Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — FY2006 Earnings Presentation
118 slides from Commonwealth Bank Of Australia's earnings presentation, Aug 11, 2006
Slide 1: Presentation of Full Year Results
Ralph Norris CHIEF EXECUTIVE OFFICER Gary Thurshy CHIEF FINANCIAL OFFICER (ACTING) 8 August 2006 Commenweatth Bank of Australia aan ram tet PRESENTATION OF FULL YEAR RESULTS For 30 June 2008,
Slide 2: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 9 August 2006. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to
Slide 3: Agenda
Agenda = Full Year Results — Ralph Norris — Highlights — Outlook = Full Year Results - Gary Thursby = Questions Conmonwealthiax jp 2
Slide 4: Notes
Notes Conmonwealthiax <p +
Slide 5: Highlights
Highlights = Very good result - Cash NPAT of $4,053 million = Good volume growth across the business = Focus on profitable growth = Successful delivery of WnB and good progress on new strategic initiatives Conmonwealthiak “jp 5
Slide 6: Other Key Information
Other Key Information Notes Cash NPAT excluding Hong Keng 6m) un 08 Dee 05: Cah NPAT 192 2.081 Lase: Praft on sale of Hong Kong 0 a9) Cah NPAT (excl HK sale) 1902 1.918, Some overall Bank indicators un 08 Dee 08 Number of branehes 4.008 4007 (Weighted av No. ofshares (cash) 1.288m 4,281m Nat tangibl
Slide 7: Highlights
Highlights 6 months 12 months Jun 06 vs Jun 06 vs wun 0S | pec 05 Jun 08 Cash NPAT (excl HK) 3,908 t 4% t 12% Cash EPS (excl HK) 304.6 t 4% t 15% Dividend 224 - t 14% Return on Equity - Cash (excl HK) 20.6% t 70 bpts t 180 bpts Gross impaired assets / RWA 0.15% i 5 bpts i 5 bpts Commonwealthiak <p 7
Slide 8: Notes
Notes Conmonwealthiax <p =
Slide 9: Good full year result
Good full year result us Hatin — eee | Scorecar jn 4 = SS Volume Growth Non intincome |v Expenses Creat Quatty Cech Baling" Funds Thewrance” Gt" WaB "Gach Frofton” Caan ‘| Cash EPS 4 pat Net investment pooftpre ‘slech NPAT Janos vaume ne ie kas unos CashEPS CashEPS 284.8 15% > “9046
Slide 10: Other Key Information
Other Key Information Notes = The payout ratio (cash basis) is calculated according to the following criteria: Payout ratio = DPS (in $) x number of shares (end of period) Cash NPAT 2.24 1,283 ie, 1% 4,053 * Payout ratio exclucing HK sale = 74% ConmonwealthBark “> 10
Slide 11: Highlights - dividend
Highlights - dividend Dividend (cents per share) 240 20 160 5 1 é 82 a 0 04 2002 2003 2005 » First Half Second Half ConmonwealthBank ?
Slide 12: Other Key Information Notes
Other Key Information Notes wun06 DecOS .4n05 Deco4 Juno4 Banking Home loans 188% 18.8% 190% 189% 189% Credit cards 05% MAW 228% 228% 227% Retall deposits 22% 229% 730% 236% 237% Personal ending ® 181% 16.0% 167% 167% 150% Business lending ® 131% 13.5% 132% 126% 137% Transaction services (corporate)
Slide 13: Highlights - market position
Highlights - market position Home Loans Personal Lending Credit Cards Retail Deposits NZ Lending NZ Deposits Business Lending Transaction Services (corporate) Transaction Services (commercial) Equities Trading (CommSec) Funds Mgt. - Aust. Retail Aust.Life Insurance (total risk) RRR RRR RRR Conmonwea
Slide 14: Notes
Notes ConmonwealthBark > 14
Slide 15: Which New Bank - A Success
Which New Bank - A Success = Technology transformation — Delivered ahead of schedule — Within budget = Financial and Productivity Target Outcome Financial Benefit $300m $1,044m EPS Growth -CAGR 10%" 14% Banking 48% AT1% Funds Management 0.74% 0.74% Insurance 42% 36.7% = Customer Satisfaction — Targe
Slide 16: Notes
Notes ConmonwealthBark > ny
Slide 17: CEO Priorities & Measures
CEO Priorities & Measures = Customer Service = Business Banking = Technology & Operational Excellence = Trust & Team Spirit > Superior operating and financial results => Australia’s finest financial services organisation ConmonwealthBark “> 7
Slide 18: Notes
Notes ConmonwealthBark > 18
Slide 19: Customer Service
Customer Service = Roll out of Sales and Service programme (SUCCESS) well underway = Increased resourcing in customer facing roles = Launch of new competitive products and Saturday trading = Some leading indicators showing positive trends = Internal measurements will track and measure customer advoc
Slide 20: Notes
Notes ConmonwealthBark > 2
Slide 21: Business Banking
Business Banking = Management and structural changes better align business with customer needs = Business bankers back into the branches = CommSee for Business roll out now complete = Commbiz being rolled out to key customers over next 3 months = Range of metrics being measured including customer sa
Slide 22: Notes
Notes ConmonwealthBark > 2
Slide 23: Technology & Operational Excellence
Technology & Operational Excellence = Appointment of new IT Head to lead Group wide Technology = Successful renegotiation of EPS component of EDS contract = Redirect spend from operational to value creation initiatives = New corporate services function to drive bank-wide cost management culture = Ob
Slide 24: Notes
Notes ConmonwealthBark > 2a
Slide 25: Trust & Team Spirit
Trust & Team Spirit Recent management changes strengthen the leadership team while building greater collaboration across the Group = Focus on developing people through investment in talent and training = Introduction of a number of initiatives for our people = Continuing measurement of progress usin
Slide 26: Notes
Notes ConmonwealthBark > 20
Slide 27: 2007 outlook
2007 outlook Good result with earnings momentum going into new fiscal year Continuing real progress made with strategic initiatives Mainly positive outlook for the domestic economy Competitive environment for financial services Confident in our ability to deliver solid profitable growth Conmonwealth
Slide 28: Notes
Notes ConmonwealthBark > 2
Slide 29: Gary Thursby - Presentation of Full Year Results
Gary Thurshy CHIEF FINANCIAL OFFICER (ACTING) 8 August 2006 Commenweatth Bank of Australia aan ram ret PRESENTATION OF FULL YEAR RESULTS For 30 June 2008,
Slide 30: Notes
Notes ConmonwealthBark > 2
Slide 31: Highlights - NPAT growth
Highlights - NPAT growth 12 months 6 months Jun0s Junosvs| [ Juno Decos Jun0é vs $M Junos $M $M Dec 05 NPAT (statutory) 3,400 16% 1,929 1,999 a) Add baok AIFRS non cash , foe 92 36% 62 - NPAT (cash) 3,492 16% 1,992 2,061 @x) Less profit on sale Hong Kong business - - ~ (145) - NPAT (cash excluding H
Slide 32: Other Key Information
Other Key Information Notes sutdintopest IRGE GE mae) [mE Geo amie ae Sa] [PR RSE Woortccwwics) | ope annum | ager ape Returns (ex HK after tax) ia 7 Large 28 a om) Woot centeeny) | SETS a] ee a om Wortannae) | apm ace vn | | sana ae cay pension expense eh 6 53% ® (a) 68%) Woorecesece) | Ses ann aoe
Slide 33: Highlights - underlying profit by business
Highlights - underlying profit by business 12 months 6 months Jun0S Jun06 vs Jun06 DecOS Jun06 vs $M Jun 05 $M $M Dec 05 Banking 2,913 1% 1,638 1,589 3% Funds Management 361 14% 217 183, 19% Insurance 156 38% 12 103 9% Underlying Profit 3,420 12% 1,967 1875 5% Conmonwealth2ank »~ 3
Slide 34: Other Key Information Notes
Other Key Information Notes Which New Bank estimates Benefits | 2004 | 2005 | 2006 Targets® | 200 | 620 | 900 Actual zat | 72a | 1,044 These were the original ful year targets set out inthe ‘Septem ber 2003 presentation Investment spend 2004 | 2005 | 2006 | Total Original eeo | 510 | ato | 1480 Actu
Slide 35: Which new Bank - Benefits
Which new Bank - Benefits 2005/06 $1,044m SLOAN cagetv Se0om) 2004/05 $724m Sra eee 2003/04 $237m SBSTIn toast ves seam) was $200) = . . Dec 03 Jun 04 Dec 04 Jun 05 Deco5 dun 06 © Cost Saving mi Revenue Benefit ConmonwealthBark “yp
Slide 36: Other Key Information
Other Key Information Notes Balance of capitalised software costs Smilin Capitalised software shan 06 229 Decos Jun 05 198 182 Dec 04 163 sun 04 107 Expense ratios Jun 06 Dec 05 Jun 05 Dec 04 Jun 04 Banking Expansete incane a4 91 a7 a5 m4 Undatying Expense to hoome 44 81 #68 92 8 Funds Management Es
Slide 37: Productivity Improvements
Productivity Improvements Expense ratios ( ane 54.7% cack arg = 4.94 y 49% AAI gg 50.4% Banking a pd e «@ 42% 0.87% ct ‘AGR = 5.3% Funds Mgt” 0.74% 0.74% Jun 03 Jun 06 © On a cash basis @ Expense to incorre: © Expense to average funds under administration SAGAAP equivalent basis © Expense ta average
Slide 38: Other Key Information
Other Key Information Notes 12 months 6 months conpatbleepanses [lin an ante] [Unis ome kn tee oa ans | | Ose Slat opens zee ze ow| | we7 tae ae Occupancy ndeauirment | ect oats | | ott 90 IT Services ws se | ow | | soe) Postage and stam | 210 0m | | orm Fees and oommiesione wo ot aw | | mz om ow Ad
Slide 39: 2006 Operating expenses
2006 Operating expenses 187 ~ no 9 $6,719 rE. a 4+3.3% EB a 20) Er ‘a -_ — = —_ 2005 Hong Kong Gandelacq FX Volume Unit Pricing = New Underlying = 2006 disposal Expenses Compliance Strategic growth (FM&ins) Initiative Initiatives ConmonwealthBark 2
Slide 40: Other Key Information
Other Key Information Notes 2006 results include: Gross] Cap&] Pal Provision ‘Wn initiatives 28 am 12 Other strategic intiatives a7 62) 39 Compliance & other projects CMLA control enviranment 66 - 6 Other (ine! Basel Il, SOX, IFRS, ete) 38 : 8 Arartisation of Software Assets 43 - 8 Total 468 (175) 2
Slide 41: 2007 Expense Drivers
2007 Expense Drivers 2006 Operating Expenses $6bn 2007 Expense driver increases: CPI & general salaries +3-4% Volume related expenses +1% Additional frontline & permanent staff +1-2% Additional project expenditure +1-2% Savings targeted: Technology savings (2%) Further WnB benefit & other expense re
Slide 42: Notes
Notes ConmonwealthBark > 2
Slide 43: Segment Results: Banking
Segment Results : Banking Conmonwealthiax <p =
Slide 44: Other Key Information
Other Key Information Notes Jun 06 Avvinterest earning assets (5m) 282,553 Netint income (excl securtisetion ($m) 3,202 Net interest Margin (ALFR'S) (op) 2.2% *% of operating Income Jun 06 Net interest income 54% ‘ther banking income 28% Funds Mat. income 14% Insurance income 6% Total 100% (© Has he
Slide 45: Banking - underlying profit
Banking - underlying profit = 11% underlying profit growth = Strong volume growth = Net interest income growth strong = Good expense control = Underlying credit quality remains sound Underlying profit up 11% since Jun 05 191 (178) 8) ace PUI ce at [ g $3,227m 2913 sunos wn (2 expenses Bat TE sano Co
Slide 46: Other Key Information
Other Key Information Notes ‘2 monthe ‘6 months Reconcilistion of Nt [ung tun 05 un Gwe] [amd6 De005 Am 06 ve Interest Margin % Ye duns % Ye Dee 05 Netinterast margin 294-24 Opis 228 288 (*O)bRIe AIFRS Volatility 0.02 2bpts oot ‘bet Underlying Net 298 24 Mpls 230 230 bre Interest margin (1 nisily tr
Slide 47: NIM - Full Year Average basis points
NIM - Full Year Average 7 basis points ————_——_,. 2.45 (0.02) 2.43 (0.02) 03) — 0.02) 0.03)_— 0.03) 02) 0.01 234 FYJune'0S AIRS FYJune'0S AIFRS Pricing —-Non_—Funding Mik Asset Mix June 06 AGAAP AIRS Volatity Lending AIFRS IEA ConmonwealthBank ? ar
Slide 48: Notes
Notes Conmonwealthiax <p =
Slide 49: NIM - Half Year basis points
NIM - Half Year 9 basis paints —_— 2.39 04) Deco IFRS Flawanttom Secondhalf June 06 Restated first helt pricing / ‘unig mix 2M September 2006 Quarterly NIM 237 2.31 December March June ConmonwealthBank “? cS
Slide 50: Other Key Information
Other Key Information Notes AIFRS Impact of hedging derivatives Junoé Dec 05 $M $M Net Interest Income 24 6 Other banking income 9) (40) Net Impact (18) (4) ‘There has been a reclassification of $2am between Net Interest Income and Other Banking Income in Dec 05 half ConmonwealthBark > 2
Slide 51: Other Banking income - key components
Other Banking income - key components 12 months 6 months Juno5 Junosvs|] [ unos Decos5 unos vs $m Junos $m $M Dec 05 Commissions & Fees 1545 6% 8200815 1% Lending Fees 733 9% at 389 6% Trading Income 440 15% 261 244 1% Other 127 38% 198 a7 Large 2.845 9% 16301485 10% Non trading derivatives a - 693)
Slide 52: Notes
Notes 6 months Jun 06 vs Jun 06 Dec05 Dec 05 Home Loans Ge) 701 2%, Consumer Finance Ea 637 A% Retail Deposits 1323 1.324 - Corporate Banking 466 486 (490, Financial Markets 475 ABA 5% Lending & Finance 631 561 12% Asia Pacific 637 529 2% Other 165 108 53% Total Banking income 4,850 4,700 3th Refer
Slide 53: Banking - Revenue by product
Banking - Revenue by product ther Ada Pacific Me Home Loans 1 6 Lending & Finance ‘2% Retail Deposts Financial markets spo 10% Corparste Banking 0% Consumer Finance 1% ‘The curent year has been afected by AIFRS 12 months Jun 06 vs Jun06__Jun05 Jun 05 Hore Loans 13901194 16% Consumer Finance 1095 985
Slide 54: Other Key Information
Other Key Information Notes Derneato growth gratile ($n) “An 6 us kn 06 ve n06 Dee05 Juno Dee0S en 05 loan Funded? me ma ms ak aducton® ie e729) aos Ne Grunté Ts Teta Hoe Lining 3585 (Bn) ‘Astalan Home Lending assets(@on) 148 1360 190TH NS Securizaon G1) 28) ON co x 17s Net (uses) ta2 169 ter 4x tte
Slide 55: Banking - Home Lending (domestic)
Banking - Home Lending (domestic) Spot Balances (including securitisation) CBA Balance Growth: . ; $130.0bn $136.00n Pe St44gon = 11% in 2006 = 15% = 7% in 2HO6 [| = Very strong second half: “Jun 05 Dee 05 “aun 06 = record approval volumes = market shares stabilised a+, Market Share = Slight margin
Slide 56: Notes
Notes ConmonwealthBark > 20
Slide 57: Home Loan Growth by Channel (Half Year)
Home Loan Growth by Channel (Half Year) (Balances sourced from each channel as a % of total CBA housing growth) 30% 4 zo% a hia wor 188% 10% . 136 8A aan 8% Gare om omer 6% ane am 47% 4% 2a 2a 2% 10% Asi ose 0% Dec 04 Jun os Dec 05 Jun os Brokers Branch 1 Premium © Total CBA, © Total Market * Doo OS
Slide 58: Other Key Information
Other Key Information Notes Half ending Personallending Jun 06 DecOS Jun 05 Jun06vs Jun O6vs gross balances sm sm $M Dec OS Jun 05 Credit cards 6.14 6,707 8,807 2% 5% Personal loans” 3,828 © 3,800 4,213 1% @%) Margin loans 5,758 4,684 4,311 23% 34% Total Personal 16,308 15,171 15,031 o% 9% Lending *
Slide 59: Banking - Personal Lending (domestic)
Banking - Personal Lending (domestic) Personal Lending Balances (") = CBA Balance growth $164bn, . $10 gg ge SEZ ang = +9% personal lending S £ 58 = +5% credit cards 42 38 38 = Credit card market share loss a Gi © to low rate cards (‘Yellow Jun 05 Dec 05 Jun 06 launched in March 06) u Credit Cards P
Slide 60: Notes
Notes ConmonwealthBark > oo
Slide 61: Banking - Deposits (domestic)
Banking - Deposits (domestic) Balances = CBA Balance Growth $71.00 ogy STOO ag pe 7200 = +8% full year 164 ® * = +2% 2HO6 J 4 24 24 23 = Margins stable a ¥ P un 05 Dec 06 Jun 08 , © Other Depa 1 Depositnot beating interest = Strong growth in NetBank 1 Savings 1 Transaction Deposits saver (+$3.6bn) —
Slide 62: Notes
Notes ConmonwealthBark > 02
Slide 63: Banking - Business Lending
Banking - Business Lending CBA Business, Corporate and = Very competitive market Institutional Lending Balances? $78.20 so = Growth in balance $68.4bn_ +1486” = 24% vs Jun 05 LI] = +8% vs Dec 05 un 05 Dec os un 06 = Introduction of CBA Business Lending Market Share!) new products 15% oe 14% h3.65% 1
Slide 64: Other Key Information
Other Key Information Notes ‘amenths months Agno ams ee ae eT Teun erin wa 7% a | | aa oe ow overneane on 20 aw | | oo 8 ow) oaiopeamg nome | aaae apm ow] | on cer ow opeaing eperset ec crag ortacaine oo | | @ om cow veevomenn ima [esa ae tan | [xo om ae vee am am | | en a tetpomane ri: ao am tow |
Slide 65: Banking - New Zealand (ASB)
Banking - New Zealand (ASB) Operational Lending* Balances (Spot - in NZD) = Cash profit up S238 gage SOM ore $38.8bn = +16% full year ° = +3% 2H06 [| = Lending balances up 17% Jun 08 Dec 06 un 06 * Operational fending = exchides treasury &stertired face NZ Housing Lending Market Share Deposits grew
Slide 66: Other Key Information
Other Key Information Notes stun 08 Wa steas3m Charge or Bad Debts 6 mtte) 21am Charge or ad Debts RWA Quaid) 0.10% Groes moar Assets” 26m Indhiualy assessed provsions si?tm Colectne provisions s1p46m Generalresine froredtosses orto») 600m Collie Provisone + General azar pretarto FWA, ome linereste
Slide 67: Notes
Notes ConmonwealthBark > 02
Slide 68: Segment Results: Funds Management
Segment Results: Funds Management ConmonwealthBark > 02
Slide 69: Other Key Information
Other Key Information Notes FUA Ay. FUACSON) Spot, FUA Gn) Margins petatng income! a. FUA Net income’ axe FUR, Expenses Opetatng expenses! auF UA Market haredt Plato (latest & Mar C6) Retall finds (Mar C6) Brealctown of funds invested Lecal equities Intemational equities LLsted and direct property F
Slide 70: Funds Management
Funds Management Underlying profit after tax up 14% = Underlying profit before tax up = +23% vs Jun 05 = +16% vs Dec 05 295 = After tax profit affected by loss of transitional tax relief 1 = Costs impacted by one-offs = Funds under administration grew 23% to $152bn Jun 05 Operating Operating Morty T
Slide 71: Other Key Information
Other Key Information Notes Total net flows un 06 sm FirctChoice & Avanteas 9397 Cash Mat 33) Other rete (2.138) Whalesale 100 Property 70s) International 2,08 Other 213) Total 8135 ‘8 months ended Dec 05 Mt 3,938 (255) 2.316) 1,188 Ge) 583 fo) 2,895 Jun 05 sm 2970 (458) 365) Gan) 3 294 ers) 099 © r
Slide 72: Funds Management - net funds flows
Funds Management - net funds flows Retail net flows ($m) €we Aare) © = CBA industry = FirstChoice attracts 00 Dp 700 record flows and can one mm reaches $25bn 0 » #10 sooo Y a a 200 = Significant inflows 0 1000 into Avanteos from tan “ceo GSJBW alliance Mar 04 Jun 04 Sep 04 Dec 04 MarOS Jun 5 SepO5
Slide 73: Notes
Notes ConmonwealthBark > 14
Slide 74: Investment Performance
Investment Performance June 2006 Gross performance and quartile ranking tyr%pa Quartile 3yr%pa Quartile Aust. Share — Core 29.1% 1 26.7% 1 Geared Share Fund 55.8% 1 51.9% 1 Imputation 26.2% 2 23.9% 3 Property Securities B7% 1 20.7% 1 Global Resources 61.2% 1 41.2% 1 Diversified 16.8% 3 14.6% 4 Austr
Slide 75: Notes
Notes ConmonwealthBark > 1
Slide 76: Segment Results: Insurance
Segment Results: Insurance ConmonwealthBark > ”
Slide 77: Insurance Results - total
Insurance Results - total = Underlying profit: = +35% on Jun 05° = +9% on Dec 05 = Solidinforce premium & operating margin growth in Australia and New Zealand = Good expense control «= Largest Life insurer in Australia and New Zealand * excluding Hong Hong qpertions Underlying 156 153 un05 Jun 05 (A
Slide 78: Notes
Notes ConmonwealthBark > 20
Slide 79: Capital Management
Capital Management ConmonwealthBark > e
Slide 80: Generation and use of Tier capital
Generation and use of Tier 1 capital 9.5% 187% (1.33%) 9.0% 05% 0.92%) 8.0% 0.63% grew) 7.46% mw 756% 7.5% 0.24% # (0.23%) 7.0% (14 basis points) 65% 6.0% Tiertan” cash” Ord, Growhin” _DRP—_chare._‘Netlesuel” Gurancy "Ther 4un 003,” NPAT Givdends RW” $822m Buyback ‘innovate andtner s00e $1dim —$4053
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Commonwealth Bank of Australia — FY2006 Earnings Presentation on 6ix