Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2021 Earnings Presentation
138 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 11, 2021
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the full year ended 30 June 2021
Slide 2: Important information
Important information The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 11 August 2021. It is information given in summary form and does not purport to be complete. Information in this presentation is no
Slide 3: Contents
Contents CEO & CFO Presentations 4 Overview & Strategy 41 Financial Overview 54 Home & Consumer Lending 77 Business & Corporate Lending 93 Funding, Liquidity & Capital 102 Economic Overview 118 Sources, Glossary & Notes 129
Slide 4: Results Presentation - CEO
Results Presentation Matt Comyn, Chief Executive Officer
Slide 5: Overview: Delivering now, building for the future
Overview Delivering now, building for the future Delivering now Building tomorrow’s bank today • Support for our customers and communities • #1 or #2 Net Promoter Scores in all core markets • Disciplined operational execution • Contributing to Australia’s recovery by supporting customers • Above sys
Slide 6: Supporting our customers and communities
Supporting Our customers and communities – simply, efficiently, effectively >6m Visits to COVID-19 support page1 Simple, Efficient, Effective 1.7m Personalised reminders on COVID-19 support available +1,000 Staff added to financial assistance teams during pandemic New deferral >250k Loan repayment d
Slide 7: Support for those impacted by COVID-19
Supporting New and ongoing support for those most impacted by COVID-19 Deferrals No. of accounts • New short term repayment deferrals for home loan and small Home Loans Business Loans business loan customers made available from June 2021 158,000 • Proactively contacting eligible customers – online a
Slide 8: This result
This result 1 Cash earnings higher on improved economic outlook, strong operational performance – final dividend of $2.00 FY21 vs FY20 Statutory NPAT ($m) 8,843 19.7% Cash NPAT ($m) 8,653 19.8% CET1 (%, Level 2) 13.1% 150bpts EPS (cash, $) 4.89 80c Dividend per share ($) 3.50 52c 1. Statut
Slide 9: Cash NPAT
Cash NPAT 1 Higher operating income and earnings – investing in the franchise – lower impairment on improved outlook Operating Income Operating Expenses Loan Impairment Expense Cash NPAT Continued core volume growth Investment in franchise + volume Improved economic outlook Low rates impacti
Slide 10: Delivering: above system volume growth
Delivering1 Continued above system volume growth in all core markets Home lending2 Household deposits3 Business lending Business deposits4 Fundings up 33% (vs FY20) RBS transaction balances +25% Double digit growth in 5 key industries New transaction accounts +37% 42% fixed rate (FY20: 17%
Slide 11: Strong volume growth across the business
Delivering Strong volume growth across the business Home lending Credit cards2 Transaction balances4 New fundings1 $bn Approvals # Group Balances $bn +33% +50% +30% 141 61% 42k Neo ~28% >900,000 39k 286 106 via proprietary of new approvals new accounts channel in 2H21 221 28k (digital 85%)3 opened i
Slide 12: Customer focus, digital engagement, operational execution
Delivering Through customer focus, digital engagement, operational execution Customer focus Digital engagement Operational execution Net Promoter Scores Mobile App Net Promoter Score4 Focus on turnaround times Rank 30.0 Home lending5 +30 • ~65% of all applications auto-decisioned same day (proprieta
Slide 13: Strength: strong balance sheet
Strength Strong balance sheet – provisioned for economic uncertainty - excess capital returned to shareholders Funding Provisioning Capital 73% deposit funded Improved portfolio credit quality (TIA -$1.2bn) $6bn off-market share buy-back Group transaction balances +30% Overlays of ~$900m
Slide 14: Our strategy
Our strategy Building tomorrow’s bank today for our customers Our purpose To improve the financial wellbeing of our customers and communities Our priorities Leadership in Australia’s Reimagined products Global best digital Simpler, better recovery and transition and services experiences and technolo
Slide 15: Leadership in Australia's recovery and transition
Leadership in Australia’s recovery and transition Help build Australia’s future economy • Helped clients access over $175bn1 of funding in FY21 Helping to fund critical infrastructure and job creation projects • 1st in Australian debt markets2 • Over $70bn3 raised to assist state and federal governm
Slide 16: Reimagined products and services
Reimagined products and services Reinforcing our core proposition AdvancePay Bill Sense Income Bill management Benefits Finder smoothing Delivering value for StepPay / Neo Entitlements Expense 11m+ smoothing Settlement retail customers CommBank Awards Loyalty Rewarding and managing CommBank everyday
Slide 17: Reimagining business banking
Reimagined products and services Reimagining business banking Efficiency Value-add Industry Verticals Proprietary Proprietary 100% Acquisition Heathcare Stream Benefits finder Working Capital (Business) • Digital working capital solution • Help to find grants, rebates, subsidies • Online platform wi
Slide 18: Reimagining home buying and ownership
Reimagined products and services Reimagining home buying and ownership Conveyancing Renewables Electricity Broadband Green loans Proprietary Proprietary CBA Stake 25% CBA Stake 25% • Digital home-buying assistant • 0.99% p.a. fixed term (10 yr) • Access to wholesale energy prices • Access to premium
Slide 19: Reimagining everyday purchases
Reimagined products and services Reimagining everyday purchases StepPay Little Birdie Klarna • Repayable in 4 fortnightly instalments • Shopping content integrated into CBA app • Integrated into CBA app, now live in NZ • ~4m CBA customers credit eligible • Personalised offers for CBA customers • Fly
Slide 20: Coming soon
Reimagined products and services Coming soon SMART Mobile more than just a payment device Tap and Pay Reader October Late Late 2021 2021 2021 • Touch screen, fully mobile • Compact, fully mobile • Next generation home lending • SIM and wi-fi enabled • Linked to payment app on phone or tablet • Digit
Slide 21: Investing in technology and capability
Global best digital experiences and technology Investing in technology and capability Investment spend ($m)2 Modernised systems, digitise end-to-end, world class engineering • Migrating to cloud (now 43% of total compute1) - focus on core workloads +26% • Digitising and automating key processes (eg
Slide 22: Personalised, differentiated, value-added
Global best digital experiences and technology Personalised, differentiated, value-added Commbank Cash Flow View Category Budgets Bill Sense AdvancePay Benefits finder For You View income, Create personalised Identify, visualise & Access money before Simplified access to a Hyper-personalised spendin
Slide 23: Simpler, better foundations
Simpler, better foundations Disciplined execution - embedding the right behaviours – divestment program nearing completion Divestments Transparent and leading risk management Completed • Remedial Action Plan – all milestones submitted • Focus on sustained outcomes – embedding the “Should we” test Ge
Slide 24: Results Presentation - CFO
Results Presentation Alan Docherty, Chief Financial Officer
Slide 25: Result overview
Result overview Result reflects a long-term, disciplined approach Responding Through Delivering to challenges disciplined execution strong outcomes • Ongoing COVID-19 impacts • Consistent operational execution • Share gains in all core products • Supporting economic recovery • Investment in franchis
Slide 26: Statutory vs Cash NPAT
Statutory vs Cash NPAT Statutory NPAT up 19.7%, in line with Cash NPAT FY20 FY21 $m Statutory NPAT – continuing operations 7,388 8,843 Non-cash items: – Gain on disposals net of transaction costs 1 70 183 • Includes sale of Aussie Home Loans, AUSIEX and other previously announced divestments – Hedgi
Slide 27: FY21 result
FY21 result 1 Cash NPAT up 19.8% on lower loan provisions, higher revenue growth + investment in franchise FY21 FY21 vs 2H21 vs $m FY20 1H21 Operating Income 24,156 1.7% 2.0% Operating Expenses 11,359 3.3% 3.2% Operating Performance 12,797 0.3% 0.9% Loan Impairment Expense 554 (78.0%
Slide 28: Operating income
Operating income1 Strong core volume growth & higher CommSec income, partly offset by lower margin & COVID-19 impacts • Volume-driven growth in retail, business and institutional lending fees and CommSec equities income • Higher one-off net profits from minority investments2 • Lower retail FX, depos
Slide 29: Group margin
Group margin1 Up 3bpts this half (mix, NZ) but lower over 12 months - ongoing pressures from low interest rates, competition This Year This Half FY22 Considerations3 -4bpts × Low-rate environment (4) × Price competition 207 (6) 6 203 × Home loan and deposits mix × Higher liquids TFF funding benefi
Slide 30: Operating expenses
Operating expenses1 Up 2.4% (ex remediation), driven by investment in the franchise and higher volumes Contribution to Mvt2: +0.9% +1.8% +1.1% -0.5% +3.3% 258 (321) 117 195 11,359 114 10,996 • To support increased loan processing Cumulative cost and financial crime assessment savings realised: volum
Slide 31: Credit risk
Credit risk Leading indicators reflect improved economic conditions, though uncertainty remains Loan Impairment Expense Arrears 2 TIA Loan loss rate (bpts)1 90+ days bpts FY20 FY21 Personal Loans Credit Cards Home Loans3 % of TCE: 0.78% 0.70% 0.61% Consumer 26 4 Corporate 50 16 1.51% 1.56% Total 33
Slide 32: Provisioning
Provisioning Strong coverage – reduction in modelled provisions partly offset by additional overlays for ongoing uncertainties Total Provisions ($m) Collective Provisions ($m) Provision Provision Coverage1 1.70% 1.81% 1.63% Coverage2 1.44% 1.58% 1.39% Jun 21 Jun 21 vs Jun 20 6,815 vs Jun 20 5,943 6,
Slide 33: Funding
Funding Conservative funding position maintained – TFF fully drawn to support SME lending Deposit funding Long term funding1 Short term funding4 Term Funding Facility (TFF) % of total funding % of total wholesale funding2 % of total funding $bn $51.1bn Drawn 74% 26% $41.0bn 69% 74% 73% Undrawn 55% 2
Slide 34: Dividend
Dividend Long term sustainable returns Sustainable returns • Final dividend of $2.00: FY $3.50 Dividend per share (cents) • DRP no discount and neutralised Cash NPAT1 Full year payout ratio Cash NPAT2 Full year payout ratio (Normalised) • Payout ratio of 71%, or ~75% normalising for long run loan lo
Slide 35: Capital
Capital CET1 of 13.1% - continued strong organic capital generation Organic Capital Organic Capital Generation (bpts) Movements in bpts Generation 30 46 Expected uplift Expected uplift DRP 10 20 (divestments) 5 (divestments & APS111) 5,6 +46bpts 6mth Historical 2H21 +39-49bpts 46-61bpts Average (201
Slide 36: Capital Management
Capital Management A disciplined and balanced approach that optimises growth, reinvestment, shareholder returns and flexibility Organically Generated Capital Released1 Capital Flexibility2 Reinvested in the Group Distributed to shareholders Retained Franchise Growth Investment3 Dividend Paid Capital
Slide 37: Capital: significant capital surplus post buy-back
Capital Post buy-back, CBA will continue to have a significant capital surplus Surplus Surplus Surplus ($bn) ($bn) ($bn) • CBA’s strong capital position 4.8 2.0 0.5 8.3 (4.1) 11.5 (6.0) ~2.0 ~7.5 and our progress on executing our strategy mean that we are Chart movements in bpts 180 (91) well placed
Slide 38: Off-market share buy-back
Off-market share buy-back Optimal structure for shareholders – returning $6bn of excess capital generated from recent divestments Rationale Financial overview In deciding to commence capital management, the Board considered: • The resilience of the domestic economy, notwithstanding recent public hea
Slide 39: Economic outlook
Economic outlook Australia faces near term challenges before a rebound • Recovery in global growth in 2021 underway – unevenly distributed • Australia faces near term challenges due to lockdowns but expected to rebound late 2021 − Significant accumulated household savings − Low supply of labour expe
Slide 40: Summary
Summary Delivering now – positioning for the future Customers Employees6 • Delivering now Net Promoter FY21 Volume • Supporting our customers and communities Scores Rank Growth5 CBA vs System • Customer focus, engaged people, disciplined execution Consumer1 #2 Business Lending >3x 88% 78% Business2
Slide 41: Overview & Strategy
Overview & Strategy
Slide 42: Why CBA? Leading franchise - leading returns
Why CBA? Leading franchise - leading returns MFI share 1 (%) Home Lending share 2 (%) Household Deposits share 3 (%) Business Banking share Change in FY21 (bpts) Deposit Funding Peers as at Mar 21 30 73% 71% 67% 66% Lending share (%)2 Deposits share (%)3 -6 -65 -51 21.3% 21.6% 34.6% CBA Peer 3 Peer
Slide 43: Balanced outcomes for all stakeholders
Delivering Balanced outcomes – delivering for all stakeholders Customer People Community Shareholders Net Promoter Scores Employee engagement5 Reputation score6 Total Shareholder Return7 65.0 Rank Period % Rank 60.6 Consumer1 #2 79 80 78 1yr 48% #4 Business2 #1 3yr 58% #1 Pride in CBA Institutional3
Slide 44: Delivering long-term sustainable returns
Delivering long-term sustainable returns A consistent, long-term strategy - focused on the customer Strong engagement with the Strong operational execution customer underpins leading market delivers scale efficiencies and shares and satisfaction rankings capacity for long-term reinvestment Scale and
Slide 45: Building on a history of innovation
Global best digital experiences Building on a history of innovation Foundations Leadership Extending leadership Broadening 24/7 ecosystem Customer Launch of Little Birdie, Amber, Core banking x15ventures Whitecoat, Doshii, Engagement CommBank BigCommerce Netbank Real-time Engine app 4.0 Building a F
Slide 46: Market leading digital assets
Global best digital experiences Market leading digital assets – delivering brilliant customer experiences Leading customer experience Strong customer engagement Mobile banking leader Mobile app CommBank app users1 Digital transactions #1 Net Promoter Score5 % of total - by value2 6.4m 70% #1 Online
Slide 47: A ventures portfolio
Reimagined products and services A ventures portfolio including new acquisitions and investments Businesses launched, invested in or acquired by x15ventures Coming soon A dedicated venture scaler to build, buy or invest in new Proprietary Proprietary Proprietary Proprietary digital solutions for our
Slide 48: Franchise strength across the lifecycle
Reimagined products and services Franchise strength supporting our customers across the lifecycle CBA 45.1% MFI Jun 16 Share Dec 20 42.8% CBA MFI share1 41.4% 33.7% Jun 21 34.9% 34.6% 30.0% 33.9% 34.3% 27.6% Jun 16 Jun 20 Dec 20 Jun 21 Aged 14-17 Aged 18-24 Aged 25-34 Aged 35-49 Aged 50-64 Aged 65+
Slide 49: Good progress on becoming a better bank
Simpler, better foundations Good progress on becoming a better bank for our customers Customer Remediation Royal Commission Remedial Action Plan4 Committed to remediating customers quickly Well progressed on implementing the All milestones submitted recommendations of the Royal Commission 100% of mi
Slide 50: Our commitment to sustainability
Our commitment to sustainability Making a positive contribution to our customers, community and our people Supporting our Supporting our Good business Engaging our people customers community practices • Committed to a freeze on forced sales • We increased our support for people • Refreshed our value
Slide 51: Managing climate change risks and opportunities
Sustainable outcomes Driving action to manage our climate change risks and opportunities Our climate commitment Strengthening governance Embedding processes We are committed to playing our part in limiting • Enhanced Board’s focus on climate risks and • Established a group-wide work program to uplif
Slide 52: Our journey to carbon neutrality
Sustainable outcomes Our journey to carbon neutrality Committed to a best practice carbon positive roadmap Greenhouse Gas emissions (tCO2-e) Scope 1 & 2 per FTE Energy Efficiency Peers (FY20)4 Group2,3 • 40% reduction in Scope 1&2 emissions (including 3.3 Australian data centres) since 2014 2.8 3.0
Slide 53: Our people through COVID-19
Supporting Our people through COVID-19 Feedback from our People1 • Voluntary Rapid Antigen Testing for branch teams in hotspots Current COVID vaccination status • Voluntary corporate vaccination program for employees and their families in hotspots - informed by feedback from our people1 ~44% ~45% ‒
Slide 54: Financial Overview
Financial Overview
Slide 55: Our profits
Our profits 80% of profits paid in tax and returned to shareholders approximates Profit before tax $12.2bn1 Tax Expense 3.6 30% • • One of Australia’s largest taxpayers PAYG of $1.4bn2 • Returned to ~870,000 shareholders + millions more via Super Dividends • Fully franked 6.2 50% • Dividend payout r
Slide 56: Overview - FY21 result: key outcomes summary
Overview – FY21 result1 Key outcomes summary Financial Balance sheet, capital & funding Statutory NPAT2 ($m) 8,843 +19.7% Capital – CET13,6 (Int’l) 19.4% +200 bpts Cash NPAT2 ($m) 8,653 +19.8% Capital – CET13 (APRA) 13.1% +150 bpts ROE2 % (cash) 11.5 +130bpts Total assets ($bn) 1,092 +7.5% 2 EPS cen
Slide 57: Key financial outcomes
Overview – FY21 result Key financial outcomes Cash NPAT1 ($m) NIM1 Cost-to-income1,2 Cash ROE1 +19.8% (4)bpts +30bpts +130bpts 8,653 207 44.3% 44.6% 7,225 203 11.5% 10.2% FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 Cash EPS1 (cents) DPS (cents) CET1 (APRA) CET1 (International)3 +52c +80c +150bpts +200bp
Slide 58: Cash NPAT by division
Cash NPAT by division1 Cash NPAT growth across all core businesses RBS2 BB IB&M NZ (NZD) vs PCP vs PCP vs PCP vs PCP • Income Flat • Income +1% • Income +1% • Income +8% • Costs Flat • Costs +8%3 • Costs (4%) • Costs +5% • Impairment (87%) • Impairment (70%) • Impairment ($257m) • Impairment ($311m)
Slide 59: Total operating income drivers
Total operating income drivers1 Volume growth, higher CommSec and lending fee income, partly offset by lower margin and Market Sales income 1.7% Funds & Insurance (1.3%) • Lower FMI reflecting a simplified portfolio of businesses ($8m) 23,761 24,156 • Lower weather event related claims experience +$
Slide 60: Balance sheet
Balance sheet Continued strong growth in core markets Jun 21 vs Jun 21 vs Group Lending $bn Jun 20 Dec 20 Jun 21 Dec 20 Jun 20 +4.9% Home loans 542.9 559.3 579.8 3.7% 6.8% Consumer finance 18.2 17.4 17.0 (2.3%) (6.6%) +3.0% 1 Business loans 122.3 127.6 135.2 6.0% 10.5% 794 817 779 Institutional loan
Slide 61: Volume growth
Volume growth Above system growth in all core products Home Lending1,2 Business Lending1,2,3 Household Deposits1,4 Business Deposits1,5 CBA CBA (excl. IB&M) CBA CBA System CBA System System 17.2% System 11.0% 9.5% 6.7% 5.4% 11.2% 10.8% 3.7% 3.4% 7.2% 6.7% 7.4% 2.4% 1.6% 6.6% 4.9% 2.2% 0.6% 6 Months
Slide 62: Market share
Market share1 Market share gains in core markets Home Lending2 Household Deposits3 % Jun 21 Dec 20 Jun 20 CBA Peers CBA Peers 30% Break in series Break in series 30% from Mar 19 Home loans – RBA2 25.3 25.2 25.0 from Jul 19 25.3% 27.4% Home loans - APRA3 26.0 25.9 25.7 20% 21.5% 20.8% 20% Credit card
Slide 63: Group margin
Group margin1 Flat ex liquids – pressure from lower interest rates, offset by favourable portfolio mix, lower wholesale funding costs FY22 Considerations × Low-rate environment Full year × Price competition × Home loan and deposits mix × Higher liquids TFF funding benefit (4)bpts 207 (4) 2 3 (2) 2
Slide 64: Group margin: hedge earnings
Group margin Hedge earnings continue to decline due to low interest rates Replicating Portfolio (RP) & Equity Hedge Liquidity & Basis Risk Liquidity In FY22 the hedge earnings decline is expected to be neutralised by the benefit of • Every additional $10bn of liquid assets2 is expected to reduce Gro
Slide 65: Margins by division
Margins by division Well managed in a low interest rate environment RBS1 BB IB&M NZ (ASB)2 Lower deposits and capital earnings Lower deposits and business lending Higher Global Markets income due to Lower wholesale funding costs and from impact of low rate environment, margins partly offset by favou
Slide 66: Other banking income (OBI)
Other banking income (OBI)1 Higher CommSec equities income and lending fees, partly offset by lower retail banking fees and Market sales activity $m Other Banking Income $m Trading Income FY21 vs FY20 FY21 vs FY20 5,007 4,837 Derivative Other 463 Higher net profits from minority Valuation 940 354 in
Slide 67: Sequential operating income
Sequential operating income1 Core volume growth, improved margin and higher OBI, partly offset by 3 fewer days, lower insurance income • Higher one-off net profits from minority investments2 • Lower impairment of aircraft operating leases • Higher business and home lending fee income, reflecting vol
Slide 68: Sequential operating expenses
Sequential operating expenses1 Higher remediation provisions and investment spend Sequential Movement2 Contribution to Mvt: +1.6% +0.9% +0.3% +0.4% +3.2% 62 (39) 15 5,768 48 91 5,591 Cumulative cost savings realised: • Increased lending processing and • 2H21 $454m financial crime assessment volumes
Slide 69: Customer remediation
Customer remediation Additional remediation provision – committed to making things right for customers Remediation and program costs Customer refunds Cumulative spend and provisions ($m) Cumulative customer refunds($m) 1,998 • $960m returned to customers • $1,038m remaining 3,210 Wealth (Aligned Adv
Slide 70: Cost approach supporting investment spend
Cost approach supporting investment spend Long term cost reduction creating capacity for long term investment Cost Reduction Investment Spend1,2 $m $m Cumulative savings Cost approach Shift to Productivity & Growth 1,809 1,809 • Simpler, more efficient Infrastructure business for our customers and &
Slide 71: Loan losses
Loan losses Lower provisions on improved economic outlook Loan Loss Rate1,2 Loan Loss Rate by business unit1 bpts bpts 22 73 Consumer Corporate 44 -6 14 -8 -13 1H21 2H21 44 41 142 36 34 33 33 26 25 76 21 20 19 50 16 16 13 11 43 16 15 15 24 23 13 20 7 7 11 8 10 14 3 29 26 17 19 17 18 18 18 18 18 17 2
Slide 72: Provisions
Provisions1 Strong provisioning coverage maintained Provision coverage/CRWA $m Provisions by stage Performing Non-performing Credit Credit Stage 2 exposures exposures3 provisions by credit grade4 Total Jun 20 Jun 21 1.63% 1.67% Retail secured 1.09% 1.16% 1.59% Jun 20 Jun 21 Jun 20 Jun 21 1.49% $199b
Slide 73: Retail Banking Services (RBS)
Retail Banking Services (RBS)1 Operational execution – volume growth above system – expenses flat, cost-to-income lower Net Promoter Score2 MFI Share3 Volume growth 10 Consumer NPS FY21 Volume growth Peers CBA 12 months to Jun 21 34.9% CBA System 11.0% 0 #2 34.6% 6.7% 9.5% 16.1% 5.4% -10 Jun 20 Jun
Slide 74: Business Banking (BB)
Business Banking (BB) Investment and renewed focus on service model, leveraging digital assets – strong volume growth Net Promoter Score1 SME Guarantee Loan Scheme2 Volume growth Business NPS Supporting Australian businesses FY21 Volume growth 12 months to Jun 21 0 Peers CBA #1 Health +18% -10 Agric
Slide 75: Institutional Banking and Markets (IB&M)
Institutional Banking and Markets (IB&M) Combining global connectivity and capability – contributing to Australian economic recovery Net Promoter Score IB&M Lending Credit RWAs Institutional NPS1 Lending decrease driven by lower institutional Decline in 2H21 driven primarily by improvement in (Turno
Slide 76: ASB
ASB Strong volume growth and lower impairments reflecting New Zealand economic recovery Retail net promoter score1 Home lending Margin2 Peers ASB 12 months to Jun 21 Lower wholesale funding costs and the impact 40 34.8 of favourable portfolio mix, partly offset by 32.5 lower deposit margins 30 27.4
Slide 77: Home and Consumer Lending
Home and Consumer Lending
Slide 78: Home lending overview
Home lending overview Process efficiency – above system growth - strong risk profile Consistent market share gains1 Net growth driven by strong new lending2 Strong growth in new fundings $bn Home Loan Fundings ($bn)3 FY21: $141bn (+33%) 24.6% 25.3% 141 23.0% 21.5% Internal Refinance 22 (22) (30) 76
Slide 79: Home loan process efficiency
Home loan process efficiency Ensuring strong volume growth can be processed quickly and efficiently Focus Areas Operational execution1 • Continued strengthening of data assets to increase coverage of auto validation across income & liabilities, including the use of Open Banking & external Focus on t
Slide 80: Serviceability assessment
Serviceability assessment1 Majority of loans originated under tightened standards to assist customers with repayment shock ~77% of the book originated under tightened standards since FY16 New Loan Assessment • All income used in application to assess serviceability is verified • 80% or lower cap on
Slide 81: Borrowing capacity
Borrowing capacity1 Maintaining credit availability – lending growth within risk appetite Borrowing capacity remains elevated over the period Driven by low interest rate environment and lower serviceability assessment floor rate Change in maximum borrowing capacity2 - Indexed Dec 16 140% (Loans asse
Slide 82: Portfolio quality remains sound
Portfolio quality remains sound 1 Strong repayment buffers in place Repayment buffers Those with less than 1 month buffer include investors and (Payments in advance 2, % of accounts) new borrowers 35% 35% 37% <1 month 35% 34% 33% 9% Jun 20 Dec 20 Jun 21 10% 10% 7% 6% 6% Residual 5% 6% 8% Structural:
Slide 83: Home loan portfolio - CBA
Home loan portfolio – CBA A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 20 Dec 20 Jun 21 New Business1 Jun 20 Dec 20 Jun 21 Total Balances - Spot ($bn) 485 498 516 Total Funding ($bn) 53 65 76 7 Total Balances - Average ($bn) 482 492 507 Average Funding Size ($’000) 354
Slide 84: Home loan portfolio - CBA ex Bankwest
Home loan portfolio – CBA ex Bankwest A balanced approach to portfolio quality, growth and returns Portfolio1 Jun 20 Dec 20 Jun 21 New Business1 Jun 20 Dec 20 Jun 21 Total Balances - Spot ($bn) 411 423 439 Total Funding ($bn) 47 57 66 6 Total Balances - Average ($bn) 407 417 431 Average Funding Size
Slide 85: Portfolio LVRs
Portfolio LVRs1 Portfolio LVR trending lower in FY21 Average Portfolio Dynamic LVR2 Dynamic LVR Bands3 Jun 20 % of total Portfolio Accounts Dec 20 60% Jun 21 53% 51% 49% 40% 20% 0% LVR LVR LVR LVR LVR LVR LVR Jun 20 Dec 20 Jun 21 ≤60% 60%- 70%- 80%- 90%- 95%- >100% 70% 80% 90% 95% 100% Negative Equi
Slide 86: Interest Only (IO) home loans
Interest Only (IO) home loans1 Reducing proportion of IO home loans for total portfolio and new business flow Portfolio of IO loans reducing New interest only loans reducing IO % of total home loans – total portfolio balance IO % of total home loans – new business flow2 22% 22% 16% 19% 12% 17% FY19
Slide 87: Home loan arrears
Home loan arrears Home loan 90+ arrears modestly higher in recent periods influenced by deferral exits Arrears by portfolio Arrears by product Arrears by repayment type Group 90+ days Group 90+ days1 Group 90+ days1 0.8% Bankwest 0.8% 0.8% 0.6% CBA 0.6% 0.6% Group 0.4% 0.4% 0.4% ASB Owner Occupied 0
Slide 88: Home loan deferrals
Home loan deferrals Digital and operational leadership ensuring effective customer support and optimal outcomes Leveraging digital assets to deliver Innovative tailored solutions, Ensuring optimal timely and efficient support delivered efficiently outcomes Innovative solutions ~158,000 • Analytics d
Slide 89: Home loan impairments
Home loan impairments Impaired home loans remain low with modest growth due to ASB COVID-19 restructured home loans1 Impaired home loans Overview 1.67 1.75 1.45 • RBS Exits have outpaced entry into impairments over the half offset by ASB 0.26 0.54 0.22 increase in ASB impairments that reflects conse
Slide 90: Portfolio losses and insurance
Portfolio losses and insurance 1 Portfolio losses remain historically low Losses to average gross loans 2 Portfolio Insurance Profile 3 % of Home Loan portfolio 2.5% Current Historical Avg.4 Group Total Loans 0.09% 0.30% 2% 21% CBA Home Loans 0.01% 0.02% Excess of loss Insurance with Genworth 2.0% r
Slide 91: Managing unsecured lending
Managing unsecured lending Strong credit quality with historically low arrears rates Credit Cards 1 Personal Loans 1 Group 90+ days Group 90+ days 1.22% 0.66% 0.61% 1.51% 1.48% 1.09% 9,574 9,615 9,237 6,016 5,284 5,091 $m 118 64 56 $m 91 78 55 Arrears Portfolio Arrears Portfolio Arrears Portfolio Ar
Slide 92: Consumer arrears
Consumer arrears Focus on prudent acquisition - healthy arrears despite balance contraction Credit Cards 1 Personal Loans 1 ASB 6.0% Group 30+ days Group 30+ days CBA 5.5% Group 4.0% 4.5% Bankwest 3.5% 2.0% 2.5% 0.0% 1.5% Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Credit C
Slide 93: Business and Corporate Lending
Business and Corporate Lending
Slide 94: Portfolio quality
Portfolio quality1 Improvement in portfolio quality metrics – investment grade ~68% Exposures by Industry1 Corporate portfolio quality Group TCE by geography AAA A+ BBB+ Investment Grade Includes TFF drawdown TCE $bn to to to Other Jun 21 Jun 20 Dec 20 Jun 21 AA- A- BBB- 68.3% Australia 79.8% 80.3%
Slide 95: Total committed exposure summary
Total committed exposure summary Close monitoring of key sectors Provisions to total Group TCE ($bn) TIA ($bn) TIA % of TCE committed exposure % Dec-20 Dec 20 Jun-21 Jun 21 Dec-20 Dec 20 Jun-21 Jun 21 Dec-20 Dec 20 Jun-21 Jun 21 Dec-20 Dec 20 Jun-21 Jun 21 Consumer 685.8 710.5 1.7 2.0 0.2% 0.3% 0.5%
Slide 96: Sector focus - commercial property
Sector focus – commercial property Portfolio weighted to NSW – TIAs remain low at 0.8% • Exposure diversified across sectors and by counterparty, with the top Group exposure Jun 20 20 counterparties representing 15% of the portfolio and having a Dec 20 weighted average rating of BBB equivalent. 80.0
Slide 97: Sector focus - transport & storage
Sector focus – transport & storage Conditions remain challenging Airlines & Aircraft Lessors 1 Group exposure Jun 20 • Exposure reduced by ~$1.2bn over the last year largely due to active Dec 20 portfolio management, amortisation and FX movements. 28.1 26.8 26.5 Jun 21 • ~72% of our airline portfoli
Slide 98: Sector focus - entertainment, leisure & tourism
Sector focus – entertainment, leisure & tourism Improving conditions now challenged due to lockdown • Diverse industry with many sub-sectors (including Accommodation, Casinos Group exposure and Cinemas) impacted by government restrictions, including border closures, Jun 20 shutdowns and social dista
Slide 99: Sector focus - retail trade
Sector focus – retail trade Consumer sentiment improving but susceptible to lockdowns Group exposure Jun 20 • Retail in general has remained resilient through the pandemic, Dec 20 buoyed by Government stimulus and the retention of cash in the 12.4 Jun 21 Australian economy with international borders
Slide 100: Sector focus - construction
Sector focus – construction Outlook is uncertain • As a designated essential industry up until the NSW lockdown in July, Group exposure Jun 20 the sector had continued to operate through COVID-19 with some Dec 20 level of disruption and productivity loss due to lockdowns and social 9.9 9.9 10.3 Jun
Slide 101: Sector focus - mining, oil & gas
Sector focus – mining, oil & gas Exposures broadly stable, well diversified Group exposure Jun 20 • Exposures of $8.7bn (0.7% of Group TCE), reduced by $0.4bn over Dec 20 the past 6 months mainly from reduced Oil & Gas facilities. 10.9 Jun 21 9.1 8.7 • Stable performance over the past 6 months: 73 6
Slide 102: Funding, Liquidity and Capital
Funding, Liquidity and Capital
Slide 103: Funding overview
Funding overview Resilient balance sheet with significant excess liquidity Funding composition Wholesale funding Funding profile Deposit growth supporting 73% of funding Weighted to long term TFF refinance to be managed across FY23-FY25 period % of total funding FY21 Maturity6 Long term % issuance S
Slide 104: Deposit funding
Deposit funding Highest share of stable household deposits in Australia Deposit funding Deposits vs peers1 Deposits in NSFR2 $bn As at June 2021 ($bn) 610 Peers as at March 20213 74% 477 73% Other 300 400 71% deposits 333 242 251 Household 192 CBA deposits 310 235 300 149 141 Peer 3 Dec 19 Jun 20 Ju
Slide 105: Wholesale funding
Wholesale funding Diversified wholesale funding across product, currency and tenor Portfolio mix Short term funding by product $bn Certificates of Deposits 68% Long term funding1 131 53% FI Deposits 19% Term Funding Facility 51 21% Commercial CommericalPaper Paper 12% Short term funding2 64 26% MTN
Slide 106: Funding and liquidity metrics
Funding and liquidity metrics1 Strong funding and liquidity positions maintained 129% NSFR NSFR (%)4 June 21 766 594 12.5 (3.3) Retail/SME (2.6) Residential Mortgages ≤ 35% Deposits (1.1) 129 risk weight2 4.5 (1.1) (1.1) 120 1.2 Other Loans Wholesale Funding & Other $bn Capital Liquids and Other Ass
Slide 107: Capital overview
Capital overview Strong capital position maintained CET1 CET1 CET1 556% Dividend per Share APRA International (cents) Level 2 Level 1 Level 2 19.4% Payout Ratio (cash NPAT basis) Assets 431 431 13.3% 17.4% 420 429 350 13.1% 148% 298 11.9% 11.6% 88% 80% 77% 75% 71% 71% Jun 20 Jun 21 Jun 20 Jun 21 Jun
Slide 108: Capital: lower share count supports returns
Capital Lower share count supports higher shareholder returns and dividends compared to peers Number of shares (m)1 Dividend per share ($)3 CBA Peers 3,669 CBA Peers 3,299 Capital raisings for 2,846 2.00 strengthening during GFC 1,776 0.70 1,516 1,774 0.59 0.60 1,506 0.58 0.58 1,260 0.29 Increase du
Slide 109: Capital drivers
Capital drivers Total risk weighted assets (RWA) lower this half – Credit RWA higher on volume growth CET1 Total Risk Weighted Assets (RWA) bpts $bn 8 454 4.7 (2.9) (0.9) (3.8) 451 (59) 97 4 Market Risk IRRBB 16 11 8 15 12.6% 13.1% 46 Credit Risk (14) Op Risk 50 IRRBB 3 CET1 impact bpts4 382 Market
Slide 110: CET1 (Level 1)
CET1 (Level 1) CET1 Level 11 of 13.3%, 20 bpts above Level 2 CET1 (Level 1) Expected uplift bpts (divestments & APS111) 2,3 Impact 46-61bpts Differences between Level 1 and Level 2 +50bpts in 2H21 (bpts) Lower RWA at Level 1 due to the exclusion of 145 banking subsidiaries 103 10 (1) 13.3% 12.8% Inv
Slide 111: Capital: strong position maintained in FY21
Capital Strong capital position maintained in FY21 Key Capital ratios (%) Jun 20 Dec 20 Jun 21 • CET1 ratio of 13.1%, +50bpts vs Dec 20, +150bpts vs Jun 20 CET1 capital ratio 11.6 12.6 13.1 • 2020 final dividend - DRP satisfied by the issuance of shares. 2021 interim dividend - DRP neutralised. Addi
Slide 112: CET1 - internationally comparable
CET1 – internationally comparable Group’s CET1 ratio of 13.1% translates to 19.4% on an international basis Internationally comparable1 CET1 CET1 APRA 13.1% Balances below prescribed threshold risk weighted, bpts Equity investments compared to 100% CET1 deduction under APRA 0.8% Balances are risk we
Slide 113: Off-market share buy-back
Off-market share buy-back Efficient capital management - optimising shareholder returns Key features • $6bn off-market share buy-back to be undertaken via a tender Key dates4 process Last day shares can be acquired to be eligible5 16 August • Estimated to represent >3.5% of issued capital Buy-back r
Slide 114: Franking
Franking Shareholders continue to benefit from a fully franked dividend and the generation of excess franking credits FY21 Franking Position Franking account surplus balance • CBA’s franking account surplus balance1 as at 30 June 2021 is ~$3.7bn. • The announced off-market share buyback is expected
Slide 115: Regulatory capital changes
Regulatory capital changes Scheduled implementation of Basel III reforms in Australia deferred by one year Change Implementation Details • Since December 2020, APRA has released a number of consultation packages on the revisions to the capital framework. APRA is targeting a capital outcome in dollar
Slide 116: Regulatory expected loss
Regulatory expected loss Lower provisions in 2H21 $m Jun 20 Dec 20 Jun 21 Non- Non- Non- Defaulted Defaulted Defaulted Defaulted Defaulted Defaulted Regulatory Expected Loss (EL) 1,710 3,200 1,891 3,062 1,931 2,956 Eligible Provisions (EP) Collective Provisions1 95 4,807 125 5,149 131 4,552 Specific
Slide 117: APRA's LAC requirements
APRA’s LAC requirements 3% increase in Total Capital by 2024 to meet loss absorbing capacity (LAC) requirement $bn Jun 21 • Based on APRA’s existing capital framework, CBA requires an additional $4.0bn of LAC qualifying issuance by 1 Jan 24 (excluding maturities). Risk Weighted Assets 450.7 • Expect
Slide 118: Economic Overview
Economic Overview
Slide 119: Key Australian economic indicators
Key Australian economic indicators1 (June FY) GDP % Trimmed mean CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 5.6 5.3 2.2 4.9 1.9 6.2 4.4 1.7 1.6 5.5 5.6 3.7 1.5 5.1 5.2 1.2 4.5 2.9 2.2 2.1 1.8 1.6 1.3 -0.2 2018 2019 2020 2021 2022 20
Slide 120: The global economy
The global economy A divergent global economy, vaccine hopes lift for 2021 The global economy to expand in 2021 China and the US leading the recovery Vaccine rollout is critical Global growth (annual % change)1 CBA GDP Forecasts (Index =100 Dec 19)2 (% of population fully vaccinated)3 % Index 8 CBA
Slide 121: The Australian Economy
The Australian Economy Australian economy to contract in Q3 CY21, but expected to rebound in Q4 CY21 GDP back above pre COVID levels, but lockdowns Consumer and business sentiment remain high but Consumer spending down but bounces when should see negative Q3 2021 off the peak with impact of lockdown
Slide 122: The Australian Economy
The Australian Economy Once lockdowns end expansionary policy, vaccine rollout and tight labour market will help the recovery Vaccine rollout gaining pace Labour supply has fallen sharply At a time when demand is strong at all skill levels Australian COVID-19 vaccinations (% of 16+ population)1 Non-
Slide 123: The Australian Economy
The Australian Economy Interest rates to rise eventually, but lift will be limited and recovery is broadening to investment But debt serviceability has fallen a long way and Household debt levels remain high Household savings are elevated expected to return to average levels (as % of disposable inco
Slide 124: The Australian Economy
The Australian Economy External sector in good shape, monetary and fiscal support is working together Gov’t spending has risen sharply and stays higher Fiscal settings remain expansionary for longer Some central banks are starting to reduce asset Taxes and spending1 (% of GDP) Budget balance1 (% of
Slide 125: Home lending
Home lending Housing market to continue its resurgence, driven by low interest rates and stimulus Residential property prices are rising strongly Investors returning to the market Strong preference for fixed rate lending Dwelling prices1 (8 capital cities) Housing loan approvals2 (excluding refinanc
Slide 126: Sustainability of the Australian housing market
Sustainability of the Australian housing market Australia housing prices and households debt is aligned to other developed economies CPI-adjusted change in house prices RBA analysis1: Household debt-to-income4 320 Sustained growth 214 300 (Australia) 17 280 Post-GFC stagnation +20% 179 260 Severe GF
Slide 127: Key New Zealand economic indicators
Key New Zealand economic indicators (June FY) GDP % CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 3.7 7.4 7.4 7.2 4.8 4.5 4.1 4.1 3.7 4.0 2.2 3.8 3.6 2.9 4.8 1.7 1.8 1.9 2.7 4.3 1.5 2.0 -1.7 2.1 2018 2019 2020 2021 2022 2023 2018 2019
Slide 128: New Zealand
New Zealand NZ economy swiftly recovers from COVID-19 disruption Dairy prices up following higher global commodity NZ economy quickly recovered to pre-Covid levels NZ unemployment rate now falling as economy prices of GDP recovers Global dairy trade auction results1 (USD/tonne) NZ GDP growth (annual
Slide 129: Sources, Glossary & notes
Sources, Glossary & notes
Slide 130: Sources and notes
Sources and notes Delivering – Continued above system volume growth in all core markets Slide 10 1. Home lending source: RBA Lending and Credit Aggregates. Household deposits source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS). CBA business lending multiple estimate is base
Slide 131: Sources and notes
Sources and notes Delivering – Through customer focus, digital engagement, operational execution Slide 12 1. DBM Consumer MFI *Net Promoter Score. Based on Australian population aged 14+ years old rating their Main Financial Institution. Net Promoter Score refers to customer likelihood to recommend
Slide 132: Sources and notes
Sources and notes Summary Slide 40 1. DBM Consumer MFI *Net Promoter Score. Based on Australian population aged 14+ years old rating their Main Financial Institution. Net Promoter Score refers to customer likelihood to recommend their MFI using a scale from 0-10 (where 0 is ‘Not at all likely’ and 1
Slide 133: Sources and notes
Sources and notes Why CBA? Slide 42 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 134: Sources and notes
Sources and notes Delivering – Balanced outcomes – delivering for all stakeholders Slide 43 1. DBM Consumer MFI *Net Promoter Score. Based on Australian population aged 14+ years old rating their Main Financial Institution. Net Promoter Score refers to customer likelihood to recommend their MFI usin
Slide 135: Sources and notes
Sources and notes Global best digital experiences Slide 46 1. The total number of customers that have logged into the CommBank mobile app at least once in the month of June for years 2017, 2019 and 2021. Includes Face ID logins. 2. The total value ($) of transfers and BPAY payments made in digital (
Slide 136: Sources and notes: Cash Profit
Sources and notes Cash Profit The Profit Announcement discloses the net profit after tax on both a statutory and cash basis. The statutory basis is prepared in accordance with the Corporations Act 2001 (Cth) and the Australian Accounting Standards, which comply with International Financial Reporting
Slide 137: Glossary
Glossary Capital & Other Funding & Risk Risk Weighted Assets The value of the Group’s On and Off Balance Sheet assets are adjusted by Liquidity Coverage The LCR is the first quantitative liquidity measure that is part of the Basel III (RWA) risk weights calculated according to various APRA prudentia
Slide 138: Contact us
Contact us Investor Relations Media Relations Investor Centre Melanie Kirk Danny John For more information Investor Relations Media Relations commbank.com.au/investors 02 9118 7113 02 9118 6919 CBAInvestorRelations@cba.com.au media@cba.com.au 138
Commonwealth Bank of Australia — FY2021 Earnings Presentation on 6ix