Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — 1H23 Earnings Presentation
137 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 15, 2023
Slide 1: Results Presentation and Investor Discussion Pack
Results Presentation and Investor Discussion Pack For the half year ended 31 December 2022
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, 15 February 2023. It is information given in summary form and does not purport to be complete. Information in this presentation is
Slide 3: Contents
Contents CEO & CFO presentations 4 Overview & strategy 33 Financial overview 54 Home & consumer lending 77 Business & corporate lending 94 Funding, liquidity & capital 103 Economic overview 120 Sources, glossary & notes 131
Slide 4: Results presentation
Results presentation Matt Comyn, Chief Executive Officer
Slide 5: Overview
Overview Customer focus driving financial result Net Promoter Scores1 Pride in CBA #1 Consumer • Rapidly shifting and uncertain context #1 Business #1 Institutional +90% of employees2 • Challenging for many customers #1 Digital - Consumer & Business Volume growth3 • Consistent and disciplined strate
Slide 6: Financial overview
Financial overview1 Strong earnings supported by higher operating performance, increased dividend 1H23 vs 1H22 Statutory NPAT ($m) 5,216 10% → Cash NPAT ($m) 5,153 9% → Operating performance2 ($m) 7,820 18% → EPS (cash, $) 3.04 31c → Dividend per share ($) 2.10 35c → 1. Statutory NPAT, Cash NPAT, O
Slide 7: Cash NPAT up 9%
Cash NPAT up 9%1 Income growth supporting strong operating performance Operating income2 Operating expenses2 Pre-provision profit2 Cash NPAT • Organic volume growth • Wage and supplier inflation Strong underlying Includes higher loan • Recovery in margin • Higher IT costs performance impairment expe
Slide 8: Strength – balance sheet
Strength – balance sheet Long-term conservative balance sheet settings – well placed as financial conditions tighten Deposit funding Long-term funding Liquid assets Capital % of total funding Weighted average maturity, yrs Average, $bn CET1 ratio, % Level 2 1 Jan 23 5.8yrs $193bn pro-forma 75% ex. T
Slide 9: Strength – credit quality
Strength – credit quality Lower TIA and arrears, well provisioned TIA Home loan arrears1 Provisioning2 Troublesome & 90+ days, % Total Provisions vs Impaired Assets (TIA) Central ECL3 Dec 22 7.8 $6.3bn 0.61% $5.5bn 6.4 $2.0bn 0.49% 0.43% $3.5bn $bn $bn Dec 19 Jun 22 Dec 22 Dec 19 Jun 22 Dec 22 Centr
Slide 10: Strength – core franchise
Strength – core franchise Well placed in a challenging environment 1. Stronger customer relationships and frequency of engagement 2. Better understanding of customer needs and risk • Strongest and most trusted brand1 • Technology leader, history of innovation • Leading MFI share2 • Leading decisioni
Slide 11: Engaged customers
Engaged customers Leading Net Promoter Score1 in all key segments Retail Business Institutional NPS1 NPS1 NPS1,2 CBA CBA CBA #1 #1 #1 Peers Peers Peers Dec 21 Dec 22 Dec 21 Dec 22 Dec 21 Dec 22 1. Refer to sources, glossary and notes at the back of this presentation for further details. 2. Turnover
Slide 12: Engaged customers
Engaged customers Strong customer engagement creating deeper relationships as the key driver of growth Net Promoter Score1 MFI share1 Transaction accounts Lending Retail Retail Retail2 Home loan balances3 Home loans New retail #1 34.7% transaction +50% attached to >95% transaction accounts accounts
Slide 13: Business Banking
Business Banking Investment in Business Banking ~$600m invested to build the franchise1 Strong earnings performance MFI share2 (%) Balance growth vs system ROTE - indexed4 Business Dec 22 vs Dec 21 Business Banking 24.7% 1.5x 1.3x +35% Peers 23.2% 20.4% 100 23.0% 17.7% 16.0% system Dec 18 Dec 21 Dec
Slide 14: Business Banking
Business Banking Differentiated customer proposition SMART CommBank eCommerce Smart Smart Health Smart Integrated Smart Mini + + • Evolution to intelligent, multi-purpose terminals • Digital payments and health claiming • Enhanced eCommerce offering • Smart Integrated and Mini in pilot to launch 2H2
Slide 15: Home lending
Home lending Navigating a challenging environment Funding CBA 6 months to Dec 22, System 1Q23 • Rapidly changing context • Substantial increase in wholesale funding costs Broker 42% • Continued focus on disciplined execution 72% • Unique assets – 37% of proprietary loans in Australia1,2 • Managing s
Slide 16: Leading in digital
Leading in digital Customer advocacy particularly strong in digital – both consumer and business Digitally Active Customers1 Net Promoter Score Net Promoter Score Monthly core digital asset users (#) Consumer mobile app2 Business digital2 Dec 22 Dec 22 8.3m 28.5 11.4 7.7 20.6 8.4 7.4 15.3 16.1 4.1 D
Slide 17: Leading in digital
Leading in digital Protecting and supporting our customers CallerCheck NameCheck Spend Tracker Benefits Finder Ongoing awareness Protection against Verification of calls Analysis / notification of Easy view and Simplified access to a and education credit fraud from CommBank payment irregularities ca
Slide 18: Results presentation
Results presentation Alan Docherty, Chief Financial Officer
Slide 19: Result overview
Result overview Result reflects macro, management and franchise factors – well positioned to support customers and economy as conditions tighten in 2023 Macroeconomic Outcomes Domestic cash rate (bpts) 335 • RBA cash rate at decade high • Rapid recovery in margins 300 • Full employment, solid GDP gr
Slide 20: Statutory vs Cash NPAT
Statutory vs Cash NPAT1 Statutory NPAT up 10%, broadly in line with Cash NPAT growth $m 1H22 2H22 1H23 Statutory NPAT – continuing operations 4,741 4,932 5,216 Non-cash items: – Transaction costs and gain on disposals2 11 (41) 51 • Includes CommInsure General Insurance, Commonwealth Financial Plann
Slide 21: 1H23 result
1H23 result 1 Cash NPAT up 9%, Operating performance up 18% 1H23 1H23 vs 1H23 vs $m 1H22 2H22 Operating income2 13,593 12.3% 12.7% Operating expenses2 5,773 5.2% 4.0% Operating performance 7,820 18.2% 17.7% Loan impairment expense 511 Large Large Cash NPAT 5,153 8.6% 6.3% 1. Presented on a continuin
Slide 22: Operating income
Operating income1 Margin recovery and volume growth, partly offset by lower other operating income • Impact of divestments (General Insurance and Bank of Hangzhou) • Lower equity accounted profits • Volume growth2 • Reduced CommSec equities trading income, partly offset by +9% • Margin recovery • In
Slide 23: Group margin
Group margin In line with expectations – benefits from rising 2H23 consideratons rates partly offset by competitive pressures • Intensity of home loan and deposit price competition • Rate of customer deposit switching • Higher wholesale funding costs and BRP • Terminal cash rate, replicating portfol
Slide 24: Operating expenses
Operating expenses1 Inflation driving cost growth, with underlying uplifts offset by productivity savings Cost to 45.3% +4.4% excl. remediation 42.5% Income2: Contribution to mvt: +0.8% +4.3% +1.7% (1.6%) +5.2% 238 91 (90) 44 5,773 5,490 Cumulative cost savings • Wage inflation3 realised: • Inflatio
Slide 25: Credit risk
Credit risk Further improvements in key credit quality indicators – impairment expense normalising Loan impairment expense Arrears2 TIA Loan loss rate (bpts)1 90+ days $bn 1H22 2H22 1H23 Consumer 0 (15) 11 Personal Loans Credit Cards Home Loans3 % of TCE: 0.53% 0.48% 0.46% Corporate (7) 16 13 Total
Slide 26: Provisioning
Provisioning1 Increased provisions, buffer to central scenario maintained Total credit provisions Provisions and scenarios $bn Dec 22 TP/CRWA: 1.29% 1.36% 1.38% $5.54bn 6.87 5.54 5.35 4.80 3.50 Pre COVID-19 $bn 2,3 2,4 Jun 19 Jun 22 Dec 22 Central Recognised Downside provisions 1. The Group uses fou
Slide 27: Funding
Funding Conservative funding position maintained as financial conditions tighten Deposit funding Long-term funding1 Short-term funding3 LCR & NSFR Liquidity Coverage Net Stable % of total funding % of total funding % of total funding Ratio4 Funding Ratio 55% 74% 75% 19% 18% 18% 26% 8% 7% 131% 129% 1
Slide 28: Capital
Capital Strong capital position maintained ahead of new APRA capital framework effective 1 Jan 23 – pro-forma CET1 ratio of 12.1% Level 17: Level 17,9: Movements in bpts 11.7% 12.4% Pro-forma Excludes the expected impact 103 (71) 12.1% of the completion (25) 11.4% of announced 9 15 (27) (14) buy-bac
Slide 29: Capital framework reform
Capital framework reform Revisions to prudential framework effective APRA Basel 3 1 January 2023 requirements effective 31 Dec 22 1 Jan 23 RWA ($bn) • Required capital broadly unchanged Owner-occupied home loans • Greater risk discrimination in home loans RWA Commercial property 262 (17%) 218 reduct
Slide 30: Dividends
Dividends Long term sustainable returns • Interim dividend of $2.10, 20% increase on 1H22 Sustainable returns Dividend per share (cents) dividend, driven by strong earnings and reduction in share count from share buy-backs • Payout ratio for the half of 69% 210 (~70% normalising for long run loan lo
Slide 31: Economic outlook
Economic outlook Downside risks to Australian economy building from a strong starting position • Solid fundamentals for Australian economy − Low unemployment, low underemployment, high participation rates − Strong exports and non-mining investment − Net overseas migration returning quickly • Austral
Slide 32: Summary
Summary Strong result driven by customer engagement, strength of franchise Customers People2 Net Promoter Scores1 Rank 81% • Strong result reflects core franchise strength Consumer #1 Pride in Business #1 CBA • Focus on customer relationships and engagement Consumer digital #1 90% #1 • Consistent, d
Slide 33: Overview & strategy
Overview & strategy
Slide 34: Why CBA?
Why CBA? Leading franchise – leading returns MFI share1 (%) Home lending share2 (%) Household deposits share3 (%) Business banking share Deposit funding Including institutional Peers as at Sep 22 75% 70% 67% 65% Lending share (%)2 Deposits share (%)3 CBA Peer 3Peer 1Peer 2 34.7% 22.4% 25% 22.1% 20%
Slide 35: Delivering
Delivering Balanced outcomes – delivering for all stakeholders Customer People Community Shareholders Net Promoter Scores1 People engagement2 Reputation score3 Total Shareholder Return4 CBA Peers Pride in CBA Rank 90% Period % Rank 64.5 Consumer #1 81% 1yr 6% #3 Consumer digital #1 80% 3yr 44% #1 62
Slide 36: How we contribute to Australia
How we contribute to Australia1 Supporting our customers, the community and the economy $13.6bn income earned • Australia’s largest home lender – $77bn in new lending in 1H233 • Helping Australia’s businesses –$18bn in new business lending in 1H23 We support customers and businesses to build a brigh
Slide 37: Our strategy
Our strategy Building tomorrow’s bank today for our customers Our purpose Building a brighter future for all Our priorities Leadership in Australia’s Reimagined products Global best digital Simpler, better foundations recovery and transition and services experiences and technology Build Australia’s
Slide 38: Leadership in Australia's recovery and transition
Leadership in Australia’s recovery and transition Supporting our customers and communities – helping to build Australia’s future economy Helping to build Australia’s future economy Supporting our customers and communities • $320bn+ in funding raised for Australian clients1 • ~1.9m offered natural di
Slide 39: Reimagining banking
Reimagining banking Franchise strength supporting our customers across the lifecycle New transaction accounts – migrant1 45.6% Migrant accounts now 45.5% back to above pre-COVID levels CBA MFI 42.1% share 1H20 1H23 Dec 19 Jun 20 Jun 21 Jun 22 Sep 20 Dec 20 Sep 21 Dec 21 Sep 22 Dec 22 Mar 20 Mar 21 M
Slide 40: Reimagining banking
Reimagining banking Reinforcing our core proposition – example initiatives CommSec CommSec Pocket * CommBank AdvancePay Invest StepPay and CommBank Neo Home Everyday Benefits finder Bill Sense CommBank App Green loans CommBank Yello* Carbon Connecting business & Business retail customers CommBank Re
Slide 41: Reimagining banking
Reimagining banking Connecting business and retail customers CommBank Rewards • Used in >60k stores1 • ~1.5m merchant referrals2 • AI shopping cashback platform • 5.1m offers activated4 • >1.3m active app users • ~3.6m website visits2 • > 220k installed users • +10% in merchant leads5 • Pay in 4, de
Slide 42: Reimagining banking
Reimagining banking Home buying and ownership • ~$3bn of homes settled1 • Property settlement leader • Deposit-gap partner • Digital property management • 98% take up a CBA home loan2 • ~$200m invested in FY22 • >$6bn in 1H23 applications • Unique tech and operations platform • 11% of pre-approved c
Slide 43: Reimagining banking
Reimagining banking Fast and safe digital propositions CommBank Yello • Digital-only home loans • New rewards and recognition program • Protecting against credit fraud • Apply in as little as 10 minutes • Exclusive shopping and partner offers • New credit lock feature used > 100k times1 • Customers
Slide 44: Reimagining banking
Reimagining banking CBA’s venture scaler – solving how to scale ventures within CBA’s ecosystem xStack A platform of technical and non-technical services provided to ventures, so they can: • Move at the pace of a start-up retaining agility and the ability to pivot rapidly • Stay safe through automat
Slide 45: Global best digital experiences and technology
Global best digital experiences and technology Building on a history of innovation Strong foundations Establishing leadership Broadening ecosystem Launch of Market first Partnerships Connecting X15 offerings with industry our digital ↑ Ventures leaders ecosystem First major bank Building a to offer:
Slide 46: Global best digital experiences and technology
Global best digital experiences and technology Market leading digital assets Digitally active Digital transactions Consumer mobile app Net Promoter Score5 customers1 % of total - by value3 8.3m 73% CBA 28.5 7.7 72 7.4 70 Peer 20.6 Dec 20 Dec 21 Dec 22 Dec 20 Dec 21 Dec 22 Peer 16.1 Peer 15.3 CommBan
Slide 47: Global best digital experiences and technology
Global best digital experiences and technology Industry leading engagement CommBank Money Plan CommSec AdvancePay Credit Score Benefits Finder Money management Manage investments Access money before Protect credit with Simplified access to a tools in one place via CommBank App pay day free credit re
Slide 48: Global best digital experiences and technology
Global best digital experiences and technology Industry leading engagement Bill Carbon Fuel Spend Profile pictures, Sense Tracker Finder Tracker favourites & wallpaper Predict and prepare Personalised carbon Save on fuel with predictions Easily view and Expanded personalised for upcoming bills footp
Slide 49: Global best digital experiences and technology
Global best digital experiences and technology Investing in technology and capability Modernised • Driving efficiencies while maintaining security through the automation and standardisation of APIs1 systems, digitised • Using AI to improve customer personalisation and risk management processes (frau
Slide 50: Leading in digital
Leading in digital Faster digital processing Consumer1 New credit card Home loan accounts via digital4 digital doc utilisation5 93% of property transactions settled digitally 83% of eligible customers choosing Digital Documents and Signing 84% 87% 78% 83% 72% 60% 64% of all proprietary applications
Slide 51: Global best digital experiences and technology
Global best digital experiences and technology Reimagining data and analytics H2O.ai Responsible AI Fairness & +80% efficiency in document processing2 +92% conversion to Bill Sense1 Partnering ~1m pages per week Document AI processing capability transparency ~1,000 Scale Digital channels Personalise
Slide 52: Simpler, better foundations
Simpler, better foundations Sustaining change, continued simplification People engagement1 Our priorities 81% • Continue to invest in technology and education to keep our customers safe 80% • Mature and evolve our aspirational risk culture built on strengthened foundations 71% • Extend operational e
Slide 53: Our commitment to sustainability
Our commitment to sustainability Building a brighter future for all • Supported 200 community organisations right across Australia through our CommBank Staff $24.4m Foundation Community Grants program • Enhanced AI capabilities on Netbank to detect suspicious behaviour on accounts, and Saved by cust
Slide 54: Financial overview
Financial overview
Slide 55: Overview – 1H23 result
Overview – 1H23 result1 Key outcomes summary Financial Balance sheet, capital & funding Statutory NPAT ($m) 5,216 +10% Capital – CET12,5 (Int’l) 18.5% +10bpts Cash NPAT ($m) 5,153 +9% Capital – CET12 (APRA) 11.4% (40bpts) ROE % (cash) 14.1% +180bpts Total assets ($bn) 1,232 +7% EPS cents (cash) 304
Slide 56: Overview – 1H23 result
Overview – 1H23 result Key financial outcomes Cash NPAT1 ($m) NIM (%)1 Cost-to-income1,2 Cash ROE1 +9% +18bpts (280bpts) +180bpts +6% +23bpts (350bpts) +80bpts 45.3% 46.0% 13.3% 14.1% 4,746 4,849 5,153 2.10 42.5% 12.3% 1.92 1.87 1H22 2H22 1H23 1H22 2H22 1H23 1H22 2H22 1H23 1H22 2H22 1H23 Cash EPS1 (
Slide 57: Cash NPAT by division
Cash NPAT by division1 Strong financial performance RBS2 BB IB&M NZ (NZD) vs PCP vs PCP vs PCP vs PCP • Income +16% • Income +27% • Income (3%) • Income +17% • Costs +3% • Costs +3% • Costs +8% • Costs +17% • Impairment expense +$230m • Impairment expense +$231m • Impairment expense +$86m • Impairme
Slide 58: Balance sheet
Balance sheet1 Continued growth in key markets Dec 22 vs Dec 22 vs Group lending $bn Dec 21 Jun 22 Dec 22 Jun 22 Dec 21 +7.3% Home loans 605.9 622.0 639.3 2.8% 5.5% Consumer finance 16.7 16.5 17.0 3.0% 1.8% +3.1% Business loans2 141.2 148.9 156.5 5.1% 10.8% 910.5 Institutional loans 84.8 95.5 97.7 2
Slide 59: Volume growth
Volume growth Good growth across products Home lending1,2,3 Business lending1,2,4 Household deposits1,5 Business deposits1,6 CBA CBA (excl. IB&M) CBA CBA System CBA (incl. IB&M) System System System (incl. Institutional lending) 4.6% 3.1% 6.4% 13.3% 14.3% 12.9% 9.3% 5.3% 6.8% 2.6% 5.1% 5.4% 5.5% 5.6
Slide 60: Delivering
Delivering Continued good volume growth across the vs PCP business 1H23 ‘000 716 New retail transaction 2H22 643 +50% Balance growth vs system1 accounts2 1H22 477 Dec 22 vs Dec 21 1.0x Dec22 ‘000 1,088 Six months to Business Dec 22 transaction Jun 22 1,042 +9% accounts Dec 21 1,003 0.8x 0.7x 1.3x 1.
Slide 61: Market share
Market share1 Strong market shares Home lending2,4 Household deposits3,4 % Dec 22 Jun 22 Dec 21 40% CBA Peers 40% CBA Peers Home loans – RBA2 25.1 25.1 25.4 Break in series Break in series from Mar 19 from Jul 19 Home loans - APRA3 25.8 25.8 26.1 30% 30% 27% 25% 3 Credit cards - APRA 28.8 28.5 28.2
Slide 62: Group margin – 12 months
Group margin – 12 months In line with expectations – benefits from rising rates partly offset by ongoing competitive pressures 2H23 considerations • Intensity of home loan and deposit price competition • Rate of customer deposit switching • Higher wholesale funding costs and BRP • Terminal cash rate
Slide 63: Deposit switching
Deposit switching Steady increase in retail switching, business stabilising Domestic retail deposits1,2 Domestic business deposits1,2,3 ($bn) ($bn) 251 238 242 247 210 215 189 183 170 176 174 176 189 178 157 118 102 94 95 121 82 86 83 82 88 76 58 62 54 48 48 46 62 59 63 68 67 63 57 54 43 48 40 47 36
Slide 64: Group margin
Group margin Increased hedge earnings from higher rates Replicated Portfolio (RP) & Equity Hedge Liquidity & Basis Risk Liquidity • In 1H23, RP and equity hedge earnings benefitted from higher rates • Earnings outlook continues to improve with higher exit tractor rates • Every additional $10bn of li
Slide 65: Margins by division
Margins by division1 Benefits from rising rates partly offset by ongoing competitive pressures RBS2 BB IB&M NZ (ASB)3 Improved deposit margins from rising rate Improved deposit margins from rising Higher funding costs in the Fixed Higher deposit margins from rising environment, partly offset by lowe
Slide 66: Other operating income
Other operating income1 Impacted by divestments and lower equity accounted profits, partly offset by increased trading income Other operating income Trading income 2,359 2,341 1H23 vs 1H22 1H23 vs 1H22 513 • Loss of revenue from divestments (incl. General Insurance and Other2 547 533 1,956 Bank of H
Slide 67: Sequential operating income
Sequential operating income1 Margin recovery, volume growth and three additional days, partly offset by lower other operating income • Impact of divestments (General Insurance and Bank of Hangzhou) • 3 additional days +$161m • Lower equity accounted profits • Margin recovery +23bpts • Reduced CommSe
Slide 68: Sequential operating expenses
Sequential operating expenses1 Inflation and seasonality driving cost growth, underlying uplifts offset by productivity savings Cost to +4.5% excl. remediation 42.5% income1: 46.0% Contribution to mvt: (0.4%) +4.5% +0.7% (0.7%) +4.0% 35 (38) (21) 248 5,773 5,549 Cumulative cost savings • Wage inflat
Slide 69: Customer remediation
Customer remediation Additional remediation provision – committed to making things right for customers Remediation & program costs Customer refunds Cumulative spend and provisions ($m)1 Cumulative customer refunds ($m)1 • $1,943m returned to customers • $518m remaining 3,855 3,535 3,210 Salaried Ali
Slide 70: Cost approach
Cost approach Long-term cost reduction creating capacity for long term investment Cost reduction Investment spend1 Cumulative savings Cost approach Shift to productivity & growth 945 933 963 • Simpler, more efficient 945 933 963 484 513 474 Expensed business for our customers and people 597 559 • Co
Slide 71: Loan losses
Loan losses Normalising loan impairment expense for 1H23 Loan loss rate1 Loan loss rate by business unit1,2 bpts 16 bpts (7) (15) Consumer Corporate (2) 1H22 1H23 (7) 41 1H22 2H22 33 23 25 76 21 20 19 50 43 16 16 15 15 16 10 11 24 23 20 7 11 9 13 11 8 10 14 3 26 26 16 13 0 17 19 17 18 18 18 18 18 17
Slide 72: Provisions
Provisions1 Provision coverage of 1.38% Provision coverage2/CRWA Provisions by stage Stage 2 exposures Performing Non-performing by credit grade3 Credit Credit Total Dec 21 Dec 22 exposures provisions $150bn Retail secured 1.04% 0.96% 1.39 1.38 $140bn $m Dec 21 Dec 22 Dec 21 Dec 22 8 Retail unsecure
Slide 73: Retail Banking Services (RBS)
Retail Banking Services (RBS)1 Operational execution – good volume growth – higher Cash NPAT Net Promoter Score2 MFI share2 Volume growth3 15 6 months to Dec 22 Peers CBA 16.4% 12.2% 11.9% System CBA Peer 3 Peer 2 Peer 1 5.6% 5 #1 34.4% 34.4% 34.7% 3.4% 2.5% 2.6% -5 Dec 21 Dec 22 Dec 21 Jun 22 Dec 2
Slide 74: Business Banking (BB)
Business Banking (BB)1 Investment and continued franchise build, leveraging digital assets for strong volume growth Performance Gap to Business lending Transaction account growth nearest Spot balances ($bn) >105k new accounts in 1H23, 35% via digital Dec 22 Rank Actual peer • Health +21% Business NP
Slide 75: IB&M
IB&M1 Combining global connectivity and capability – contributing to Australian economic recovery Net Promoter Score IB&M lending Credit RWAs Institutional NPS2 Growth across warehouse facilities, corporate Increase in Dec 22 over the prior half driven (Turnover $300m+ pa) lending, and carbon and co
Slide 76: ASB
ASB1 Good volume growth and higher Cash NPAT Consumer Net Promoter Score2 Business Net Promoter Score3 Volume growth4 6 months to Dec 22 Peers ASB Peers ASB System ASB 10 35 #1 0 25 -10 2.9% #3 2.6% -20 1.8% 1.9% 15 -30 Break in series 5 -40 from 1Q23 Dec-21 Dec 21 Dec-22 Dec 22 Dec 21 Dec 22 Busine
Slide 77: Home and consumer lending
Home and consumer lending
Slide 78: Home lending overview
Home lending overview Process efficiency – disciplined volume growth – strong risk profile Consistent market share performance1 Net growth driven by new fundings2 New fundings remain strong3 25% 25% 77 (6) (18) 23% 21% Internal Refinance 6 (39) 94 21% 20% 76 76 77 71 65 15% 14% 556 570 15% 13% $bn $
Slide 79: Home loan experience
Home loan experience Enhancing the customer experience with efficient, scalable and digitised processes Focus areas Operational execution1 Focus on touchpoints throughout origination • Insights and recommendations – enhanced guidance to help customers • Digital ID & KYC – enhanced real-time, self-se
Slide 80: Borrowing capacity
Borrowing capacity 1 Higher serviceability buffers and rising interest rates impacting borrowing capacity Borrowing capacity reducing Driven by increase in serviceability buffer and interest rates Change in maximum borrowing capacity2 – Indexed Dec 16 (Loans assessed based on the higher of the custo
Slide 81: Portfolio quality remains sound
Portfolio quality remains sound Strong repayment and savings buffers in place Repayment buffers – 34% more than 2 years in advance1 Savings buffers1 (Payments in advance 2, % of accounts) Offset account balances ($bn) 70 Residual 66 4% 57 34% 5% New loans < 12mths 45 49 4% Structural e.g. fixed 15%
Slide 82: Serviceability assessment
Serviceability assessment1 Over 80% of the book originated under tightened standards since FY16 Key serviceability changes by year2 New loan assessment (from FY16)3 • Increased serviceability buffer & buffers on existing debts • Removed Low doc and EQFS products • All income used in application to a
Slide 83: Cash rate resilience
Cash rate resilience1,2 Increases in minimum monthly repayments reflect the net impact of a higher interest component & lower principal payments Approximately 83% of the book is exposed to rate Increases in minimum monthly repayments reflect the net impact of a increases by December 2023 higher inte
Slide 84: Cash rate resilience
Cash rate resilience1,2 Targeted support for those customers in the highest risk segment (~0.2% of book) Risk profile at Portfolio RBA OCR 3.85% $483bn $23.5bn4 5% $1.1bn (0.2%)5 DLVR > 90%, no LMI Exposures with the $2.1bn (0.4%)5 DLVR 80-90%, no LMI capacity to deleverage 6% Higher $2.3bn (0.5%)5
Slide 85: Home loans – CBA
Home loans – CBA1 A balanced approach to portfolio quality, growth and returns Portfolio1,2 Dec 21 Jun 22 Dec 22 New Business1,2 Dec 21 Jun 22 Dec 22 3 Total Balances - Spot ($bn)3 539 556 570 Total Funding ($bn) 94 76 77 3 9 Total Balances - Average ($bn) 528 548 563 Average Funding Size ($’000) 38
Slide 86: Home loans – CBA ex BWA
Home loans – CBA ex BWA1 A balanced approach to portfolio quality, growth and returns Portfolio1,2 Dec 21 Jun 22 Dec 22 New Business1,2 Dec 21 Jun 22 Dec 22 3 3 Total Balances - Spot ($bn) 459 472 483 Total Funding ($bn) 80 65 65 3 8 Total Balances - Average ($bn) 450 466 478 Average Funding Size ($
Slide 87: Home loan portfolio profile
Home loan portfolio profile1 Higher interest rates triggered shift from fixed to variable home loans Fixed vs variable rate stock and flow2 Fixed rate expiry schedule Variable 54 Fixed 42 62% 62% 53% 28 67% 66% 27 24 93% 38% 38% 47% 7 33% 34% $206B $209B $45B 7% 1 5 $168B $192B $bn 1 0 $6B Jun 21 De
Slide 88: Home loan portfolio profile
Home loan portfolio profile1 Strong portfolio LVR, negative equity and offset balances Negative equity2 Dynamic LVR bands3 Proportion of balances in negative equity % of total portfolio accounts • 54% of negative equity is from NSW and VIC 70% Dec 21 • 56% of customers ahead of repayments 60% Jun 22
Slide 89: Home loan arrears
Home loan arrears Arrears remain low, supported by a strong labour market Arrears by portfolio Arrears by product Arrears by repayment type Group 90+ days Bankwest 90+ days1 90+ days1 1.0% 1.0% Interest Only CBA Principal & Interest 0.8% Group 0.8% 0.8% ASB 0.6% 0.6% 0.6% 0.4% 0.4% 0.4% Owner Occupi
Slide 90: Home loan impairments
Home loan impairments Impaired home loans stable in 1H23 Impaired home loans 1.90 Overview 1.71 1.72 ASB 0.66 • Relatively stable impaired home loans year to date with small increase in ASB 0.52 0.56 impairments (+$46m) offset by improvement in Australian home loan impairments (-$39m) CBA 1.24 1.19
Slide 91: Portfolio losses and insurance
Portfolio losses and insurance1 Portfolio losses remain historically low Losses to average gross loans and acceptances (GLAA)2 Portfolio insurance profile3 % of home loan portfolio 2.5% Group total loans CBA home loans 18% Insurance with Genworth 2.0% or QBE for higher risk loans above 80% LVR 1.5%
Slide 92: Managing unsecured lending
Managing unsecured lending Arrears improved HoH, in line with seasonal trends and underpinned by low levels of unemployment Credit cards1 Personal loans1 Group 90+ days Group 90+ days 0.49% 0.52% 0.46% 0.97% 1.02% 0.95% 9,267 9,191 9,648 4,782 4,810 4,987 45 48 44 46 49 48 $m $m Arrears Portfolio Ar
Slide 93: Consumer arrears
Consumer arrears Arrears remain low, supported by a strong labour market and historically low unemployment 4.0% Credit cards1 6.0% Personal loans1 ASB Group 30+ days Group 30+ days CBA Group 4.0% Bankwest 2.0% 2.0% 0.0% 0.0% Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Credi
Slide 94: Business and corporate lending
Business and corporate lending
Slide 95: Portfolio quality
Portfolio quality1 Improvement in portfolio quality metrics Exposures by industry1 Corporate portfolio quality Group TCE by geography AAA A+ BBB+ Investment grade TCE $bn to to to Other Dec 22 Dec 21 Jun 22 Dec 22 AA- A- BBB- 71.0% Australia 81.6% 82.1% Gov. Admin & Defence 217.5 14.9 1.2 - 233.6 81
Slide 96: Total committed exposure summary
Total committed exposure summary Close monitoring of key sectors Provisions to total Group TCE ($bn) TIA ($bn) TIA % of TCE committed exposure % Jun 22 Dec 22 Jun 22 Dec 22 Jun 22 Dec 22 Jun 22 Dec 22 Consumer 748.5 765.6 1.9 1.9 0.3% 0.2% 0.3% 0.4% Government administration & defence 227.6 233.6 0.
Slide 97: Sector focus – commercial property
Sector focus – commercial property Portfolio weighted to NSW – impaired exposures low • Exposure diversified across sectors and by counterparty, with the top Group exposure Dec 21 20 counterparties representing 14% of the portfolio Jun 22 84.4 87.3 89.9 43.4 Dec 22 • Net movement in investment grade
Slide 98: Sector focus – transport & storage
Sector focus – transport & storage Conditions remain challenging Group exposure1 Dec 21 Airlines & aircraft lessors Jun 22 • Strengthening demand following the opening up of domestic and international 25.6 54.6 55.8 60.2 25.4 Dec 22 travel is supporting recovery of airlines across the industry. Port
Slide 99: Sector focus – entertainment, leisure & tourism
Sector focus – entertainment, leisure & tourism Improving trends evident despite uncertainty Group exposure Dec 21 • Diverse industry with many sub-sectors with distinct challenges 14.8 Jun 22 14.0 14.0 • Pubs, clubs and restaurants are experiencing positive trends in Dec 22 performance nearing pre-
Slide 100: Sector focus – retail trade
Sector focus – retail trade Household spending remains high despite cost of living pressures Group exposure Dec 21 Jun 22 • CBA’s data shows household spending remains elevated, though 13.4 13.6 14.7 Dec 22 32.0 29.6 29.2 trajectory is expected to ease with softening consumer sentiment as interest r
Slide 101: Sector focus – construction
Sector focus – construction Sector remains challenged Group exposure Dec 21 • Pressures relating to supply chains and materials cost inflation have Jun 22 eased, however site productivity continues to be hindered by labour 13.3 Dec 22 10.8 11.2 11.8 constraints and adverse weather. This has caused i
Slide 102: Sector focus – mining, oil & gas
Sector focus – mining, oil & gas Managing sub-sector exposures in line with strategy, stable portfolio performance Group exposure Dec 21 Jun 22 Dec 22 67.0 67.3 68.0 7.7 7.8 7.5 • Exposures of $7.5bn (0.5% of Group TCE); overall exposure remained largely unchanged with further reductions in oil & ga
Slide 103: Funding, liquidity and capital
Funding, liquidity and capital
Slide 104: Funding overview
Funding overview Resilient balance sheet with significant excess liquidity Funding composition Wholesale funding Funding profile Deposit growth supporting 75% of funding Weighted to long term TFF refinance to be managed across FY23-FY25 period % of total funding FY23 Maturity3 issuance Short term 9%
Slide 105: Funding
Funding Conservative funding position maintained as financial conditions tighten Customer deposit balances Long-term funding maturities $bn FY23-25, $bn % of total 68% 75% 67% 65% 70% Portfolio WAM2, yrs 4.8 5.8 ~4 funding CAGR 800 12 mths 112 107 1% 621 612 ending3; 105 177 567 570 25% 84 28 75 22
Slide 106: Deposit funding
Deposit funding Highest share of stable household deposits in Australia Deposit funding Deposits vs peers1 Deposits in NSFR2 $bn As at December 2022 ($bn) 700 Peers as at September 20223 75% Other 537 74% 337 477 73% deposits 264 356 291 300 CBA Household 195 Peer 3 363 deposits 273 186 161 Peer 2 2
Slide 107: Wholesale funding
Wholesale funding Diversified wholesale funding across product, currency and tenor Portfolio mix Short term funding by product $bn Certificates of deposits 57% Long-term funding1 136 51% Commercial paper 19% Short-term funding2 78 30% Central Bank deposits 18% MTN 4% Term Funding Facility (TFF) 51 1
Slide 108: Funding and liquidity metrics
Funding and liquidity metrics1 Strong funding and liquidity positions maintained NSFR NSFR (%)4 129% December 2022 0.9 (0.3) (2.3) 0.2 2.3 (1.7) 855 (0.1) 663 130 Retail/SME 129 Deposits Residential Mortgages ≤ 35% risk weight2 Wholesale funding Other loans & other $bn Liquids & other assets 3 Capit
Slide 109: Capital overview
Capital overview Strong capital position maintained CET1 CET1 Dividend per share (cents) APRA Impact of share CET1 buy-backs +539% Level 2 Level 1 International Payout Ratio (cash NPAT basis)1 18.5% Assets 200 200 200 210 175 +180% 200 150 69% 11.7% 62% 11.4% 79% 72% 74% 67% Dec 22 0 Dec 22 Dec 22 1
Slide 110: Capital management
Capital management A disciplined and balanced approach that optimises growth, reinvestment, shareholder returns and flexibility Organically generated Capital released1 Capital flexibility Reinvested in the Group Distributed to shareholders Retained Franchise growth Investment2 Dividend paid Capital
Slide 111: Simpler, better foundations
Simpler, better foundations Announced divestment program - ~$7.8bn returned to shareholders to date, on-market share buy-back to increase by a further $1bn Divestments CET1 Associated Divestments Completed +248bpts Buy-back General Insurance Sep 22 Bank of Hangzhou (HZB)1 Jun 22 Colonial First State
Slide 112: Capital
Capital Lower share count supports higher shareholder returns and dividends compared to peers Number of shares (m)1 Dividend per share ($)3 CBA Peers CBA Peers Capital raisings for 2.10 3,509 strengthening during 3,151 GFC 3,003 0.78 0.59 0.74 1,776 0.58 1,516 1,688 0.29 0.64 1,506 0.26 1,260 Increa
Slide 113: Capital drivers
Capital drivers Risk weighted assets (RWA) higher this half – driven by higher Credit & Market RWA growth CET1 (Level 2)1 Total Risk Weighted Assets (RWA) bpts $bn (25) 9 15 (27) 498 8.4 3.1 0.2 (5.2) 504 11.5% (71) 103 (14) 11.4% Market Risk IRRBB 48 11 14 48 Credit Risk4 (15) Op Risk 46 41 Market
Slide 114: CET1 (Level 1)
CET1 (Level 1) CET1 Level 1 of 11.7%, 30bpts above Level 2 Level 1 vs Level 2 CET1 (Level 1)1 CBA vs Peers5 bpts L1 vs L2: +30bpts 30 bpts (23) 0 bpts 100 4 16 (28) (77) (2) (30 bpts) 11.8% 11.7% 11.4% (60 bpts) CBA Peer 3 Peer 2 Peer 1 Dec 22 Sep 22 Sep 22 Dec 22 Jun 22 2H22 NPAT Underlying Divestm
Slide 115: CET1 Level 1 vs Level 2
CET1 Level 1 vs Level 2 CET1 Level 1 of 11.7%, 30bpts above Level 2 Level 1 11.7% Commonwealth Bank of Australia RWA of Level 2 banking subsidiaries (140) Offshore Branches and Extended Licensed Entities Higher reserves and retained earnings at Level 1 90 Level 2 ASB Bank Ltd (ASB) Elimination of in
Slide 116: Capital
Capital Strong capital position maintained in 1H23 Key Capital ratios (%) Dec 21 Jun 22 Dec 22 • CET1 ratio of 11.4% CET1 capital ratio 11.8 11.5 11.4 • 2022 interim and final dividends – DRP neutralised Additional Tier 1 capital 2.2 2.1 1.9 • $6bn off-market share buy-back completed in 1H22 Tier 1
Slide 117: Regulatory capital changes
Regulatory capital changes Basel III reforms in Australia finalised and a number of regulatory changes in progress Change Implementation Details • Higher regulatory capital buffers, with the CCyB default level set at 100 basis points for all ADIs and the CCB increasing by an additional 125 basis poi
Slide 118: Regulatory expected loss
Regulatory expected loss1 Higher Tier 2 Capital add-back in 1H23 $m Dec 21 Jun 22 Dec 22 Non- Non- Non- Defaulted Defaulted Defaulted Defaulted Defaulted Defaulted Regulatory Expected Loss (EL) 1,676 2,888 1,560 2,886 1,361 3,122 Eligible Provisions (EP) Collective Provisions2 105 4,462 127 3,907 10
Slide 119: APRA's LAC requirements
APRA’s LAC requirements Increase in Total Capital by 2026 to meet loss- absorbing capacity (LAC) requirement At 5% by At 6.5% by • Based on 1 Jan 20231 RWA, CBA requires an additional $0.8bn and $7.9bn of $bn 1 Jan 2024 1 Jan 2026 LAC qualifying issuance (excluding maturities) by 1 Jan 2024 and 1 Ja
Slide 120: Economic overview
Economic overview
Slide 121: Key Australian economic indicators (June FY)
Key Australian economic indicators1 (June FY) GDP % Headline CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 11.1 7.0 6.2 7.8 5.1 5.6 3.7 3.1 4.4 4.3 4.2 2.2 2.2 5.6 5.2 3.4 3.6 1.4 2.1 1.3 1.6 1.6 1.7 -0.1 2019 2020 2021 2022 2023 2024
Slide 122: Key Australian economic indicators (December CY)
Key Australian economic indicators1 (December CY) GDP % Headline CPI % Unemployment rate % Calendar year average Calendar year average Calendar year average GDP Nominal GDP 11.1 11.3 6.6 5.2 6.5 5.2 5.2 5.1 3.6 5.2 3.9 1.9 1.6 2.8 2.9 3.7 1.6 0.8 -1.8 -1.1 2019 2020 2021 2022 2023 2019 2020 2021 202
Slide 123: The global economy
The global economy Advanced economy recession expected in 2023 World economic growth to slow1 Inflation showing signs of peaking2 Official interest rates closer to the peak2 World Economic Growth Estimates (annual change) Headline inflation (annual change) Interest rates with projections % UK 12 % 4
Slide 124: The Australian economy
The Australian economy The consumer was resilient for most of 2022, expect slowdown in 2023 Retail trade above pre-covid, but weak in December1 Large difference between values and volumes1 Signs discretionary spend is moderating after mix shift2 Retail trade (Total) Retail trade (Index, 2018=100) CB
Slide 125: The Australian economy
The Australian economy RBA signals more interest rate hikes to come due to high inflation and rising wages growth RBA has materially lifted the cash rate1 Interest payments rising significantly2 Fiscal settings helping control inflation3 RBA cash rate (with CBA Economist forecasts) Household debt in
Slide 126: The Australian economy
The Australian economy Material lift in interest rates is taking time to impact the economy Due to the delay between rate hikes and higher And mix shift to fixed rate home loans in recent years, Combined with a lift in savings since 20203 repayments1 Household savings (rate and deviation from averag
Slide 127: The Australian economy
The Australian economy Wages growth will rise further on tight labour market Wages growth above 3% for first time since 20131 Inflation showing signs of peaking%2 Elevated inflation driven essential items2 Wages (annual % change) Price signals % Inflation (annual % change) 4 2.0 10 Non- 61.0 discret
Slide 128: Housing sector
Housing sector Housing market is weakening, expect to plateau out FY24 Monthly home prices now falling quickly1 Divergence between capital cities still evident1 Home lending has fallen2 Dwelling prices (8 capital cities) CoreLogic Dwelling Prices (3mth change) Housing loan approvals (excluding refin
Slide 129: Key New Zealand economic indicators (June FY)
Key New Zealand economic indicators (June FY) GDP % CPI % Unemployment rate % Financial year average Financial year average Financial year average GDP Nominal GDP 7.0 4.7 4.4 6.0 8.0 6.3 4.2 4.1 8.0 4.2 3.3 3.4 3.2 5.9 4.4 4.9 4.1 1.1 1.7 1.8 1.9 2.4 -0.7 -0.7 2019 2020 2021 2022 2023 2024 2019 2020
Slide 130: New Zealand
New Zealand Global headwinds, high inflation and ongoing rate hikes are testing the NZ economy’s resilience USD Dairy prices have eased on softer demand Growth is softening as the global economy slows Worker shortages are keeping the labour market tight Global dairy trade auction results1 (USD/tonne
Slide 131: Source, glossary & notes
Source, glossary & notes
Slide 132: Sources and notes
Sources and notes Slide 5 1. Refer to the glossary for source information. 2. Represents results from employees who undertook the ‘CBA Your Voice’ survey. 3. 1H23 Home Lending - Includes RBS internal refinancing, Unloan, Residential Mortgage Group and Bankwest fixed splits of existing variable loans
Slide 133: Sources and notes
Sources and notes Slide 46 1. The total number of customer who have logged into a core digital asset (NetBank, CommBank Mobile App or CommBank Tablet App. Excludes CommBiz) at least once in the month of December for years 2020-2022. 2. The total number of customers that have logged into the CommBank
Slide 134: Sources and notes
Sources and notes Slide 51 1. AI model trained to improve customer engagement engine message next best conversation (NBC) relevance. 92% uplift in customers starting Bill sense onboarding vs prior in one month trial. Bill sense is an official case study for Australia’s AI Ethics Principles, publishe
Slide 135: Sources and notes
Sources and notes Slide 104 1. Includes other short term liabilities. 2. Represents the Weighted Average Maturity of outstanding long term wholesale debt with a residual maturity greater than 12 months as at reporting date. As at 31 December 2022, WAM and Long term % includes Term Funding Facility (
Slide 136: Glossary
Glossary Cash Profit, Capital & Other Customer Metrics Funding & Risk Cash Profit The Profit Announcement (PA) discloses the net profit after tax on Main Financial MFI Share measures the proportion of Banking and Finance MFI Customers that nominated each bank as their Committed The RBA provided the
Slide 137: 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 137
Commonwealth Bank of Australia — 1H23 Earnings Presentation on 6ix