use only Results Presentation For the half year ended 31 December 2009 10 February Commonwealth Bank of Australia ACN 123 123 124 2010
Commonwealth Bank of Australia — H1 FY2011 Earnings Presentation on 6ix