Commonwealth Bank Of Australia · ASX:CBA

Commonwealth Bank Of Australia — Non-Deal Roadshow (September 2010)

19 slides from Commonwealth Bank Of Australia's roadshow presentation, Sep 9, 2010

  1. Slide 1: Australian Residential Housing

    For personal use only Australian Residential Housing Sydney, 9 September 2010: Senior executives from the Commonwealth Bank of Australia (“the Group”) will soon be travelling overseas to meet with some of the Group’s offshore shareholders and other investors interested in Australia and the Australia

  2. Slide 2: Australian residential housing and mortgages: CBA mortgage book secure

    Determined to be better than we‟ve ever been. For personal use only Australian residential housing and mortgages CBA mortgage book secure 9 September 2010 Commonwealth Bank of Australia ACN 123 123 124

  3. Slide 3: Overview

    Overview  Concerns of a potential residential housing price bubble in Australia are often based on a For personal use only superficial/incomplete analysis of the Australian market.  Taking into account geographic differences, the ratio of house prices to income in Australia is not that much differ

  4. Slide 4: Concerns of a housing bubble are often based on superficial/incomplete analysis

    Concerns of a housing bubble are often based on a superficial/incomplete analysis of the Australian market For personal use only Commentary Our View Morgan Stanley, August 2010  Australia‟s house-price-to-income ratio is 4.3, “In my view, Australian house prices are expensive on similar to many oth

  5. Slide 5: Taking into account geographic differences, Australian house prices are similar to other countries

    Taking into account geographic differences, Australian house prices are similar to other countries Ratio of house prices to income Coastal city comparison For personal use only Capital Cities: 5.6 House Price (see table at right for major to Income city comparison) Australia Sydney 6.2 6 Australia M

  6. Slide 6: Population growth has been a key driver of Australian house price appreciation

    Population growth has been a key driver of Australian house price appreciation For personal use only Strong net migration Population growth vs dwelling starts „000s „000s „000s 500 250 500 450 400 400 200 350 300 300 250 150 200 200 150 100 100 100 50 0 50 0 1981 1985 1989 1993 1997 2001 2005 2009 M

  7. Slide 7: Other drivers of house price appreciation are structural, rather than cyclical

    Other drivers of house price appreciation are structural, rather than cyclical in nature Low inflationary environment Average dwelling size For personal use only % m2 10 250 Houses Inflation (10 yr rolling average) 9 8 RBA target range 7 200 6 5 4 Other residential 3 150 2 1 0 100 1990 1994 1998 200

  8. Slide 8: The household debt ratio in Australia is similar to many other developed countries

    The household debt ratio in Australia is similar to many other developed countries Household debt For personal use only (per cent of household disposable income) % 200 180 UK Australia 160 NZ 140 Canada 120 US Japan 100 Germany 80 60 40 20 1988 2000 2009  Australian household debt as a percentage o

  9. Slide 9: Much of the increase in household debt has been taken up by strongest segments

    Much of the increase in household debt has been taken up by segments in the strongest position to service it For personal use only Households with owner-occupied debt Share of household debt by income % 3.4% 6.4% 60 1997/98 2007/08 16.3% 40 49.2% 24.7% 20 0 First (bottom 20% of income earners) Secon

  10. Slide 10: Strong economic fundamentals minimise the downside risk to Australian house prices

    Strong economic fundamentals minimise the downside risk to Australian house prices For personal use only Unemployment GDP growth (pa) % True unemployment 10 Yr Forecast 9.7 closer to 15% Avg 2010-11 9.3 Full 8.4 Asia 8.0 7.8 employment 7.8 8.0 at approx 5% 7.6 Australia 3.1 3.4 US 1.9 2.8 5.3 Japan

  11. Slide 11: Historically, home loan losses have been very low

    Historically, home loan losses have been very low, notwithstanding cyclical house price movements For personal use only House prices movements vs Home loans losses (CBA) % % 0.30 50.0 Peak Home Loan 40.0 0.20 Losses of 5bpts 30.0 20.0 0.10 10.0 0.00 0.0 -10.0 -0.10 -20.0 -30.0 -0.20 -40.0 -0.30 -50.

  12. Slide 12: Even under a high stress scenario, potential CBA home loan losses would be modest

    Even under a high stress scenario, potential CBA home loan losses would be modest ($740m or 0.2% of book) For personal use only High stress loss = $740m Factors Mitigating Against (0.2% of book)* Potential Losses Based on 6x probability of default eg:  Portfolio average LVR 43% Interest Unemploymen

  13. Slide 13: Appendix: Typical drivers of a housing bubble

    Appendix: Typical drivers of a housing bubble For personal use only Typical Drivers Current Position Increased housing stock leading to Strong population growth; Demand>Supply excess supply An influx of speculators/investors Investment lending steady at ~30% Strong volume growth driven by Already st

  14. Slide 14: Appendix: Australia vs US

    Appendix: Australia vs US For personal use only CBA/Australia United States Unemployment ~5% ~10% No-Recourse Lending No Yes Variable vs Fixed 85%/15% 15%/85% Adjustable Rate Loans Nil/minimal Widespread 1 Sub-Prime % (Mkt) 0% ~36% Securitisation % ~2% ~55% Account Ownership Retained by bank Extensi

  15. Slide 15: Appendix: Household Wealth & Leverage

    Appendix: Household Wealth & Leverage For personal use only Leverage to Housing Stock Household Wealth HOUSING EQUITY WITHDRAWAL $bn $bn 2400 2400 Cumulative increase in dwelling wealth 1600 Cumulative 1600 rise in Cumulative housing debt housing equity withdrawal 800 800 0 0 Mar-01 Mar-03 Mar-05 Ma

  16. Slide 16: Appendix: Population/Demographics

    Appendix: Population/Demographics Projected population change Population living in Urban areas of For personal use only 2009-2050 greater than 750,000 persons 61% 55% 43% 48% 47% 43% 27% 24% 24% 29% 29% Australia United New Canada United Japan Australia Japan United Canada New United States Zealand

  17. Slide 17: Appendix: Genworth Financial

    Appendix: Genworth Financial For personal use only  APRA regulated  AA- Credit Rating (S&P)  Strong capital position:  APRA require domestic insurers to hold twice as much capital as offshore regulators  requirements met under even the most “extreme” stress scenarios (over-and-above CBA stress

  18. Slide 18: Disclaimer

    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, 9 September 2010. It is information given in summary form and does not purport to be complete. It is not intended to be

  19. Slide 19: Australian residential housing and mortgages: CBA mortgage book secure

    Determined to be better than we‟ve ever been. For personal use only Australian residential housing and mortgages CBA mortgage book secure 9 September 2010 Commonwealth Bank of Australia ACN 123 123 124

Commonwealth Bank of Australia — Non-Deal Roadshow (September 2010) on 6ix