Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 FY2020 Earnings Presentation
156 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 12, 2020
Slide 1: For the half year ended 31 December 2019
For the half year ended 31 December 2019
Slide 2: Disclaimer
The material in this presentation is general background information about the Group and its activities current as at the date of the presentation, 12 February 2020. It is information given in summary form and does not purport to be complete. Information in this presentation is not intended to be rel
Slide 3: Contents
CEO & CFO Presentations 4 Overview & Strategy 31 Financial Overview 57 Home & Consumer Lending 91 Business & Corporate Lending 106 Deposits, Funding & Liquidity 117 Capital 123 Economic Overview 137 Sources, Glossary & Notes 150 Commonwealth Bank of Australia | ACN 123 123 124 | 3
Slide 4: Results Presentation - CEO
Results Presentation Matt Comyn, Chief Executive Officer Commonwealth Bank of Australia | ACN 123 123 124 | 12 February 2020
Slide 5: Core franchise strength and strategic progress
Core franchise strength – balanced outcomes, strong execution Strategic progress – well positioned for future challenges/opportunities Supporting customers and communities – drought and bushfire relief 5
Slide 6: Drought and bushfire relief
CANGive bushfire appeal Emergency assistance package Bushfire recovery grants $4.6 million raised from customers Available to customers – individuals, Up to $50,000 for replacement/ for Australian Red Cross businesses, volunteer firefighters repair of community facilities CBA matching dollar
Slide 7: Half year result summary
1H20 vs 1H20 1H19 Statutory profit ($m) 6,161 +34.0% Cash NPAT ($m) 4,477 (4.3%) CET1 (%, Level 2) 11.7% +90bpts EPS (cash, $) 2.53 (12c) Dividend per share ($) 2.00 Flat 1. Statutory profit, CET1 and Dividend per share include discontinued operations. Cash NPAT and EPS are on a continuing
Slide 8: Income, expenses, impairment and cash NPAT
Operating Operating Loan Impairment Cash Income Expenses Expense NPAT $m $m $m $m Flat +2.6% +12.5% -4.3% 624 649 12,408 11,999 12,416 577 4,676 5,980 4,477 5,289 5,429 3,816 • Core volume growth • Cost savings momentum • Lower consumer arrears • Stable Group NIM • Wage inflation and IT • TIA stable
Slide 9: Franchise strength and consistent returns
Franchise strength Consistent returns MFI Share1 Volume Growth2 Dividend per Share (cents) 1H20 vs 1H19 35.6% 9% 3% 4% 35.1% 199 200 200 2004 17.3% 198 198 Next Highest Dec 18 Dec 19 Business Home Transaction Peer Lending Lending balances Pro-forma3 Deposit funding CET1 12.2% Level 2 5 79%5 11.7% 5
Slide 10: Home lending growth and fundings
Above system growth New lending up 8% Strongest lending in core segments CBA growth vs system1 Fundings2 ($bn) Fundings 1H203 Principal & Interest +8% Owner Occupied5 ~1.5x Proprietary4 88% 14 15 Investor 71% 1.3x Owner 58% 35 38 Interest only 0.9x Occupied Broker Investor 12% 42% 29% Dec 18 Jun 19
Slide 11: A simpler bank, a better bank
A simpler bank A better bank • Well progressed with divestments • Remediation – $630m returned to customers • Core franchise delivering >97% of Cash NPAT • APRA Remedial Action Plan – on track, more to do • Cost savings momentum • Royal Commission – 23 applicable recommendations underway Best in dig
Slide 12: Product highlights
World debit card and Fee free Business Home Loan Ultimate Awards credit card Transaction Account Compassionate Care Access exclusive Making digital business transaction Supporting customers and overseas travel benefits banking free and seamless their families in difficult times1 1. Compassionate Car
Slide 13: CommBank app, Rewards and Secure
#1 App Relaunch CommBank Rewards CommBank Secure Improving financial wellbeing and Rewarding loyal customers through Protecting customers from putting customers in control personalised cashback offers fraud and cyber threats, 24/7 13
Slide 14: Technology leadership and focus
A history of leadership Current focus Delivering outcomes Leading assets Modernising systems Leading experiences – CommBank app – NetBank Engineering for resilience Lower risk – CommBiz Digitising end-to-end Lower cost Leading infrastructure Improving data Greater velocity – Real
Slide 15: Everyday banking, Home buying, Business
Everyday Home Business / banking buying private 15
Slide 16: Results Presentation - CFO
Results Presentation Alan Docherty, Chief Financial Officer Commonwealth Bank of Australia | ACN 123 123 124 | 12 February 2020
Slide 17: Context, response and outcomes
Context Response Outcomes Volume growth in core markets Lower interest rates Operational execution Stable NIM Improved credit quality, lower arrears Constrained consumer Conservative balance sheet Lengthened funding profile Growing cost savings momentum Regulatory focus Cost an
Slide 18: Statutory to cash NPAT
$m 1H19 2H19 1H20 Statutory NPAT 4,599 3,972 6,161 Less Cash NPAT - discontinued operations 92 122 17 • Earnings virtually all divested Non-cash items: • GAM profit on sale 1,688 - Gains/(losses) on disposals and transaction costs1 (74) 13 1,631 • Other (57) - Hedging2 & other (95) 21 36 • Realisati
Slide 19: Group financial results
1H20 1H20 vs $m 1H19 Operating Income 12,416 Flat Operating Expenses 5,429 2.6% Operating Performance 6,987 (1.9%) Loan Impairment Expense 649 12.5% Cash NPAT 4,477 (4.3%) 1. Presented on a continuing operations basis. 19
Slide 20: Operating income movement
• Core volume growth • Loss from realised NZ hedge (45) • Stable NIM • Derivative Valuation Adjustment (30) • Higher Markets income offset by lower institutional lending fees +35 +1.7% -1.3% -14.2% (33) -54.4% Flat 159 (81) (37) 12,408 Volume Growth2 12,416 • CFS/Other repricing (70) Home Loans 4% T
Slide 21: Net interest margin
This half Cash Rate Headwinds3 2H20 (vs 1H20) 5bpts Transactions (4) FY20 (vs FY19) 4bpts Savings (3) FY21 (vs FY20) 4bpts Replicating Portfolio +3 +1bpt (4) 1 4 (4) (1) 216 214 5 210 210 211 Home loans: Capital (2) - SVR +4 Strong growth NZ earnings (1) - Fixed +1 in transaction AASB 162 (1) - Disc
Slide 22: Operating expenses
6,000 Notable items +2.6% (142) 296 145 (249) 36 5,429 34 20 5,289 5,000 +400 Avg. FTE • Costs plateaued (~$200m per half) Wage inflation and IT costs • One-off releases & rebates ~($200m) offset Cost reduction achieved (last 3 halves): by accelerated amortisation ~$220m • 1H19 = $80m • 2H19 = $110m
Slide 23: Loan loss rate and troublesome assets
Loan Loss Rate1 - Group Loan Loss Rate1 – Divisions TIA ex. drought/bushfire • Improved retail portfolios provision RBS – lower arrears, improving property market Consumer 14 13 • Pockets of stress remain in BPB – higher collective provisions for drought Corporate 24 18 discretionary retail, constru
Slide 24: Arrears and collective provisions
90+ days Arrears1 $m Collective Provisions Provision Coverage3 1.56% 1.44% 1.44% 1.06% 1.38% 1.03% 1.05% 1.08% Ex. drought/bushfire provision 1.21% 3,904 4,067 1.03% 1.02% 3,814 0.94% 0.88% v v v 0.80% 2,464 Consumer 2,350 2,416 0.70% 0.67% 0.68% 0.59% 0.61% Corporate 1,464 1,488 1,603 Dec 17 Jun 18
Slide 25: Long term funding and funding costs
Long term funding1 Indicative funding costs2 Weighted Average Maturity (WAM), Years 3.00% New issuance (1H20) 9.5 10yr market 2.50% funding cost 5.4 Portfolio 5.0 5.1 2.00% v 66% 66% 66% 1.50% Long Long Long Term Term Term 1.00% 5yr market 0.50% funding cost Dec 18 Jun 19 Dec 19 Dec 10 Jun 19 Dec 19
Slide 26: CET1 movement
CET1, bpts Organic +37bpts 12.2% 27 3 11.7% GRCL4 10 Credit Risk3 12 Klarna5 (10) 83 IRRBB 2 Other (90) 100 Market Risk 12 3 (23) Op Risk 1 10.8% 10.7% GAM 731 Organic Capital Generation6 (bpts) 10.5% unquestionably 2 CommInsure Life 10 strong DRP 30 neutralised DRP 11 37 19 6mth Historical 1H20 Ave
Slide 27: Capital management
• Very strong surplus at both Level 1 and Level 2 • Target at or above 10.5% for majority of year (7mths+) • Capital management and planning gives • Binding constraint is the lower of Level 1 and Level 2 consideration to both Level 1 and Level 2 capital • Historical track record: • Strong franchise
Slide 28: Capital management and DRP
Prevailing Operating Conditions Prepared for a range of possible macro-economic Pro-forma outcomes 12.2% • Capital planning includes Remaining Divestments • Third successive DRP neutralisation - $0.5bn2 on consideration of changes in RWA market share buyback (growth/quality) or earnings that 11.7% m
Slide 29: Outlook
Australian economy underpinned by good long-term fundamentals – Growing population – Strong trade and fiscal position – Pipeline of infrastructure investment – Key indicators improving – housing, unemployment Global near-term uncertainties and risks For CBA – Focused on core businesses and con
Slide 30: Summary
Customer Financial 35.6% • MFI share up 0.5% to 35.6% • Stable margin • Improving Net Promoter Scores 35.1% • Cost savings momentum • Volume growth in core markets Dec 18 Dec 19 • Sound credit quality MFI Share Strength Best in digital • Strong capital surplus 200 • #1 mobile app 200 • Organic capit
Slide 31: Overview & Strategy
! Overview & Strategy
Slide 32: Key financial metrics
Cash NPAT Operating income Group NIM Lower Cash NPAT Income flat, with volume growth in core markets and Lower basis risk partly offset by the impact of stable NIM offset by lower non-interest income cash rate reductions (4.3%) Flat +1bpt 4,676 4,477 12,408 11,999 12,416 3,816 210 210 211 $m $m bpts
Slide 33: MFI share, volume growth and funding
MFI share1 Volume growth2 Funding Main Financial Institution share further improved to Solid growth in our core markets of business lending, Resilient funding with ongoing customer deposit growth 35.6% (more than one-third of all Australians) home lending and transactions. and lengthened wholesale f
Slide 34: Loan impairment expense and consumer arrears
Loan Impairment Expense1 Consumer arrears2 Loan losses4 Portfolio credit quality remains sound with Loan Consumer arrears lower across all portfolios Portfolio losses remain low Impairment Expense at 17bpts Arrears 90+ days Group Total Loans Current5 Historical 2.5% Avg.6 Personal Loans Credit Cards
Slide 35: Simpler bank, remediation and better outcomes
Simpler Bank $m Customer Remediation Better Customer Outcomes Divestments well progressed, Focus on remediating customers quickly Delivering better customers outcomes through facilitating renewed focus on core franchise eliminated or reduced fees and charges Cumulative spend & provisions 1H20 Cash N
Slide 36: Market share and peer comparison
MFI share1 Home Lending share2 Household Deposits share2 Net Promoter Score Change in 1H20 (bpts) Deposit Funding 21 Peers as at Sep 19 Mobile app3 71% 68% 35.6% 24.9% -19 -18 -51 26.8% 65% 61% 36.2 CBA Peer 2 Peer 1 Peer 3 CBA Peer 3 Peer 1 Peer 2 22.5% 22.0% 26.6 26.0 17.3% 14.4% 13.6% 13.6% 12.5%
Slide 37: CBA in numbers
$53 billion >17m in new home lending1,2 Customers $19 billion Call centres in new business lending1,4 Australia based $3 billon in new lending to small CBA new retail transaction 595k businesses1,5 accounts opened1,3 >$18 million 1,134 branches in drought and bushfire Largest network assistance Stab
Slide 38: Customers, people, communities
Customers People Communities MFI Share1 Consumer NPS2 Employee engagement3 Reputation score4 20 35.6% 72% CBA Nov 19 10 58.4 35.1% 0 67% 68% 34.0% -8.0 CBA Pulse Score -10 Average of peer companies Peers CBA -20 CBA CBA CBA 2008 2012 2015 2018 2019 Dec 14 Dec 18 Dec 19 Dec 15 Dec 17 Dec 19 Oct 18 Ap
Slide 39: Regulatory and Royal Commission update
• Royal Commission – addressing recommendations and implementing the necessary changes, regulators investigating referred matters • APRA – delivering all 173 milestones of the Remedial Action Plan, with updates to APRA by the Independent reviewer every 3 months. Delivering on APRA requirements and r
Slide 40: Becoming a simpler, better bank
Building Becoming Delivering on our competitive advantages a simpler, better bank growth & sustainable returns Leading franchise Divesting non-core Strong growth • Largest customer base • Reduced business complexity • Seek opportunities to invest in core • Broadest distribution network • Bette
Slide 41: Execution priorities
Become a simpler, better bank for our customers To deliver balanced and sustainable outcomes Execution priorities Simplify our business Customers Lead in retail and commercial banking Better outcomes Best in digital People Shareholders Energised, Long-term accountable sustainable Supported by strong
Slide 42: MFI share across customer lifecycle
50.1% Dec 14 47.4% Dec 18 43.6% Dec 19 CBA MFI Share CBA MFI share1 MFI share1 34.0% 35.1% 35.6% 35.6% 32.3% 27.9% 17.3% 12.8% 11.2% 27.2% Dec 14 Dec 18 Dec 19 CBA Peer 3 Peer 1 Peer 2 Aged 14-17 Aged 18-24 Aged 25-34 Aged 35-49 Aged 50-64 Aged 65+ Customer Spending Paying Wealth Youth Starting out
Slide 43: Business banking: lending and service model
Smarter everyday banking Enhanced service model Growing businesses $19bn ofin Australia new lending to businesses 1 Zero fee option when Increased access to same you switch to digital, day lending decisions $3bn ofBusinesses new lending to Small 2 with smart alerts for you through BizExpress with >2
Slide 44: Digital banking history
Real-time App 1m digitally active Relaunch transaction NetBank turns 20 with CommBank app Over 1m records begin 40m monthly logins customers online customers Core in NetBank X15 CommBank Banking Ventures CommBank app Website development Instant Banking Beem It commences 1995 1997 2000 2004 2008 2010
Slide 45: Mobile banking leadership
Mobile banking leader Leading customer experience Forrester Banking WaveTM: Australian Mobile Net Promoter Score Apps Q2 20191 Customer’s likelihood to recommend main financial institution based on use of internet banking services via mobile app2 +40 36.2 +30 Peers 20-27 +20 +10 Jun 18 Dec 18 Jun 19
Slide 46: Recognition, app users and digital transactions
Recognition and engagement CommBank app users Monthly unique customers (m)7 Mobile app #1 Net Promoter Score1 5.9m 4.8 5.3 Online banking #1 (Canstar - 10 years in a row)2 3.4 4.1 Mobile banking #1 (Canstar - 4 years in a row)3 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Ranked in Australia Digital transacti
Slide 47: Simple, smart, secure app
Simple Smart Secure App relaunched Benefits finder now live Protecting customers 24/7 • Personalised experiences • Connecting customers to >200 benefits • 100% security guarantee2 • Customisable features • Internationally recognised1 • New security features and experiences • Greater accessibility •
Slide 48: App relaunch example
Sydney Water bill We’ve noticed you’ve paid for your July bill twice 48
Slide 49: Personalised, customisable, accessible
Personalised Customisable Accessible Sydney Water bill We’ve noticed you’ve paid for your July bill twice Using data to create individual experiences Empowering customers to choose how Designed for our broad customer base, that help our customers manage their their app looks and surface their most w
Slide 50: CommBank Rewards
Personalised rewards Get notified Earn cashbacks Track savings Based on Get notified when Receive cashbacks Track how where you new rewards within 5-14 much you shop are available business days have saved 50
Slide 51: Home buying made simpler
Home buying is hard – we make it simpler • Tool for small business owners • Streamlining the home buying process • Universal shopping experience • Aggregating and analysing data • Contract review through to settlement • Integrated into the CommBank app • Providing actionable insights • Step-by-step
Slide 52: Divestment progress
Status Core Sovereign Completed Jul 18 CET1 1H20 Cash NPAT TymeDigital Completed Nov 18 $m Pro-forma CFSGAM Completed Aug 19 Level 2 12.2% Aligned Advice – Count Financial Completed Oct 19 Remaining CommInsure Life1 29 BoComm 18 +54 bpts PTCL 7 CommInsure Life1 JCA entered Nov 19 Completed GAM 73 Bo
Slide 53: Remedial Action Plan and Royal Commission
Remedial Action Plan1 Royal Commission Dec 19 Dec 19 107 23 submitted2 underway3 No action required as action is with government/regulator or CBA does not No action 23 required by CBA4 26 operate in that business Submitted Not yet Due Actively participating in consultation Government 4 3 13 legislat
Slide 54: Banking Code, Open Banking, credit reporting
Banking Code of Practice Open Banking Comprehensive Credit Reporting New code 1 July 2019 – updated 1 March Enabling customers to take control of their data, with the Enhancing customers financial security and 2020. right to direct data to accredited third parties. Information enabling better
Slide 55: Community, people and environment metrics
Start Smart Employee engagement Renewable energy Students booked for Start Smart classes CBA Employee Engagement Index (%)2 Exposure ($bn)3 (‘000)1 77 78 4.3 297 272 305 73 3.7 259 72 3.3 232 2.3 67 1.7 1H16 1H17 1H18 1H19 1H20 1H16 1H17 1H18 1H19 1H20 1H16 1H17 1H18 1H19 1H20 Pro bono and volunteer
Slide 56: Climate change risk management
Understanding and Implementing responses, Seizing managing risk setting targets opportunities We report our approach to managing climate The Bank’s Environmental and Social Policy5 Support for low carbon projects (exposure change risk in line with the recommendations climate commitments includ
Slide 57: Financial Overview
! Financial Overview 57
Slide 58: Tax expense, dividends and reinvestment
1 Profit before tax $6.3bn approximates • One of Australia’s largest taxpayers • PAYG of $0.76bn2 Tax Expense 1.9 29% • Returned to ~830,000 shareholders + millions more via Super Dividends 3.5 56% • Fully franked • Lending to Australian businesses, home owners and consumers Reinvested 0.9 15% • Inv
Slide 59: Financial, balance sheet, capital and funding summary
Financial Balance sheet, capital & funding Statutory NPAT2 ($m) 6,161 +34.0% Capital – CET12,4(Int’l) 17.5% +100 bpts Cash NPAT3 ($m) 4,477 (4.3%) Capital – CET12 (APRA) 11.7% +90 bpts ROE3 % (cash) 12.7 (110) bpts Total assets ($bn) 980 Flat EPS3 cents (cash) 253 (12c) Total liabilities ($bn) 909 (
Slide 60: Key financial trends
Cash NPAT1 ($m) NIM1 Cost-to-income1 Cash ROE1 (4.3%) +1bpt +110bpts (110)bpts 4,676 4,477 211 49.8% 13.8% 210 210 42.6% 43.7% 3,816 12.7% 11.2% 1H19 2H19 1H20 1H19 2H19 1H20 1H19 2H19 1H20 1H19 2H19 1H20 Cash EPS1 (cents) DPS (cents) CET1 (APRA) CET1 (International)2 (12c) Flat +90bpts +100bpts 265
Slide 61: Cash basis results
Incl. discontinued operations Continuing operations Financial year ended (“cash basis”) 1H20 1H20 vs 1H19 1H20 1H20 vs 1H19 Cash net profit after tax $4,494m (5.7%) $4,477m (4.3%) Cost-to-income1 44.4% Flat 43.7% +110 bpts Effective tax rate 29.3% +90 bpts 29.4% +90 bpts Cost of Capital 10.0% Flat 1
Slide 62: Operating expenses excluding notable items
Continuing operations ($m) 1H20 1H19 1H20 vs 1H19 2H19 Op. expenses incl. notable items and prior period one offs 5,429 5,289 140 5,980 Notable items: - AUSTRAC insurance recovery - (145) 145 - - Aligned Advice remediation - 200 (200) 334 - Total - 55 (55) 334 Customer remediation, risk and complian
Slide 63: Division cash NPAT
2 RBS BPB IB&M NZ (NZD) • Income +3% • Income +1% • Income (9%) • Income +2% • Costs +2% • Costs +4% • Costs (1%) • Costs +7% • Impairment (13%) • Impairment +32% • Impairment +71% • Impairment (51%) +6% 2,166 (3%) 2,052 1,860 1,545 1,498 1,386 (21%) +1% 602 579 515 476 553 587 $m 1H19 2H19 1H20 1H1
Slide 64: Division volume and margin
% 1H20 vs 1H19 Assets: +4%2 Margin: +8bpts 2 OBI: (10%) Assets: +5% Margin: (10)bpts FMI: +12% 3 Assets: Flat 2 IB: (10%) FUA: +8% Margin: +3bpts Markets: (4%) Margin: (7)bpts 3.3% 1.2% 0.8% 4 Flat RBS BPB IB&M WM ASB (NZD) Group (4.3%) (8.5%) 1. Presented on a continuing operations basis. 2. Moveme
Slide 65: Operating income composition
Funds & Insurance (18.5%) Flat Bushfire claims ($83m) 12,408 12,416 BCO2 – CFS/Other repricing ($70m) 638 520 Average FUA +8.2% 2,636 2,603 Other Banking Income (1.3%) Derivative Valuation Adjustment (XVA) ($30m) Lending fees (4.7%) Trading (excl. XVA) +22.3% 9,134 9,293 Commissions (2.9%) Net Inter
Slide 66: Net interest income
$m Volume: +1.3% Margin: +1 bpt +6 bpts (6) bpts +2 bpts +5 bpts (5) bpts (1) bpt 1.7% 86 215 (215) (43) 258 (258) 116 9,293 9,134 Strong Lower earnings Higher asset Cash Rate growth in on free equity, pricing, partly offset Reductions not transaction lower New by Home Loan passed onto and savings Z
Slide 67: Group lending, assets and deposits
Group Lending Dec 19 vs Dec 19 vs $m Dec 18 Jun 19 Dec 19 Jun 19 Dec 18 +2% Home Loans 512,505 522,942 535,090 2.3% 4.4% +1% Consumer finance 22,690 21,993 21,167 (3.8%) (6.7%) Business and corporate loans 222,996 214,953 214,145 (0.4%) (4.0%) 758 760 770 Total Group Lending 758,191 759,888 770,402
Slide 68: Home, business lending and deposit growth
Home Lending Business Lending Household Deposits Volume growth1 Volume growth1,2 Includes Volume growth IB&M System CBA System CBA System CBA annualised annualised annualised 2.0% 7.7% 2.5% 2.5% 4.8% -4.0% 7.5% 3.1% 3.9% 2.8% 1.3% 2.5% 6 Months 5 Months 6 Months 5 Months 6 Months 6 Months Jun 19 Dec
Slide 69: Market share by product
% Dec 19 Jun 19 Dec 18 Home loans – RBA1 24.9 N/A – series break N/A – series break Home loans - APRA 2 25.5 25.2 N/A – series break Credit cards - APRA 2 26.6 26.6 N/A – series break Other household lending - APRA2,3 19.2 19.3 N/A – series break Household deposits - APRA 2 26.8 26.7 N/A – series br
Slide 70: NIM movement
bpts Transactions (4) Savings (4) Replicating Portfolio +3 Other (1) 5 (5) 6 (6) 2 (1) - 210 Capital (3) 211 Home Loans: Strong growth NZ earnings (1) - SVR +8 in transaction AASB 162 (1) - Fixed +1 and savings - Discounting (4) deposits - Switching (2) Business Lending +2 Consumer Finance +1 1H19 A
Slide 71: Basis risk and replicating portfolio
Basis Risk Replicating Portfolio (RP) & Equity Hedge Every 5 bpts = 1 bpt of NIM1 Equity and Deposit Hedge 1.0% 8.0% Dec 19 1H20 Exit Average Balance Avg. Tractor2 investment $bn Tractor2 Rate term Equity Hedge 46 1.83% 1.62% 3 yrs Deposit Hedge 77 2.09% 1.88% 5 yrs RP Hedge 0.5% 4.0% Rate Avg 28bpt
Slide 72: Cash rate and approach
% Cash rate Approach • Group wide co-ordination • Preserving strong funding & liquidity position, optimising portfolio composition 1.75 • Granular deposit margin management aligned with 1.50 1.50 customer and regulatory value 1.25 • Product structuring, focusing on customer value CBA Economist Forec
Slide 73: NIM by division
RBS BPB IB&M NZ (ASB) Lower basis risk & home loan Higher business lending and Lower bond yields and Declining margin reflecting repricing partially offset by lower home loan margins, partly offset commodities financing income the lower interest rate deposit margins and home loan by lower deposit ma
Slide 74: Other banking and trading income
Other Banking Income Trading Income $m $m 2,636 1H20 vs 1H19 569 1H20 vs 1H19 2,603 2,432 480 Other 275 231 Realised loss on Derivative Valuation 494 154 New Zealand Improved hedge Adjustment 23 216 trading Trading 494 569 performance 480 Trading 107 209 and higher hedging income Lower institutional
Slide 75: Income forgone
Income forgone by line item Income forgone by date of initiative $m $m RBS BPB WM 415 • Calculation of interest on credit cards RBS BPB WM Total • Wealth Management – Protecting Your Super FMI 25 - 45 70 OBI 90 5 - 95 • CFP – removal of ongoing service fees FMI NII 35 5 - 40 Date of 190 • We
Slide 76: Operating income vs 2H19
$m • 3 additional days +149 • Favourable Global Markets Performance +42 • Margin +1bpt • Derivative valuation adjustment +43 • Core volume growth • Higher gains from the Structure Asset Finance portfolio +12 Impact of bushfires and Qld hailstorm +3.5% +7.0% (13) (48) +3.4% 171 12,416 (2.6%) 307 11,9
Slide 77: Operating expenses vs 2H19
$m 7,000 Notable items +1.5% (ex. notable items) -9.2% 6,000 5,980 (609) (112) 20 190 (40) - 5,429 5,000 • Costs plateaued (~$200m per half) Wage inflation and IT increases • One-off releases & rebates ~($200m) offset • Business rationalisation 4,000 by accelerated amortisation ~$220m • Optimising d
Slide 78: Remediation and program costs
Remediation and program costs Composition Cumulative spend and provisions Cumulative spend and provisions $2,204m $2,174m $2,204m Refunds made 630 $1,178m Refunds remaining 596 • $160m aligned advice remediation Program costs 978 • $818m banking, wealth remediation FY14 FY15 FY16 FY17 FY18 FY19 1H20
Slide 79: Investment spend
$m 1H20 vs $m 1H20 vs Investment spend 1H19: Investment spend 1H19: 676 672 (1%) Total 1,399 384 384 flat Expensed 2nd Half 723 1st Half (1%) Capitalised 676 672 (1%) 292 288 FY19 FY20 1H19 1H20 Investment spend $bn Capitalised software balance % of total Branches & 2.23 Average amortisation 8% 8% 7
Slide 80: Cost reduction progress
Focus Approach Progress to-date Cost reduction achieved (last three halves) Tighten discretionary spend and Embed better cost realise cost benefits of portfolio discipline changes $222m Simplify IT architecture and reduce Simplify technology the unit costs of technology Make it simpler for $110m cus
Slide 81: Credit risk, funding, liquidity and capital
Credit Risk Funding Liquidity Capital • Disciplined approach • Peer leading deposits • Sound liquidity position • Unquestionably strong • Drought/bushfire provision • Stable NSFR 113% • LCR well above minimum • Neutralisation of DRP Total Provision Coverage1 Deposit Balances2 LCR3 CET1 $bn Level 2 1
Slide 82: Total provisions
$m • AASB 9 adopted from 1 July 2018, increasing impairment provisions Total Provisions by $1,058 million due to recognition of impairment losses on a forward looking basis. • Collective Provisions include the impact of four probability-weighted economic scenarios1 and adjustments for emerging risk
Slide 83: Credit exposures by stage
Overview Exposures by stage Credit exposure ($m) Credit provisions ($m) • AASB 9 classifies loans into stages; • Stage 1 – Performing Jun 191 Dec 19 Jun 19 Dec 19 • Stage 2 – Significantly Increased Credit Risk Stage 1 747,787 768,166 905 965 Collectively Assessed • Stage 3 – Non-performing (impaire
Slide 84: Business unit performance
% of Group Loan Cost-to- Operating Operating Operating Cash Business Unit NPAT Impairment Income Income Expenses Performance NPAT 1H20 2 Expense 1H20 3 RBS 48.4% 3.3% 2.4% 3.8% (13.4%) 5.6% 37.9% BPB 33.5% 1.2% 4.2% (0.3%) 32.0% (3.0%) 35.1% IB&M 10.6% (8.5%) (1.0%) (13.1%) 71.1% (20.9%) 40.8% WM 2.
Slide 85: Group NPAT and divestments
$m $m ~ 97% of Group NPAT1 Divestments/Strategic reviews Movements are 1H20 vs 1H19 Movements are 1H20 vs 1H19 6% (3%) (21%) Flat (23%) 17% (8%) (95%) (95%) Large 2,166 1,498 614 476 100 (415) 127 6 1 11 RBS 2 BPB IB&M ASB IFS Other Wealth Wealth Mortgage Broking IFS/Other - (NZD) Management - Manag
Slide 86: Retail Banking Services
% of Group NPAT2 Volume growth Balancing growth and returns - managing regulatory requirements 6 months to Dec 19 (annualised) 48% 7.7% 4.8% 7.5% System 2.8% System 4 Home 3 Household Loans Deposits $m Dec 18 Dec 19 % Margin RBS provides simple, convenient and Income 5,235 5,406 3 Driven by lower wh
Slide 87: Business and Private Banking
% of Group NPAT1 Volume growth Dec 19 vs Dec 18 Business Services +5% Hospitality +5% 34% Property Investment +5% 1.5% 1.9% -0.8% Business Home Deposits Lending Loans Business and Private Banking serves the $m Dec 18 Dec 19 % Margin banking needs of business, corporate and Income 3,626 3,670 1 Highe
Slide 88: Institutional Banking and Markets
% of Group NPAT1 Volume growth Front book discipline, back book optimisation, and 11% impacts from SA-CCR requirements in current half. RWA $bn 101 97 96 Other 90 86 86 13 16 20 17 19 14 88 81 76 73 67 72 Credit Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 $m Dec 18 Dec 19 % Margin Institutional Bankin
Slide 89: New Zealand (ASB)
% of Group NPAT1 Volume growth Solid volume growth in lending and deposits 13% 12 months to Dec 19 3% 5% Deposits 2 Lending $m Dec 18 Dec 19 % Margin ASB provides a range of banking, wealth and Income 1,372 1,383 1 Declining margin reflecting the lower interest insurance products and services to its
Slide 90: Wealth, CFSGAM and Life
Wealth1 CFSGAM (Discontinued) (Continuing) CFSGAM was sold to Mitsubishi UFJ Trust and Banking Corporation (MUTB). Results reflect performance up until 2 August 2019 Higher average FUA has been mainly offset by platform pricing changes 5.9% % FUA Growth(4) 223 Sep 19 vs Sep 18 Movements 1H20 vs 1H19
Slide 91: Home and Consumer Lending
! Home and Consumer Lending 9
Slide 92: Housing market and lending demand
Lower interest rates supportive of new lending New lending demand underpins rising house Demand is further supported by prices, particularly in Sydney and Melbourne population growth Housing Loan approvals1 Dwelling prices2 Population growth1 $bn (excluding refinancing) Index ‘000 (indexed) (annual
Slide 93: Home loan balance growth and fundings
CBA balance growth above system Growth driven by new fundings Fundings remain strong CBA growth vs system1 Home Loan Fundings ($bn)2 Fundings2 ($bn) ~1.5x +8% 9.5 8.0 8.5 8.4 8.3 8.1 9.1 9.1 49 45 49 43 53 6.6 6.5 7.2 7.4 7.3 1.3x Investment 14 14 15 13 12 0.9x Owner- 35 32 35 31 38 Occupied Dec 18
Slide 94: Home loan origination standards
~60% of the book originated under tightened standards from 2016 New Loan Assessment All income used in application to assess serviceability is verified • Serviceability buffers on income and debt in line with regulatory guidance 80% or lower cap on less stable income sources (e.g rent, bonus) •
Slide 95: Borrowing capacity and interest rate buffers
Borrowing capacity Lower floor rates supportive - broadly offsetting impact of revised HEM Increase driven by: Change in maximum borrowing capacity2 • Reduction in floor Interest rate buffers3 (%) 160% Indexed December 2016 assessment rate (Loans assessed based on the higher of the customer rate4 +
Slide 96: Repayment buffers and income bands
Repayment buffers Those with less than 1 month buffer include investors and new borrowers (Payments in advance2, % of accounts) <1 month Residual 9.6% 10.3% Dec 18 Dec 19 5.6% 5.0% Structural: e.g. fixed rate loans 4.8% 4.8% 34.4%34.0% New Accounts: <1 year on book 31.5%32.3% 14.4% 13.9% 12.1%12.0%
Slide 97: Dynamic LVR and negative equity
Average Portfolio Dynamic LVR2 70% Dynamic LVR Bands3 Dec 18 60% Jun 19 % of total Portfolio Accounts 50% Dec 19 40% 52% 53% 30% 51% 20% 10% 0% LVR LVR LVR LVR LVR LVR LVR Dec 18 Jun 19 Dec 19 ≤60% 60%- 70%- 80%- 90%- 95%- >100% 70% 80% 90% 95% 100% Negative Equity Negative Equity4 70% Dynamic LVR B
Slide 98: Home loan portfolio profile - CBA
Portfolio1 Dec 18 Jun 19 Dec 19 New Business1 Dec 18 Jun 19 Dec 19 Total Balances - Spot ($bn) 458 467 477 Total Funding ($bn) 49 43 53 Total Balances - Average ($bn) 455 462 472 Average Funding Size ($’000)7 326 320 343 8 Total Accounts (m) 1.8 1.8 1.8 Serviceability Buffer (%) 2.25 2.25 2.50 Varia
Slide 99: Home loan portfolio profile - Bankwest
Portfolio1 Dec 18 Jun 19 Dec 19 New Business1 Dec 18 Jun 19 Dec 19 Total Balances - Spot ($bn) 388 395 403 Total Funding ($bn) 42 36 44 Total Balances - Average ($bn) 384 391 399 Average Funding Size ($’000)6 325 317 340 Total Accounts (m) 1.5 1.5 1.6 Serviceability Buffer (%)7 2.25 2.25 2.50 Variab
Slide 100: Interest only loans
Proportion of IO loans reducing Augmented by a reducing proportion of total new business flows IO % of total home loans – total portfolio balance IO % of total home loans – new business flow 33% 19% 20% 26% 22% 23% 1H18 1H19 1H20 1H18 1H19 1H20 Switching from IO to principal and interest peaked in D
Slide 101: Home loan arrears
Group portfolio arrears improved Trends are broadly consistent across …with interest only arrears improved over this half loan types last 12 months Group Arrears by Portfolio Bankwest Arrears by Product 1.0% Arrears by Repayment Type 1.2% 1.0% Group 90+ days CBA 90+ days1 90+ days1 ASB 0.8% 0.8% 0.6
Slide 102: Impaired home loans
Home loan impairments Impaired home loans ($bn) Overview 1.81 1.85 1.55 0.17 0.31 • WA/QLD account for 63% of total impaired home loans1. 0.10 ASB • ASB recently adopted a centralised hardship management model CBA1 1.45 1.64 1.54 which drove the recent increase in impairments. Process for identifica
Slide 103: Home loan losses and insurance profile
Losses to average gross loans2 Portfolio Insurance Profile3 2.5% % of Home Loan portfolio Current4 Historical Avg.5 Excess of loss re- insurance 4% Insurance with Genworth 2.0% or QBE for higher risk Group Total Loans 0.12% 0.31% 21% loans above 80% LVR CBA Home Loans 0.02% 0.02% 1.5% 5% Insurance n
Slide 104: First Home Loan Deposit Scheme
Australian Government initiative, from 1 Jan 2020 Supporting eligible first home buyers purchase a home Minimum deposit of 5% of the property’s value Supporting up to 10,000 home loans each financial year Panel of participating lenders, including Commonwealth Bank 104
Slide 105: Credit cards and personal loans
Credit Cards Group Credit Cards 2015 1.8% Bankwest 2016 Group 90+ days CBA Group 90+ days 2017 2018 ASB 1 1.1% 2019 1.2% 0.9% 0.6% 0.0% 0.7% Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Personal Loans Group Personal Loans 2015 Bankwest 2016 Group 90+ days Group
Slide 106: Business and Corporate Lending
"Business and Corporate Lending <“»
Slide 107: Business and corporate lending balances
Total lending balances down 4% from Dec 18 Front book discipline and portfolio optimisation IB&M Credit RWA’s significantly reduced Business and • Disciplined pricing - focus on relationship returns $bn BPB +2% $bn Credit RWA – IB&M Corporate Lending NZ +3% • Actively reducing capital intensity of e
Slide 108: Corporate exposures and loan impairment
Corporate Corporate Loan Impairment Expense1 Total Credit Exposures Basis Points of GLAA $bn bpts 185 470 478 455 448 435 426 397 352 361 306 309 306 98 Drought/Bushfire 47 32 19 24 18 14 13 15 6 8 11 18 1H09 1H10 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 1H09 1H10 1H11 1H12 1H13 1H14 1H15 1
Slide 109: Exposures by industry and portfolio quality
Exposures by Industry Corporate portfolio quality Group TCE by geography AAA A+ BBB+ Dec 18 Jun 19 Dec 19 Dec TCE $bn to to to Other Investment Grade 19 AA- A- BBB- Australia 77.9% 78.4% 79.5% Sovereign 97.0 10.3 0.6 - 107.9 67.9% 67.4% 66.4% New Zealand 10.4% 10.6% 10.8% Property 3.6 6.2 16.4 44.9
Slide 110: Group TCE and TIA by sector
Group TCE TIA $m TIA % of TCE Jun 19 Dec 19 Jun 19 Dec 19 Jun 19 Dec 19 Consumer 58.6% 60.0% 2,101 2,111 0.33% 0.32% Sovereign 9.7% 9.9% - - - - Property 6.3% 6.5% 775 835 1.14% 1.17% Banks 4.5% 3.0% 9 - 0.02% - Finance – Other 4.9% 4.9% 35 33 0.07% 0.06% Retail & Wholesale Trade 1.9% 1.9% 636 647 3
Slide 111: Group exposure to a selected sector
Group exposure Dec 18 Exposures of $8.1bn (0.7% of Group TCE) with no material 8.3 8.2 8.1 Jun 19 changes to sector composition. Dec 19 Portfolio rated 18% investment grade and 41% of exposures 17 18 18 secured. Industry deterioration continues due to difficult market 7.1 6.5 210 170 5.1 93 0.
Slide 112: Property exposures
Increase in Property exposures of 4.3% for the half driven 71.1 Group exposure Dec 18 67.2 68.2 Jun 19 by increased exposure to investors. Dec 19 Diversified across sectors and by counterparty with the top 20 counterparties representing 16.8% of the portfolio and 34 35 37 having a weighted avera
Slide 113: Apartment development exposure
Apartment Development1 exposure reduced by $3.3bn (63%) since Total Residential Profile Apartment Development1 $9.0bn (13% of CP) $1.9bn (0.2% of TCE) Dec 16. Project specific issues for a small number of projects resulting in pre- Perth Other sale settlements taking longer, delaying full repaym
Slide 114: Agriculture exposure
Group exposure Dec 18 Group agriculture exposure of $22.6bn (2.1% of Group TCE) – 22.4 22.5 22.6 Jun 19 diversified by geography, sector, client base. Dec 19 Australian agriculture portfolio continues to face drought conditions with additional impact expected from bushfires. The Australian dairy
Slide 115: Australian agriculture and drought
Emergency Assistance Package enacted June 2018 for drought and measures extended to fire affected customers in November 2019. Drought conditions continue to deteriorate predominantly in NSW and QLD with pockets of VIC, SA and WA also impacted. Past droughts have not materially impacted the por
Slide 116: Retail trade exposure
Group exposure Dec 18 The retail trade sector remains weak, challenged by low wage 11.7 11.3 10.2 Jun 19 Dec 19 growth, continued subdued consumer sentiment and online disruption. 23 24 24 Retail trading conditions, particularly in the discretionary retail 61 57 sectors, are expected to continue
Slide 117: Deposits, Funding and Liquidity
! Deposits, Funding and Liquidity <>
Slide 118: Deposit funding, wholesale funding, NSFR and LCR
Resilient balance sheet with ongoing Stable wholesale funding composition ...with a >5.0yrs WAM to reduce customer deposit growth weighted to longer term funding… refinancing risk Deposit funding Long Term Funding Long Term Funding WAM1 % of total wholesale funding tenor, years 68% 69% 71% 66% 66% 6
Slide 119: Deposit funding and deposits vs peers
Deposit funding $bn Deposits vs peers1 Deposits in NSFR5 As at 31 Dec 2019 ($bn) 71% 515 Peers as at 30 September 20196 69% 431 68% Other deposits 251 340 250 CBA 66% 283 66% 214 Peer 3 206 160 Household 264 Peer 1 deposits 217 134 123 200 CBA Peer 2 overweight Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 CBA
Slide 120: Funding portfolio mix
Portfolio mix Short term funding by product¹ Certificate of Deposits 51% Short term 34% 34% 34% funding¹ FI Deposits 24% 66% 66% 66% Long term Commercial Paper 20% Funding2 5.0 5.1 5.4 WAM3 WAM3 WAM3 MTN 5% Dec 18 Jun 19 Dec 19 Other 0% Long term funding by currency2 Long term funding by product2 De
Slide 121: Benchmark and term issuance
Group 1H20 benchmark issuance New term issuance by currency New term issuance by tenor Tenor Volume Spread at Issue 25% 21% Date Entity Type 32% (yr) (m) (bpts) 38% 42% 50% 45% AUD 63% >5 years Aug 19 ASB NZD Senior 3 NZD 600 MS + 85 41% USD 3-5 years Sep 19 CBA USD Tier 2 15NC10/20 USD 2,500 T+205
Slide 122: NSFR and LCR movements
113% NSFR NSFR (%) 654 Dec 19 578 1.8 (0.5) (0.9) 113% Liquids and Other Assets 2 Wholesale 112% 0.8 0.0 Funding & Other Other Loans Retail/SME Deposits Residential Mortgages ≤ 35% $bn risk weight 3 Capital Jun 19 Jun 19 Capital Retail/SME Wholesale Residential Liquids & Dec 19 Dec 19 Deposits Fundi
Slide 123: Capital
! Capital
Slide 124: CET1 ratios and international comparison
CET1 CET1 CET1 478% APRA International Level 2 Level 2 17.5% Assets 11.7% 16.5% 123% 10.8% 10.7% 16.2% 2007 2009 2011 2013 2015 2017 2019 Dec 18 Jun 19 Dec 19 Dec 18 Jun 19 Dec 19 International CET1 ratios 17.5 17.3 G-SIBs in dark grey 16.4 15.9 15.9 15.2 15.1 14.7 14.4 14.4 14.3 14.0 13.9 13.6 13.6
Slide 125: Interim dividend
Interim Dividend cents per share Cash NPAT1 Payout Ratio Cash NPAT1 Payout Ratio (ex. Notable items) 2002 198 198 199 200 200 79% 71% 70% 72% 74% 70% 76% 1H15 1H16 1H17 1H18 1H19 1H20 1. Cash NPAT inclusive of discontinued operations. 2. The DRP will apply with no discount and will be neutralised. 1
Slide 126: Franking and geographic earnings
Overview Geographical distribution Geographic earnings • CBA’s actual dividend franking account balance for tax purposes is (% of total Group Cash Profit before tax) currently ~$3bn1. Int’l NZ • The interim dividend will utilise ~$1.5bn of franking credits. • Approximately 85% of CBA’s profit is gen
Slide 127: Shares, dividends, NTA and TSR
Number of shares (bn) Dividend Per Share ($)1 3.5 Capital raisings for 3.0 4.31 strengthening during 2.9 GFC 2.6 2.8 2.1 1.74 1.8 1.30 1.66 1.5 1.8 1.23 1.60 1.5 1.5 0.64 1.3 0.54 CBA Peers Increase due to acquisitions CBA Peers FY00 FY19 FY00 FY19 Net Tangible Assets per share2 ($) Total Shareholde
Slide 128: CET1, RWA and IRRBB
bpts CET1 $bn 3 Total Risk Weighted Assets (RWA) (23) 83 100 27 (90) (0.9) (5.1) 11.7% 453 2.6 (0.3) 449 Market Risk 10.7% 10 10 5 9 IRRBB RWA (19) Credit RWA1 12 IRRBB 2 Op Risk 60 60 Other (4) Market RWA 12 Op RWA 1 CET1 impact bpts2 375 Credit 373 Risk (7) 2 12 1 8 Jun 19 SA-CCR/ Divestments 2H19
Slide 129: Organic capital generation
Organic Capital Generation1 1H20 $m Bpts RBS 2,243 50 Organic capital generation Opportunities BPB 1,528 34 Since Basel III, bpts • Simpler operating model IB&M 999 22 37 • Cost reduction New Zealand 426 9 30 11 • Capital efficient NPAT DRP Wealth 296 7 growth 19 IFS and Other 213 5 • Improved data
Slide 130: Level 1 CET1 movement
CET1, bpts Organic +55bpts Pro-forma 12.5% 145 4 (4) 12.1% Differences between Level 1 and Level 2 Impact (bpts) 65 (94) Lower RWA’s at Level 1 due to the exclusion of 135 11.2% (24) banking subsidiaries Investment in insurance subsidiaries risk weighted 10 at 400% at Level 1 - full deduction at Lev
Slide 131: Internationally comparable CET1
bpts Internationally comparable1 CET1 CET1 APRA 11.7% Equity investments 1.0% Capitalised expenses 0.1% 64 18 17.5% Deferred tax assets 0.4% 77 (115) 126 IRRBB RWA 0.2% 16.2% (40) Residential mortgages 2.3% Other retail standardised exposures 0.1% Unsecured non-retail exposures 0.4% Non-retail undra
Slide 132: Expected loss and eligible provisions
$m Dec 18 Jun 19 Dec 19 Regulatory Expected Loss (EL) 4,600 4,706 4,440 Eligible Provisions (EP) Collective Provisions1 3,4532 3,5102 3,6632 Specific Provisions1,3 1,650 1,751 1,647 General Reserve for Credit Losses adjustment4 539 515 - Less: ineligible provisions (standardised portfolio) (325) (35
Slide 133: APRA capital framework changes
Change Details Implementation APRA’s • Capital to exceed unquestionably strong benchmark of CET1 >10.5% by 1 Jan 2020. 1 Jan 2020 unquestionably strong APRA commenced consultation on: • Revisions to risk-based capital requirements for credit, interest rate risk in the banking book and operational ri
Slide 134: Total capital requirement for D-SIBs
18.0% • Additional 3% of RWA in Total Capital applicable to all 17.4% Capital Surplus domestically systemically important banks (D-SIBs) by 1 Jan 24. 15.0% Tier 2 14.5% • This represents additional $13.5bn of Total Capital requirement for CBA. Capital Surplus 14.1% Additional Tier 1 Capital • 1H20 L
Slide 135: RBNZ capital requirement changes
RBNZ capital requirement changes 16.0% 18.0% • ASB will require an additional ~NZ$3bn in Tier 1 capital (of which Minimum 2.0% Tier 2 ~NZ$2.5bn must be CET1 capital) assuming current balance Tier 1 sheet size and composition, and under APRA’s proposed 2.5% AT1 revisions to APS111, an equity injectio
Slide 136: Leverage ratio
Leverage ratio introduced to constrain the build-up of leverage in $m Dec 19 the banking system Tier 1 Capital 63,218 Leverage ratio = Tier 1 Capital Total Exposures 1,040,423 Total Exposures Leverage Ratio (APRA) 6.1% 7.0% $m Dec 19 6.4% 6.5% 6.1% Proposed Group Total Assets 979,868 5.6% 5.6% 3.5%
Slide 137: Economic Overview
! Economic Overview Y 137
Slide 138: Australian economic forecasts
GDP % Underlying CPI % Unemployment rate % GDP Nominal GDP 2.0 5.9 6.2 1.7 1.8 1.7 5.7 1.6 2.8 2.9 2.5 4.9 5.3 1.4 5.5 2.3 3.8 4.0 5.3 2.1 1.8 5.1 5.1 2.3 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Cash rate % Total credit
Slide 139: Global economy slowed in 2019
The global economy slowed in 2019… …as the trade war lifted uncertainty… …and global trade and production weakened Index Global PMI1 Index Global Policy Uncertainty2 % Global Trade & Production3 60 (higher readings indicate greater uncertainty) (annual % change) 400 8 Services Global industrial 56 E
Slide 140: GDP, unemployment and inflation
Real GDP growth is at the low end of the range Progress in reducing unemployment Inflation rates remain low % GDP Growth1 % Unemployment Rate1 % CPI Growth1 6 6 6 4 4 4 2 2 2 0 0 0 Dec 07 Dec 11 Dec 15 Dec 19 Dec 07 Dec 11 Dec 15 Dec 19 Dec 07 Dec 11 Dec 15 Dec 19 Nominal GDP growth to slow as terms
Slide 141: Consumer spending and household debt
Consumer spending remains soft Residential construction is falling Household debt is high and job security fears persist % p.a Spending & Income1 ‘000s Building approvals & dwelling starts1 Index Household indicators2 % (rolling five-year average) (rolling annual total) 90 211 6 Household debt to Re
Slide 142: Economic resilience and twin surpluses
The 29-year plus expansion highlights Australia’s The “twin surpluses” provide some protection Economic parameters are favourable economic resilience % Australia: Key Balances1 Index Economic Parameters2 Index % Real GDP1 (annual % change) (rolling annual total, % of GDP) 108 6 3 180 GS Financial Re
Slide 143: Housing market and growth constraints easing
Some of the temporary constraints on The turn in the housing market is boosting Leading indicators like building approvals economic growth are easing household wealth suggest a bottom in resi construction Temporary Growth Disruptors1 Household wealth & spending % Building approvals Index % ‘000 (Q1’
Slide 144: Drought and farm incomes
Drought exerting a prolonged drag on the …and falling farm incomes that contribute to We are now seeing a meaningful impact on economy with declining farm production… weaknesses in household income CPI growth Index Farm Indicators Index Farm Income Index CPI Indicators Meat & (Q1’15 = 100)1 (Q1’15 =
Slide 145: Coronavirus impact on tourism and education
SARS IMPACT ON GDP IN 20031 TOURISM & EDUCATION & SARS2 TOURISM & THE ECONOMY3 (% reduction) '000 (Nov'02 to Jul'03, rolling annual) '000 (% of total in 2018/19) China & Australia4 % % 170 4900 US Chinese share of: 2003 2019 Japan Australia Australian exports 8% 34% New Zealand 165 4825 Indonesia In
Slide 146: Household Spending Intentions index
Combines actual CBA transactional data and publically available Google Trends search data. Combined, these two data sets provide unique insights and a new perspective on the Australian economy. Results are published monthly for 7 different categories of the economy: Home buying, Retail, Travel
Slide 147: Home buying and retail spending intentions
% % CBA HSI: Home Buying1 CBA HSI: Retail Sales1 35 (annual % change) (annual % change) Smoothed 6 20 HSI Smoothed 2 5 HSI -10 -2 -25 -6 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Combines actual CBA transactional data and Google Trends search data to derive a measure of
Slide 148: New Zealand economic forecasts
GDP % CPI % Unemployment rate % GDP Nominal GDP 2.1 3.7 6.6 6.7 1.9 5.2 5.0 3.4 3.2 5.9 1.7 4.5 2.8 5.2 1.4 1.5 4.1 4.2 4.2 2.5 4.3 2.0 3.6 0.3 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Cash rate % Total credit growth % Ho
Slide 149: New Zealand dairy, terms of trade, rates
Dairy prices support above-average earnings NZ’s Terms of Trade expected to remain high % Inflation to hold up near 2% Global dairy trade auction results1 NZ Terms of Trade2 6 NZ CPI inflation3 (USD/tonne) Index (f) 6,000 5 1500 Annual % 4 5,000 Whole Milk Powder 1300 3 4,000 1100 2 3,000 1 2,000 90
Slide 150: Sources, Glossary & Notes
! Sources, Glossary & Notes Y
Slide 151: Notes: Core franchise strength
Core franchise strength Slide 9 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 152: Notes: Balanced outcomes
Balanced outcomes Slide 38 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 insti
Slide 153: Notes: Best in digital
Best in digital Slide 46 1. Net Promoter Score (NPS) - Mobile App (via mobile app on a mobile phone or tablet): Roy Morgan Research. Australian population 14+ who used the internet banking services of their (self-nominated) main financial institution in the last 4 weeks, rolling average of the last
Slide 154: Glossary: Funding, risk, capital
Capital & Other Funding & Risk Risk Weighted Assets or The value of the Group’s On and Off Balance Sheet assets are adjusted by risk Liquidity Coverage Ratio The LCR is the first quantitative liquidity measure that is part of the Basel III RWA weights calculated according to various APRA prudential
Slide 155: For more information
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
Slide 156: Thank You
Thank You
Commonwealth Bank of Australia — H1 FY2020 Earnings Presentation on 6ix