Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — H1 FY2013 Earnings Presentation
143 slides from Commonwealth Bank Of Australia's earnings presentation, Feb 13, 2013
Slide 1: Commonwealth Bank of Australia 13 February 2013
For personal use only 13 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Slide 2: Disclaimer
Notes Disclaimer For personal use only The material that follows is a presentation of general background information about the Group’s activities current at the date of the presentation, 13 February 2013. It is information given in summary form and does not purport to be complete. It is not intended
Slide 3: Agenda
Agenda For personal use only Ian Narev, CEO – Company Update David Craig, CFO – Financial Overview Ian Narev, CEO – Outlook and Summary Questions and Answers 3
Slide 4: Additional information
Additional information Cash Earnings ($m) ROE - Cash (%) For personal use only 3,576 3,780 3,335 18.5 19.2 19.2 18.1 2,943 Dec 09 Dec 10 Dec 11 Dec 12 Dec 09 Dec 10 Dec 11 Dec 12 EPS (cents) DPS (cents) 235.5 164 214.3 227.2 191.7 132 137 120 Dec 09 Dec 10 Dec 11 Dec 12 Dec 09 Dec 10 Dec 11 Dec 12 4
Slide 5: Financial Overview
Financial Overview For personal use only vs Dec 12 Dec 11 Statutory Profit ($m) 3,661 1% Cash NPAT ($m) 3,780 6% ROE – Cash (%) 18.1% (110) bpts Cash Earnings per Share (cents) 235.5 4% Dividend per Share (cents) 164 20% 5
Slide 6: Business Unit Profitability
Additional information Business Unit Profitability For personal use only Mvt Tax & non- Cash Cash Mvt $m Operating Operating Impairment Investment controlling NPAT NPAT Cash performance performance expense experience interests Dec 12 Dec 11 NPAT RBS 2,394 7% (246) - (642) 1,506 1,329 13% BPB 1,202 (
Slide 7: Cash NPAT Drivers
Cash NPAT Drivers 1H13 For personal use only Income 5% Operating performance 15% Margin 10bpts Expenses 2% CVA turnaround +$82m C:I ratio 140 bpts Deposit income 11% NII 7% LIE $14m +13% Business loans 3.5% Net Flows Income 2% 1 $6.5bn Expenses flat Net Op. inc
Slide 8: Strategy – highlights this half
Additional information Strategy – highlights this half For personal use only Sustained improvements in customer satisfaction Customer Focus Further gains in products per customer Continued commitment to no offshoring People From diversity to full inclusion Absolute commitment to talent dev
Slide 9: Our Strategy
Our Strategy For personal use only Customer Focus Capabilities People Technology Strength Productivity opportunities “One CommBank” Growth Continued growth in business and institutional banking Disciplined capability-led growth outside Australia TSR Outperformance 9
Slide 10: Products per Customer
Additional information Products per Customer For personal use only Average Number of Banking and Finance Products held by Customers 18+ (at the Financial Institution)3 Average Products held at Financial Institution 2.90 2.90 2.84 2.80 2.78 2.70 2.60 2.59 2.50 2.40 2.30 CBA Peers 2.20 2.10 2.00 Sep 0
Slide 11: Sustained improvements in customer satisfaction
Sustained improvements in customer satisfaction For personal use only Retail Business 2 85% Customer Satisfaction 1 8 Customer Satisfaction 80% 75% 7 70% 65% CBA CBA 3 Peer average 3 Peer average 60% 6 Jan 06 Jun 09 Dec 12 Dec 10 Dec 11 Dec 12 1, 2 Refer notes slide at back of this presentation for
Slide 12: Australia's leading technology bank
Additional information Australia’s leading technology bank For personal use only Property Guide Property Guide CommSee QkR App Bump on Kaching “Leo” available App For Android Feb 2004 Jan 2012 2012 Dec 2012 Jul 2010 Jan 2013 Everyday “Pi” & “Leo” Kaching for SmartSign for Asset NetBank FirstChoice S
Slide 13: Technology – continued innovation
Technology – continued innovation Recent Innovations For personal use only Kaching for Android Property Guide for Android CommBiz for mobile* Next generation ATMs “Leo” available to merchants “Pi” software developer kits* NetBank enhancements MyWealth Video Conferencing in branches
Slide 14: Notes
For personal use only 14 Notes
Slide 15: Transaction Accounts
Transaction Accounts RBS Personal Transaction Accounts For personal use only Leveraging Core Banking capabilities (# ’000) New accounts 370 +13% New RBS Personal Transaction 337 Accounts up 13% 328 RBS Transaction Account balances 1 up 9% since June 1H12 2H12 1H13 BPB Transaction Accounts up
Slide 16: Cost to Income
Additional information Cost to Income For personal use only % 45.8% (70 bpts) 45.1% Dec 11 Dec 12 Revenue per FTE1 $’000 236 +8% 219 Dec 11 Dec 12 1 Total operating income divided by average FTE. 16
Slide 17: Embedding a productivity culture
Embedding a productivity culture 1 Retail Branch Network Retail Call Centres For personal use only Transactions Sales and converted Call handling time per CSR referrals per CSS +16% (5%) +6% Dec 11 Dec 12 Dec 11 Dec 12 Dec 11 Dec 12 Local Business Banking Home Loan Processing $ lending balance per L
Slide 18: Snapshot – 1H13 Results
Additional information Snapshot – 1H13 Results1 For personal use only Financial Operating Performance by Division Cash earnings ($m) 3,780 6% Retail Banking Services ($m) 2,394 7% ROE (Cash) 18.1% (110) bpts Business and Private Banking ($m) 1,202 (2%) Cash EPS (Cents) 235.5 4% Institutional Banking
Slide 19: Strength
Strength Deposit Funding Wholesale Funding Tenor (years)1 For personal use only % of Total Funding 5.2 5.3 63% 62% 62% 4.0 3.6 3.7 3.7 Dec 11 Jun 12 Dec 12 Dec 11 Jun 12 Dec 12 New Issuance Portfolio Total Provisions2 to Credit RWA Liquidity and Capital Total provisions Total provisions to CRWA 3 Li
Slide 20: Notes
For personal use only 20 Notes
Slide 21: Commonwealth Bank of Australia
For personal use only 13 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Slide 22: Notes
For personal use only 22 Notes
Slide 23: Solid profit growth
Solid profit growth For personal use only Dec 12 Dec 11 Dec 12 vs $m $m Dec 11 Operating income 10,535 10,049 5% Operating expenses (4,755) (4,602) 3% Operating performance 5,780 5,447 6% Investment experience 84 56 50% Loan impairment expense (616) (545) 13% Tax and non-controlling interest (1,468)
Slide 24: Non-cash Items
Additional information For personal use only Non-cash Items Dec 12 Dec 11 $m $m Hedging and IFRS volatility Unrealised accounting gains and losses arising from the application of “AASB 139 Financial (10) 115 Instruments: Recognition and Measurement” Other Bankwest non-cash items (33) (35) Trea
Slide 25: Statutory Profit
Statutory Profit For personal use only Dec 12 Dec 11 $m $m Cash NPAT 3,780 3,576 6% Hedging and IFRS volatility (10) 115 Other non-cash items (109) (67) Statutory NPAT 3,661 3,624 1% 25
Slide 26: Other Banking Income
Additional information Net Trading Income For personal use only Other Banking Income $m 291 306 426 291 241 281 443 Dec 12 Dec 11 Dec 12 vs 52 $m $m Dec 11 80 124 2 120 Commissions 993 1,009 (2%) 102 23 54 79 42 28 Lending fees 509 461 10% 321 244 251 267 209 225 226 Other 190 216 (12%) Sub-total 1,
Slide 27: Operating Income
Operating Income For personal use only +5% 1H13 vs 1H12 Funds & Average FUA 10% insurance +4% Average inforce premiums 16% Insurance Income 1% Other banking income +11% Commissions, fees, other $6m - Trading income (ex CVA) $113m 41% CVA (Group)1 $89m Large Net interest income +3% Volume $281m
Slide 28: Group NIM
Additional information Group NIM For personal use only bpts 12 Month Movement 15 (8) (13) 4 212 210 1H12 1H12 Asset pricing Wholesale Deposits Replicating 1H13 1H13 & mix funding (ex replicating portfolio portfolio) 28
Slide 29: Group NIM
Group NIM bpts 6 month NIM For personal use only bpts 6 Month Movement 217 212 210 206 Jun 11 Dec 11 Jun 12 Dec 12 7 (9) 3 1 2 210 206 2H12 Asset pricing Funding Replicating Basis risk Other1 1H13 & mix costs portfolio 1 Includes Treasury, New Zealand and other unallocated items. 29
Slide 30: Investment Spend
Additional information Investment Spend Investment Spend Profile For personal use only $m % of Investment Spend 1,286 1H13 1,179 1,075 1,020 1,036 639 Core 638 Banking 783 24% 538 583 563 Productivity & growth 49% 5% Other 434 3% Branch 19% refurbishment 647 582 Risk/ 537 541 437 474 Compliance 349
Slide 31: Productivity focus enables continuing investment
Productivity focus enables continuing investment Total Operating Expenses For personal use only 1H13 vs 1H12 3% underlying (ex Investment Spend; -2% underlying Count acquisition) (ex Volume Related 3% underlying (ex Investment Expenses, expansion) Spend; Volume) 9% 6% 6% Group 3%1 Flat 3% 3% 2% 2% 2
Slide 32: Credit quality metrics
Additional information PD Ratings Migration Risk-Rated Portfolio1 Loan Impairment Expense (Cash) to Gross Loans For personal use only bpts 2 10 Consumer Adjusted for changes 5 to customer segment Exposures ($bn) reporting 0 37 5 28 10 23 23 Total Upgrades 18 20 19 15 Downgrades - excluding defaults
Slide 33: Sound credit quality
Sound credit quality Loan Impairment Expense (Cash) to Gross Loans Group Consumer Arrears For personal use only CBA Group1 90+ days Six months annualised 1.4% (basis points) 85 0.9% 0.4% Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 61 Home loans Personal loans Credit cards 55 Troublesome and Impaired Assets $
Slide 34: Provisions to Credit RWA
Additional information Collective Provisions to Credit RWA Individual Provisions to Impaired Assets For personal use only Collective provisions Collective provisions to CRWA to CRWA (ex Residential Mortgages CRWA) 1.49% 1.48% 42.8% 1 1.40% 37.4% 1.32% 34.1% 30.3% 1.13% 1.11% 1.08% 1.05% Peer 3 CBA P
Slide 35: Provisioning
Provisioning Individual Provisions Collective Provisions For personal use only $m $m Economic overlay unchanged 3,043 2,984 2,837 2,858 Overlay 1,049 970 847 892 2,125 2,097 2,008 1,845 598 528 473 470 979 999 Bankwest 934 780 177 218 808 890 898 853 227 199 Consumer 969 880 847 866 Commercial 588 5
Slide 36: Retail Banking Services
Additional information Retail Banking Home Loan Market Share For personal use only Dec 12 Dec 12 vs Services $m Dec 11 Home loans 1,545 15% 28% 25.1% 26% Consumer finance 1,014 13% 24% Retail deposits 1,120 (11%) 22% 18.7% 23.5% Distribution 178 7% 20% Business products 61 - 18% 15.1% 16% 13.6% Tota
Slide 37: Retail Banking Services
Retail Banking Services 1H13 vs 1H12 RBS Margin For personal use only Segment Income Operating Performance bpts 283 7% 270 15% 5% 253 13% 253 248 247 237 244 239 249 2% (11%) Home Consumer Retail Income Costs Operating loans finance deposits performance 1H06 1H07 1H08 1H09 1H10 1H11 2H11 1H12 2H12 1
Slide 38: Business & Private Banking; Institutional Banking & Markets
Additional information For personal use only Business & Private Dec 12 Dec 12 vs Institutional Banking & Dec 12 Dec 12 vs Banking $m Dec 11 Markets $m Dec 11 Corporate Financial Services 666 - Institutional Banking 987 1% Regional and Agribusiness 313 2% Markets 341 61% Local Business Banking 591 4%
Slide 39: Corporate
Corporate 1H13 vs 1H12 - BPB Business Lending Growth (RBA)1 For personal use only Segment Income Operating Performance 3.5% 4% 5% 2% 0.7% 0% 0% 0.0% 0.0% (0.1%) (1%) (6.5%) (15%) (2%) BPB IB&M BWA BWA CBA System CFS RAB LBB Private Equities Income Costs Operating legacy core Group Bank & ML performa
Slide 40: Wealth Management
Additional information Platform* Half Year Net Flows Dec 12 Dec 12 vs For personal use only Wealth Management $m Dec 11 $bn 2.0 1.6 1.7 1.8 CFSGAM 406 7% 1.4 Colonial First State 379 28% CommInsure 333 (3%) Other (1) - Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 * FirstChoice & Custom Solutions Net operating
Slide 41: Wealth Management
Wealth Management 1H13 vs 1H12 Highest Net Flows for 5 years For personal use only Segment Income1 Operating Performance $bn FUA 16.6 215.9 28% 11% 6.5 10% 6.8 192.8 9% 184.0 2.0 7% (3%) CFSGAM CFS CommInsure Income1 Costs2 Operating Dec 11 Net Investment Jun 12 Net Investment Dec 12 performance Flo
Slide 42: Australian Deposits and Term Maturity Profile
Additional information Australian Deposits Term Maturity Profile1 For personal use only $bn Total Deposits $bn (excl CD’s) Weighted Average maturity 3.7yrs 336 297 241 168 204 163 14 5 7 156 117 22 7 168 134 1 16 17 18 85 87 9 9 CBA Peer 3 Peer 2 Peer 1 FY 2013 2014 2015 2016 2017 >2017 Household de
Slide 43: Funding & Liquidity
Funding & Liquidity 1 Funding Liquidity For personal use only $bn Source of funds Use of funds $bn 128 13 (15) 63% 57 Deposit Funded 7 31 Regulatory minimum (7) $53bn 2 40 1 (1) IFRS & FX Equity Customer New long term Long term Lending Net short term Dec 12 deposits funding maturities funding Intern
Slide 44: Dividends Per Share
Additional information Dividends Per Share For personal use only 74.2% 75.0% 78.2% 73.9% 73.2% 75.0% 89% Payout 84% ratio (cash) 84% 70% 87% 88% 62% 61% 63% 63% 84% 74% 61% cents 107 149 113 153 113 115 120 170 132 188 137 197 164 2007 2008 2009 2010 2011 2012 2013 Interim Final 44
Slide 45: Interim Dividend
Interim Dividend Dividend per share For personal use only 140% cents 164 +20% 120% 137 132 120 113 113 107 100% 80% 84% Target 70% 70%60% 61% 63% 63% 62% 61% 40% 1H07 1H08 1H09 1H10 1H11 1H12 1H13 20% Dividend per share Cash NPAT Payout Ratio 0% 45
Slide 46: Peer Basel III Common Equity
Additional information 12.1 11.6 Peer Basel III Common Equity For personal use only 10.6 10.6 10.6 10.4 10.0 10.0 9.8 9.8 9.5 9.3 9.3 9.3 Peer bank average CE ratio 9.2 8.8 8.7 8.7 8.7 (ex. Australian banks): 8.9% 8.4 8.2 8.2 8.1 8.0 8.0 7.8 7.7 7.7 7.5 7.5 7.4 2 1 2 2 Wells Fargo Barclays Nordea IN
Slide 47: Strong Capital Position
Strong Capital Position Basel III International Common Equity Tier 1 For personal use only Basel III CET1 International of 9.8% 10.6% 9.3% 10.6%* vs peer average 8.9% Board >9% 6.9% Up 54% since Jun 07 +54% Basel III CET1 APRA 8.1% (Jun 12: 7.5%) Jun 07 Dec 11 Jun 12 Dec 12 DRP neutralisatio
Slide 48: Notes
For personal use only 48 Notes
Slide 49: Summary - responding to the environment
Summary - responding to the environment Managing margins Improving cost-to-income For personal use only bpts Group NIM 45.8% 217 45.1% 212 210 206 Jun 11 Dec 11 Jun 12 Dec 12 Dec 11 Dec 12 Maintaining conservative settings Delivering strong, sustainable returns Deposit funding Liquids cents Capital
Slide 50: Notes
For personal use only 50 Notes
Slide 51: Commonwealth Bank of Australia
For personal use only 13 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Slide 52: Economic Summary
Additional information Economic Summary For personal use only As at June 2009 2010 2011 2012 2013 (f) 2014 (f) Credit Growth % – Total 3.2 3.0 2.7 4.4 3-5 5½-7½ Credit Growth % – Housing 6.5 8.0 6.0 5.0 4-6 5½-7½ Credit Growth % – Business 0.9 -4.0 -2.1 4.5 1½-3½ 6-8 Credit Growth % – Other Personal
Slide 53: Outlook
Outlook For personal use only Current operating environment – Some improvements in global macro economy – Increased stability and lower volatility – Positive for global debt and equity markets Going forward – Still some downside risk which dictates continued caution – Slow but steady rebuild of
Slide 54: Notes
For personal use only 54 Notes
Slide 55: Summary
Summary For personal use only Consistent execution of long-term strategic priorities Good revenue growth in a subdued environment Productivity focus enabling investment Stable credit quality reflecting long-term conservatism Strong ROE notwithstanding significantly stronger capital positio
Slide 56: Commonwealth Bank of Australia
For personal use only 13 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Slide 57: Index
Index For personal use only Strategy 57 Business Performance 80 Risk and Credit Quality 98 Capital, Funding & Liquidity 111 Economic Indicators 125
Slide 58: CBA Overview
CBA Overview Largest Australian Bank by market capitalisation For personal use only AA- / Aa2 / AA- Credit Ratings (S&P, Moodys, Fitch) Basel III CET1 Internationally harmonised 10.6% Total assets of $721bn ~14.5 million customers 51,000 staff Over 1,100 branches, leading online platfo
Slide 59: Stakeholders
Stakeholders Customer Product Holdings1 For personal use only 11.6m Super fund unit holders ? 4.4m 10.4m 3.9m 2.0m 4.0m 1.7m 3.0m 1.8m 540k 625k 305k 1.2m 800k 51k Home Loans Credit Cards Retail Savings and Insurance Personal Loans Business Funds CommSec Shareholders Employees Transactions Relations
Slide 60: Strong contributor to Australian economy
Strong contributor to Australian economy Where does our income go? For personal use only 1H13 ($bn) Loan impairment Expenses Cost of lending across Serving ~14.5 the economy million customers 2.2 0.6 Tax expense 1.5 Australia’s 4th largest tax payer1 2.6 1.1 Salaries Employing 2.6 Retained for capit
Slide 61: Return on Equity
Return on Equity For personal use only Return on Equity (Cash) 600 21.5% 21.7% 550 20.4% 19.5% 500 18.7% 18.6% 18.1% 15.8% 450 1.1% 1.0% 400 Return on 350 Assets 300 250 200 150 100 2006 2007 2008 2009 2010 2011 2012 1H13 61
Slide 62: Bank Profitability
Bank Profitability 1 % ROE CBA Ranking For personal use only (Amongst ASX 100 companies) Russia Indonesia CBA China Rank 2 Canada India Market capitalisation (ASX) 2nd Australia Korea Dividends declared 2nd Singapore Japan Taxes paid 4th US UK Return-on-Equity (ROE) 23rd Spain Germany Return-on-Asse
Slide 63: Customer Satisfaction
Customer Satisfaction For personal use only Retail Business 1 2 Customer Satisfaction Customer Satisfaction 85% 8 % Satisfied ('Very Satisfied' or 'Fairly Satisfied') 80% Satisfaction - Average 75% 7 70% 65% 60% 6 Jan 06 Jun 09 Dec 12 Jun 11 Dec 11 Jun 12 Dec 12 CBA Peers CBA Peers 1, 2 Refer notes
Slide 64: Business Customer Satisfaction by Segment
For personal use only 6.5 7.0 7.5 8.0 6.5 7.0 7.5 8.0 May 11 May 11 Jun 11 Jun 11 Jul 11 Jul 11 Aug 11 Aug 11 Sep 11 Sep 11 Oct 11 Oct 11 Nov 11 Nov 11 CBA CBA Dec 11 Dec 11 Jan 12 Jan 12 Feb 12 Feb 12 Micro Mar 12 Mar 12 Medium Apr 12 Apr 12 May 12 May 12 Peers Peers Jun 12 Jun 12 Jul 12 Jul 12 Aug
Slide 65: Products per Customer
Products per Customer Average Product Composition between CBA, For personal use only 3 the 3 Major Banking Peers and Bankwest 18+ 2.90 2.84 2.78 Insurance 0.34 2.59 0.34 0.25 Personal Lending 2.41 0.23 Home loan 0.20 0.07 0.25 0.24 0.23 0.32 Cards 0.70 0.81 0.74 0.69 Managed Funds 0.66 Superannuatio
Slide 66: MFI
MFI 5 MFI Customer Proportion For personal use only % CBA ANZ NAB WBC (incl BWA) (incl SGB) 33.2 33.2 33.2 33.2 33.0 20.6 20.3 20.2 20.2 20.1 13.5 13.5 13.5 13.4 13.7 11.1 10.2 10.4 10.6 10.9 Dec Jun Dec Jun Dec Dec Jun Dec Jun Dec Dec Jun Dec Jun Dec Dec Jun Dec Jun Dec 10 11 11 12 12 10 11 11 12 1
Slide 67: Branch of the Future
Branch of the Future For personal use only Creating capacity for front line staff Outbound sales capability Promoting customer self service Testing new branch design elements Building further capability in front line sales staff Rollout of Video Conferencing Installation of Intelligent
Slide 68: Video Conferencing
Video Conferencing Rolling out across the branch network For personal use only A tangible example of “One CommBank” in action Customers connected to CBA specialists; – Personal Lenders – CommSec specialists – Business Bankers – Agribusiness – Financial Planners Customer needs met at first in
Slide 69: Australia's leading technology bank
Australia’s leading technology bank For personal use only #1 #1 >40% >4.5m Online In the youth of all payment App 1 banking segment transactions downloads #1 739k >$4.7bn #1 Social & Kaching Kaching Contactless 2 3 Facebook downloads transactions acceptance points 4.36m >2.2m MFI for #1 active onlin
Slide 70: Core Banking Modernisation
Core Banking Modernisation Focus on benefits realisation For personal use only Implemented SAP banking platform 12+ million customers migrated First Australian bank to go real - time, 24 x 7 and one of the first in the world Enabled industry leading functionality including Kaching and Everyd
Slide 71: Technology – transformational change
Technology – transformational change Revitalising front-line customer interfaces For personal use only Delivering best-in-class online, mobile and social platforms Innovating in the back-end (Core, cloud, information as a service, data centres) More reliable services in face of increasing ch
Slide 72: Innovations across four touch points
For personal use only Innovations across four touch points Online Mobile Social POS CommBank CommBank Kaching Contactless NetBank Kaching Facebook Pi CommBiz Property Guide YouTube Everyday Settlement
Slide 73: CBA in Asia – strong growth
CBA in Asia – strong growth For personal use only Customer Numbers (IFS) Cash NPAT2 (proprietary)1 $m Improvement in Singapore Stronger HZB Growth driven by credit trading performance contribution improved markets as markets stabilised 34 166 +55% 331,000 12 7 263,000 113 214,000 4 IFS Asia +24% +47
Slide 74: CBA in Asia
CBA in Asia Country Representation as at December 2012 For personal use only China Bank of Hangzhou (20%) – 125 branches Qilu Bank (20%) – 84 branches County Banking (84%) – 5 Banks in Henan Province Beijing Beijing Representative Office Jinan BoCommLife JV (37.5%) – Henan Province Tokyo operating i
Slide 75: Timeline of CBA in Asia
Timeline of CBA in Asia CBA group strategically building long-term growth opportunities in Asia For personal use only 1986 1996 2006 Dec 12 Tokyo Beijing Tokyo Beijing Beijing Jinan Tokyo Jinan Hanoi Hangzhou Henan Tokyo Hong Kong Shanghai Hangzhou Hanoi Jakarta Hong Kong Hanoi Mumbai Singapore Jaka
Slide 76: Timeline of CBA in Asia
Timeline of CBA in Asia For personal use only Additional Investment in BoCommLife FTE 2 County banks opened in China 3,000 3 County banks opened in China Additional Investment in VIB 2,500 India branch opened Initial VIB Investment Shanghai branch opened 2,000 BoCommLife JV launched Increased Invest
Slide 77: Sustainability progress
Sustainability progress In the first half of the financial year 2013 and in line with our sustainability strategic framework, the Group has continued to implement initiatives that deliver long-term value to our customers, shareholders, employees as well as to the wider community. For personal use on
Slide 78: Sustainability scorecard
Sustainability scorecard Units 1H 2013 FY2012 FY2011 FY2010 FY2009 Customer satisfaction For personal use only 81.9 79.0 75.2 75.6 73.0 Roy Morgan MFI retail customer satisfaction 1 % (ranked 2nd) (ranked 2nd) (ranked 4th ) (ranked 2nd) (ranked 3rd) 7.4 7.3 7.1 7.0 DBM Business Financial Services Mo
Slide 79: Transaction volumes
Transaction volumes m Branch m ATMs For personal use only 130 (deposits & withdrawals) (all transactions1) 325 325 313 90 86 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1H13 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1H13 1H13 (x2) 1H13 (x2) 2 3 m EFTPOS m Internet 392 (all transactions
Slide 80: Index
Index For personal use only Strategy 57 Business Performance 80 Risk and Credit Quality 98 Capital, Funding & Liquidity 111 Economic Indicators 125
Slide 81: Market share
Market share 1 Dec 12 Jun 12 Dec 11 For personal use only CBA BWA Combined CBA + BWA CBA + BWA Home loans 21.1% 4.0% 25.1% 25.2% 25.3% Credit cards - RBA 2 21.2% 2.7% 23.9% 23.3% 23.2% Other household lending3 15.5% 1.1% 16.6% 16.4% 16.3% Household deposits 25.8% 2.9% 28.7% 28.9% 29.4% Retail deposi
Slide 82: Continued cost discipline
Continued cost discipline Total Operating Expenses For personal use only $m +3% +8% +1% +3% +3% Increased system support costs and increased software Inflation-related salary amortisation 4,755 increases and higher 4,602 defined benefit plan expense 1H12 Staff Occupancy & IT Other 1H13 equipment 82
Slide 83: Home Lending Growth Profile
Home Lending Growth Profile Home Loan Balance Growth External Refinancing For personal use only $bn 5% % of Total Balances 14 (36) 29 (3) 272 276 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jun 12 New Redraw & Repayments / External Dec 12 fundings interest Other refinance CY 2006 CY 2007 CY 2008
Slide 84: Wholesale Funding Costs
Wholesale Funding Costs 1 2 Marginal Funding Costs Average Long Term Funding Costs For personal use only Indicative Long Term Wholesale Funding Costs bpts % 2.00 Peak 200 Dec 13 1.75 169 Jun 12 153 1.50 150 137 Margin to BBSW 1.25 Margin to BBSW 106 109 Dec 12 1.00 100 92 74 0.75 54 50 43 0.50 25 14
Slide 85: Increase in retail funding costs since Jun
Increase in retail funding costs since Jun 07 For personal use only Basis Risk 37% x 1.43% Wholesale funding Deposit 63% x 1.96% funding Deposit Funding Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Increase in wholesale funding1 1.30% 1.72% 1.43% Increase in de
Slide 86: RBS – Month Periods
RBS – 6 Month Periods Dec 12 vs For personal use only $m Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net interest income Home loans 1,444 1,198 1,234 17% Consumer finance 763 731 671 14% Retail deposits 928 993 1,062 (13%) Business products 27 23 27 - 3,162 2,945 2,994 6% Other banking income Home loans
Slide 87: RBS
RBS Dec12 vs For personal use only Cash Earnings $m Dec11 $m 15% Balances 3%; Home loans 1,545 Recovering margins 113 (136) 100 (90) Strong volume growth Consumer driven by new products 1,014 13% 206 (28) finance and campaigns 12 1,506 13% Balances 8%, largely (11%) 7% 2% (29%) 16% in term d
Slide 88: BPB – Month Periods
BPB – 6 Month Periods Dec 12 vs For personal use only $m Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net interest income Corporate Financial Services 509 499 500 2% Regional & Agribusiness 268 255 254 6% Local Business Banking 487 487 467 4% Private Bank 118 112 113 4% Equities and Margin Lending 77 83 8
Slide 89: BPB
BPB Dec12 vs $m For personal use only Cash Earnings Key segments Dec11 $m Lending balances 8% Corporate Financial 666 - offset by deposits and Services risk management 767 (24) Margin growth in 1 (21) Regional & Lending as a result of 12 735 313 2% Agribusiness effective margin (1%) 0% manageme
Slide 90: IB&M – Month Periods
IB&M – 6 Month Periods Dec 12 vs For personal use only $m Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net interest income Institutional Banking 584 610 601 (3%) Markets 110 136 142 (23%) 694 746 743 (7%) Other banking income Institutional Banking 403 394 377 7% Markets 231 60 70 Large 634 454 447 42% Tot
Slide 91: IB&M
IB&M For personal use only Cash Earnings Dec12 vs $m Dec11 $m Higher leasing income and average Institutional lending balance 47 (25) 987 1% (64) Banking growth, offset by 82 higher funding costs 6% (17) impacting margins 9 19% 603 571 Large Large 10% Improved trading 1% Markets 341 61% performa
Slide 92: WM – Month Periods
WM – 6 Month Periods $m Dec 12 vs For personal use only Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net operating income CFSGAM 406 364 379 7% Colonial First State 379 357 296 28% CommInsure 333 300 343 (3%) Other (1) 1 (1) - 1,117 1,022 1,017 10% Operating expenses CFSGAM (235) (215) (224) 5% Colonial F
Slide 93: Wealth Management
Wealth Management For personal use only Cash Earnings $m Dec12 vs Dec11 $m Average FUM 5% to 83 (10) CFSGAM 406 7% $153bn, outperforming (63) rising equity markets (3%) Improved market 27 (13) 6 334 CFS 379 28% conditions, inclusion of 9% Count Financial 304 28% 15% 11% Strong General 7% Insu
Slide 94: New Zealand – Month Periods
New Zealand – 6 Month Periods NZ$m Dec 12 vs For personal use only Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net interest income ASB 666 649 632 5% Other 9 11 7 29% Total NII 675 660 639 6% Other banking income ASB 180 162 161 12% Other (19) (19) (17) (12%) Total OBI 161 143 144 12% Total banking incom
Slide 95: New Zealand
New Zealand NZ Dec 12 vs For personal use only Cash Earnings $m Dec 11 Strong lending NZ$m ASB volume growth Operating 875 7% Benefit from fixed 58 (11) Income rate loan repricing (14) (9) Productivity gains 3% 1 393 partially offset by Large ASB increased 368 7% 2% Operating technology and (3
Slide 96: Bankwest – Month Periods
Bankwest – 6 Month Periods For personal use only $m Dec 12 vs Dec 12 Jun 12 Dec 11 Dec 11 (6 months) Net interest income 761 707 755 1% Other banking income 110 100 101 9% Total banking income 871 807 856 2% Operating expenses (416) (420) (428) (3%) Loan impairment expense (86) (23) (38) Large Net p
Slide 97: Bankwest
Bankwest For personal use only Cash Earnings $m Dec12 vs Key balances $m 12 (48) Dec11 Higher home loan 15 volumes and Banking (3%) 871 2% margins offset by income lower deposit 273 margins 2% Productivity gains Lower IT costs 6 258 Expenses (416) (3%) Lower marketing spend Large (5%) Norm
Slide 98: Index
Index For personal use only Strategy 57 Business Performance 80 Risk and Credit Quality 98 Capital, Funding & Liquidity 111 Economic Indicators 125
Slide 99: Regulatory Exposure Mix
Regulatory Exposure Mix For personal use only Regulatory Credit Exposure Mix CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 57% 40% 42% 56% Corporate, SME & Specialised Lending 27% 35% 40% 31% Bank 5% 7% 9% 4% Sovereign 7% 10% 6% 5% Qualifying Revolving 3% 3% 2% 3% Other Retail 1% 5% 1% 1% Total Adv
Slide 100: RBS home loan book quality very sound
RBS home loan book quality very sound For personal use only Portfolio dynamic LVR 1 of 49% and portfolio LVR 2 of 51% 81% of customers paying in advance of required monthly mortgage repayment 3 Maximum LVR of 95% for low risk customers Lenders Mortgage Insurance (LMI) is required for higher LVR loan
Slide 101: Home Loan Portfolio Profile
Home Loan Portfolio Profile Dec Jun Dec Dec Jun Dec For personal use only 11 12 12 11 12 12 Total Balances - Spot ($bn)1 346 353 359 Total Balances – Avg ($bn)1 341 345 356 Total Accounts (m) 1.4 1.4 1.4 Portfolio Dynamic LVR (%)3 48 48 49 Fundings ($bn)2 28 26 29 Customers in advance (%)4 82 82 81
Slide 102: Consumer Arrears (Group)
Consumer Arrears (Group) Credit Cards Personal Loans1 For personal use only 90+ days 2.0% 90+ days 2.0% 1.0% 1.0% 0.0% Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 0.0% Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 RBS Bankwest ASB RBS Bankwest ASB Home Loans1 RBS First Home Buy
Slide 103: Consumer Arrears (RBS)
Consumer Arrears (RBS) Home Loans Home Loans by State For personal use only 2.2% 30+ days 2.0% 90+ days 2.0% 1.8% 1.5% 1.6% 1.4% 1.0% 1.2% 1.0% 0.5% 0.8% 0.6% 0.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 07/08 08/09 09/10 10/11 11/12 NSW/ACT SA/NT QLD V
Slide 104: RBS Home Loans – LVR and Arrears by Vintage
RBS Home Loans – LVR and Arrears by Vintage Home Loan Dynamic LVR1 Profile Home Loan Arrears Rates by Vintage For personal use only 70% Average 2.00% LVR 60% Dec 11 48% Jun 12 48% 50% Proportion of Total Portfolio Dec 12 49% 1.50% FY09 FY08 90+ Arrears Rate 40% FY07 1.00% 30% 20% FY10 0.50% 10% FY11
Slide 105: RBS Home Loans – Stress Test
RBS Home Loans – Stress Test Observations Key Assumptions For personal use only Year 1 Year 2 Year 3 Worse case: 32% house price decline, Unemployment 7.0% 10.5% 11.5% 11.5% unemployment, 3 year timeframe. 1 Hours under-employed 11.4% 15.8% 18.4% Cumulative House Prices -15% -32% -32% Cash Rate 3.
Slide 106: Credit Exposure by Industry
Credit Exposure by Industry 1 For personal use only Jun 12 Jun 12 Dec 12 Dec 12 Consumer 52.8% 53.4% Agriculture 2.1% 2.1% Mining 1.0% 1.3% Manufacturing 2.1% 1.9% Energy 1.1% 1.0% Construction 0.9% 0.9% Retail & Wholesale 2.4% 2.5% Transport 1.5% 1.6% Banks 11.1% 10.4% Finance – other 3.5% 3.4% Bus
Slide 107: Sector Exposures
Sector Exposures Commercial Exposures by Sector1 Top 20 Commercial Exposures2 ($m) For personal use only AAA to A+ BBB+ to $bn Other Dec 12 AA- to A- BBB- Banks 38.5 38.6 4.8 0.7 82.6 A+ A+ Finance Other 8.6 9.4 2.0 7.0 27.0 A- BBB Property 0.1 5.7 11.0 36.0 52.8 AA+ A- Sovereign 55.7 1.9 0.5 0.1 58
Slide 108: Commercial Property Market
Commercial Property Market CBD Office Supply Pipeline1 CBD Vacancy Rates For personal use only % of Total Stock Current Previous 40% Peak 1991 Recession Current Previous 35% 1st Half 2nd Half (1st Half FY13) (2nd Half FY12) Market 1990s FY13 FY12 30% 25% Sydney 22.4% 8.4% 8.6% 20% Perth 31.8% 5.6% 2
Slide 109: Interest Rate Risk in the Banking Book
Interest Rate Risk in the Banking Book 0 2,000 For personal use only 62bpts 36bpts 40bpts 33bpts 40bpts $880m 20 1,500 $1,363m Optionality Risk Optionality $781m Risk $922m Basis Risk Basis Risk 40 1,000 $776m Repricing and Yield Curve Risk 60 Repricing and 500 Yield Curve Risk Embedded Loss 80 - Em
Slide 110: Risk Weighted Assets 1H13
Risk Weighted Assets 1H13 Total RWA Credit RWA – Driver Analysis For personal use only $bn $bn (9.4) (3.0) 8.3 0.5 (2.4) 0.9 1.2 302.8 (0.3) 301.6 261.4 258.5 Jun 12 Credit Traded IRRBB Operational Dec 12 Jun 12 Bankwest Quality Volume Data & Dec 12 Risk Market Risk Accreditation & FX Methodology Ri
Slide 111: Index
Index For personal use only Strategy 57 Business Performance 80 Risk and Credit Quality 98 Capital, Funding & Liquidity 111 Economic Indicators 125
Slide 112: Capital Overview
Capital Overview December 12 Summary Basel III For personal use only Common Equity Tier 1 Capital Common Equity Tier 1 Capital 11.8% 10.6% 10.6% 9.3% 9.8% 8.3% 8.1% 7.1% 7.5% 8.1% BII BII BIII BIII Dec 11 Jun 12 Dec 12 APRA UKFSA APRA Int'l BIII (APRA) BIII (Int'l) Basel II Strong capital position
Slide 113: Basel II v III CET1 (APRA & International)
Basel II v III CET1 (APRA & International) Basel II v III Reconciliation – December 2012 For personal use only 1.4% 10.6% 1.1% 8.3% (0.9%) 8.1% 0.9% 0.1% (0.3%) Basel II Deductions 1 Risk weighted Dividends Other 3 Basel III Deductions 5 Risk weighted Basel III 4 7 APRA assets 2 APRA assets 6 Intern
Slide 114: Basel III CET1 – Dec 2012 Half Year
Basel III CET1 (APRA & Int’l) – Dec 2012 Half Year For personal use only 34 11 10.6% 132 (20) 9.8% (77) 8.1% 7.5% 1 Jun 12 Dividend Cash Credit Bankwest Other 3 Dec 12 (net of DRP) Earnings RWA Advanced 2 Accreditation APRA International 1 Dividend net of DRP relates to the June 12 half year (declar
Slide 115: Basel II Tier One Capital Movement
Basel II Tier One Capital M’vt – Dec 12 Half Year For personal use only 125 (87) 30 4 (1) 10.5% (21) 10.0% 8.3% 7.8% 2 Jun 12 Cash Dividend Credit Bankwest PERLS IV/VI Other Dec 12 Earnings RWA Advanced 1 Accreditation CET1 Tier 1 1 Represent benefit from reduction in Credit RWA. APRA extended the G
Slide 116: UK Comparison
UK Comparison The following table estimates the impact on CBA Group capital, as at December 2012, of the differences For personal use only between the APRA Basel II guidelines and those of the UK regulator, Financial Services Authority (FSA). Common Tier One Total Equity Capital Capital 1 Capital Re
Slide 117: Funding - Portfolio
Funding - Portfolio Funding Composition Wholesale Funding by Product For personal use only Customer Deposits Structured MTN 2%1% 1% 4% 5% ST Wholesale Funding 9% Vanilla MTN 12% 4% Commercial Paper LT Wholesale Funding maturing 4% Debt Capital < 12 months 5% LT Wholesale Funding maturing CDs >= 12 m
Slide 118: Funding – Issuance and Maturity
Funding – Issuance and Maturity1 Funding strategy driven by market and investor diversity, appropriate maturity profile and overall cost For personal use only Term wholesale funding requirement has eased materially since FY 2010 $bn 60 50 9 Weighted Average Maturity 3.7yrs 40 30 Expected 0.5 fun
Slide 119: UK and US Balance Sheet Comparison
UK and US Balance Sheet Comparison For personal use only United Kingdom USA Assets Liab + Equity Assets Liab + Equity Cash 9% 7% Equity Cash 8% 10% Equity Home loans 13% Home loans 19% 50% Deposits Deposits 54% Other lending 40% Other lending 43% 10% Long term Other fair Long term Value assets 16% 1
Slide 120: Australian Banks – Safe Assets, Secure Funding
Australian Banks – Safe Assets, Secure Funding For personal use only Commonwealth Bank Balance Sheet Comparisons Assets – CBA’s assets are safer because: Assets Liab + Equity 52% of balance sheet is home loans, which are stable/long Cash 3% term 6% Equity Trading securities and other fair value
Slide 121: Funded Assets
Funded Assets For personal use only $bn Jun Dec $bn 12 12 7 2 1 Transactions 81 83 (1) (2) 43 Equity Savings 91 100 123 Long term wholesale Investments 197 192 Short term 108 wholesale Other 10 11 Total customer 653 659 660 deposits 379 386 Wholesale 232 231 Customer funding 386 deposits Total fundi
Slide 122: Replicating Portfolio
Replicating Portfolio Replicating portfolio provides partial economic hedge for certain liabilities and assets that display For personal use only imperfect correlation between the cash rate and the product interest rate Actual and Forecast Scenario1 8% 7% 6% Replicating Portfolio Yield 5% Official
Slide 123: Regulatory Expected Loss
Regulatory Expected Loss 1 Prior periods restated Dec 11 Jun 12 Dec 12 For personal use only $m $m $m CBA Regulatory Expected Loss (EL) – before tax 4,005 3,961 5,497 Eligible Provision Collective provision 2 2,859 2,685 2,701 Individually assessed provisions 2,3 2,201 2,143 2,622 Other provisions 2
Slide 124: Regulatory Change
Regulatory Change 2012 2013 2014 2015 2016 2017 2018 For personal use only ♦ Capital - APRA draft and LCR - APRA observation 60% effective LCR (BCBS) 100% effective Timetable final standards ♦ LCR, NSFR – APRA draft standards NSFR - APRA observation and review NSFR - Effective ♦ BCBS LCR review 1 ♦
Slide 125: Index
Index For personal use only Strategy 57 Business Performance 80 Risk and Credit Quality 98 Capital, Funding & Liquidity 111 Economic Indicators 125
Slide 126: Australian economy remains in good shape
Australian economy remains in good shape GDP growth outperformance Stronger labour market For personal use only ECONOMIC GROWTH IN 2012 (annual % change) % UNEMPLOYMENT RATE % Australia 12 12 Austria Belgium United Canada Euro States France zone Germany Greece 8 8 Ireland Italy UK Japan Australia Ne
Slide 127: Policy protection is available
Policy protection is available Interest rates can be cut Fiscal policy can be used For personal use only OFFICIAL INTEREST RATES GENERAL GOVERNMENT NET DEBT % % % (% of GDP) % 100 100 8 8 Advanced G-20 75 75 6 6 UK Australia 50 50 Emerging G-20 4 4 25 25 NZ US Australia 2 2 Canada 0 0 Euro Japan Sou
Slide 128: The consumer
The consumer Consumers are spending but are And job security remains a key Balance sheet pressures are easing For personal use only selective about where they spend concern CBA H/HOLD WEALTH INDICATOR CONSUMER SPENDING GREATEST FEAR (annual % change) % % (annual % change) (% of respondents) % % 30 3
Slide 129: Labour market
Labour market For personal use only The labour market is soft Some indicators suggest stronger jobs growth LABOUR MARKET '000 TAXES & JOBS % % % 6.0 90 (annual % change) 5 20 Unemployment rate Payroll tax (lhs) (rhs) 5.5 60 3 10 5.0 30 4.5 0 1 0 Employment growth Gross PAYG 4.0 (3mnth average, rhs)
Slide 130: Business
Business The mining construction boom will reach a Which means that the non-mining economy For personal use only peak during the next year will have to make more of a contribution MINING INVESTMENT THE TWO SPEED ECONOMY % % % (annual % change) % (% of GDP) 10 10 24 24 Source: RBA/CBA CBA (f) 8 8 Min
Slide 131: Credit
Credit For personal use only Modest credit growth set to continue Economic growth prospects are CREDIT & SPENDING reasonably favourable % % (annual % change) 30 30 CBA (f) Reduction in global tail risks has Credit improved financial market sentiment 20 20 But downside risks persist 10 10 Hou
Slide 132: Funding
Funding Funding is longer and more diversified Major Banks’ Deposit Rates For personal use only 132
Slide 133: Housing market - summary
Housing market - summary An orderly adjustment occurred in the Australian housing market post-GFC For personal use only This adjustment was characterised by slower credit growth and increased savings and was assisted by lower servicing ratios Australian house prices underwent a modest correcti
Slide 134: An orderly adjustment in the Australian housing market
An orderly adjustment has occurred in the Australian housing market, as households repair their balance sheets Debt:income ratios have plateaued Housing credit growth has slowed For personal use only HOUSEHOLD DEBT % RBA HOUSING CREDIT (% of h/hold disposable income) (annual % change) 200 200 25 20
Slide 135: Australian house prices have undergone a modest correction
Australian house prices have undergone a modest correction as part of the adjustment process House prices House price growth For personal use only MEDIAN HOUSE PRICES 3 Years 12 mths 6 mths $'000 (Stratified median) $'000 Mvt (%) to Dec 12 to Dec 12 to Dec 12 700 700 Sydney houses Sydney 5.6% 2.1% 0
Slide 136: Demand-supply balance mitigates risk of price decline
The demand-supply balance significantly mitigates the risk of a material decline in Australian house prices Population growth Housing demand & supply Projected population change For personal use only 2011-2050 POPULATION DRIVERS HOUSING DEMAND & SUPPLY '000 '000 '000 '000 60% 450 450 Demand 40% 40%
Slide 137: Housing indicators supportive of house prices
Low vacancy rates, growth in rents, affordability trends and positive sentiment are all supportive of house prices Housing indicators Affordability & prices For personal use only HOUSING INDICATORS CBA AFFORDABILITY & PRICES % % 60 9.0 % (annual % change) % 40 70 Housing Rents CBA-HIA housing sentim
Slide 138: House prices influenced by high urbanisation rate
Australian house prices are influenced by a high urbanisation rate Urban population Density & house prices Dwelling prices For personal use only URBAN POPULATION DWELLING PRICES DENSITY & HOUSE PRICES (ratio to household income) (% in two largest cities) %80urban pop in 2 largest *Source: OECD/RBA N
Slide 139: House price to income ratios in line with global norms
The house price to income ratios in Australia is in line with global norms Dwelling price to income ratios* For personal use only 139
Slide 140: Factors characterising a house price bubble not evident
Factors that typically characterise a house price bubble are not evident in Australia For personal use only Housing “Bubble” – Current position in Australia typical characteristics Unsustainable asset prices Prices supported by the excess of demand over supply Australia’s population continues to
Slide 141: Differences between Australian and US housing markets
Significant differences between Australian and US housing markets minimise risk of a US style house price collapse CBA / Aust US Australian mortgage product For personal use only Principal and interest amortising 25/30 Unemployment ~5%1 ~8%1 year loan Variable interest rate set at bank’s No-Reco
Slide 142: Customer Satisfaction - Sources
Notes Customer Satisfaction - Sources Roy Morgan Research Main Financial Institution (MFI) Retail Customer Satisfaction. Australian population 14+, % “Very Satisfied” For personal use only 1 or “Fairly Satisfied” with relationship with that MFI. 6-month rolling average. CBA excludes Bankwest. 2 DBM
Slide 143: Commonwealth Bank of Australia
For personal use only 13 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Commonwealth Bank of Australia — H1 FY2013 Earnings Presentation on 6ix