Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Debt Investor Presentation (February 2021)
66 slides from Commonwealth Bank Of Australia's debt investor presentation, Feb 10, 2021
Slide 1: Fixed Income Investor Discussion Pack
Commonwealth f° Bank Fixed Income Investor Discussion Pack For the half year ended 31 December 2020 Commonwealth Bank of Australia | ACN 123 123 124 | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000
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, 10 February 2021. It is information given in summary form and does not purport to be complete. Information in this presentation is
Slide 3: Economic Update
Economic Update CBA Chief Economist
Slide 4: Key Australian economic indicators (June FY)
MY Key Australian economic indicators (June FY) GDP % Trimmed mean CPI % Financial year average Financial year average GDP , Nominal GDP : 17 17 61 16 16 46 5.6 +8 1.3 29 49 46 2.3 2.2 -0.2 16 04 2017 2018 2019 2020 2021 2022 2017 2018 2019 2017 2018 2019 2020 2021 2022 2020 2021 2022 Unemployment r
Slide 5: The Australian COVID-19 health crisis in context
The Australian COVID-19 health crisis in context Reasonably well contained on a global scale Australia has had (relative) success in slowing the pace of the spread of COVID-19 Daily infections and deaths (per million of population) * UK Death (rhs) 15 Eurozone 4 ‘Australia 800.00 _ Infections (Ihs)
Slide 6: The Australian Economy
The Australian Economy Recovery underway across a range of indicators, caution warranted with recent outbreaks Consumer and business sentiment remains high despite falls in January Index Index 140 6 20 120 0 100 “ -40 80 Business Consumer confidence (rhs) sentiment (ihs) i «0 -80 Mar 97 Mar 01 Mar05
Slide 7: Total salary, wages & govt benefits paid
Total salary, wages & govt benefits paid, annual % change Govt Benefits Wages & Salaries Paid % % Household disposable income (lhs) Wage Price Index (rhs)
Slide 8: Thousands
$bn CBA (f) Index % Admin services Household furnishings & equipment Thousands Total 60 Retail 25 Education Food Services GDP Arts & -10 Accommodation & Recreation recreation Transport food -45 Alcohol Services -80 Jan 20 Apr 20 Jul 20 Oct 20 Jan 21 $bn $bn
Slide 9: Overview & Strategy
Overview & Strategy
Slide 10: Growth vs System (6 months to Dec 20)
>3x 1.5x 1.7x 1.1x system +5.6% +16.5% +7.4% +19.6% Growth vs System (6 months to Dec 20)
Slide 11: 1.81% 12.6% 12.8% 1.72% 1.71% 11.5% 11.3% 11.5% 11.4% 11.1% 1.64% 11.2%
1.81% 12.6% 12.8% 1.72% 1.71% 11.5% 11.3% 11.5% 11.4% 11.1% 1.64% 11.2%
Slide 12: Strengthening balance sheet and capital settings
Strengthening Already strong balance sheet and capital settings Funding = 75% deposit funded = Group transaction balances +37% Deposit funding % of total funding 74% 75% 55% Dec 20 Jun 08 Jun 20 Total provisions of $6.8bn — increased coverage Ongoing adjustments for economic forecasts, stress factor
Slide 13: Our purpose and priorities
Our purpose To improve the financial wellbeing of our customers and communities Our priorities Leadership in Australia’s Reimagined products Global best digital Simpler, better recovery and transition and services experiences and technology foundations Build Australia’s leading Anticipate changing D
Slide 14: Dec 18 Jun 19 Dec 19
+35 +30 +25 +20 +15 +10 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20
Slide 15: Simpler, better foundations
Simpler, better foundations Good progress on becoming a better bank for our customers COVID-19 support Rapid support to customers impacted by COVID-19 +250k Loan repayment deferrals >im Calls and online request for help >6.3mM Visits to COVID-19 support page >50% Of all new SME Guarantee loans Custo
Slide 16: Supporting customers through COVID-19
Supporting Simply, efficiently, effectively Support ‘So7oe,2020 Ala ‘We can. Together COVID-19 >6.3m_ support page visits <12mins_BizExpress online applications funded >730m in-app COVID-19 response messages > 1. Australian deferral accounts as at 31 January 2021. CBA Product view basis. Repayment d
Slide 17: FY19 FY20 FY18
73 41 142 33 76 25 22 21 20 19 50 43 16 16 15 15 16 45 24 23 20 13 11 8 10 14 29 26 26 17 19 17 18 18 18 18 18 17 14 1H21 FY10 FY20 FY09 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Slide 18: Sector focus
Sector focus Close monitoring as COVID-19 support measures unwind — increased provisioning in sectors of concern Sector focus + Air Transport and Services + Facing an extended period of travel restrictions * Exposure split evenly between airports/airlines + Increased provisions, reduced carrying val
Slide 19: Financials
Slide 20: Overview — 1H21 result
Overview — 1H21 result1 Key outcomes summary MY Financial Balance sheet, capital & funding Statutory NPAT? ($m) 4,877 (20.8%) Capital — CET12.5(Int'l) 18.7% +120 bpts 3 Cash NPAT® ($m) SEBS (10.8%) Capital - CET1? (APRA) 12.6% +90 bpts 3 9 ROE? % (cash) Hols (180)bpts Total assets ($bn) 1,058 +7.9%
Slide 21: Operating income
Operating income* Lower margin and impact of COVID-19, partly offset by core volume growth Comparative Movement Sequential Movement + Lower margin + COVID-19 Impact (282) + Core volume growth - Lower credit card, retail FX and deposit fee income (158) . - Lower SAF income from impairment of aircraft
Slide 22: Group margin
MY Group margint Down 4bpts excluding the impact of higher liquids — mainly continued pressure from lower interest rates Cash Rate Headwinds? FY21 vs FY20 & 7bpts - (10)bpts -|_ Minimal impact on Nil oe 3 1 Home loans: = Pricing +11 | - Switching (4) - = Discounting (4) Transactions (6) Higher depos
Slide 23: Operating expenses
Operating expenses? Up 2.3% (ex remediation), due to franchise investment, higher volumes, and continued momentum in simplification Comparative Movement? Sequential Movement Contribution toMvt! +4.6% +2.4% -0.1% +6.9% Lower remediation provisions ' 0, 77 (193)! (2.2%) — ' — 241 : Increased lending C
Slide 24: Investment spend
Investment spend? 2 Investment spend up 34%, with a higher proportion of productivity & growth related spend $m Investment spend 1H21 vs 1H20: +35% Expensed +33% Capitalised 1H20 2H20 1H21 $m Investment spend 856 Branches & Other Risk & Compliance Productivity & Growth 1H20 2H20 1H21 1. Presented on
Slide 25: Provisioning
MY Provisioning Strong provision coverage maintained — remain cautious notwithstanding improved economic outlook (vs Jun 20) Collective Provisions Total Provisions ($bn) Provisions/CRWA2 Provision Coverage 1.08% 1.44% 1.58% © collective Individual 1 consumer Corporate 181% bn Dec 20 vs 68 1.70% - Ju
Slide 26: Central Recognised Impairment
• • • 9.0 6.8 5.0 $bn Central Recognised Downside Impairment Provisions
Slide 27: Collectively Individually
1,682 Collectively Assessed 3,491 770 Individually Assessed 872 CBA Peer 2 Peer 3 Peer 1 6,815 Jun 20 Dec 20
Slide 28: Capital
Capital CET1 of 12.6% after payment of 2H20 dividend Organic Capital Generation Expected uplift (divestments) * Expected uplift (divestments) * 32-42bpts 26-36bpts +43bpts 18.7% international .6Y 12.8% 11.6% 42 17 (32) 88 8) @) 12.6% 7 APRA ‘unquestionably =. -- -4 - strong’ Regulatory Credit Risk (
Slide 29: Divestment program well progressed
Simpler, better foundations Divestment program well progressed - BoCommLife completed - Aussie Home Loans / Lendi merger announced Divestment Status Completed Sovereign TymeDigital CFSGAM Count Financial CFP Pathways Financial Wisdom PT Commonwealth Life BoCommLife Announced Comminsure Life AUSIEX C
Slide 30: Funding, Liquidity and Capital
Funding, Liquidity and Capital
Slide 31: Dec 20 Jun 21 Jun 22
51 35 33 20 20 11 Dec 20 Jun 21 Jun 22 Jun 23 Jun 24 > Jun 24 Senior Debt Covered Bond Securitisation AT1 / T2 TFF (14) 39 (13) (1) (18) 3 2 (11) 18 (5) Equity Long Long TFF Short Customer Lending Liquid Trading 10 Other** Term Term Drawings Term Deposits Assets Assets Issuance Maturities*9 Funding
Slide 32: Deposit funding
Deposit funding Highest share of stable household deposits in Australia Deposit funding Deposits vs peers? Deposits in NSFR2 $bn As at December 2020 ($bn) 590 Peers as at September 20202 74% 464 Other PA 391.307 71% deposits 300 232 = CBA Household 186 Peer 3 deposits 232 250 149141 Peer 1 Dec 19 Ju
Slide 33: Wholesale funding
Wholesale funding Diversified wholesale funding across product, currency and tenor Portfolio mix? $bn Long term funding? 61% Term Funding Facility 9% Short term funding? 31% Long term funding by currency? Dec 20 Dec 19 = AUD Dec 18 | =usD Dec 17 BEUR = Other Dec 16 nt 0% 20% 40% 60% 80% 100% Short t
Slide 34: FY20 1H21 2H21
• 7.9 • • 4.2 4.6 . 2.1 1.9 0.8 0.3 0.3 FY20 1H21 2H21 FY22 FY23 FY24 FY25 FY26+
Slide 35: Toronto Dominion 3
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 18.7 18.2 16.7 16.5 16.1 15.8 15.6 15.4 15.2 15.2 14.6 14.5 14.3 13.6 13.2 13.2 13.1 13.1 13.1 13.0 12.9 12.8 12.5 12.4 12.4 12.2 11.9 11.9 11.8 11.8 11.7 11.6 11.3 10.9 10.9 10.4 Credit Agricole SA 2, 3 9.5 Toronto Dominion
Slide 36: CET1 — internationally comparable
CET1 — internationally comparable The Group's CET1 ratio of 12.6% translates to 18.7% on an international basis Internationally comparable? CET1 bpts 113 (10) (4) 31 42 17.4% 42 2) Jun 20 Divestments APRA 2H20 Cash Underlying RWA Other Int'l Operational Dividend NPAT (excluding Op Risk Add-on Risk A
Slide 37: Regulatory capital changes
Regulatory capital changes Scheduled implementation of Basel Ill reforms in Australia deferred by one year Change Details Implementation APRA‘s revisions to the ADI capital framework Loss Absorbing Capacity ("LAC") RBNZ Capital Review Leverage ratio APS 220 Credit Risk Management Dividend Guidance a
Slide 38: Asset Quality
Asset Quality
Slide 39: Total committed exposure summary
Total committed exposure summary Close monitoring of key sectors Group TCEt TIA $m TIA % of TCE? % of provisions to TCE? Jun 20 Dec 20 Jun 20 Dec 20 Jun 20 Dec 20 Jun 20 Dec 20 Consumer 58.8% 58.7% 1,929 1,662 0.29% 0.24% 0.5% 0.5% Government, Admin., & Defence 11.8% 12.8% - - - - - z Finance & Insu
Slide 40: SA Other QLD
• • • • • Other • SA 3% Industrial 3% 11% QLD Retail Other Commercial 9% 25% 12% • WA NSW 15% 49% Residential 14% Office • Real Estate 24% VIC Investments 21% Trust 14%
Slide 41: Sector focus — transport and storage
Sector focus — transport and storage Conditions remain challenging Airlines & Aircraft Lessors + Reduced exposure by ~$1bn over last 12mths (~22%) largely due to active portfolio management, amortisation and FX movements. + ~75% of our airline portfolio exposure is to strong counterparties; state- o
Slide 42: Cafes, Restaurants & Catering Other
• • • • Cafes, Restaurants & Other Aus Overseas Catering 5% 10% 10% • Other Pubs, Clubs & Unsecured QLD 22% 14% Casinos 9% NSW 38% WA 47% Fully secured 6% Partially secured 61% 17% • Accommodation VIC 38% 18% SA 5%
Slide 43: Sector focus — retail trade
Sector focus — retail trade Consumer sentiment improving * Consumer confidence has improved in recent months with external indices moving into optimistic territory and sales up in the half year period. Relaxation of border restrictions across the country will support improvement in trade. * Increase
Slide 44: Sector focus — mining, oil and gas
Sector focus — mining, oil and gas Exposures broadly stable, well diversified + Exposures of $9.1bn (0.8% of Group TCE), reduced by $1.8bn over the past 6 months mainly from stronger AUD and reduced Oil & Gas and Iron Ore facilities. + Stable performance over the past 6 months: + Investment grade ma
Slide 45: Sector focus — construction
Sector focus — construction Outlook is uncertain Group exposure1 Dee 19 [Jun 20_| + Asa designated essential industry, the sector has continued to operate jun 20 through COVID-19 with some level of disruption and productivity loss due 9 en some le eee ee ec vay 99 99 _ Dec 20 to lockdowns and social
Slide 46: Business loan repayment deferrals
Business loan repayment deferrals? Majority of exits do not require further assistance Business loan deferrals? Deferral exits Active deferrals? Customers returning to repayments have an . 9 83k arrears profile consistent with the rest of the 2k loans or 0.3% of portfolio portfolio / + 81k accounts
Slide 47: Consumer arrears
Consumer arrears Arrears remain insulated by government support initiatives < Credit Cards+ 6.0% Group 30+ days 4.0% 2.0% 0.0% Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Credit Cards+ Group 90+ days 18% P v 1.2% 0.6% 0.0% Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Personal Loans? Group Group 30+ days ——-Bankwest CB
Slide 48: Arrears Portfolio balance balance Arrears Portfolio
6,752 6,016 11,555 9,615 5,284 9,574 118 93 91 78 92 64 Arrears Portfolio Arrears Portfolio Arrears Portfolio Arrears Portfolio Arrears Portfolio Arrears Portfolio balance balance balance balance balance balance balance balance balance balance balance balance • • • •
Slide 49: Home Lending
Home Lending
Slide 50: Alts & Ads (rhs) Residential
$ % % CBA (f) Alts & Ads (rhs) Residential (lhs)
Slide 51: Home lending overview
Home lending overview Process efficiency — above system growth - strong risk profile Consistent market share gains? Net growth this period a combination of Strong growth in new fundings Ez] strong new lending, redraws and run-off 2 Home Loan Fundings ($bn)$ +23% 23.0% $bn I 5 21.6% 11 20.7% 21.4% 65
Slide 52: FY07-FY10 FY13 FY12 FY14
FY07-FY10 FY13 FY12 FY14 FY15 FY19 FY11 FY16 FY20 FY18 FY17
Slide 53: Home loan repayment deferrals
Home loan repayment deferrals Majority of exits do not require further assistance Home loan deferrals Deferral exits Active deferrals 158k Customers exiting deferral with higher average ($51bn) payments in advance 25k loans or 1.4% of portfolio 74% with DLVR <80% 17% with 3months+ redraw/offset 28%
Slide 54: Serviceability assessment
Serviceability assessment? Tighter serviceability and underwriting standards Stricter assessment criteria applied progressively from Apr 202 + Additional cap on bonus & commission income + Manual assessment where less stable income source used + Lower of JobKeeper income or verified income prior to
Slide 55: 2.25 2.25 2.25 2.50 2.50 2.50 5.22 5.37 5.37 4.80 4.55 4.55
2.25 2.25 2.25 2.50 2.50 2.50 5.22 5.37 5.37 4.80 4.55 4.55
Slide 56: 0k to 75k 75k to 100k 100k to 125k
35% 35% 35% 34% 33% 33% 12% 12% 11% 7% 7% 7% 7% 7% 6% 7% 6% 6% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 0k to 75k 75k to 100k 100k to 125k 125k to 150k 150k to 200k 200k to 500k > 500k 0k to 75k 75k to 100k 100k to 125k 125k to 150k 150k to 200k 200k to 500k > 500k
Slide 57: Home loan portfolio - CBA
Home loan portfolio - CBA A balanced approach to portfolio quality, growth and returns Portfolio* Dec19 Jun 20 Dec 20 New Business" Dec 19 Jun 20 Dec 20 Total Balances - Spot ($bn) 477 485 498 Total Funding ($bn) 53 53 65 Total Balances - Average ($bn) 472 482 492 Average Funding Size ($'000)" 343 3
Slide 58: Dec 19 Jun 20 Dec 19
Dec 19 Jun 20 Dec 20 • • • Dec 19 Jun 20 Dec 20
Slide 59: 9.6 5.5 6.4 5.5 4.1 4.2 3.8 11.6 10.7 9.6 9.9 9.1 8.8 7.0
9.6 5.5 6.4 5.5 4.1 4.2 3.8 11.6 10.7 9.6 9.9 9.1 8.8 7.0 1
Slide 60: Home loan impairments
Home loan impairments Home loan impairments lower - influenced by deferrals and government support measures Overview + Exits have outpaced entry into impairments over the half + New impairment volumes reduced as a result of COVID-19 deferral take- up, where arrears are paused. Process for identifica
Slide 61: 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1983 1989 1995 2001 2007 2013 2019
2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1983 1989 1995 2001 2007 2013 2019
Slide 62: Sources, Glossary & notes
Sources, Glossary & notes
Slide 63: Sources and notes
Sources and notes Delivering Slide 10 1. As reported in APRA Monthly ADI Statistics (MADIS). System multiple calculated on a non-annualised basis. CBA business lending multiple estimate is based on Business Banking growth rate (excluding Institutional Banking and Markets) over published APRA Total B
Slide 64: Sources and notes
Sources and notes Global best digital experiences Slide 14 1. DBM Consumer MFI Mobile Banking App *Net Promoter Score: Based on Main Financial Institution (MFI) customers rating their likelihood to recommend their MFI Mobile Banking App used in the last 4 weeks. Net Promoter Score refers to customer
Slide 65: Sources and notes
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 and the Australian Accounting Standards, which comply with International Financial Reporting Standards
Slide 66: Glossary
Glossary Capital & Other Funding & Risk Risk Weighted Assets (RWA) CET1 Expected Loss (EL) Adjustment Leverage Ratio Internationally Comparable Capital Derivative Valuation Adjustments (XVA) Credit Value Adjustment (CVA) Funding Valuation Adjustment (FVA) o The value of the Group's On and Off Balanc
Commonwealth Bank of Australia — Debt Investor Presentation (February 2021) on 6ix