Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2018 Earnings Presentation
157 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 8, 2018
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the full year ended 30 June 2018
Slide 2: Results Presentation
Results Presentation Matt Comyn, Chief Executive Officer Alan Docherty, Acting Chief Financial Officer 2 Commonwealth Bank of Australia | ACN 123 123 124 | 8 August 2018
Slide 3: Results presentation agenda
Results presentation agenda Business update Matt Comyn Full-year results Alan Docherty Summary Matt Comyn Questions & Answers 3
Slide 4: Transformation underway
Transformation underway Customer and community • Fixing mistakes and resolving complaints • Continued progress on financial wellbeing Culture and governance • New leadership team – 6 new appointments • Renewed purpose and values • Remuneration consequences for executives Regulatory engagement • AUST
Slide 5: Our strategy
Our strategy Become a simpler, better bank for our customers To deliver balanced and sustainable outcomes Simplify our business Lead in retail and commercial banking Customers Better outcomes Best in digital People Shareholders Energised, Long-term Supported by stronger capabilities accountable sust
Slide 6: Simplify our business
Simplify our business Core banking businesses Demerger and divestments • Retail and business banking • Wealth management - Australia and New Zealand • Mortgage broking • Institutional banking • Life insurance - clients with links to Australia • South Africa Strategic review 90+% • General Insurance
Slide 7: Lead in retail and commercial banking
Lead in retail and commercial banking Superior franchise Leading technology Strong balance sheet • Customer base • Commbank App • Capital • Brand • Netbank/CommBiz • Liquidity • Distribution reach • Data and analytics • Funding tenor • Merchant base • Real time banking • Deposit base People dedicate
Slide 8: Best in digital
Best in digital Market leading customer engagement engine Best digital customer Broadest and richest data sets interfaces • 27 billion data points • Leading MFI share1 refreshed daily • 6.5 million active digital customers • Leading transaction • 21 million interactions daily5 account share2 • 5.1 m
Slide 9: Solid underlying results
Solid underlying results Jun 18 vs Jun 17 Statutory profit ($m) 9,329 (6.0%) +3.7% Cash NPAT - continuing ($m) 9,233 (4.8%) ex one-offs ROE (cash) - continuing (%) 14.1% (160)bpts ROE ex one-offs (%) 15.3% (30)bpts Dividend per share ($) 4.31 +0.5% 9
Slide 10: Cash NPAT
Cash NPAT Good contributions across the portfolio 1 90+% of Group NPAT Demerger / $m Strategic Reviews +5% FY18 vs FY17 5,193 CommInsure Life 160 Sovereign 96 TymeDigital (78) BoComm 15 PTCL 28 Other (14) VIB & Other 17 +4% 1,888 (14%) +12% +18% +25% +5% +6% +13% +65% 1,121 1,143 681 568 257 102 133
Slide 11: Franchise strength
Franchise strength Excluding one-off items, resilient business performance1,2 Cash NPAT Operating Performance Cost-to-Income LIE $m % % Bpts of GLAA +3.7% +3.7% (10)bpts Flat 15 15 778 One-off 41.2% bpts bpts 9,652 items 3.4% 41.1% 3.1% 9,233 FY17 FY18 Income Expenses FY17 FY18 FY17 FY18 ex one-off
Slide 12: Balance sheet strength
Balance sheet strength Strong funding and liquidity, pro-forma CET1 capital at 10.7% Deposit Funding LCR NSFR CET1 % of total funding APRA Post divestments1 131% 112% 129% 68% 10.7% 67% 107% 10.4% 10.1% bpts Transaction Liquid Strengthening Organic +32 Balances assets of the balance One-offs (52) +1
Slide 13: Dividend
Dividend Final dividend of $2.31 - full year $4.31, payout ratio of 75% ex AUSTRAC cents per share 420 429 431 Cash NPAT1 Payout Ratio 420 401 364 334 320 290 256 266 80% 75% 228 76% 76% 75% 75% 77% 75% 74% 73% 78% 74% 75%2 ex AUSTRAC FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1. Ca
Slide 14: Results Presentation
Results Presentation Alan Docherty, Acting Chief Financial Officer 14 Commonwealth Bank of Australia | ACN 123 123 124 | 8 August 2018
Slide 15: Summary
Summary ► A number of moving parts in this result: Continuing vs discontinued operations Reconciliations Statutory vs Cash NPAT on following One-off items within Cash NPAT slides ► Strong fundamentals: Cash NPAT excluding one-off items up 3.7%1 Revenue – supported by asset repricing, with
Slide 16: Statutory vs Cash NPAT
Statutory vs Cash NPAT Statutory NPAT inclusive of gains and losses on divestments $m FY18 Statutory NPAT 9,329 Discontinued operations CommInsure Life Expected to be sold in 2018 Less Sovereign Completion of sale 2 Jul 18 BoComm Expected to be sold in 2018 Cash NPAT - discontinued operations 179 Ty
Slide 17: Cash NPAT excluding one-off items
Cash NPAT excluding one-off items $m FY17 FY18 % Cash NPAT – continuing operations 9,696 9,233 (4.8%) Cash One-off items (after tax) (44) 778 NPAT Cash NPAT ex one-offs 9,652 10,011 3.7% Operating Income 25,257 25,907 2.6% Visa share sale (397) Income AHL1 (41) (237) Operating Income ex one-offs 24,
Slide 18: Operating income up 3.4%
Operating income up 3.4%1 Asset repricing and higher funds/insurance offsetting lower fee and trading income Margin +5 bpts +3.4% Volume2: +4.5% (3.7%) +11.6% Owner-Occupied HL +6% Investor HL -1% 793 (190) 248 25,670 Business Loans +3% Institutional Loans -6% Total Lending +2% Funds 178 FUA 9.0% In
Slide 19: Group margin
Group margin1 Up 5 bpts over the year, but lower home loan margins and basis risk impacted 2H18 12 Months 6 Months Largely the benefit of last year’s HL discounting and switching (2) asset repricing Lower institutional lending +1 bpts Higher New 216 Zealand NIM 213 215 (1) 210 214 (2) 1 Higher basis
Slide 20: Group margin – key sensitivities
Group margin – key sensitivities Basis Risk and Replicating Portfolio % Basis Risk Replicating Portfolio Replicating Portfolio Every 5 bpts of elevated BBSW/OIS Bottoming of rate cycle = lower 1.0% spread costs ~1 bpts of Group NIM 7.0% benefits (~2 bpts of NIM drag in FY19) 5.0% Replicating Portfol
Slide 21: Operating expenses
Operating expenses1 Elevated risk and compliance costs the largest contributor to expense growth Includes $35m2 Excludes $155m2 of FY17 risk and one-off regulatory Includes wage inflation partly offset by costs compliance costs lower incentives 2 +3.1% 199 65 58 30 (34) 10,229 10,547 Lower IT rebate
Slide 22: Balance sheet resilience
Balance sheet resilience Conservative settings, fully prepared for a range of possible macro-economic outcomes Strategic choices & changes Collective Provision Coverage1 • Strengthened underwriting Credit Risk • Increased levels of provisioning 1.03% 0.75% • AASB9 30Jun 30 Jun 2018 2018 1 1Jul Jul20
Slide 23: Credit risk - Loan Impairment Expense
Credit risk - Loan Impairment Expense Credit risk outcomes broadly stable this period – LIE at 15 basis points LIE/GLAA 73 Group bpts FY17 FY18 Basis Points of GLAA1 RBS 20 20 41 BPB 5 11 Consumer 18 Corporate 10 IB&M 6 8 25 21 20 BWA 14 7 16 16 19 15 15 ASB 9 10 Group2 15 15 FY09 FY10 FY11 FY12 FY1
Slide 24: Credit risk - consumer arrears
Credit risk - consumer arrears Higher home loan arrears and consumer collective provisions reflecting pockets of stress % Arrears1, 90+ Days $m Collective Provisions 1.46% 1.44% 2,772 2,763 Personal Loans 1.41% 2,747 1.34% Overlay 711 811 756 Credit Cards 1.03% 0.99% 1.03% 1.05% Consumer 1,195 1,158
Slide 25: Credit risk - AASB 9
Credit risk - AASB 9 Higher collective provisioning took effect from 1 July 2018 Impact on Collective Provision Increase of $1.06bn due to +$1.06bn forward-looking factors1 lifetime expected credit losses on stage 2 loans2 $3.82bn Increase to be taken through opening retained $2.76bn earning
Slide 26: Wholesale funding
Wholesale funding Lengthened at favourable rates, reducing refinancing risk – cost pressures emerging Wholesale Funding Indicative Funding Costs2 Weighted Average Maturity1 Average Annual Maturity Average Annual Issuance 3.00% 10yr market Portfolio (yrs) funding cost 34 28 28 New Issuance (yrs) 2.50
Slide 27: Capital
Capital Op. risk add-on absorbed – clear path to “unquestionably strong” (pro-forma 10.7%) bpts Organic CET1 CET1 +32 Pro-forma 38 18 10.7% 10.4% 106 1 (7) (52) (67) (10) 10.1% 10.1% (21) 27 One-off items Operational RWA Adjustment2 (33) AUSTRAC (7) Colonial debt3 (7) BoComm4 (5) Dec 17 Dec 17 Cash
Slide 28: Capital generation
Capital generation Focus on capital efficient NPAT growth Organic Capital Generation1 2H18 $m Bpts IB&M Credit RWA RBS 2,352 51 -28% BPB 485 11 Future Opportunities 106 IB&M 964 21 76 • More focused business New Zealand 431 10 $bn • Cost reduction Bankwest 211 5 Jun 16 Jun 18 • Emphasis on regulator
Slide 29: Summary
Summary Underlying performance strong Focus on the core franchise Further potential in the core Strong team appointed Focused on execution 29
Slide 30: Group Overview
Group Overview CommonwealthBank y
Slide 31: Leadership team
Leadership team Matt Comyn, David Cohen, Deputy Adam Bennett, Group Pascal Boillat, Alan Docherty, Acting Andrew Hinchliff, Group Chief Executive Officer Chief Executive Officer Executive Business & Chief Information Officer Chief Financial Officer Executive Institutional • 19 years at CBA • 10 year
Slide 32: Deliver balanced and sustainable outcomes
Deliver balanced and sustainable outcomes • Better customer outcomes Our Purpose • Lead in customer experience #1 Customers Improve the NPS1,2 • Resolve issues fairly and quickly financial wellbeing of our customers and communities • Earn trust Top quartile Community • Contribute to our communities
Slide 33: Lead in retail and commercial banking
Lead in retail and commercial banking Superior franchise Leading technology Strong balance sheet • #1 MFI share (34%)1 • #1 CommBank App NPS (+38)8 • 15.5% International CET112 • #1 home loan share (24%)2 • #1 Internet Banking NPS (+31)8 • 10.7% pro-forma APRA CET112 • #1 household deposits (28%)3 •
Slide 34: Franchise strength
Franchise strength The Group maintains Australia’s largest share of MFI customers1 Jun 13 Jun 18 47.6% Overall MFI share1 41.7% 45.2% CBA MFI Share Others CBA 31.1% 22.6% 34.4% 27.3% 27.1% 11.5% Peer 2 13.1% 18.4% Aged 14-17 Aged 18-24 Aged 25-34 Aged 35-49 Aged 50-64 Aged 65+ Peer 3 Peer 1 Customer
Slide 35: Build stronger capabilities
Build stronger capabilities Operational risk Cost reduction Data and analytics Innovation and compliance • More accountable, • Simpler portfolio • Deeper customer • Increased investment customer-focused • Simpler operating engagement in innovation in the culture model • Higher quality decisions core
Slide 36: Operational risk and compliance action plan
Operational risk and compliance action plan Build a more accountable, customer- focused and transparent culture APRA endorsed action plan Achieve better customer and risk • Comprehensive transformation plan focusing on uplifting CBA’s performance outcomes across customer and risk outcomes • Addresse
Slide 37: Leading in digital
Leading in digital Committed to remaining a leader in technology and innovation Mobile App Net Promoter Score6 #1 (CANSTAR) Online Banking – 9 years in a row Customer’s likelihood to recommend main financial institution based on use of Internet Banking services via Mobile App +37.8 1 +35 #1 Mobile +
Slide 38: Real time digital banking
Real time digital banking Customer take-up of digital options Digital transactions CommBank app users CommBank app % of total transactions - by value1 Monthly unique customers (m)2 Logons per day (m)3 59% 5.0 5.1 4.8 4.9 56 4.4 4.3 4.1 3.9 54 3.7 3.4 3.4 53 3.0 3.1 52 52 2.7 2.7 51 2.3 50 Dec 14 Jun
Slide 39: Innovation: Helping customers to …
Innovation Helping customers to … Budget Save Avoid fees Spend Tracker Spend Less Challenge1 High Cost Transaction Notifications2 1. Spend Less Challenge is currently in customer pilot within the CommBank app. 2. High cost transactions refer to withdrawing cash or transferring funds from a credit ca
Slide 40: Innovation: Keeping connected with customers
Innovation Keeping connected with customers Activity Feed Ceba Assisted Chat Click-to-Call Get alerts about Chat to an Resolve your Go straight from the upcoming automated banking enquiry by securely app to the right person payments and assistant for simple chatting to a on the phone, without transa
Slide 41: Innovation: Making payments easier
Innovation Making payments easier PayID Beem It Google Pay, Samsung Pay One of the first major banks to CommBank collaboration with two Secure payment experience via allow you to securely send and other major banks to allow you to NFC1, linked to your CommBank receive payments instantly pay, request
Slide 42: Innovation: business customer solutions
Innovation Innovative solutions remain key to the Group’s business customer offerings Wiise Albert A small and medium enterprise Giving customers 24/7 access business management solution to insights about their The clever EFTPOS tablet that integrates your banking, business 50+ apps in total financi
Slide 43: Our strategy – measuring success
Our strategy – measuring success Net Promoter Score – Consumer1 Net Promoter Score – Business2 Goal – #1 Peers Goal – #1 Peers CBA CBA 0 -5 -10 -15 -20 -2.7 -19.6 -25 Jul 15 Jun 16 Jun 17 Jun 18 Jul 15 Jun 16 Jun 17 Jun 18 Reputation Scores3 Employee Engagement Index Score4 Goal – Top quartile Goal
Slide 44: Doing business sustainably
Doing business sustainably Delivering balanced and sustainable outcomes for all our stakeholders Community investment Employee engagement Renewable energy lending Employee engagement index (%)2 Lending exposure ($bn) Total community investment ($m)1 290 81 81 3.7 263 266 78 2.8 77 243 2.2 72 1.4 Jun
Slide 45: Task Force on Climate-related Financial Disclosures
Task Force on Climate-related Financial Disclosures1 Initial reporting released – taking action on climate change Better understand the impacts of climate change on the Bank Increase the resilience of the Bank to climate risks Take advantage of opportunities created by climate change Support our cus
Slide 46: Energy Value Chain
Energy Value Chain Key: (+%) (-%) CBA exposure(1) to the Energy Value Chain as at 30 June 2018 Change since FY17 1. All figures are Total Committed Exposures (TCE) as at 30 June 2018. Figures represented have been specifically derived based on material client exposures. 2. Diversified miners not inc
Slide 47: CBA overview
CBA overview Delivering innovative solutions to ~16m customers Customers Innovation Strength 49,1251 people delivering Australia’s leading technology Australia’s 3rd largest company quality service to bank and the first to offer real- by market capitalisation ~16m1 customers time banking, 24x7 Digit
Slide 48: Financial Overview
Financial Overview CommonwealthBank y
Slide 49: Our profits
Our profits 88% of profits paid in tax and returned to shareholders 1 Profit before tax $13.2bn approximates Tax Expense 4.0 One of Australia’s largest tax payers 30% Dividends Returned to ~800,000 shareholders 7.6 58% (+ millions more via Super) Reinvested Retained for lending, investment 1.6 12% &
Slide 50: Key Comparative Financial Metrics
Key Comparative Financial Metrics This result impacted by one-off items Incl. of discontinued Continuing operations, Pro-forma continuing operations & incl. one-offs2 incl. one-offs2 operations, ex. one-offs3 FY18 v FY18 v FY18 v Full year ended (“cash basis”) 1 FY18 FY17 FY18 FY17 FY18 FY17 Cash ne
Slide 51: FY18 – result overview
FY18 – result overview1 Financial Balance Sheet, Capital & Funding Statutory NPAT2 ($m) 9,375 (4.0%) Capital – CET1 (Int’l)4 15.5% (10)bpts Cash NPAT2 ($m) 9,233 (4.8%) Capital – CET1 (APRA) 10.1% Flat Total assets ($bn) 975 (0.1%) ROE2 % (cash) 14.1 (160)bpts Total liabilities ($bn) 907 (0.6%) EPS2
Slide 52: Result overview
Result overview Cash NPAT1,2 ($m) NIM1 C:I ex one-offs1,2 Cash ROE1,2 +3.7% +5 bpts (10)bpts (30)bpts 215 41.2% 15.6% 778 ex one-offs 41.1% 15.3% 9,652 210 ex one-offs 9,233 14.1% FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 Cash EPS1,2 (cents) DPS (cents) CET1 (APRA) CET1 (International)3 +2.2% + 2 cent
Slide 53: Total income drivers
Total income drivers1 Gains in Net Interest Income and Funds/Insurance offset by lower OBI (trading) +2.5% Funds & Insurance 11.6% 25,280 25,924 Average FUA 9.0% AHL & Visa 397 461 eChoice 237 254 AHL 41 Invest Exp 17 2,384 Insurance income 31.4% Invest Exp 23 2,136 2 5,140 4,950 Other Banking Incom
Slide 54: Operating income by line of business
Operating income by line of business1 Divisional income growth broadly underpinned by asset repricing and modest volume growth % FY18 vs FY17 2 3 2 Assets: +4% FUA: +10% Assets: +7% Margin: +8 bpts FMI: +9% Margin: +7 bpts OBI: -7% Insurance: +51% FMI: +18% 2 Assets: +2% 2 Margin: +7 bpts Assets: +4
Slide 55: Net Interest Income
Net Interest Income1 NII growth driven by margin gains from asset repricing and volume growth Volume: +2.3% Margin: +5 bpts +4.5% +4 bpts (1)bpt +2 bpts Home Loans +3.7% 171 18,341 (85) Business Loans +1.7% 341 Bank levy and increased wholesale funding cost 371 offset by deposit repricing 17,543 Rep
Slide 56: Balance Sheet
Balance Sheet1 $m FY17 FY18 Mvt % Home Loans 485,857 501,665 3.3% Consumer finance 23,577 23,317 (1.1%) Business and corporate loans 226,484 222,367 (1.8%) Non-lending interest earning assets 163,665 150,306 (8.2%) Other 76,735 77,510 1.0% Total Assets 976,318 975,165 Flat Total interest bearing dep
Slide 57: Group NIM
Group NIM1 Up 5 bpts over the past 12 months, largely due to asset repricing in 1H18 bpts 2 215 (1) 210 4 Bank levy and Repricing of interest only Favourable change in higher wholesale and investor loans, funding mix from strong funding costs partly partly offset by growth in transaction offset by d
Slide 58: Other banking income
Other banking income Subdued OBI from lower trading, reduced interchange and removal of ATM fees Other banking income1 Trading income $m $m 5,140 4,950 Other 352 1,149 357 1,025 Trading 1,149 1,025 Trading 404 Widening Volume driven 271 spreads on the growth and mix inventory of high Lending fees 1,
Slide 59: Markets income
Markets income Lower trading income due to widening of spreads and lower sales in 2nd Half Income Contribution $m 600 556 620 549 Jun 18 vs Dec 17 5 Trading 520 32 469 Widening of spreads on the 233 10 163 inventory of high grade 171 108 420 corporate and government bonds 320 220 Sales 388 388 351 L
Slide 60: Investment spend
Investment spend Investment expense up 22% on higher financial crimes compliance costs Investment spend1 Investment spend1 $m % of total Expected to 1,336 remain above 1,183 50%2 Capitalised 38% 612 50% Risk & compliance +4% 591 10% 12% Branches & Other Expensed 724 +22% 52% 592 38% Productivity & G
Slide 61: Investment spend and capitalised software
Investment spend and capitalised software Investment spend increased due to the strengthening of financial crimes compliance Gross investment spend1 Capitalised software balance $m $bn 2.50 Average 1,336 amortisation period 1,183 5.0 years 2.25 2.23 714 2nd Half Average 2nd Half 625 Expensed amortis
Slide 62: Provisioning
Provisioning Higher consumer collective provisions $m Individual Collective 2,747 2,772 2,763 Overlay 711 811 756 980 978 870 257 254 256 Consumer 1,195 1,158 1,199 723 724 614 Corporate 841 803 808 Jun 17 Dec 17 Jun 18 Jun 17 Dec 17 Jun 18 62
Slide 63: Divisional contributions
Divisional contributions1 Good contributions across the portfolio FY18 vs FY17 % of Group Cost-to- 2 2 Operating Operating Operating Cash Business Unit NPAT LIE Income Income Expenses Performance NPAT FY18 FY18 3 RBS 56.2% 3.9% 2.2% 4.7% 2.0% 4.8% 30.5% BPB 20.4% 4.8% 1.4% 6.8% Lge 4.4% 36.1% IB&M 1
Slide 64: Retail Banking Services (RBS)
Retail Banking Services (RBS) Managing revenue challenges whilst maintaining efficiency focus Volume growth1 Margins3 Cost-to-income3 Balancing growth and Home Loan repricing, Positive Jaws NPAT3 returns - managing partly offset by mix shift driving cost-to-income FY18 vs FY17 regulatory requirement
Slide 65: Business & Private Banking (B&PB)
Business & Private Banking (B&PB) Good volume growth in priority sectors, supported by improved margins Volume growth Margins Revenue Health +14% Higher deposit balances Broad-based revenue NPAT Agri +5% and margins partly offset by growth across segments FY18 vs FY17 Property -0.5% lower home loan
Slide 66: Institutional Banking and Markets (IB&M)
Institutional Banking and Markets (IB&M) Market conditions impacted trading result - continued focus on RWA optimisation Volumes Net Interest Margins Revenue Portfolio optimisation of Improved client margin Trading revenue impacted NPAT Credit RWA this half by market conditions FY18 vs FY17 RWA (6.9
Slide 67: Wealth (Continuing Operations)
Wealth (Continuing Operations) Revenue growth driven by funds volume growth, fewer weather events and lower remediation Funds General Insurance NPAT Strong markets driving General Insurance income benefited from FY18 vs FY17 AUM/FUA lower event claims Income Net Event Claims 4.8% 51.2% 33.4% 216 183
Slide 68: Wealth – Net flows
Wealth – Net flows Mixed results - good net inflows into CFS, net outflows in CFSGAM CFS INFLOWS AND OUTFLOWS BY PRODUCT CLOSING FUA (SPOT) FY18 CFS NET FLOWS BY PRODUCT $bn +9% $m 2,053 Funds Under FY17 FY18 148 135 1,312 1,347 10 Administration (FUA) 9 17 16 $m Inflows Outflows Inflows Outflows 31
Slide 69: Wealth (Discontinued Operations)
Wealth (Discontinued Operations) Inforce Premium Life Business NPAT Loss of wholesale Non-recurrence of IP loss recognition FY18 vs FY17 schemes offsetting lower funds income Insurance Income Funds Income (13.2%) 1,703 1,479 (26.7%)1 143 (20.7%) 317 337 121 96 $m $m (25.5%) (7.8%) (30.4%) FY17 FY18
Slide 70: Wealth management and mortgage broking demerger
Wealth management and mortgage broking demerger Creation of a new wealth management and mortgage broking company (“NewCo”) NewCo ► Wealth management and mortgage broking company A leading investment platform provider of scale: CFS Super and Spot FUA $138bn4 Investments • FY18 Pro-forma Cash NPAT >$5
Slide 71: NewCo – Indicative
NewCo1 - ndicative Profit & Loss Key Financial Metrics $m FY17 FY18 Mvt % FY17 FY18 Mvt % Total operating income 1,735 2,046 182 Operating expense to total operating income (%) 58.4 64.0 large Operating expenses (1,013) (1,310) 292 AUM – average ($m) 3 205,910 215,768 5 Net profit before tax 722 736
Slide 72: CFS Super and Investments
CFS Super and Investments A leading superannuation, investment and retirement solutions platform provider Historical FUA growth ($bn) ► Spot FUA $138bn1 Platform ► History of sustainable FUA growth 126 138 provider with ► Material market share position3 111 114 scale ► Largest non-government payer o
Slide 73: CFS Global Asset Management
CFS Global Asset Management A globally diversified asset manager of scale AUM by region3 Large scale ► AUM $213bn1 global asset ► 11 global locations across Asia, Australia, EMEA North America Asia 4% manager and North America 10% EMEA 29% Diversified by ► ~80% of revenue from AUM sourced outside Au
Slide 74: Aligned Advice and Mortgage Broking
Aligned Advice and Mortgage Broking Portfolio of leading distribution networks ► Over 1,000 brokers ► Serving ~320,000 customers ► Highly regarded within the mortgage broking industry ► Continued customer demand for mortgages expected to drive growth ► ~770 financial advisers ► ~360 member practices
Slide 75: CBA excluding NewCo – Indicative
CBA excluding NewCo – Indicative1 CBA CBA CBA CBA Including Excluding Including Excluding FY18 ($m) NewCo NewCo Mvt Key Metrics NewCo NewCo Mvt Total banking income 23,523 23,280 (243) NIM 2.15% 2.15% Flat Funds management income 2,091 288 (1,803) Operating expense to total 44.8% 43.1% (170)bpts ope
Slide 76: Volume growth
Volume growth1 Subdued volume growth in key markets this period Household Deposits Home Lending Business Lending Market share1 Market share1 35% CBA Peers CBA Peers 30% 26% 28.4% 24.4% 25% 23.1% 23.5% 21% 20% 15% 14.2% 16% 14.7% 13.2% 14.6% 10% 11% Jun 07 Jun 18 Jun 07 Jun 18 5.5% 5.6% 4.1% RBS 3.7%
Slide 77: Market share
Market share1 % Jun-18 Dec-17 Jun-17 Home loans 24.4 24.6 24.8 Credit cards – APRA2 27.2 27.3 27.0 Other household lending3 28.0 27.3 26.9 Household deposits. 28.4 28.5 28.8 Business lending – RBA 15.9 16.2 16.5 Business lending - APRA 17.8 18.4 18.6 Business deposits – APRA 20.2 20.4 20.3 Equities
Slide 78: Home and Consumer Lending
Home and Consumer Lending CommonwealthBank y
Slide 79: Home lending - Overview
Home lending - Overview ► Population growth continues to support overall housing system growth ► Regulatory changes have contributed to a cooling in housing and investment lending ► For CBA, the market slowdown has coincided with a loss of market share, reflecting early measures to manage regulatory
Slide 80: System overview – housing credit
System overview – housing credit Population growth continues to underpin overall system growth Population1 System Housing Credit Growth2 Annual % change Annual % change 2.4 7.3 6.7 6.6 6.4 Long run 1.6 5.6 5.5 average CBA Economist Forecast Range 3.5 0.8 0.0 1973/74 1981/82 1989/90 1997/98 2005/06 2
Slide 81: System overview - housing credit
System overview - housing credit Regulatory changes have contributed to a cooling in housing and investment lending Owner-Occupied vs Investor Housing Price Growth3 System, 12 Month Rolling Growth1 Period Movements to June 2018 % APRA 30% cap on new IO loans 3 1 6 (31 Mar 17)2 Owner Occupied Years Y
Slide 82: CBA home lending
CBA home lending1 CBA took early measures to manage regulatory requirements, ceding some share Home Lending Home Lending Growth Market share 12 months to Jun 18 CBA 12.5% 26% 24.4% 23.1% Owner-Occupied +6.2% Investor (1.2)% 21% FY18 Mvt by Qtr (RBS, bpts) Q1 Q2 Q3 Q4 5.6% -5 -9 -8 16% -16 3.7% 14.7%
Slide 83: CBA home lending
CBA home lending CBA remains focused on its core market – owner-occupied, proprietary lending Owner-Occupied vs Investor Proprietary Home Loans3 12 Month Rolling Growth1 Proprietary % of Total Home Loan Flows ($) CBA APRA 30% cap System on new IO loans (31 Mar 17)2 62% 64% 63% 7.7% 6.2% 47% 45% 45%
Slide 84: Home lending
Home lending Portfolio growth remains strongest in NSW State Profile1 Balance Growth1 FY18 Balance Growth $bn 39 (100) NSW/ACT VIC/TAS QLD WA SA/NT 94 5.2% % of Portfolio (18) 6% 436 451 4.5% 16% 34% 18% 26% 2.5% 0.1% Jun 17 New Redraw & Repayments External Jun 18 Fundings Interest / Other Refinance
Slide 85: Home lending
Home lending The Group has continued to tighten its serviceability and underwriting standards FY16 FY17 FY18 Increased serviceability buffers Limited periods of interest-only (IO) to Further buffers on existing debts 5 years maximum Reduced reliance on less stable Increased verification of
Slide 86: Home lending
Home lending Australian Home Loan1 Serviceability Assessment All income used to assess serviceability is verified 80% or lower on less stable income sources (e.g. rent, bonuses) Interest rate buffers Income Limits on investor income allowances e.g. RBS restrict rental 10% Built into serviceabi
Slide 87: Home loan portfolio – Australia
Home loan portfolio – Australia A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 17 Dec 17 Jun 18 New Business1 Jun 17 Dec 17 Jun 18 Total Balances - Spot ($bn) 436 444 451 Total Funding ($bn) 49 49 45 Total Balances - Average ($bn) 423 440 443 Average Funding Size ($’000)
Slide 88: Home loan portfolio – CBA
Home loan portfolio – CBA A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 17 Dec 17 Jun 18 New Business1 Jun 17 Dec 17 Jun 18 Total Balances - Spot ($bn) 368 374 381 Total Funding ($bn) 41 42 39 Total Balances - Average ($bn) 357 371 374 Average Funding Size ($’000)6 305
Slide 89: Home lending
Home lending CBA home lending supported by strong income profile Applicant Gross Income Band1 Investor Home Loans Owner Occupied Fundings $ Fundings # 6 months to Jun 18 6 months to Jun 18 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 0-75k 75k-100k 100k-125k 125k-150k 150k-200k 200k-500k 500k+ 0-75
Slide 90: Home lending
Home lending Losses remain low and remain manageable under a stressed scenario 1 Losses to average gross loans Stress test Stress scenario 2.5% 3 year scenario of cumulative 31% house price decline, peak 11% unemployment and a reduction in the cash rate to 0.5% 2.0% CBA Home Loans Outcomes ($m) Tota
Slide 91: Home lending
Home lending Portfolio dynamic LVR at 50% and well insured Home loan dynamic LVR1 Portfolio Insurance Profile2 % of Australian Home Loan portfolio 70% Average Dynamic LVR Excess of Loss 60% Re-insurance Jun 17 50% Dec 17 50% % of Total Portfolio Accounts 50% 5% Jun 18 50% 40% 69% 21% Insurance with
Slide 92: Home lending
Home lending Significant repayment buffers reduce portfolio risk Repayment buffers (Payments in advance1, % of accounts) 6% Residual: have less than 1 month repayment buffer 9% Structural: loans that structurally restrict payments in advance e.g. fixed rate loans etc 5% New Accounts: loans that are
Slide 93: Home loan arrears
Home loan arrears An uptick in arrears reflects pockets of stress Arrears by Portfolio Arrears by Portfolio 1.00% 90+ days Australia1 90+ days 1.8% 0.80% Group Bankwest CBA ASB 0.60% 1.2% 0.40% 0.6% 0.70% Owner Occupied 0.60% 0.20% Portfolio Investment Loans 0.0% 0.00% Jun 16 Dec 16 Jun 17 Dec 17 Ju
Slide 94: Home loan arrears
Home loan arrears Largest increases have been in WA and NT Arrears by State 2.00% Portfolio Balance % Australia1 90+ days ACT, 2% WA, 16% NSW, 33% WA VIC, 1.50% 25% QLD, NT, 1% NT 18% TAS, SA, 5% 1% QLD SA 1.00% Australia TAS VIC 0.50% NSW ACT 0.00% Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 1. Includes CBA
Slide 95: Home loan arrears
Home loan arrears Current year arrears elevated but recent vintage performance remain strong Arrears by Year Arrears by Vintage 1.8% Group 90+ days 2.0% Australia1 90+ days 1.5% 1.2% FY07-FY10 2014 2015 2016 2017 2018 FY13 FY12 1.0% FY14 FY15 0.6% FY11 0.5% FY16 FY18 FY17 0.0% 0.0% Jul Aug Sep Oct N
Slide 96: Home loan arrears - interest only
Home loan arrears - interest only Interest only arrears rate impacted by reducing interest only portfolio balances Arrears Balances Arrears by Repayment $bn Australia1 90+ days Australia1 90+ days 300 1.20% Interest Only 90+ day arrears balance Interest Only Interest Only – total portfolio balances
Slide 97: Interest only – switching
Interest only – switching Switching activity peaked in Sep 17, with significant buffers in place Balance Movement ($m)1 Scheduled IO term expiry1 Interest Only (IO) to Principal and Interest (P&I) (% of total IO Loans) Quarterly Payments in advance > 6 27% months2: accounts with a financial buffer t
Slide 98: Consumer arrears
Consumer arrears1 Arrears rates remained broadly stable across unsecured retail portfolios Credit Cards Personal Loans 1.8% Group 90+ days Group 90+ days 1.8% Group 1.2% Bankwest 1.2% CBA 0.6% ASB 0.6% 0.0% 0.0% Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec
Slide 99: Regulatory exposure mix
Regulatory exposure mix1 CBA’s portfolio is heavily weighted to home lending Regulatory Credit Exposure Mix Portfolio CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 57% 41% 46% 57% Corporate, SME, Specialised Lending 26% 31% 38% 29% Bank 4% 5% 5% 2% Sovereign 9% 16% 9% 8% Qualifying Revolving 3% 2%
Slide 100: Business and Corporate Lending
Business and Corporate Lending
Slide 101: Business and Corporate Lending - Overview
Business and Corporate Lending - Overview ► System business credit growth remained relatively subdued through FY18 - a moderate pick-up is expected in FY19 ► Credit conditions remained broadly stable, though sectors exposed to discretionary consumer spend remained challenged (eg Retail Trade) ► For
Slide 102: System overview – business credit
System overview – business credit Business credit growth remained relatively subdued through FY18 Business Credit Growth1 Market Shares2 System, Year-to-June % June 2018 APRA NFC RBA System 6.5 (includes Bills) 4-6 CBA Economist 21.3% 4.4 4.3 Forecast 18.1% 17.8% Range 15.9% 3.4 3.2 14.4% 2014 2015
Slide 103: Business and Corporate Lending
Business and Corporate Lending For CBA, focus is on portfolio optimisation and targeted growth in priority segments Business and Corporate Lending Group Priority sectors: Growth reflects Health +14% long term strategic Growth in Portfolio Agri +5% focus on this corporate (2%) optimisation Property i
Slide 104: IB&M – Credit RWA
IB&M – Credit RWA Returns focus through disciplined balance sheet management Credit RWA – IB&M Quarterly 89 85 82 82 $bn 76 $bn Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 -28% Key drivers • Disciplined pricing with a focus on relationship returns • Portfolio optimisation – actively reducing capital intensit
Slide 105: BPB - lending by sector
BPB - lending by sector Strong growth in diversified industries partly offset by decline in property developer FY18 v FY17 2H18 v 1H18 14.0% Spot Balance Spot Balance Property Investor +2% 6.9% 6.7% Property Investor +1% Property Developer -17% 5.8% Property Developer -5% 6.1% 5.2% 2.8% 2.5% 0.8% -0
Slide 106: Corporate lending
Corporate lending Overall book quality remains sound, with cash LIE at 10 bpts of GLAA Corporate Corporate LIE Total Credit Exposures Basis Points of GLAA $bn bpts 465 477 445 453 382 393 142 361 332 307 300 76 43 24 23 20 13 11 8 10 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 F
Slide 107: Portfolio quality
Portfolio quality1 Approximately 68% of the corporate lending portfolio is rated investment grade Corporate Portfolio Quality Exposures by Industry AAA A+ BBB+ Investment Grade TCE $bn Other Jun 18 to AA- to A- to BBB- 69.2% 68.0% 67.9% Sovereign 91.8 8.3 0.7 0.2 101.0 Property 2.7 6.0 13.8 44.7 67.
Slide 108: Credit exposure summary
Credit exposure summary Portfolio weighted to Australia and New Zealand, TIA/TCE stable at 0.60% Group TCE by Geography Top 10 Commercial Exposures BBB+ Jun 16 Jun 17 Jun 18 A- AAA Australia 76.7% 76.9% 77.6% A- BBB+ New Zealand 9.2% 9.7% 10.0% AA- A+ BB+ exposure well secured Europe 5.4% 5.5% 4.7%
Slide 109: Credit exposure summary
Credit exposure summary Group TCE TIA $m TIA % of TCE Dec 17 Jun 18 Dec 17 Jun 18 Dec 17 Jun 18 Consumer1 56.6% 57.4% 1,511 1,659 0.25% 0.27% Sovereign 9.7% 9.3% - - - - Property 6.3% 6.2% 586 632 0.86% 0.94% Banks 5.2% 5.5% 9 9 0.02% 0.01% Finance – Other 5.1% 5.2% 35 31 0.06% 0.05% Retail, Wholesa
Slide 110: Sectors of Interest
Sectors of Interest Broadly stable outcomes across most sectors 70.2 67.8 67.2 Commercial Property Mining, Oil and Gas Jun 17 70 71 72 Dec 17 Jun 18 33 33 34 14.713.8 13.8 6.5 6.3 6.2 1.0 0.9 0.9 111 90 83 0.16 0.13 0.12 1.4 1.3 1.3 3.2 3.0 2.6 252 378 304 1.7 2.8 2.2 TCE ($bn) % of Group % of portf
Slide 111: Retail trade
Retail trade Conditions remain challenging in Retail Trade The sector remains challenged by low wage growth, pressure on 12.2 12.2 Group Exposure 11.7 Jun 17 consumer disposable income (housing affordability, rising energy, Dec 17 fuel and interest rate costs), the entrance of online disrupters an
Slide 112: Mining, oil & gas
Mining, oil & gas Exposures reduced over the year, well diversified Exposure of $13.8bn (1.3% of Group TCE) is lower over Group Exposure the year and in line with Dec 17. Reductions in Oil & Gas 70 71 72 Jun 17 facilities were offset by increased committed facilities to Dec 17 Mining clients. Jun
Slide 113: Commercial property
Commercial property Portfolio weighted to NSW – TIA less than 1.0% 70.2 67.8 Group Exposure Exposure has remained relatively flat in the half year. Remains 67.2 Jun 17 diversified across sectors and by counterparty. Dec 17 Jun 18 Composition remains steady in last 6 months with 87% of Commercial
Slide 114: Residential apartments – weighted to Sydney
Residential apartments – weighted to Sydney Improved qualifying pre-sales, lower LVR Profile Apartment Development1 exposure reduced Total Residential Apartment Development1 $10.7bn (16% of CP) $3.7bn (0.3% of TCE) $0.3bn for the half. Perth Other Facilities being repaid on time from pre-sale $0
Slide 115: Agriculture
Agriculture Well diversified portfolio, weighted to NZ dairy 21.5 Group Exposure Group agriculture exposure of $21.8bn (2.0% of Group TCE) is 21.7 21.8 Jun 17 well diversified by geography, sector and client base. Dec 17 Australian agriculture portfolio performance stable with some 14 14 Jun 18
Slide 116: Deposits, Funding and Liquidity
Deposits, Funding and Liquidity
Slide 117: Funding overview
Funding overview Over the last 12 months, the Group continued to strengthen its funding position $bn Source of funds Use of funds Portfolio 5.1 yrs 112% NSFR 68% Deposit Funded (24) 33 131% LCR Core Funding Surplus $2bn 4 (21) 9 (11) 10 Equity Long Term Issuances Long Term Maturities1 Short Term Fun
Slide 118: Deposit funding
Deposit funding The Group maintains the highest share of stable, household deposits in Australia Deposits vs Peers1 Deposits in LCR calculation CBA Peer 1 Jun 18 ($bn) As at 30 June 2018 ($bn) Peer 2 160 Peers as at 31 March 20182 Peer 3 140 CBA overweight 487 more stable deposits 424 120 Other depo
Slide 119: Deposit funding – transactions
Deposit funding – transactions Over one million new personal transaction accounts were opened in FY18 Group Transaction Balances1 Transaction Balance Growth1 $m FY18 vs FY17 +24.6% +10.6% 13.9% 14.3% 12.8% Group 10.6% 142,916 158,012 126,780 6.8% 6.9% 2 3 FY16 FY17 FY18 RBS BPB IB&M BW NZ RBS New Tr
Slide 120: Funding costs - wholesale
Funding costs - wholesale Favourable funding conditions for opportunistic tenor lengthening Average long term funding costs Indicative funding cost curves Margin to BBSW (bpts) Margin to BBSW (bpts) 250 Jun 07 Jun 12 Dec 17 Jun 18 200 2.00 213 1.75 200 187 178 150 1.50 155 1.25 150 113 111 100 1.00
Slide 121: Wholesale funding – composition
Wholesale funding – composition Diversified wholesale funding across product, currency and tenor Funding composition Term Wholesale Funding by Currency2 Customer Deposits 68% Jun-18 ST Wholesale Funding 1 10% AUD Jun-17 LT Wholesale Funding > 12 months 10% USD LT Wholesale Funding ≤ 12 months 4% Jun
Slide 122: Wholesale funding – issuance and maturity
Wholesale funding – issuance and maturity $33bn wholesale issuance completed FY18 FY18 benchmark issuance Date Type Tenor (yr) Volume (m) Spread at Issue (bps) Securitisation Jul-17 USD Senior 30 1,500 T+103 Jul-17 AUD Senior 5, 10.5 1,850 3m BBSW +88 / 105 Covered Bond Sep-17 USD Senior 3, 5, 10 3,
Slide 123: Funding and Liquidity Metrics
Funding and Liquidity Metrics1 The Group continues to maintain strong funding and liquidity positions NSFR NSFR (%) FY17 vs FY18 112% % Jun 18 112 635 0.7 1.6 (0.5) (1.6) 569 Wholesale 3.3 Liquids and Other Assets2 Funding & Other Other Loans 107 1.5 Retail/SME Deposits Residential Mortgages ≤ 35% $
Slide 124: Capital
Capital CommonwealthBank y
Slide 125: Capital Overview
Capital Overview The Group is committed to maintaining a strong capital position over time ► A consistently strong capital position maintained over time CET1 422% ► CET1 growth has outstripped asset growth over last decade ► CBA one of the best capitalised banks in the world ► Always mindful of the
Slide 126: International CET1 ratios
International CET1 ratios The Group is one of the best capitalised banks in the world 21.1 G-SIBs in dark grey 16.4 16.3 16.1 15.5 14.7 14.7 14.6 14.6 14.5 14.3 13.9 13.7 13.4 13.1 13.1 12.9 12.8 12.6 12.5 12.1 12.0 12.0 12.0 12.0 11.9 11.8 11.8 11.7 11.4 11.3 11.2 11.1 10.9 10.9 10.7 10.5 Sumitomo
Slide 127: Dividends
Dividends Always mindful of the importance of dividends to shareholders Payout ratio (cash) 74% 75% 78% 74% 73% 76% 76% 75% 75% 77% 75% 80%2 Net of DRP 47% 52% 53% 61%1 53% 55% 76%1 67%1 62% 64% 53% 68%3,4 cents 230 231 218 222 222 Interim Final 197 200 198 198 199 200 188 183 170 164 149 153 132 13
Slide 128: Capital drivers
Capital drivers The Group’s Jun-18 CET1 of 10.1% absorbs several one-off items Capital – CET1 (APRA) bpts 106 1 (6) (8) 8 (1) (7) 1 (33) 2 10.4% (67) (7) (5) (10) 10.1% Organic Capital Generation +32 bpts One-off items (52) bpts Dec 17 Dividends Cash Credit Market IRRBB Underlying AUSTRAC Operationa
Slide 129: Capital drivers
Capital drivers Credit RWA impact of (6) bpts largely driven by FX and regulatory changes Total Risk Weighted Assets Credit Risk Weighted Assets $bn $bn 14.8 459 441 2.5 0.6 (3.6) 3.4 0.5 2.2 370 TMR 24 8 367 (2.7) 1.6 IRRBB 28 5 0.9 57 Op Risk 41 CET1 impact bpts CET1 impact bpts Credit 367 370 (6)
Slide 130: Interest rate risk in the banking book (IRRBB)
Interest rate risk in the banking book (IRRBB) A reduction in capital this period due to increases in hedging and embedded gains bpts 27 48 20 56 52 71 57 2,235 1,880 1,951 1,401 1,712 Optionality Risk $m Basis Risk 868 596 Repricing & Yield Optionality Risk Curve Risk Basis Risk Repricing & Yield C
Slide 131: APRA and International comparison
APRA and International comparison The Group’s CET1 ratio of 10.1% translates to 15.5% on an international basis The following table provides details on the differences, as at 30 June 2018, between the APRA Basel III capital requirements and internationally comparable capital ratio1. CET1 APRA 10.1%
Slide 132: CET1 – Internationally comparable
CET1 – Internationally comparable One-off items have driven the internationally comparable ratio lower this half Internationally Comparable1 CET1 bpts 2 137 (16) (89) (16) (3) (9) 2 3 16.3% (67) (4) (3) (10) 15.5% Dec 17 Dec 17 Cash Credit Market Underlying AUSTRAC Operational Colonial BoComm Other
Slide 133: Regulatory expected loss
Regulatory expected loss $m Jun 17 Dec 17 Jun 18 Regulatory Expected Loss (EL) 4,736 4,592 4,453 Eligible Provisions (EP) Collective Provisions1 2,486 2,525 2,484 Specific Provisions1,2 1,856 1,813 1,581 General Reserve for Credit Losses adjustment 589 554 589 Less: ineligible provisions (standardis
Slide 134: Leverage ratio
Leverage ratio CBA leverage ratio is well above prescribed Basel Committee minimum Leverage ratio introduced to constrain the build-up of leverage in $m Jun 18 the banking system. Tier 1 Capital 56,432 Leverage ratio = Tier 1 Capital Total Exposures 1,018,622 Total Exposures Leverage Ratio (APRA) 5.
Slide 135: Regulatory change timetable
Regulatory change timetable 2018 2019 2020 2021 2022 ADIs to target unquestionably strong capital ratios, Capital to exceed APRA’s unquestionably which will also cover Basel Committee’s finalised Basel unquestionably strong Implementation strong III reforms benchmark by 1 Jan 2020 APRA commenced con
Slide 136: Economic Overview
Economic Overview CommonwealthBank y
Slide 137: Key economic indicators (June FY)
Key economic indicators (June FY) GDP % CPI% Unemployment Rate % GDP Nominal GDP 6.2 3.1 5.9 2.8 2.7 2.7 2.7 2.6 4.8 5.9 2.4 4.3 5.8 2.1 4.1 2.0 5.7 1.7 1.7 1.4 5.5 2.4 5.4 1.5 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Cas
Slide 138: Key economic indicators (June FY)
Key economic indicators (June FY) 2013 2014 2015 2016 2017 2018 2019 World GDP 3.5 3.6 3.5 3.2 3.8 3.9 3.9 Australia Credit Growth % – Total 3.1 5.0 5.9 6.2 5.4 4.5 3½-5½ Credit Growth % – Housing 4.6 6.4 7.3 6.7 6.6 5.6 3½-5½ Credit Growth % – Business 1.2 3.4 4.4 6.5 4.3 3.2 4-6 Credit Growth % –
Slide 139: The Global Economy Continues to Expand
The Global Economy Continues to Expand But the period of maximum acceleration is over WORLD GROWTH GLOBAL COMPOSITE PMI (annual % change) % % Index Index Source: IMF 6 6 Expansion 10-year average 55 55 4 4 2 2 50 50 0 0 Contraction Global recessions Source: IHS Markit -2 -2 45 45 1960 1970 1980 1990
Slide 140: Some Downside Global Risks Are Building
Some Downside Global Risks Are Building High debt levels and trade disputes are threats to global growth GLOBAL DEBT IMPACT OF A 15% TARIFF RISE (% of GDP) % % % 0 0 % Source: IIF Mature market 100 government 100 debt -3 -3 Global GDP would fall by 2.9% 75 75 -6 -6 Emerging market non-financial Sour
Slide 141: Australia: An Economic Snapshot
Australia: An Economic Snapshot Favourable trends remain intact AUSTRALIA: KEY INDICATORS AUSTRALIA: KEY BALANCES % (rolling annual total, % of GDP) % % 3 3 % Unemployment Budget rate balance (%) 6 6 0 0 GDP 4 (%pa) 4 -3 -3 2 2 -6 -6 CPI Current (%pa) account Source: ABS Source: ABS/Dept of Finance
Slide 142: The End Of The Growth Headwinds
The End Of The Growth Headwinds The commodity “bust” is over and the economy has transitioned to non-mining growth THE COMMODITY BOOM-BUST TRANSITION DRIVERS (start=100) (end 2012=100) Index Index Index Index 254 Mining capex (lhs) Residential 120 construction 120 Mining 400 construction 186 jobs No
Slide 143: Growth Positives
Growth Positives Rising resource exports and infrastructure spending are key growth drivers MINING OUTPUT BY SECTOR STATE PUBLIC CAPEX (Q3’12=100) (trend, Dec’12=100) Index Index Index Index Iron ore 130 130 175 175 Tas NSW Oil & 150 gas 150 110 110 WA Coal 125 125 Vic 90 90 100 100 Other Source: AB
Slide 144: Growth Positives
Growth Positives Rising Asian income is driving booms in tourism and education EMERGING & DEVELOPING ASIA EDUCATION & TOURISM Bn % Mn Billions '000 Thousands Population (lhs) Asian 4 tourists 400 3.2 92 (lhs) 3 300 GDP per capita 2.6 73 as a share of the global total Asian (rhs) 2 200 education visa
Slide 145: Easing Growth Risks
Easing Growth Risks Population growth supports construction and business capex is lifting DWELLING SUPPLY NON-MINING CAPEX (new construction as % of population growth) (annual % change) 120 % 120 % % % 10 10 Average 80 80 0 0 40 40 -10 -10 Source: ABS Source: ABS -20 -20 0 0 Sep-08 Sep-11 Sep-14 Sep
Slide 146: Growth Risks
Growth Risks High household debt at a time of weak income growth is the main domestic risk WAGES & DEBT SAVING RATIO % %pa % % 150 6 15 15 Household debt (% of GDP) (lhs) 10 10 100 4 5 5 50 2 Wage 0 0 Price Index (rhs) Source: IIF/ABS Source: ABS 0 0 -5 -5 Mar-98 Mar-02 Mar-06 Mar-10 Mar-14 Mar-18 M
Slide 147: Housing Risks
Housing Risks Prices falling after earlier large rises DWELLING PRICES Housing Price Growth3 (annual % change) Period Movements to June 2018 % % % Source: CoreLogic 3 1 6 Melbourne 20 20 Years Year Months Sydney Sydney 13.5 -4.5 -2.6 10 10 Melbourne 21.6 1.0 -1.8 Brisbane 7.8 1.1 0.3 0 0 Adelaide 8.
Slide 148: Housing Risks
Housing Risks The larger and longer price falls associated with extreme economic events AUSTRALIA: DWELLING PRICE DROPS (% decline from peak) The BIS identify Australia as having the longest-running housing boom. Price cycle peak in,,, 19 But prices have fallen. 2010 months 7 There are six epi
Slide 149: New Zealand
New Zealand Global dairy trade auction results1 NZ Terms of Trade2 (USD/tonne) Index NZ TERMS OF TRADE 6,000 1500 Whole Milk Powder 5,000 1300 4,000 1100 3,000 GDT overall price 900 2,000 Source: Statistics NZ 1,000 700 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 57 62 67 72 77 82 87 92 9
Slide 150: New Zealand
New Zealand NZ CPI inflation1 OCR forecasts2 (%) (ASB forecast and implied market pricing, %) % % 6 4.0 (f) 5 Annual % 3.5 4 3.0 3 2 2.5 OCR implied by current market pricing 1 2.0 0 ASB Economics Forecast (peak of 3.5% in 2022) quarterly change -1 1.5 Jun 00 Jun 06 Jun 12 Jun 18 Jun 13 Jun 14 Jun 1
Slide 151: New Zealand
New Zealand NZ household lending growth1 NZ median house price2 (annual % change) (3 month moving average, $’000) % $ 000's 20 1000 15 900 Auckland Mortgage lending 800 10 700 5 Wellington 600 NZ 0 500 400 -5 Consumer Credit 300 Canterbury/Westland -10 200 Jun 04 Jun 06 Jun 08 Jun 10 Jun 12 Jun 14 J
Slide 152: Sources & Notes
Sources & Notes CommonwealthBank y
Slide 153: Sources and Notes
Sources and Notes Best in digital 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 one
Slide 154: Sources and Notes
Sources and Notes Lead in retail and commercial banking 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 determi
Slide 155: Sources and Notes
Sources and Notes Franchise Strength 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 156: Glossary
Glossary Capital & Other Funding & Risk Risk Weighted Assets or The value of the Group’s On and Off Balance Sheet assets are Liquidity coverage ratio The LCR is the first quantitative liquidity measure that is part of the Basel III RWA adjusted by risk weights calculated according to various APRA (L
Slide 157: Notes
Notes Disclaimer The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 8 August 2018. It is information given in summary form and does not purport to be complete. Information in this presentation is not inte
Commonwealth Bank of Australia — FY2018 Earnings Presentation on 6ix