Commonwealth Bank Of Australia · ASX:CBA
Commonwealth Bank Of Australia — Debt Investor Presentation (February 2013)
82 slides from Commonwealth Bank Of Australia's debt investor presentation, Feb 13, 2013
Slide 1: Debt Investor Update
Debt Investor Update For the half year ended 31 December 2012 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Slide 2: Notes: Disclaimer
Notes Disclaimer 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 to be relied upon as
Slide 3: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 4: CBA Overview
CBA Overview Result – 6 months to 31 Dec 20121 Largest Australian Bank by market capitalisation Cash earnings ($m) 3,780 6% AA- / Aa2 / AA- Credit Ratings (S&P, Moodys, Fitch) ROE (Cash) 18.1% (110) bpts Basel III CET1 Internationally harmonised 10.6% Cash EPS (Cents) 235.5 4% DPS (Cents) 164
Slide 5: NPAT performance – 6 months to Dec 2012
NPAT performance – 6 months to 31 Dec 2012 Cash NPAT 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
Slide 6: Expenses - continued cost discipline
Expenses - continued cost discipline Cost to Income $m 45.8% Total Operating Expenses 45.1% (70bpts) +3% Dec 11 Dec 12 +8% +1% +3% +3% Increased system support costs and increased software amortisation Inflation-related salary 4,755 increases and higher defined benefit plan 4,602 expense 1H12 Staff
Slide 7: Group NIM
Group NIM bpts 6 month NIM bpts 6 Month Movement 217 212 210 206 Jun 11 Dec 11 Jun 12 Dec 12 7 (9) 3 1 2 210 206 2H12 Asset pricing Funding Replicating Basis risk Other1 1H13 & mix costs portfolio 1 Includes Treasury, New Zealand and other unallocated items. 7
Slide 8: Increase in retail funding costs since Jun 07
Increase in retail funding costs since Jun 07 Basis Risk 37% x 1.43% Wholesale funding Deposit 63% x 1.96% funding Deposit Funding Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 From Jun 2007 to: Dec 10 Dec 11 Dec 12 Increase in wholesale funding1 1.30% 1.72% 1.4
Slide 9: Sound credit quality
Sound credit quality Loan Impairment Expense (Cash) to Gross Loans PD Ratings Migration Risk-Rated Portfolio2 CBA Group1 10 Six months annualised (basis points) 5 Exposures ($bn) 0 5 85 10 Total Upgrades 15 Downgrades - excluding defaults Total Defaults Net 20 Sep 09 Dec 09 Jun 10 Sep 10 Dec 10 Jun
Slide 10: Sound credit quality
Sound credit quality Collective Provisions to Credit RWA Individual Provisions to Impaired Assets 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 Peer 2 Peer 1 CBA Peer 3
Slide 11: Provisioning
Provisioning Individual Provisions Collective Provisions $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 588 596 619 643 Jun 11 Dec
Slide 12: Our Strategy
Our Strategy 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 12
Slide 13: Strategy highlights this period
Strategy highlights this period 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 development Core Banking close to completion T
Slide 14: Customer focus
Customer focus 1 Customer satisfaction – Retail1 Products per customer2 85% Average Number of Banking and Finance Products held by Customers 18+ (at the Financial Institution)3 % Satisfied ('Very Satisfied' or 'Fairly 80% Average Products held at Financial Institution 75% 2.90 2.90 Satisfied') 2.84
Slide 15: Technology – transformational change
Technology – transformational change Revitalising front-line customer interfaces 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 change and complexity Mo
Slide 16: Investment Spend
Investment Spend Investment Spend Investment Spend Profile $m % of Investment Spend 1,286 1H13 1,179 1,075 1,020 1,036 639 Core 638 Banking 783 24% 538 583 563 Productivity & growth 49% 5% Other 434 3% Branch 19% refurbishment 647 582 Risk/ 537 541 437 474 Compliance 349 FY07 FY08 FY09 FY10 FY11 FY1
Slide 17: Strength
Strength Deposit Funding Wholesale Funding Tenor (years)1 % of Total Funding 5.2 5.3 63% 62% 62% 4.0 3.6 3.7 3.7 Dec 11 Jun 12 Dec 12 Dec 11 Jun 12 Dec 12 New Issuance Portfolio Total Provisions2 to Credit RWA Liquidity and Capital Total provisions Total provisions to CRWA 3 Liquids ($bn) Common Equ
Slide 18: Embedding a productivity culture
Embedding a productivity culture 1 Retail Branch Network Retail Call Centres 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 Local Business Banking
Slide 19: CBA in Asia
CBA in Asia Country Representation as at December 2012 China Bank of Hangzhou (20%) – 125 branches Beijing Qilu Bank (20%) – 84 branches County Banking (84%) – Jinan 5 Banks in Henan Province Henan Tokyo Shanghai Beijing Representative Office Hangzhou BoCommLife JV (37.5%) – Hong Kong operating in 4
Slide 20: Outlook
Outlook 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 confidence 20
Slide 21: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 22: Funding & Liquidity
Funding & Liquidity 1 Funding Liquidity $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 Internal RMBS Bank, NCD, Bil
Slide 23: Funding – Portfolio
Funding – Portfolio Funding Composition Wholesale Funding by Product 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 months 4% 36% Securitis
Slide 24: Funding – Deposits
Funding – Deposits Australian deposits Retail deposit rates $bn Total Deposits (excl CD’s) 336 297 241 168 204 163 156 117 168 134 85 87 CBA Peer 3 Peer 2 Peer 1 Household deposits Other deposits Source : APRA Retail Banking Services deposit mix Deposit spreads over money market rates Dec 11 $bn Dec
Slide 25: Funding – Long Term Issuance and Maturity
Funding – Long Term Issuance and Maturity1 Funding strategy driven by market and investor diversity, appropriate maturity profile and overall cost Term wholesale funding requirement has eased materially since FY 2010 $bn 60 50 9 Weighted Average Maturity 3.7yrs 40 30 Expected 0.5 funding 5 45 12
Slide 26: Funding cost increases
Funding cost increases Average Long Term Funding Costs1 % Peak 2.00 Dec 13 1.75 1.50 1.25 Margin to BBSW 1.00 0.75 0.50 0.25 0.00 Dec 06 Dec 08 Dec 10 Dec 12 Dec 14 Average Long Term Funding cost Indicative Long Term (5yr) Wholesale Funding Costs 1 Forecast assumes wholesale market conditions / rate
Slide 27: Funding – Covered Bonds
Funding – Covered Bonds Banking Act amendment of Oct 2011 set a legislative limit of 8% of Australian assets Limits equates to ~30% of LT wholesale debt Multi-jurisdiction programme Covered bonds offer alternative issuance options, especially during periods of market dislocation Issuance o
Slide 28: Balance Sheet Comparison
Balance Sheet Comparison Commonwealth Bank USA Assets Liab + Equity Assets Liab + Equity Cash 3% 6% Equity Cash 8% 10% Equity Home loans 13% Home loans 52% 60% Deposits Deposits 54% Other lending 40% Other fair Long term 28% Value assets 16% 10% Other lending Long term 13% 15% Short term Other fair
Slide 29: Capital
Capital Strong capital position across all measures Basel III Basel III Int’l CET1 10.6% (APRA 8.1%) at top end of Common Equity Tier 1 Capital peers 10.6% Significant improvement in the period driven by 9.3% 9.8% strong earnings; and Bankwest’s move to Advanced Accreditation 7.1% 7.5% 8.1
Slide 30: Strong relative capital position
Strong relative capital position 12.1 11.6 Peer Basel III Common Equity 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 ING Santander
Slide 31: Interim Dividend
Interim Dividend Dividend per share 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% 31
Slide 32: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 33: Regulatory Exposure Mix
Regulatory Exposure Mix 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 Advanced 100% 100% 100% 1
Slide 34: Sector Exposures
Sector Exposures Commercial Exposures by Sector1 Top 20 Commercial Exposures2 ($m) AAA to A+ BBB+ to $bn Other Dec 12 AA- to A- BBB- Banks 38.5 38.6 4.8 0.7 82.6 A+ A+ Finance Other 8.6 9.4 2.0 7.0 27.0 A- BBB Property 0.1 5.7 11.0 36.0 52.8 AA+ A- Sovereign 55.7 1.9 0.5 0.1 58.2 A- A- Manufacturing
Slide 35: Credit Exposure by Industry
Credit Exposure by Industry 1 Jun 12 Jun 12 Dec 12 Dec 12 Consumer 52.8% 53.4% Agriculture 2.1% 2.1% Mining 1.0% 1.3% Manufacturing 2.1% 1.9% Energy 1.1% 1.0% Construction 0.9% 0.9% Retail & Wholesale 2.4% 2.5% Transport 1.5% 1.6% Banks 11.1% 10.4% Finance – other 3.5% 3.4% Business Services 1.0% 1.
Slide 36: Home Loan Portfolio Profile
Home Loan Portfolio Profile Dec Jun Dec Dec Jun Dec 11 12 12 11 12 12 Total Balances - Spot ($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 Variable Rate (%) 86 8
Slide 37: Home Loan Arrears
Home Loan Arrears Home Loans1 RBS Home Loans by State 90+ days 2.0% 90+ days 1.5% 1.0% 1.0% 0.5% 0.0% 0.0% Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 NSW/ACT SA/NT QLD VIC/TAS WA National RBS Bankwest ASB RBS First Home Buyers Home Loans by vintage 90+
Slide 38: Home Lending Growth Profile
Home Lending Growth Profile Home Loan Balance Growth External Refinancing $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 CY 2009 CY 2010 CY 20
Slide 39: 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 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 FY12 FY13 0% 0.00% 0-
Slide 40: RBS Home Loans – Stress Test
RBS Home Loans – Stress Test Observations Key Assumptions 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 3.00% 1.00% 1.00% Hous
Slide 41: Unsecured Consumer Arrears
Unsecured Consumer Arrears Credit Cards – Retail Bank Credit Cards - Group 3.8% 30+ days 90+ days 2.0% 3.6% 3.4% 3.2% 3.0% 2.8% 1.0% 2.6% 2.4% 2.2% 2.0% 0.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 07/08 08/09 09/10 10/11 11/12 RBS
Slide 42: Commercial Property Market
Commercial Property Market CBD Office Supply Pipeline1 CBD Vacancy Rates % 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% 2.9% 15% Melbourne 25.8
Slide 43: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 44: Economic Summary
Economic Summary 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 -7.1 3.0 0.7 -1.4 -1-1 1½-3½ GDP % 1.6 2.1 2
Slide 45: Australian economy remains in good shape
Australian economy remains in good shape GDP growth outperformance Stronger labour market 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 New Zealand Norway Portu
Slide 46: Policy protection is available
Policy protection is available Interest rates can be cut Fiscal policy can be used 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 Source: IMF Fiscal Monito
Slide 47: The consumer
The consumer Consumers are spending but are And job security remains a key Balance sheet pressures are easing selective about where they spend concern CBA H/HOLD WEALTH INDICATOR CONSUMER SPENDING GREATEST FEAR (annual % change) % % (annual % change) (% of respondents) % % 30 30 % % Unable to pay Lo
Slide 48: Labour market
Labour market 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) -30 revenue Employment
Slide 49: Business
Business The mining construction boom will reach a Which means that the non-mining economy 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 Mining 16 16 6 6 8 8 Prev
Slide 50: Business and capex
Business and capex Support economic growth Structural change in the economy Capex & project status Pipeline dominated by multi-year projects 1. Source: Australian Govt Bureau of Resources & Energy. advanced = “committed or under construction”. - 50
Slide 51: Advanced minerals and energy projects
Advanced minerals and energy projects Source : Australian Bureau of Resources and Energy Economics, April 2012 51
Slide 52: Credit
Credit 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 Households and businesses
Slide 53: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 54: An orderly adjustment has occurred 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 HOUSEHOLD DEBT % RBA HOUSING CREDIT (% of h/hold disposable income) (annual % change) 200 200 25 20 150 150 15 Total housi
Slide 55: 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 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% 0.2% 600 600 Perth hous
Slide 56: Demand-supply balance mitigates risk of material house 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 2011-2050 POPULATION DRIVERS HOUSING DEMAND & SUPPLY '000 '000 '000 '000 60% 450 450 Demand 40% 40% 200 200 30% Net 300 mi
Slide 57: Low vacancy rates, rent growth and affordability support house prices
Low vacancy rates, growth in rents, affordability trends and positive sentiment are all supportive of house prices Housing indicators Affordability & prices HOUSING INDICATORS CBA AFFORDABILITY & PRICES % % 60 9.0 % (annual % change) % 40 70 Housing Rents CBA-HIA housing sentiment* (%pa, affordabili
Slide 58: Australian house prices are influenced by a high urbanisation rate
Australian house prices are influenced by a high urbanisation rate Urban population Density & house prices Dwelling prices URBAN POPULATION DWELLING PRICES DENSITY & HOUSE PRICES (ratio to household income) (% in two largest cities) %80urban pop in 2 largest *Source: OECD/RBA New Zealand cities Aust
Slide 59: House price-to-income ratio in line with global norms
The house price-to-income ratio in Australia is in line with global norms Dwelling price to income ratios* 59
Slide 60: 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 Principal and interest amortising 25/30 Unemployment ~5%1 ~8%1 year loan Variable interest rate set at bank’s No-Recourse Lending No Yes di
Slide 61: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered Bonds 70
Slide 62: Market share
Market share 1 Dec 12 Jun 12 Dec 11 CBA BWA Combined CBA+BWA CBA+BWA Home Loan Market Share Home loans 21.1% 4.0% 25.1% 25.2% 25.3% Credit cards – RBA2 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% 28% 25.1% Retail
Slide 63: Retail Banking Services (RBS)
Retail Banking Services (RBS) Dec12 vs 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 te
Slide 64: Business & Private Bank (BPB)
Business & Private Bank (BPB) Dec12 vs $m 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% mana
Slide 65: Institutional Banking & Markets (IB&M)
Institutional Banking &Markets (IB&M) 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 6
Slide 66: Wealth Management
Wealth Management 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% Insurance result. CommInsu
Slide 67: New Zealand
New Zealand NZ Dec 12 vs 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 (364) 3% Expenses market
Slide 68: Bankwest
Bankwest Cash Earnings $m Dec12 vs Key balances $m 12 (48) Dec11 Higher home loan 15 volumes and Banking (3%) 871 2% margins offset by income lower deposit 273 margins 2% Productivity gains Lower IT costs 6 258 Expenses (416) (3%) Lower marketing spend Large (5%) Normalisation of impairmen
Slide 69: Notes
Notes Customer Satisfaction - Sources 1 Roy Morgan Research Main Financial Institution (MFI) Retail Customer Satisfaction. Australian population 14+, % “Very Satisfied” or “Fairly Satisfied” with relationship with that MFI. 6-month rolling average. CBA excludes Bankwest. 2 DBM Business Financial Ser
Slide 70: Index
Index Results and Strategy 4 Capital, Funding and Liquidity 22 Risk and Credit Quality 33 Economic Indicators 44 Housing market 54 Additional information 62 Covered bonds 71
Slide 71: Australian Covered Bond legislation
Australian Covered Bond legislation The Australian parliament passed the Banking Amendment (Covered Bonds) Bill in October 2011 Issuance only allowed under the legislative framework Segregation of cover assets achieved via a special purpose vehicle Maximum issuance cap of 8% of ADI assets in
Slide 72: Structural enhancements
Structural enhancements The Asset Coverage Test (ACT) is performed monthly by the Trust Manager to test the Adjusted Aggregate Asset Coverage Test Mortgage Loan Amount is at least equal to the A$ equivalent of all outstanding covered bonds (see Slide 41) The Amortisation Test is performed monthly by
Slide 73: House price indexation
House price indexation Indexation is used in the Asset Coverage Test ABS House Price Index and the Amortisation Test to protect investors 160.0 from a downward move in property prices 150.0 Indexation is applied to the LVR Adjusted 140.0 Mortgage Loan Balance (see Slide 41) in the 130.0 120.0 AC
Slide 74: Covered bond pool summary
Covered bond pool summary 31-Dec-12 Owner Occupied Investment Total Geographic Distribution Pool Size 12,715 5,521 18,235 ACT, 1.4% No. of Loans 56,499 20,625 77,124 Tasmania, 2.5% Average Loan Size 225,044 267,668 236,443 Northern NSW, 37.5% Territory, 1.1% Maximum Loan Size 1,168,639 1,915,850 1,9
Slide 75: Covered bond pool summary
Covered bond pool summary Seasoning (Months) Current LVR Profile 30% 20% 25% 15% 20% 15% 10% 10% 5% 5% 0% 0% Origination Year Distribution Current Principal Balance Distribution 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 75
Slide 76: Diverse product suite
Diverse product suite Package Max Package Low Doc Cover Product Benefits Rate p.a. rates LVR availability availability pool • Standard Variable Rate • Unlimited extra repayments 100% offset 6.40% 5.60% 95% (SVR) • Split option • No Fee • No Fees for the life of the loan Simple and Transparent
Slide 77: Sources of origination
Sources of origination % of Channel Description Population Size Inflows (2011/12) Portfolio Customer can apply through any of our 1000+ Branch Network branches. 661 $20b (38%) 42% Our Mobile Lenders are trained specialists with years Mobile Banking of experience, they are available to visit our cust
Slide 78: Mortgage decisioning process
Mortgage decisioning process Applications in CommSee Home Loans (CHL) are system credit scored. Credit Analysts Application received rely on the credit score and referral reason to determine what level of assessment is from Lender via CHL required. Team Leader allocates Types of assessment can be: A
Slide 79: Mortgage broker accreditation process
Mortgage broker accreditation process There are two requirements for CBA Broker Accreditation as follows: 1. Legislative licensing requirements Must be National Credit Regulation compliant, through any of the following: hold an Australian Credit License be appointed as a Credit Representative of
Slide 80: Home loan collections
Home loan collections “Arrears” are defined as a monthly payment or a proportion of a monthly payment, which has fallen due but has not been paid Broadly speaking there are two stages of arrears management and they are segmented by the number of days an account is in arrears Pre - Collections Co
Slide 81: How to find us
How to find us 24 Hour Global Contact Numbers… Sydney Direct Line Mobile Number Email Simon Maidment +61 2 9118 1339 +61 412 227 188 simon.maidment@cba.com.au Richard Nelson – Debt IR +61 2 9118 1343 +61 422 165 939 richard.nelson@cba.com.au Patrick Bryant +61 2 9118 1345 +61 424 754 934 patrick.bry
Slide 82: Debt Investor Update
Debt Investor Update For the half year ended 31 December 2012 82 FEBRUARY 2013 | COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
Commonwealth Bank of Australia — Debt Investor Presentation (February 2013) on 6ix