Additional information Digital Better Kaching Property property Everyday CommSee QKR Business for Guide App settlement origination Feb 2004 Dec 2011 Insights FaceBook Jul 2010 in PEXA Dec 2013 Nov 2012 Mar 2013 Jun 2013 New Video NetBank CommSec CommBank CommSec Essential Conferencing NetBank for mobile App for MyWealth app on iphone Super in branches Nov 1996 Android Android Feb 2013 Dec 2013 / Jul 2008 Jul 2013 Jun 2013 Feb 2011 Mar 2012 Jan 2014 Tap&Pay “Pi” & Real-time CommBank NFC with CommBiz SmartSign UnionPay “Leo” Banking Kaching Samsung & Dec 2006 May 2013 Jul 2013 Aug 2010 Dec 2011 Dec 2012 MasterCard Dec 2013 PayTag for New Redesigned CommBiz Android & NetBank Everyday CommBiz FirstChoice generation CommBank Markets on for ipad Settlement Mobile iPhone May 2002 ATM’s & NetBank mobile May 2010 Oct 2011 Mar 2013 Dec 2013 / 2012-2013 Jun 2013 Aug 2013 Jan 2014 16
Technology a continuing investment priority Simplified Processes New CommBank app Over 1 million registered users Simplified processes reducing CBA led the market, first with cards and then with 1 since launch Dec-13 online account opening times by 80% terminals Now ~20% of total card transactions and growing Customer Video-Conferencing Express Branches Smaller, smarter design with focus Rolled out across the network, with 1 on self-service & technology over 24,000 referrals to date 1 Transaction and saving accounts. 17
Notes 18
Conservative business settings Deposit Funding Wholesale Funding 1 % of Total Funding Portfolio Tenor (years) 3.8 3.7 63% 63% 3.6 62% Dec 11 Dec 12 Dec 13 Dec 11 Dec 12 Dec 13 Liquidity Capital 2 Common Equity Tier 1 Liquids ($bn) (Basel III International) 137 11.4% 128 115 10.6% 9.3% Dec 11 Dec 12 Dec 13 Dec 11 Dec 12 Dec 13 1 Weighted Average Maturity of long term wholesale debt. Includes all deals with first call or contractual maturity of 12 months or greater. 19 2 Liquids reported post applicable haircuts.
Notes 20
FOR THE HALF YEAR ENDED 31 DECEMBER 2013 DAVID CRAIG CHIEF FINANCIAL OFFICER COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 12 FEBRUARY 2014
Notes 22
A strong financial result Dec 13 vs $m Dec 13 Dec 12 Dec 12 Operating income 11,067 10,205 8% Operating expenses (4,751) (4,467) 6% Operating performance 6,316 5,738 10% Investment experience 81 84 (4%) Loan impairment expense (457) (616) (26%) Tax and non-controlling interests (1,672) (1,456) 15% Cash NPAT 4,268 3,750 14% 23
Addition Additi onal info al information rmation Non-cash Items $m Dec 13 Dec 12 Hedging and IFRS volatility Unrealised accounting gains and losses arising from the application of “AASB 139 Financial (5) (10) Instruments: Recognition and Measurement” Other Bankwest non-cash items (30) (33) Treasury shares valuation adjustment (28) (31) Bell Group Litigation - (45) Gain on sale of management rights 2 - (56) (109) Total (61) (119) 24
Statutory Profit $m Dec 13 Dec 12 +14% Cash NPAT 4,268 3,750 Hedging and IFRS volatility (5) (10) Other non-cash items (56) (109) +16% Statutory NPAT 4,207 3,631 25
Additi Addition onal info al information rmation Other Banking Income Net Trading Income $m Dec 12 Dec 13 vs $m Dec 13 Dec 12 426 291 241 281 443 420 508 26 Commissions 1,081 993 9% 52 44 189 80 Lending fees 537 509 6% 87 124 120 102 23 Other 108 160 (33%) 42 321 Sub-total 1,726 1,662 4% 251 267 289 293 244 226 Trading income 508 443 15% (43) (90) (37) Total 2,234 2,105 6% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 Sales Trading CVA 26
Income growth across all key lines Operating Income +8% 1H14 vs 1H13 22% Average FUA 12% Average inforce premiums Funds & +12% 9% Insurance income insurance Other 4% Commissions, fees, other $64m +6% banking 1 52% Underlying trading income $65m income 50% CVA (Group) 2 ($26m) Net 6% Volume $435m +8% interest 2% Margin $147m income 1H13 1H14 1 Underlying Trading ex CVA and Sales. 27 2 Group CVA movement of ($26m) comprises IB&M ($23m), Bankwest ($2m) and BPB ($1m).
Notes 28
Income growth assisted by FX and timing benefits Operating Income $m Underlying +1.6% +8.4% +5.4% 150 164 94 11,067 454 10,753 10,205 1H13 Underlying Underlying 1H14 FX Benefit Timing 1H14 1 Banking Income Funds & Underlying Benefits Insurance Income 1 Includes the full period benefit of asset re-pricing conducted late in 1H13 and lower short term wholesale funding costs. 29
Addition Additi onal info al information rmation Increase in retail bank funding costs since Jun 07 Basis Risk 33% x 1.37% Wholesale funding 2 67% x 1.94% 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 Jun 13 Dec 13 Dec 12 Dec 13 (6 month average) (6 month average) Increase in wholesale funding 1 1.53% 1.37% Increase in deposit funding 1.87% 1.94% Increase in weighted average cost 1.75% 1.75% 1 Includes basis risk. 30 2 Retail deposits as a proportion of retail lending.
Group NIM marginally lower in the half bpts 6 month NIM Group NIM bpts 213 (6 Month Movement) 209 217 214 212 210 206 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 12 month NIM (2) (3) 3 (1) 217 3 basis point decline 214 due to lower cash rate environment 1 1H14 2H13 Funding costs Basis risk Portfolio mix Other 1H14 2H13 1 Includes Treasury, Replicating Portfolio, impact from change in Non Lending Interest Earning Assets and other unallocated items. 31
Addition Additi onal info al information rmation Investment Spend $m 1,286 1,237 1,179 1,020 1,075 1,036 639 655 638 538 563 583 647 582 589 537 541 473 437 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1 st Half 2 nd Half 32
Productivity benefiting underlying expense growth Operating Expenses +6.4% $m +1.5% Underlying 4,751 +1.7% 68 +1.7% 46 18 4,544 75 4,467 181 Cost-to-income (234) 130 44.2% 43.8% 42.9% 1 1H12 1H13 1H14 1H13 Productivity Compensation Other 1H14 FX Amortisation Investment Software 1H14 1H13 1H14 1H14 2 under- Spend write-offs underlying lying 1 Adjusted to conform to presentation in 1H13 and 1H14. 33 2 Represents write-off of approximately 30 individual projects completed prior to 2012.
Additi Addition onal info al information rmation 1 PD Ratings Migration Risk-Rated Portfolio Loan Impairment Expense (Cash) to Gross Loans 2 Consumer bpts 10 TCE ($bn) 5 37 Adjusted for changes to customer segment reporting 0 28 23 23 5 19 19 18 16 16 10 15 Total Upgrades Downgrades - excluding defaults Total Defaults Net 15 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Group Consumer Arrears Loan Impairment Expense (Cash) to Gross Loans 3 90+ days Corporate bpts 1.4% Adjusted for changes to customer segment reporting 98 96 0.9% 4 54 47 4 39 32 28 8 18 14 0.4% Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Home Loans Personal Loans Credit Cards 1 Excludes Banks and Sovereigns. 2 Represents Retail Banking Services, ASB Retail and Bankwest Retail. Six months annualised basis points as a percentage of average GLA. 34 3 Represents Institutional Banking and Markets, Business and Private Banking, ASB Business, Bankwest Business and other corporate related expense. Six months annualised basis points as a percentage of average Gross Loans and Acceptances (GLA). 4 Statutory Loan Impairment Expense (LIE) for June 2010 90 bpts and for December 2012 38 bpts.
Sound credit quality Loan Impairment Expense Home Loan Arrears 90+ days Loan Impairment Expense (Cash) to average GLA (basis points) 1 1.0% 2 73 0.0% Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 RBS Bankwest ASB Troublesome and Impaired Assets 3 41 $bn 13.1 12.3 25 11.1 10.5 10.1 3 9.5 21 5.4 20 5.5 8.2 4 4.9 16 4.7 4.5 4.3 3.9 7.7 6.8 6.2 5.8 5.6 5.2 4.3 FY09 FY10 FY11 FY12 FY13 1H14 Pro-forma Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Commercial Troublesome Group Impaired 1 Basis points as a percentage of average Gross Loans and Acceptances (GLA). 2 FY09 includes Bankwest on a pro-forma basis and is based on impairment expense for the year. 35 3 Statutory Loan Impairment Expense (LIE) for FY10 48 bpts and for FY13 21 bpts. 4 Six months annualised.
Additi Addition onal info al information rmation Collective Provisions 1 to Credit RWA 2 Provisions for Impaired Assets 3 to Impaired Assets 4 50.0% 1.45% 40.0% 1.25% 1.05% 30.0% 0.85% 0.65% 20.0% FY08 FY09 FY10 FY11 FY12 FY13 1H14 FY08 FY09 FY10 FY11 FY12 FY13 1H14 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Total Provisions 1 to Credit RWA 2 Impaired Assets 4 to Gross Loans and Acceptances 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.0% 0.5% FY08 FY09 FY10 FY11 FY12 FY13 1H14 FY08 FY09 FY10 FY11 FY12 FY13 1H14 CBA Peer 1 Peer 2 Peer 3 CBA Peer 1 Peer 2 Peer 3 Charts based on financial year data (CBA: 31 December and 30 June, Peers: 31 March and 30 September). 1 Provisions do not include General Reserve for Credit Losses, equity reserves or other similar adjustments. 36 2 All ratios subsequent to 1 January 2013 are based on Basel III credit RWA, all ratios prior to this date are based on Basel II/Basel 2.5 credit RWA. 3 CBA ratios prior to June 2010 and Peers 1 & 2 ratios based on Individually Assessed Provisions to Impaired Assets. 4 CBA data from June 2010 has been updated for changes in the definition of impaired assets to include unsecured retail exposures which are 90 days past due.
Provisioning Individual Provisions Collective Provisions $m $m 2,870 2,858 2,858 2,837 Economic overlay 823 847 875 892 Overlay portion unchanged 2,008 1,845 419 377 473 1,628 470 Bankwest 934 1,416 780 659 906 909 547 898 853 199 227 Consumer 157 149 866 847 812 720 707 712 643 619 Commercial Jun 12 Dec 12 Jun 13 Dec 13 Jun 12 Dec 12 Jun 13 Dec 13 37
Additi Addition onal info al information rmation Retail Banking Services Home Loan Market Share Dec 13 vs 28% $m Dec 13 25.3% Dec 12 26% Home loans 1,772 15% 24% Consumer finance 1,129 12% 22% 1,088 (4%) Retail deposits 18.7% 23.2% 20% Distribution 203 17% 18% Other 54 (8%) 13.6% 15.3% Total banking income 4,246 9% 16% Operating expenses 1,572 6% 13.5% 14% Operating performance 2,674 11% 12% 14.0% 11.8% Loan impairment expense 290 18% 10% Jun 07 Dec 13 Tax 713 10% CBA ANZ NAB WBC Cash net profit after tax 1,671 10% Source: RBA/APRA. CBA includes Bankwest. 38
Retail Banking Services Improved Market Shares 1 Dec 13 vs Dec 12 Segment Income Operating Performance Movements in market share bpts Dec 13 vs Dec 12 15% 66 12% 11% 9% 47 6% 22 18 (4%) Home Household Credit Personal Home Consumer Retail Income Costs Operating 2 Loans Deposits Cards Loans loans finance deposits performance RBS Margin Retail Deposit Mix bpts $bn Dec 12 Dec 13 283 3 4 270 18 21 31 41 255 255 253 249 248 247 244 29 33 237 32 88 89 62 NBS & Goal Saver Investment accounts Savings deposits 1H06 1H07 1H08 1H09 1H10 1H11 1H12 1H13 2H13 1H14 Business Online Saver Transaction accounts 1 System figures adjusted for series breaks to normalise movement. CBA only. Home Loans / Credit Cards (RBA), 39 Household Deposits (APRA), Personal Loans (Retail finance intelligence). 2 Credit Cards movement is Dec 12 to Nov 13 (latest data).
Addition Additi onal info al information rmation Business & Private Banking Institutional Banking & Markets Dec 13 vs Dec 13 vs $m Dec 13 $m Dec 13 Dec 12 Dec 12 Institutional Banking 1,006 Corporate Financial Services 4% 657 2% Markets 362 6% Regional and Agribusiness 331 2% Local Business Banking 644 4% Private Bank 149 5% CommSec 154 - Total banking income Total banking income 1,935 3% 1,368 5% Operating expenses (709) Operating expenses (455) 2% 5% Operating performance 913 Operating performance 1,226 4% 3% Loan impairment expense (21) (78%) Loan impairment expense (87) (42%) Tax (218) 20% Tax (342) 9% Cash net profit after tax 797 10% Cash net profit after tax 674 13% 40
Corporate Business Lending Growth (RBA) 1 NIM 2 bpts BWA 218 (11.1%) 5.3% 5.3% 5.4% 2.9% 206 1.7% 205 196 (4.2%) (6.9%) BPB IB&M CBA BWA BWA CBA System legacy core Group Jun 12 Dec 12 Jun 13 Dec 13 book market BPB – Dec 13 vs Dec 12 IB&M – Dec 13 vs Dec 12 Segment Income Operating Performance Segment Income Operating Performance 5% 16% 5% 4% 5% 4% 3% 3% 2% 2% 6% 2% 4% 0% CFS RAB LBB Private Comm Income Costs Operating Institutional Markets Markets Income Costs Operating Bank Sec performance Banking (incl CVA) (ex CVA) performance 1 Source: RBA. 12 months to Dec 13. 41 2 Combined Institutional Banking and Markets and Business and Private Banking.
Addition Additi onal info al information rmation Wealth Management Platform 2 Half Year Net Flows $bn 4.2 Dec 13 vs Dec 13 $m Dec 12 CFSGAM 468 15% 2.0 2.0 1.7 1.8 1.7 Colonial First State 1 421 11% 350 5% CommInsure - - Other Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 2 FirstChoice and Custom Solutions 1,239 11% Net operating income FUA Net Flows (790) 6% Operating expenses 9.9 $bn (108) 7% Tax 6.1 1.1 341 25% Underlying profit after tax 2.0 Platforms 2.1 1.8 Domestic Non retail 2.9 54 (7%) Investment experience (0.4) Standalone/ other retail (3.4) Internationally sourced 3 Cash net profit after tax 395 19% (2.9) Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 1 Colonial First State incorporates the results of all financial planning businesses 3 Includes Kiwi Income Property Trust transaction including Commonwealth Financial Planning. 42
Wealth Management Strong Investment Performance – 3 years FUA +19% 99% 93% 100% 100% 100% 99% 92% 100% $bn 89% 19.0 260.4 1.1 11.3 240.4 9.9 219.2 42% 39% 3% Core Growth Global Global Property Global Fixed Cash First Property Infra Weighted Dec 12 Net Investment Jun 13 Net Investment Dec 13 equities resources securities infra- interest State funds structure Average flows income flows income structure Stewart funds and other and other securities Percentage of funds in each asset class outperforming benchmark Spot movement Dec 13 vs Dec 12 Inforce Premiums $m Segment Income 1 Operating Performance +10% 15% 94 2,273 20% 77 31 11% 2,071 11% 5% 6% Dec 12 Retail Wholesale General Dec 13 Income 1 Costs 2 CFSGAM CFS CommInsure Operating life life insurance performance Spot movement 1 Net operating income. 43 2 Operating expenses.
Additi Addition onal info al information rmation Australian Deposits Term Maturity Profile 1 $bn $bn Total Deposits Weighted Average maturity 3.8yrs ( excl CD’s) 366 320 261 5 182 219 8 172 2 7 167 122 8 25 1 184 19 19 148 16 94 97 10 10 CBA Peer 3 Peer 2 Peer 1 2014 2015 2016 2017 2018 >2018 FY Household deposits Other deposits Long Term Wholesale Debt Government Guaranteed Covered Bond Source : APRA Funding Costs 2 Term Issuance $bn bpts Indicative Long Term Wholesale Funding Costs 200 FY11 FY12 FY13 169 Jun 12 $23bn $29bn $25bn 153 25 1H14 137 150 $17bn Margin to BBSW 20 115 Jun 13 106 99 15 100 82 Dec 13 99 84 10 51 43 69 50 5 17 23 42 14 13 Jun 07 8 19 - 3 0 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 1 year 2 year 3 year 4 year 5 year Domestic Offshore Private Offshore Public 1 Maturity profile includes all long term wholesale debt. Weighted Average Maturity of 3.8 years includes all deals with first call or 44 maturity of 12 months or greater. 2 CBA Group Treasury estimated blended wholesale funding costs.
Funding and Liquidity 1 Funding Liquidity $bn $bn Source of funds Use of funds 137 128 17 (12) 115 53 63% (24) 57 38 Deposit 21 Funded Reg min $71bn 30 37 31 (16) 8 54 40 40 4 2 Equity IFRS & FX Net short term Customer New long term Long term Lending Other Assets Dec 11 Dec 12 Dec 13 funding deposits funding maturities Internal RMBS Bank, NCD, Bills, RMBS, Supra, Covered Bonds 6 Months to December 2013 Cash, Govt, Semi-govt 1 Liquids reported post applicable haircuts. 45
Notes 46
Interim Dividend +12% 183 140% cents 164 120% 137 132 120 113 113 100% 107 80% 84% 71% 1 70% 60% 63% 63% 62% 61% 61% 40% 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14 20% Dividend per share Cash NPAT Payout Ratio 0% 1 Dividend payout ratios for 2013 have been restated to conform to the presentation in the current period. 47
Notes 48
Strong Capital Position CET1 (International) 1 CET1 (International) of 11.4% well 11.4% 11.0% 10.6% above international peer average of 10% 6.9% +65% Strong organic growth in the half year with CET1 +40 bps and up over 65% since Jun 07 Jun 07 Dec 12 Jun 13 Dec 13 CET1 (APRA) of 8.5%. APRA CET1 (APRA) adopts a more conservative measurement of capital than other 8.5% 8.2% 8.1% jurisdictions +89% 4.5% Jun 07 Dec 12 Jun 13 Dec 13 1 Assumes Basel III Capital reforms have been fully implemented. 49
Notes 50
International peer Basel III CET1 13.9 12.8 Peer bank average CET1 ratio (ex. Australian banks): 11.6 11.4 11.1 11.0 10.9 10.8 10.8 10.7 10% 10.6 10.6 10.5 10.4 10.3 10.3 10.0 9.9 9.9 9.9 9.8 9.8 9.8 9.7 9.6 9.5 9.5 9.5 9.4 9.4 9.3 9.1 9.0 8.7 8.6 8.6 8.2 7.9 2 1 1 1 Nordea UBS Westpac CBA Intesa Sanpaolo Mitsubishi UFJ China Construct. Bank ANZ BNP Paribas Credit Suisse ICBC Standard Chartered Citi ING HSBC NAB Bank of America Bank of Comm SocGen Sumitomo Mitsui BBVA UniCredit Wells Fargo Deutsche Barclays Bank of China JP Morgan Lloyds Agri. Bank of China China Merchants Bank RBC RBS Scotiabank Toronto Dominion Commerzbank Mizuho Santander Credit Agricole SA Source: Morgan Stanley. Based on last reported CET1 ratios up to 7 February 2014 assuming Basel III capital reforms fully implemented. Peer group comprises listed commercial banks with total assets in excess of A$700 billion and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure for a Morgan Stanley estimate. 1 Domestic peer figures as at September 2013. Westpac excludes impact of Lloyds Australia acquisition. 51 2 Barclays includes impact of rights issue (120bp) settled on 4 October 2013.
Notes 52
CBA CET1 under various regulatory regimes 1 +4.2% +3.2% +4.2% +3.4% +4.2% 12.7% 12.7% 12.7% 11.9% 11.7% 11.4% 8.0% 8.5% D-SIB buffer 1.0% CBA if regulated in South Africa CBA if regulated in Singapore CBA if regulated in Canada CBA if regulated in Europe Internationally harmonised 2.5% CCB CBA if regulated in UK CET1 min 4.5% APRA 2 CBA Canada UK Europe Singapore South Africa Source: CBA, PwC and Morgan Stanley. Morgan Stanley has reviewed the methodology used to calculate the impact in Canada, UK and Europe only. 1. Calculations under the non-APRA regimes include the impact of international harmonisation as well as adjusting for additional 53 regulatory constraints imposed by APRA which are not required in those jurisdictions. 2. Based on CRD IV as implemented by the European Commission.
Notes 54
CBA vs peers in each jurisdiction Under UK regime Under Canadian regime Under European regime 12.7 12.8 12.7 11.7 10.8 10.7 10.4 9.9 9.8 9.8 9.7 9.6 9.5 9.3 9.1 9.0 8.7 8.6 8.2 7.9 1 CBA Barclays Lloyds RBS CBA UBS ING SocGen BBVA UniCredit Deutsche Commerzbank Santander CBA RBC Scotiabank Toronto Dominion BNP Paribas Credit Suisse Credit Agricole SA Source: CBA, PwC and Morgan Stanley. Based on last reported CET1 ratios up to 7 February 2014 assuming Basel III capital reforms fully implemented. 1. Barclays includes impact of rights issue (120bp) settled on 4 October 2013. 55
Notes 56
Financial Summary Cost-to-income lower Good momentum Operating Performance 1 10% 44.2% 43.8% 42.9% 5% 3% 2 1H12 1H13 1H14 1H12 1H13 1H14 Conservative business settings Strong returns EPS DPS RoE LT Wholesale Tenor Liquids Basel III CET1 (Int’l ) ($) ($) (%) (years) $bn +13% +12% +80bpts 11.4% 10.6% 18.7 1.83 137 2.64 3.8 3.7 17.9 128 2.34 1.64 8.1% 8.5% 1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14 1H13 1H14 APRA 1 Operating Performance is Total Operating Income less Operating Expense. Movement on prior comparative period. 57 2 Adjusted to conform to presentation in 1H13 and 1H14.
Notes 58
FOR THE HALF YEAR ENDED 31 DECEMBER 2013 IAN NAREV CHIEF EXECUTIVE OFFICER COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 12 FEBRUARY 2014
Additi Addition onal info al information rmation Economic Summary - Australia 2010 2011 2012 2013 2014 (f) 2015 (f) Credit Growth % – Total 3.0 2.7 4.4 3.1 3½-5½ 4½-6½ Credit Growth % – Housing 8.0 6.0 5.0 4.6 5-7 5½-7½ Credit Growth % – Business -4.0 -2.2 4.4 1.0 1-3 3-5 Credit Growth % – Other Personal 3.0 0.6 -1.4 0.4 1-3 2-4 GDP % 2.0 2.2 3.6 2.7 2.6 2.9 CPI % 2.3 3.1 2.3 2.3 2.5 2.6 Unemployment rate % 5.5 5.1 5.2 5.4 5.8 5.9 Cash Rate % 4½ 4¾ 3½ 2¾ 2½ 3 CBA Economist’s Forecasts Credit Growth = 12 months to June qtr GDP, Unemployment & CPI = Financial year average Cash Rate = As at end June qtr 60
Outlook Positive on medium term outlook, with short term improvements likely to be gradual rather than dramatic Domestic confidence slow to rebuild Key question is whether lower dollar will stimulate non- resource driven growth Global volatility likely to continue due to tapering and mixed growth signals Economic narrative critical Conservative settings retained, with flexibility to adapt as circumstances dictate to support customers 61
Notes 62
Summary Continuing momentum from a long-term strategy All divisions contributing, with good momentum across the business Still considerable upside from effective execution of the strategy; – On-going strengthening of customer focused culture – Productivity focus enabling on-going investment – Long-term commitment to technology leadership – Disciplined capability transfer in selected off-shore markets – Conservative business settings 63
FOR THE HALF YEAR ENDED 31 DECEMBER 2013 PAGE Strategy 65 Business Performance 85 Risk and Credit Quality 99 Capital, Funding & Liquidity 111 Economic Indicators 127 SUPPLEMENTARY SLIDES COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124 | 12 FEBRUARY 2014
CBA Overview Largest Australian bank by market capitalisation AA- / Aa2 / AA- Credit Ratings (S&P, Moodys, Fitch) Basel III CET1 (International) 11.4% Total assets of $782bn ~14.5 million customers ~51,000 staff 1,155 branches (includes Bankwest) #1 in household deposits #1 in home lending #1 FirstChoice platform 65
Stakeholders Customer Product Holdings 1 12.3m Super fund unit holders ? 10.8m 4.5m 3.9m 2.1m 1.7m 4.1m 3.0m 680k 570k 1.8m 340k 1.2m 51k 800k Home Loans Credit Cards Retail Savings and Insurance Personal Loans Business Funds CommSec Shareholders Employees Transactions Relationships Management Australia Offshore 1 Customers who hold at least one product in each of the major product categories shown. Totals not mutually exclusive – includes 66 cross product holdings. Figures are approximates only and may include some level of duplication across customer segments. CommSec total includes active accounts only.
Strong contributor to Australian economy Where does our income go? 1H14 Loan impairment ($bn) Expenses Cost of lending across Serving ~14.5 the economy million customers 0.5 2.0 Tax expense 1.7 Contributing to the community 2.8 1.2 Salaries Employing 2.9 Retained for capital ~51,000 people and growth Over $60 billion in new lending in 1H14 Dividends Returned to ~800,000 shareholders and Super funds 67
Return on Equity (Cash) 600 550 20.4% 19.5% 500 18.7% 18.7% 18.6% 18.2% 450 15.8% 1.1% 1.0% 400 Return on 350 Assets 300 250 200 150 100 2008 2009 2010 2011 2012 2013 1H14 68
Bank Profitability ROE 1 CBA Ranking % (Amongst ASX 100 companies) Indonesia China Russia CBA Rank 2 Canada Australia 2 nd Market capitalisation (ASX) India Singapore 1 st Dividends declared Japan South Korea 3 rd Taxes Paid United States United Kingdom France 27 th Return-on-Equity (ROE) Germany Spain 77 th Return-on-Assets (ROA) Italy Negative 0 5 10 15 20 25 1. Source: Factset. Weighted average for listed banks in each country. Statutory ROEs weighted by shareholders' equity. 69 2. Most recent annual results data amongst ASX 100 companies. Sourced from Bloomberg 5 February 2014.
Customer satisfaction and products per customer Products per Customer Retail Customer Satisfaction 86.0% CBA 3.20 CBA Peers Peers 84.0% 3.00 82.0% 80.0% 2.80 78.0% 2.60 76.0% 74.0% 2.40 72.0% 2.20 70.0% 68.0% 2.00 Jun 07 Dec 13 Jun 07 Dec 13 Average Number of Banking and Finance Products held by % Satisfied ('Very Satisfied' or 'Fairly Satisfied') 1 Customers 18+ (at the Financial Institution) 8 1, 8 Refer notes slide at back of this presentation for source information. 70
Business customer satisfaction by segment 3 Small Micro 7.8 7.8 7.6 7.6 7.4 7.4 7.2 7.2 7.0 7.0 6.8 6.8 6.6 6.6 6.4 6.4 6.2 6.2 Dec 10 Dec 11 Dec 12 Dec 13 Dec 10 Dec 11 Dec 12 Dec 13 CBA Peers CBA Peers Large Medium 7.8 8.5 7.6 8.0 7.4 7.2 7.5 7.0 7.0 6.8 6.6 6.5 6.4 6.2 6.0 Dec 10 Dec 11 Dec 12 Dec 13 Dec 10 Dec 11 Dec 12 Dec 13 CBA Peers CBA Peers 3 Refer notes slide at back of this presentation for source information. 71
Products per Customer and MFI 10 8 MFI Customer Proportion Products per Customer 3.04 % 2.90 2.83 2.71 0.53 2.55 0.48 CBA 0.50 2.36 0.49 Other (incl BWA) 0.21 2.20 0.48 0.20 0.22 0.46 0.21 22.6 0.44 0.20 0.74 32.7 0.70 0.20 0.65 0.56 0.18 0.51 0.44 0.42 20.0 WBC 13.4 1.52 1.47 1.42 1.40 11.3 1.31 (incl SGB) 1.22 1.10 ANZ NAB Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Wealth Personal lending Home Loans Cards Deposit & Transaction accounts 8 Refer notes slide at back of this presentation for source information. Wealth includes Superannuation, Managed Investments and Insurance. 72 10 Refer notes slide at back of this presentation for source information.
Branch of the Future 3 key pillars - proud people, simple and easy processes, leading technology Video conferencing facilities in all 1 branches Dedicated small business capability with 123 new specialists New concept branches being trialled across Australia 189 Smart ATMs allowing anytime deposits New tablet and software for branch concierges to enhance customer flow 1 Excludes Bankwest and a very small number of CBA Branches. 73
CFSGAM – Global Reach Edinburgh London Frankfurt Toronto Paris New York Beijing Tokyo Shenzhen Hong Kong Australia and New Zealand Singapore AUM $110.6 billion Jakarta UK, Europe and Middle East AUM $51.1 billion Asia AUM $16.5 billion Sydney North America Auckland AUM $4.2 billion^ Melbourne Portfolio Management Team / Distribution team Joint Venture or Strategic Alliance AUM as at 31 December 2013 ^ USA assets managed through CFSAMAL, (Australia based non-domiciled), FSII, (UK based non-domiciled), FSI Singapore 74 (Singaporean based non-domiciled), USA SEC Registered Investment Advisers.
CBA in Asia – strong growth Cash NPAT 1 $m Strong contribution from Strong performance from Growth driven by strong China investments and Trade Finance and the investment performance and Indonesian proprietary weakening of AUD a weaker AUD businesses against USD 201 9 19 14 159 3 IFS Asia +30% +26% 1H13 2 IFS Wealth IB&M and 1H14 Asia 3 Management BPB 1 Includes Asia region Cash NPAT from Business & Private Banking, Institutional Banking & Markets, Wealth Management and IFS Asia businesses. 2 Previously reported 1H13 result restated to include IFS Asia head office support costs and to restate Wealth Management history 75 in line with amended structure. 3 Includes China, Indonesia, Vietnam, India and Japan IFS Asia businesses. Represents IFS Asia growth in Cash NPAT.
CBA in Asia – strong proprietary growth 1 2 NPAT and Revenue Proprietary Customers IFS Asia (‘000) IFS Asia (A$m) 450 200 70 400 180 Cash NPAT CAGR - 41% 60 350 160 Revenue CAGR - 19% 50 140 300 120 250 40 100 200 30 80 150 60 20 100 40 10 50 20 - - 0 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Cash NPAT (RHS) Revenue (LHS) 2 Proprietary Loans and Inforce Premium Proprietary FTE IFS Asia (A$m) IFS Asia Decline due to weakening IDR 400 2,000 3,133 Inforce Premium CAGR - 19% Lending Balances CAGR - 27% 300 1,500 1,000 200 100 500 298 23 - - Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 2013 1986 2000 Loans (LHS) Total Inforce (RHS) Total Inforce (RHS) normalised 1 IFS Asia NPAT includes proprietary businesses in China, Indonesia, Vietnam, India and Japan and income from investments in Bank of Hangzhou, Qilu Bank, BoCommLife and Vietnam International Bank. 76 2 IFS Asia Proprietary includes China County Banks, Indonesian banking and insurance businesses, Vietnam branch and India branch.
CBA in Asia Country Representation as at December 2013 Bank of Hangzhou (20%) – 140 branches China Qilu Bank (20%) – 85 branches County Banking – 7 County Banks and 1 County Bank branch in Henan (5 Banks and 1 County Bank branch @ 80% and 2 Banks Beijing @ 100% shareholding) and 3 banks in Hebei Hebei (100% shareholding). Tokyo Jinan Beijing Representative Office and Beijing Henan Jiangsu Branch Anhui Shanghai BoCommLife JV (37.5%) – operating in 6 Hubei provinces Hangzhou First State Cinda JV, FSI Hong Kong Shenzhen Hong Kong and Shanghai branches Hong Kong Hanoi PTBC (98.88%) – 91 branches and 142 Indonesia Mumbai ATMs PT Commonwealth Life (80%) – 31 life offices First State Investments (FSI) Ho Chi Minh City VIB (20%) – 154 branches Vietnam CBA branch Ho Chi Minh City and 24 ATMs Singapore Hanoi Representative Office India CBA branch Mumbai Japan CBA branch Tokyo, FSI Tokyo Indonesia Singapore CBA branch, First State Investments 77
Sustainability progress In the first half of the financial year 2014, the Board-endorsed sustainability strategic framework with its five focus areas has continued to support the Group’s vision and the creation of enduring value for our customers, people, shareholders and the broader communi ty. Sustainable Business Practices Maintained our focus on productivity, disciplined financial management, rigorous governance practices and transparent reporting. Continued to work with internal and external stakeholders to incorporate Environmental, Social and Governance (ESG) considerations in our business practices in light of our material issues and a rapidly changing operating environment. Responsible Financial Services Maintained number one position in customer satisfaction among our peers across all key businesses since January 2013. Successfully completed the ambitious upgrade of our core systems and continued to implement world-leading technology with innovations such as the new CommBank website, video conferencing and a range of mobile applications. Engaged and Talented People Updated our performance management framework with our values of Integrity, Collaboration, Accountability, Excellence and Service to support our vision to excel at securing and enhancing the financial wellbeing of people, businesses and communities. Continued to progress our Diversity and Inclusion agenda with the launch of ENABLE, our disability employee network which aims to increase opportunities for our people with disability and improve accessibility of our products and services for our customers; the establishment of a gender diversity employee group to accelerate the advancement of women, a key priority for the organisation; and demonstrated our support of LGBTI inclusion by becoming a principal partner of the 2014 Bingham Cup, the biennial international gay rugby tournament to be hosted in Sydney this year. Community Contribution and Action Continued to strengthen our ties with our community by delivering the StartSmart financial literacy program to more than 145,000 students across the country in the first half of the financial year, awarding $2 million in community grants to 235 organisations through the Staff Community Fund and supporting Indigenous Australia in the promotion of social, economic and financial inclusion. Donated $100,000 and collected almost $400,000 in donations on behalf of Red Cross in the wake of the New South Wales bushfires; and collected more than $985,000 for the Australian Red Cross Typhoon Haiyan (Philippines) Appeal. Environmental Stewardship Achieved a position in CDP’s Global 500 and ASX 200 Climate Performance Leadership Indices (CPLI) in recognition of our programs to reduce our carbon emissions, mitigate the risks and identify the opportunities presented by climate change and was recognised as the highest ranking Australian bank in the CDP Australia and NZ Climate Report 2013 report. 78 More information about sustainability is available at commbank.com.au/sustainability2013
Sustainability scorecard Units 1H14 FY13 FY12 FY11 FY10 FY09 83.5 83.0 79.0 75.2 75.6 73.0 Roy Morgan MFI retail customer % satisfaction 1 Rank 1 st 1 st 2 nd 4 th 2 nd 3 rd Customer Avg. score 7.5 7.4 7.3 7.1 7.0 DBM Business Financial Services Monitor 2 n/a satisfaction Rank =1st =1 st =1 st =2 nd =1 st Wealth Insights Platform Service Level Avg. score 8.32 7.86 7.74 7.70 7.59 Annual Survey 3 Rank 1 st 1 st 1 st 1 st 1 st Employee Engagement Index Score 4 % Annual 80 80 n/a n/a n/a Women in Executive Manager and above % 31.3 30.3 30.9 28.2 26.3 26.1 roles 5 People Lost Time Injury Frequency Rate (LTIFR) 6 Rate 1.4 2.0 2.7 2.5 2.8 2.4 Absenteeism 7 Rate 6.3 6.2 6.2 6.0 5.9 5.9 Employee Turnover Voluntary % 10.7 10.6 12.9 12.7 12.7 11.4 Scope 1 emissions tCO 2 -e 4,872 8,780 8,941 9,835 10,248 12,018 Environment – Greenhouse Scope 2 emissions tCO 2 -e 45,962 100,997 118,047 137,948 142,218 139,303 Gas Emissions 8 8,698 17,767 Scope 3 emissions tCO 2 -e 20,137 22,885 24,340 21,431 Community School banking students (active) Number 221,521 233,217 191,416 140,280 92,997 91,601 – Financial literacy programs 9 StartSmart students (booked) Number 147,622 284,834 235,735 200,081 119,669 51,426 1,2,3,4,5,6,7,8,9 Refer notes slide at back of this presentation for source information. 79
Technology transformation – delivering strategic competitive advantage Revitalised Best-in-class Supporting front-line online, mobile Innovating in One customer and social the back-end CommBank interface platforms Single view of customer NetBank Legacy system Deeper customer across channels replacement relationships through personalised value offers CommBiz (price & bundle) CommSee Real-time banking delivering CommSec relationship value Simplicity and convenience Revitalised Sales & anywhere, anytime, on Service processes FirstChoice any device Straight-through processing Kaching Customer insights e.g. budgeting and planning Concurrent tools process redesign Leading privacy, trust and security 80
Real time technology innovation Everyday Settlement CommBiz Mobile Contactless Payments Same day access to funds, everyday, Real-time cash flow information Fast, simple in-store payments Payment authorisation from anywhere for merchant customers CBA market leading (cards and terminals) 120k logins, 28k authorisations since launch Market leading innovation enabled by Core 15% of total card transactions and growing CommBiz Markets launched August 2013 Material benefit to customer cash flows CommBank PayTag Pi, Albert & Leo SmartSign World first innovations revolutionising Online contract acceptance 1 The Banks new contactless payments solution point-of-sale experience 85% of asset finance transactions via SmartSign for smartphones, available from Dec 2013 for Pi launched and growing, Leo in rollout, Albert Average document turn-around-times reduced by Android and from Jan 2014 for iPhone pilot coming soon 85% in last 6 months customers 1 For Asset Finance, Business Transaction account opening and CommBiz applications. 81
Transaction volumes Branch ATMs m m (deposits & withdrawals) (all transactions 1 ) 130 325 290 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14 x 2 x 2 m 2 3 m EFTPOS Internet m m 450 (value transactions) 1,360 (all transactions, including credit cards) NetBank logins via Mobile Device 700 ~60-70%* * Tablet and mobile Dec 2013 40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14 x 2 x 2 All figures are approximates . 1 All cardholder transactions at Australian-located CBA ATMs. 82 2 Calendar years to 2006; financial years thereafter. Includes EFTPOS Payments Australia Ltd (EPAL), MasterCard and Visa volumes only. 3 Calendar years to 2007; financial years thereafter. Includes BPAY.
Transaction volumes % of total transactions NetBank logins via mobile device* 1H14 Weekly 75% By number By value 70% 70% 4% 11% 13% 65% 63% 39% 60% 21% 62% 46% 55% 4% 50% 45% EFTPOS ATM 40% Internet Branch Apr 12 Jan 13 Dec 13 * Tablet and mobile 83
Total High Impact system incidents 400 338 314 153 150 93 67 12 FY07 FY08 FY09 FY10 FY11 FY12 FY13 1H14 84
Market share 1 Dec 13 Jun 13 Dec 12 % CBA BWA Group Group Group Home loans 21.2 4.1 25.3 25.3 25.1 Credit cards – RBA 2 21.9 2.8 24.7 24.4 23.9 Other household lending 3 17.1 1.1 18.2 16.9 16.6 Household deposits 4 25.8 2.8 28.6 28.8 28.8 Retail deposits 5 22.5 2.9 25.4 25.5 25.3 Business lending – RBA 15.6 2.4 18.0 18.0 17.8 Business deposits – APRA 18.5 2.7 21.2 21.7 20.8 Asset finance - 13.3 13.3 13.3 13.3 Equities trading 5.1 - 5.1 5.2 5.4 Australian Retail – administrator view 6 15.7 - 15.7 15.7 15.3 FirstChoice Platform 6 11.4 - 11.4 11.5 11.6 Australia life insurance (total risk) 6 12.9 - 12.9 13.1 13.4 Australia life insurance (individual risk) 6 12.7 - 12.7 12.9 13.2 NZ home loans 22.1 22.3 22.1 NZ retail deposits 20.4 20.1 20.2 NZ business lending 10.6 10.4 10.1 NZ retail FUA 17.3 17.9 17.7 NZ annual inforce premiums 29.4 29.5 29.7 1 Prior periods have been restated in line with market updates. 2 As at 30 November 2013. 3 Other household lending market share includes personal loans, margin loans and other forms of lending to individuals. In the current period, certain revolving credit products were reclassified from Home loans to Other 85 household lending, resulting in the increase in this category. 4 Comparatives have not been restated to include the impact of new market entrants in the current period. 5 In accordance with RBA guidelines, these measures include some products relating to both the retail and corporate segments. 6 As at 30 September 2013.
RBS – 6 Month Periods Dec 13 vs $m Dec 13 Jun 13 Dec 12 $m Dec 12 Net interest income Home loans 1,665 1,567 1,431 16% Consumer finance 858 804 764 12% Retail deposits 890 874 937 (5%) Other 19 20 28 (32%) 3,432 3,265 3,160 9% Other banking income Home loans 107 103 104 3% Consumer finance 271 237 246 10% Retail deposits 198 193 193 3% Other 35 33 31 13% Distribution 203 191 173 17% 814 757 747 9% Total banking income Home loans 1,772 1,670 1,535 15% Consumer finance 1,129 1,041 1,010 12% Retail deposits 1,088 1,067 1,130 (4%) Other 54 53 59 (8%) Distribution 203 191 173 17% 4,246 4,022 3,907 9% Operating expenses (1,572) (1,504) (1,488) 6% Loan impairment expense (290) (287) (246) 18% Cash NPAT 1,671 1,566 1,523 10% 86
RBS Cash Earnings Financial Summary Dec 13 Dec 13 vs $m $m Dec 12 Above system balance Home loans 1,772 15% growth (42) Successful new 119 Consumer 25 (84) 1,129 12% business campaigns finance (44) (4%) 11% 237 Strong growth in at call (63) 6 % savings products & 12% 18% transactions Retail Deposits 1,088 (4%) Lower margins due to 10% 1,671 competition Strong FX performance 15% 1,523 including Travel Money Card Distribution 203 17% Increased insurance commissions Merchants growth Decrease in Asset Other 54 (8%) Finance Total banking 4,246 9% income Inflation related staff Operating expenses & one off (1,572) 6% Dec 12 1H13 Home Consumer Deposits Distribution Expenses Impairment Taxation Dec 13 1H14 expenses impairment loans finance / Other expense Volume and elevated Loan impairment (290) 18% personal loans arrears expense Cash NPAT 1,671 10% 87
BPB – 6 Month Periods Dec 13 vs $m Dec 13 Jun 13 Dec 12 Dec 12 Net interest income Corporate Financial Services 489 481 489 - 283 283 278 2% Regional & Agribusiness Local Business Banking 536 526 512 5% Private Bank 123 122 120 3% (4%) CommSec 70 68 73 1,501 1,480 1,472 2% Other banking income Corporate Financial Services 168 141 157 7% 4% Regional & Agribusiness 48 48 46 Local Business Banking 108 103 107 1% 26 25 22 18% Private Bank 4% CommSec 84 87 81 434 404 413 5% Total banking income 657 622 646 2% Corporate Financial Services Regional & Agribusiness 331 331 324 2% Local Business Banking 644 629 619 4% 5% Private Bank 149 147 142 CommSec 154 155 154 - 1,935 1,884 1,885 3% Operating expenses (709) (696) (696) 2% Loan impairment expense (87) (130) (150) (42%) Cash NPAT 797 748 726 10% 88
BPB Cash Earnings Financial Summary Dec 13 Dec 13 vs $m $m Dec 12 Lending and Deposit Corporate (29) balances 9% and 63 Financial 657 2% 11% offset by margin Services compression in Deposits (13) 50 9% 797 Deposit balances 9% Regional & offset by margin 331 2% Agribusiness 2% (42%) compression in Deposits Lending and Deposit 3% 726 balances 7% and 6% Local Business 644 4% offset by margin Banking compression in Deposits Higher Lending and Private Bank 149 5% Advisory revenue Trading volumes 8% offset by reduced Margin CommSec 154 - Lending revenues Total banking 1,935 3% income Higher amortisation and Operating FTE costs offset by (709) 2% expenses productivity initiatives Improved portfolio quality Loan and non repeat of Dec 12 Total banking Expenses Impairment Taxation Dec 13 impairment (87) (42%) income expense softening in collateral expense values Cash NPAT 797 10% 89
IB&M – 6 Month Periods $m Dec 13 vs Dec 13 Jun 13 Dec 12 $m Dec 12 Net interest income Institutional Banking 615 551 587 5% Markets 89 93 110 (19%) 704 644 697 1% Other banking income Institutional Banking 391 412 379 3% Markets 273 217 230 19% 664 629 609 9% Total banking income Institutional Banking 1,006 963 966 4% Markets 362 310 340 6% 1,368 1,273 1,306 5% Operating expenses (455) (439) (432) 5% Loan impairment expense (21) (57) (97) (78%) Cash NPAT 674 599 596 13% 90
IB&M Cash Earnings Financial Summary 76 (37) Dec 13 Dec 13 vs $m $m Dec 12 Growth in asset Institutional balances partly offset 1,006 4% Banking by lower deposits 674 20% (23) income. 46 Favourable trading 40 (24) performance, partly Markets 362 6% 5% (78%) offset by less favourable CVA 1 . 16% (51%) Total banking 1,368 5% income 4% 596 Higher amortisation of Operating IT platforms and (455) 5% expenses inflation related salary increases. Higher level of Loan impairment (21) (78%) write-backs and expense recoveries. Dec 12 Dec 12 Institutional CVA Markets Expenses Impairment Taxation Dec 13 Dec 13 Banking (ex CVA) expense Cash NPAT 674 13% 1 Counterparty fair value adjustment. 91
WM – 6 Month Periods Dec 13 vs $m Dec 13 Jun 13 Dec 12 Dec 12 Total operating income CFSGAM 468 433 406 15% Colonial First State 1 421 400 379 11% 350 327 332 CommInsure 5% 1,239 1,160 1,117 11% Operating expenses CFSGAM (276) (241) (235) 17% Colonial First State 1 (272) (298) (278) (2%) CommInsure (158) (162) (156) 1% Other (84) (50) (74) 14% (790) (751) (743) 6% Underlying profit after tax CFSGAM 156 143 139 12% Colonial First State 1 104 72 71 46% CommInsure 142 117 123 15% Other (61) (28) (60) 2% 341 304 273 25% Cash NPAT CFSGAM 176 159 152 16% Colonial First State 1 105 71 73 44% CommInsure 175 151 169 4% Other (61) (33) (63) (3%) 395 348 331 19% 1 Colonial First State incorporates the results of all financial planning businesses including Commonwealth Financial Planning. 92
Wealth Management Cash Earnings Financial Summary $m Dec 13 Dec 13 vs $m Dec 12 (47) 18 Average AUM 19% 42 due to equity markets, (7) CFSGAM 15% 468 strong investment (4) 62 5% performance and foreign exchange benefits 6% 7% 11% 7% 395 Improved market CFS 1 421 11% conditions and solid net flows 331 15% Average Inforce Premiums 10% and lower lapse rates CommInsure 350 5% partially offset by further reserve strengthening and higher event claims Total operating 1,239 11% income Productivity gains offset by inflation related salary Operating (790) 6% increases and the expenses impact of AUD depreciation Dec 12 CFSGAM CFS CommInsure Expenses Taxation Investment Dec 13 operating operating operating experience income income income Cash NPAT 395 19% 1 Colonial First State incorporates the results of all financial planning businesses including Commonwealth Financial Planning. 93
New Zealand – 6 Month Periods Dec 13 vs Dec 13 Jun 13 Dec 12 NZ$m Dec 12 ASB 743 693 672 11% Net interest income Other 5 (2) (3) Large Total NII 748 691 669 12% ASB 177 167 179 (1%) Other banking income Other (15) (16) (19) (21%) Total OBI 162 151 160 1% ASB 920 860 851 8% Total banking income Other (10) (18) (22) (55%) Total banking income 910 842 829 10% Funds management income 34 32 29 17% 97 115 97 - Insurance income Total operating income 1,041 989 955 9% Operating expenses (443) (439) (415) 7% Loan impairment expense (21) (28) (28) (25%) Investment experience after tax - 4 2 Large Corporate tax expense (144) (130) (125) 15% Cash NPAT 433 396 389 11% 94
New Zealand Cash Earnings Financial Summary Dec 13 Dec 13 vs NZ$m NZ$m Dec 12 Lending and retail deposits both 6% ASB 74 (26) Careful margin Operating 951 8% Income management across the deposit portfolio 7 (14) Uplift in staff levels to ASB 7 grow frontline (4) Operating (386) 7% (25%) 7% capacity and annual Expenses 433 salary increase 10% Lge (9%) Strengthening of the New Zealand ASB economy and the Impairment (21) (25%) housing market has Expense resulted in an improved home loan 8% 389 portfolio Adverse claims experience and lower Sovereign 40 (9%) investment returns Inforce premiums 5% 1 Dec 12 Dec 13 1H13 ASB ASB ASB ASB Sovereign Other 1H14 Operating Operating Impairment Tax Income Expenses Expense Cash NPAT 433 11% 1 Other includes ASB and Sovereign funding entities and elimination entries between Sovereign and ASB. 95
Bankwest – 6 Month Periods Dec13 vs $m Dec 13 Jun 13 Dec 12 Dec 12 Net interest income 804 776 761 6% Other banking income 103 100 110 (6%) Total banking income 907 876 871 4% Operating expenses (401) (409) (416) (4%) Loan impairment expense (5) (32) (86) (94%) Net profit before tax 501 435 369 36% Corporate tax expense (148) (132) (111) 33% Cash NPAT 353 303 258 37% 96
Bankwest Cash Earnings Financial Summary Dec 13 vs $m $m Dec 13 Dec 12 (37) 81 Modest growth in average interest Banking 907 4% earning assets 33% 353 15 income Improved net 36 (94%) interest margin (4%) 4% 258 Efficiency savings in technology Operating (401) (4%) expenses expenses Lower salary related expenses Reduced individual Loan provision charges Significant run-off impairment (5) (94%) of troublesome and expense impaired portfolio Dec 12 1H13 Banking Expenses Impairment Tax Dec 13 1H14 Income Expense Cash NPAT 353 37% 97
Home Lending Growth Profile Balance Growth 1 by Channel Home Loan Balances Six Monthly (Annualised) $bn % 14 (40) 37 8.5 (3) 8.0 6.7 293 5.7 5.6 5.5 285 5.1 4.5 4.0 3.1 3.7 2.2 Dec 12 Jun 13 Dec 13 Jun 13 New Redraw Repayments External Dec 13 fundings & interest / Other refinance Brokers Proprietary CBA Total* System* Excludes Bankwest CBA excludes Bankwest * Source RBA External Refinancing Growth Summary 5% % of Total Balances Portfolio Balances Dec 13 12% Excludes Bankwest +4.6% 7% +7.9% 34% +5.9% 19% +4.0% 28% +5.1% 1H14 Annualised Growth Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 NSW/ACT Vic/Tas Qld SA/NT WA CY 2012 CY 2013 Excludes Bankwest 1 System figures adjusted for series breaks to normalise growth. 98
Regulatory Exposure Mix Regulatory Credit Exposure Mix CBA Peer 1 Peer 2 Peer 3 42% Residential Mortgages 58% 36% 56% 41% Corporate, SME & Specialised Lending 24% 33% 30% 8% Bank 5% 13% 4% 6% Sovereign 9% 10% 5% 2% Qualifying Revolving 3% 3% 3% 1% Other Retail 1% 5% 2% Total Advanced 100% 100% 100% 100% Source: Pillar 3 disclosures for CBA as at December 2013 and Peers as at September 2013. 99 Excludes Standardised (including Other Assets and CVA) and Securitisation exposures (representing 7 % of CBA, 6% of Peer 1, 17% of Peer 2 and 5% of Peer 3). Exposure mix is re-baselined to total 100%.
RBS home loan book quality very sound Portfolio dynamic LVR 1 of 47% and portfolio LVR 2 of 51% 78% of customers paying in advance of required monthly mortgage repayment 3 Maximum LVR of 95% 4 for low risk customers Lenders Mortgage Insurance (LMI) is required for higher LVR loans Low Deposit Premium (LDP) available to low risk customers for LVR 80%-90% Serviceability test based on higher of the customer rate plus a 1.5% interest rate buffer or a minimum floor rate First Home Buyer arrears similar to overall portfolio Limited “Low Doc” lending (1.6% of total portfolio; only 0.2% of new approvals) with stringent lending criteria Under aggressive “stress test” scenarios, potential losses manageable Mortgages in Possession (MIP) represents 0.06% of portfolio balances (down from 0.11% in December 2012) All statements relate to the RBS home loan book. 1 Defined as current balance/current valuation. Current balance and valuations as at September 2013. 100 2 Defined as current balance/original valuation. Current balance as at December 2013. 3 Defined as any payment ahead of monthly minimum repayment. 4 Excluding any capitalised mortgage insurance.
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