Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Debt Investor Presentation (February 2025)
61 slides from Commonwealth Bank Of Australia's debt investor presentation, Feb 12, 2025
Slide 1: Fixed Income Investor Discussion Pack
Fixed Income Investor Discussion Pack For the half year ended 31 December 2024 Commonwealth Bank of Australia
Slide 2: Disclaimer and forward-looking statements
The material in this presentation is general background information about the Group and its activities current as at the date of this presentation, 12 February 2025. It is information given in summary form and does not purport to be complete. It is intended to be read by a professional analyst audie
Slide 3: Australian economic forecasts
GDP % Unemployment rate % Headline CPI % Calendar year average Year on year, December quarter December quarter average GDP Nominal GDP 4.0 4.3 4.2 3.9 3.5 7.8 12.7 4.1 4.1 2.1 2.2 5.6 3.3 2.5 1.9 3.8 4.0 4.2 2.4 1.0 2022 2023 2024 2025 2026 2022 2023 2024 2025 2026 2022 2023 2024 2025 2026 2022 2023
Slide 4: Annual economic growth slowest in 30 years outside pandemic
Annual economic growth slowest in 30 years GDP per capita has fallen for seven quarters1 Investment still contributing to growth1 outside the pandemic period1 Quarterly growth in GDP and GDP per capita GDP drivers, index =100, 2019 % % Index 15 140 Economic growth 0.6 10 130 Public investment 0.4 Bu
Slide 5: Real per capita consumption has declined
Real per capita consumption has declined1 Consumers have wound back discretionary spend1 Renters feeling the pain2 Real household consumption (index = 100, Q4 19) Household consumption (annual growth contribution) Per capita household consumption (annual growth smoothed) Index % % 12 Discretionary c
Slide 6: Inflation, wages and labour market
Headline inflation in target1 Housing inflation moderating2 Falling share of prices rising by more than 3%3 Inflation (annual change) Inflation (annual change) Inflation (annual change) % % % 9 22 80 7 18 70 Trimmed Mean CPI New dwelling Share of CPI basket items 14 60 5 construction costs with pric
Slide 7: Spending, population growth and Australian dollar
Spending has room to lift given income growth1 Population growth slowing, but still high2 Australian dollar has fallen3 CBA card spend and income growth (annual change) Population growth (with CBA forecast) AUD vs USD and trade weighted index (TWI) % % AUD/USD Index 20 3.0 Population 1.3 90 growth 2
Slide 8: Disposable income, spending and saving by age
Disposable income Spending3,4 Saving3,5 Real household disposable income1 Year on year change: Essentials Discretionary Oct – Dec 24 Per capita – indexed to Dec 19 Apr – Jun 24 Age, years 112 3.5% 1.4% 1.0% Actual 20 – 24 110 Forecast range2 2.1% 1.9% (0.9%) (0.3%) for lowest 108 25 – 34 income quar
Slide 9: New Zealand economic forecasts
GDP % CPI % Unemployment rate % Calendar year average Year on year, December quarter December quarter average GDP Nominal GDP 5.1 4.9 7.2 4.5 4.0 9.2 3.4 6.9 4.7 2.9 3.1 2.9 3.9 2.2 2.4 2.3 1.8 2.1 0.9 (0.5) 2022 2023 2024 2025 2026 2022 2023 2024 2025 2026 2022 2023 2024 2025 2026 2022 2023 2024 20
Slide 10: Summary
Summary
Slide 11: Market share, provisioning, capital and returns versus peers
Retail MFI share1 Home lending share2 Household deposits share3 Business MFI share1 Next highest peer Deposit funding Business deposits Peers as at September 20244 market share5 44.9% 42.2% 77% 72% 67% 22% 21% 66% 18% 16% 15.4% 34.6% 12.7% 18-24 25-34 CBA Peer 3 Peer 2 Peer 1 CBA Peer 2 Peer 3 Peer
Slide 12: CommBank app and digital banking
CommBank app Australia’s best banking >12.3 million Simpler, more personalised app experience Daily logins to the app2 CommBank app6 • Personalised, dynamic navigation Bank of the Year • Enhanced search functionality, easy to find features – Digital Banking 15 years in a row2 • Access to share tradi
Slide 13: Supporting customers and protecting communities
• Focus on supporting our customers with cost of living pressures • Provided more than 65,000 tailored payment arrangements for customers most in need of support1 Supporting • More than 3 million customers using digital money management tools monthly to manage their finances2 customers • Maintained
Slide 14: Operating income, expenses, pre-provision profit and cash NPAT
Operating income Operating expenses Pre-provision profit Cash NPAT Disciplined approach to Inflation and Higher operating income Lower loan volume growth with increased investment and growth in operating impairment stable underlying margin in technology and frontline expenses expense +3% +6% +1% +2%
Slide 15: Funding, liquidity and capital strength
Deposit funding1 Long-term funding Liquid assets Capital % of total funding Weighted average maturity, yrs Average2, $bn CET1 ratio, Level 2 5 77% 5.1yrs $175bn 12.2% 5.4 73% 11.7%4 140 57% 3.5 5.0%3 50 Pre- Pre- Pre- Pre- GFC GFC GFC GFC COVID COVID COVID COVID Jun 08 Dec 19 Dec 24 Jun 08 Dec 19 De
Slide 16: Loan impairment expense, arrears and troublesome exposures
Loan impairment expense Arrears2 Troublesome & non-performing exposures4 Loan loss rate, bpts1 90+ days Corporate, $bn 1H24 2H24 1H25 Home loans Personal loans Credit cards % of TCE: 0.80% 0.85% 0.80% 1.11% 1.01% Consumer 7 4 3 Corporate 13 19 16 Total 9 8 7 Historic 1.38% 1.48% avg3 1.14% 6.5 6.2 1
Slide 17: Total credit provisions and scenarios
Total credit provisions Provisions and scenarios $bn Dec 24 TP/CRWA: 1.29% 1.66%2 1.62%2 8.14 $6.23bn $6.23bn 6.14 4.80 3.07 3.23 Corporate 3.87 3.07 3.00 Consumer Pre-COVID $bn $bn Jun 19 Jun 24 Dec 24 Central Recognised Downside scenario3,4 provisions scenario3,5 1. The Group uses four alternative
Slide 18: Housing market: prices, lending, vacancy and affordability
National home price growth has stalled1 After prices reached fresh record highs1 New lending has been robust2 Dwelling prices (8 capital cities) Dwelling prices (8 capital cities) Housing loan approvals (excluding refinancing) % % Index $bn 200 20 Owner-occupier 6 Annual growth (rhs) 20 16 (ex FHB)
Slide 19: Home lending portfolio and new business metrics
Portfolio1 Dec 23 Jun 24 Dec 24 New business1 Dec 23 Jun 24 Dec 24 8 Total balances – spot ($bn) 582 596 616 Total funding ($bn) 67 69 87 Average funding size ($’000)9 453 457 490 Total balances – average ($bn) 580 587 605 Serviceability buffer (%)10 3.0 3.0 3.0 Total accounts (m) 1.9 1.9 1.9 Variab
Slide 20: Payments in advance, offset balances and home loan arrears
Average payments in advance2,3 Offset and redraw balances # of payments $bn % customers 82% 79% 80% 81% 148 in advance2 133 134 95 63 35 58 59 30 29 31 Redraw4 46 75 75 85 Offset 49 Dec 19 Dec 23 Jun 24 Dec 24 Dec 19 Dec 23 Jun 24 Dec 24 Home loan arrears5 Dynamic LVR8 30+ days, 90+ days 30+ days Po
Slide 21: Exposure by industry
TCE ($bn) 0 TNPE ($bn) TNPE % of TCE Provisions % of TCE Dec 23 Jun 24 Dec 24 Dec 23 Jun 24 Dec 24 Dec 23 Jun 24 Dec 24 Dec 23 Jun 24 Dec 24 Government Administration & Defence 206.9 174.5 175.6 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Finance & Insurance 113.3 98.9 111.2 0.1 0.1 0.0 0.1% 0.1% 0.0%
Slide 22: Funding, liquidity & capital
Funding, liquidity & capital
Slide 23: Funding composition, wholesale funding and liquidity
Funding composition Wholesale funding2,3 Funding profile Long-term as % of total wholesale funding $bn % of total funding Issuance Maturity5 74% Short-term 66% 68% 6% 8% 8% wholesale1 24% 17% 14% 15% 66 Long-term 19% 43% wholesale 5.2 5.2 5.1 78% 3.5 WAM4 WAM4 WAM4 29 30 77% 77% 17 25 Deposits2 57%
Slide 24: Customer deposits vs peers and by segment
Customer deposits vs peers1 Customer deposits by segment4,5 $bn $bn % of total funding 70% 77% 66% 72% 67% 840 852 874 5.5 yr 874 ASB & Other5 95 98 100 11% CAGR 730 IB&M 153 154 149 17% 181 674 613 581 1% 94 21% 249 162 BB 216 216 218 25% Other deposits 178 73 165 Operational deposits1 9% 94 83 33
Slide 25: Short-term and long-term funding by product
Portfolio mix Short-term funding by product4 Dec 24 32% 68% Short-term funding 1 Certificates of deposits 50% Long-term funding 2 Jun 24 34% 66% Term Funding Facility (TFF) Commerical paper 33% Commercial Dec 23 26% 61% 13% MTN 17% Jun 23 23% 57% 20% Long-term funding by currency Long-term funding b
Slide 26: Total capital ratio and Tier 2 profile
• Total capital ratio of 20.7% as at 31 Dec 24, $11.7bn above 1 Jan 26 requirement of 18.25%. • With 6.6% of Tier 2 as at 31 Dec 24, CBA is well positioned to meet the upcoming increases to the LAC requirement. 1 Jan 2026 1 Jan 2027 20.7% $bn 31 Dec 2024 Req. of Req. of 7.75% 6.5% 18.25% 18.25% Risk
Slide 27: APRA requirements effective 1 Jan 2026
APRA Requirements • APRA discussion paper released 10 Sep 24 with a proposal to increase the effectiveness of the capital framework in stress by removing Additional Tier 1 Capital (AT1) Total Capital Changes • Subsequently on 9 Dec 24, APRA released a letter confirming that it is proceeding with its
Slide 28: Regulatory change implementation details
Change Implementation Details • Revised APS 330 on public disclosure requirements which aligns with both APRA’s new capital framework and the Basel Committee’s Revision to capital framework APS 330 (1 Jan 2025) internationally agreed minimum requirements effective from 1 Jan 2025, replacing the exis
Slide 29: CET1 international adjustments
CET1 International adjustments1 Level 2 Definition of Risk weighting equity investments, deferred tax assets, capitalised expenses which are fully deducted from CET1 1.6% capital under APRA rules 18.8% IRRBB 1.5% Removal of IRRBB RWA from APRA’s minimum Pillar 1 capital requirements International RW
Slide 30: Financial overview
Financial overview
Slide 31: Financial, balance sheet, capital & funding
Financial Balance sheet, capital & funding Statutory NPAT ($m) 5,142 +6.3% Capital – CET12,5 (Int’l) 18.8% (20bpts) Cash NPAT ($m) 5,132 +2.3% Capital – CET12 (APRA) 12.2% (10bpts) ROE (cash) 13.7% (10bpts) Total assets ($bn) +2.6% 1,309 EPS cents (cash) 307 +7c Total liabilities ($bn) 1,233 +2.5% 2
Slide 32: Operating income movement
• Underlying margin2 +1bpt • 2 additional days $125m • Markets trading and sales income and • Lending volume growth2 +2.8% • Volume related growth in banking fees and commissions +4.2% 514 58 14,097 13,525 Avg. Volume Growth Home loans 2% 3 Business loans 5% Insto. loans4 3% Deposits 1% $m 2H24 Net
Slide 33: Net interest margin
Minimal impact on earnings Stable underlying margin 6 1 (5) 5 - 1 - 207 208 200 Deposit competition (4) Higher earnings on capital 3 $31bn decrease in Basis risk (1) Replicating portfolio 2 average liquid assets Deposit mix Home lending (1) Consumer finance 1 bpts 2H24 Liquids Institutional Rebased
Slide 34: Operating expenses
Cost to income1 45.2% 45.2% Contribution to mvt: +4.4% +1.1% +0.2% (1.5%) +4.2% 67 5 (90) 272 6,372 6,118 • Investment in AI capabilities infrastructure Cumulative cost savings modernisation, fraud and cyber, partly offset by realised (last 6 years): • Insourcing of technology capabilities including
Slide 35: Cost reduction and investment spend
Cost reduction Investment spend Cumulative savings1 Examples Increase in infrastructure spend – accelerated technology refresh Capitalised software Capitalised ($bn) software as a % 8% 8% 7% 6% 6% 6% 7% 8% 8% of revenue2: Additional investment spend to 1.9 1.8 1.9 2.1 2.3 1.7 • Enhanced self-service
Slide 36: CET1 capital movement
Movements in bpts Level 1 12.1% (37) 12.2% (88) 110 1 12.3% >11% target operating range7 10.25% APRA minimum8 Credit Risk4 (36) Partial sale of VIB5 10 Operational Risk (7) HQLA (ISRR)6 (7) IRRBB 5 Capitalised software (4) Market Risk 1 Other 2 3 Jun 24 2H24 dividend Cash NPAT RWA Other Dec 24 2 Lev
Slide 37: Loan loss rate
Loan loss rate1 Loan loss rate by business unit1,2 bpts bpts 9 8 7 13 19 16 Consumer Corporate 7 4 3 1H24 1H25 1H24 2H24 1H25 41 33 25 18 17 76 21 20 19 50 43 16 16 15 15 16 12 9 9 24 23 20 7 9 7 7 13 11 8 10 14 3 3 26 26 16 4 15 16 2 2 17 19 17 18 18 18 18 18 17 11 16 4 (7) 6 3 (4) (8) FY10 FY11 FY
Slide 38: Provision coverage and provisions by stage
Provision coverage/CRWA Provisions by stage % Total Credit Credit Stage 2 exposures provision 1.69 exposures provisions by credit grade2 coverage 1.62 $m Jun 24 Dec 24 Jun 24 Dec 24 1.47 $209bn 1.26 Stage 1 941,150 968,239 1,795 1,805 $191bn 9 Weak Collectively assessed 8 Stage 23 191,460 208,850 2,
Slide 39: Group lending and deposits
Dec 24 vs Dec 24 vs Group lending $bn Dec 23 Jun 24 Dec 24 Jun 24 Dec 23 Home loans 650.5 664.7 685.3 3.1% 5.4% +5.2% Consumer finance 17.5 16.8 16.9 0.6% (3.5%) +2.9% Business loans2,3 168.7 177.9 185.3 4.2% 9.8% 974.8 Institutional loans3 89.9 88.2 87.4 (0.9%) (2.9%) 926.6 947.5 Total Group lendin
Slide 40: Home lending, business lending and deposits growth vs system
Home lending1,2 Business lending1,2,3 Household deposits1,4 Business deposits1,5 CBA CBA (excl. IB&M) CBA CBA System CBA (incl. IB&M) System System System (incl. Institutional lending) 11.2% 10.4% 9.3% 8.1% 8.7% 5.7% 6.9% 6.9% 3.2% 5.5% 4.3% 5.7% 4.8% 3.3% 2.7% 1.4% (1.3%) (1.3%) 6 months 12 months
Slide 41: Market share
% Dec 23 Jun 24 Dec 24 Home lending2,9 Household deposits3,9 Home loans – RBA2 24.6 24.5 24.6 CBA Peers CBA Peers Break in series 40% Break in series from Jun 21 Home loans – APRA 3 25.2 25.2 25.4 40% Break in series from Jun 21 Break in series from Mar 19 from Jul 19 30% 30% 26% Credit cards – APRA
Slide 42: Asset quality
Asset quality
Slide 43: Commercial property exposure
• Commercial property trading activity has started to increase as institutions and Group exposure Dec 23 offshore buyers have weighed back into property markets. Jun 24 94.0 94.9 98.4 Dec 24 • Increased trading activity over the half contributed to exposure growth of ~4% which was diversified across
Slide 44: Agriculture exposure
• Portfolio growth of ~3% in the half, mostly in Livestock Farming, Grain Group exposure Dec 23 Growing and Mixed Farming. Jun 24 Dec 24 33.6 • Weather conditions have been generally favourable, with good subsoil 31.2 32.5 moisture profiles in most regions. There were drier conditions in SA and cent
Slide 45: Entertainment, leisure and tourism exposure
• Portfolio growth of ~10% in the half weighted to Accommodation, with the Group exposure Dec 23 sub-sector increasingly attracting largely offshore institutional capital flows. Jun 24 Dec 24 • LVRs are typically lower than 55%, with minimum ICR requirements a key 20.1 constraint on gearing. 18.2 16
Slide 46: Wholesale trade and retail trade exposure
Wholesale Trade Retail Trade • Portfolio growth of ~12% in the half, focused on higher quality and diversified operators • Portfolio growth of ~3% in the half reflecting cautious credit settings given sector headwinds. within the sector across Farm Produce, Food & Beverage and Mineral, Metal & Chemi
Slide 47: Construction exposure
• Portfolio growth of ~4% in the half focused on established Civil & Group exposure Dec 23 Non-Building Contractors, and smaller trade services which are in high Jun 24 demand. Dec 24 14.2 • Home builders have worked through long-dated, loss-making contracts and 12.5 13.1 13.6 10.8 are now deliverin
Slide 48: Credit cards and personal loans arrears
Credit cards Portfolio Group Portfolio Group By year 2020 BWA BWA 2021 Group 30+ days Group 90+ days Group 90+ days ASB ASB 2022 6.0% 2.0% CBA CBA 1.5% 2023 5.0% 2024 1.5% 4.0% 1.0% 3.0% 1.0% 2.0% 0.5% 0.5% 1.0% 0.0% 0.0% 0.0% Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 Dec 24 Dec 19 Dec 20 Dec 21 Dec 22 Dec
Slide 49: Home lending
Home lending
Slide 50: Market share and fundings mix
Consistent market share performance1 Fundings weighted towards proprietary distribution, with increased investor lending 25% 25% Fundings mix2 Fundings mix2 Fundings mix3 Broker 22% 3% 1% 1% originated home 20% Fixed loans 21% 20% Broker 33% ~20-30% less IHL 37% 40% 42% 35% 34% profitable than propr
Slide 51: Serviceability changes and new loan assessment
Key serviceability changes by year2 New loan assessment (from FY16)3 • Increased serviceability buffer and buffers on existing debts • Removed Low doc and EQFS products • All income used in application to assess serviceability is verified FY16-19 • Tightened lending requirements for non-residents an
Slide 52: Borrowing capacity and serviceability buffer
Borrowing capacity3 Application gross income band7 % of applicants with Change in maximum borrowing capacity3 – indexed Dec 16 additional capacity to borrow4 6 months to Dec 24 – Funding $ Owner occupied (OO) Investor home loans (IHL) 92% 89% 89% 90% 60% 120.0% Dec 21 Dec 22 Dec 23 Dec 24 50% 100.0%
Slide 53: Repayment buffers
Repayment buffers Repayment buffers Payments in advance1, % of accounts Payments on time1, % of accounts Residual Dec 23 Structural: e.g. fixed rate loans Jun 24 New accounts: <1 year on book Dec 24 Investment loans: negative gearing/tax benefits 34% 33%34% 20% 20% 19% 6% 6% 6% 20% 20% 19% 3% 3% 2%
Slide 54: Dynamic LVR bands and negative equity
Dynamic LVR bands2 Average dynamic LVR3 Dec 23 Negative equity4 Jun 24 % of total portfolio balances Dec 23 45% Dec 24 Proportion of balances in negative equity • 65% of customers ahead of repayments 70% Jun 24 43% • 15% of home loans in negative equity have Lenders Mortgage Insurance 60% Dec 24 42%
Slide 55: Australian non-performing home loans
Australian non-performing home loans2 Australian non-performing, not well-secured home loans2,3 Moderate increase in non-performing home loans driven by 90+ arrears and well-secured % by state NSW restructures. Stable non-performing not well-secured home loans underpinned by resilient VIC housing ma
Slide 56: Home loan arrears by product, state and vintage
Portfolio Product Repayment and interest type 90+ days Group 90+ days1 Owner occupied 90+ days1 Principal & interest Variable BWA Investment Interest only Portfolio ASB Fixed 1.0% CBA 0.8% 1.0% 0.8% 0.8% 0.6% 0.6% 0.6% 0.4% 0.4% 0.4% 0.2% 0.2% 0.2% 0.0% 0.0% 0.0% Dec 19 Dec 20 Dec 21 Dec 22 Dec 23 D
Slide 57: Sources, glossary & notes
Sources, glossary & notes
Slide 58: Sources and notes
Slide 12 1. Initial rollout to 20,000 small business customers from November 2024. 2. CBA won Canstar's Bank of the Year – Digital Banking award for 2024 (for the 15th year in a row). Awarded June 2024. 3. Represents the growth in the total number of customers that have logged into the CommBank app
Slide 59: Sources and notes (continued)
Slide 40 1. Percentage growth calculations are based on actual numbers on a non-annualised basis. 2. Source: RBA Lending and Credit Aggregates. 3. Business including select financial businesses. CBA excludes Cash Management Pooled Lending Facilities. Historic CBA balances restated to reflect resegme
Slide 60: Glossary
Term Description Term Description Cash Profit The Profit Announcement (PA) discloses the net profit after tax on both a statutory and cash basis. The statutory basis is prepared NPS – RFI Global Atlas Consumer MFI NPS. Based on Australian population aged 14+ years old rating their likelihood to reco
Slide 61: Further investor information and reports
Annual Report Climate Report Corporate Governance Profit Announcement Pillar 3 Report Statement Investor Discussion Pack Sustainability Performance Metrics UN PRB, GRI and SASB reporting Modern Slavery and Human Trafficking Statement
Commonwealth Bank of Australia — Debt Investor Presentation (February 2025) on 6ix