Strong underlying result 1 Dec 17 vs Underlying 2 $m Dec 16 Volume ↑ 3.5% 2.3% 4.9% Operating Income 13,122 Margin ↑ 6 bpts 4.7% 5.3% Compliance projects +$200m Operating Expense 5,764 Acceleration benefit ($64m) BAU costs ↑ 2.0% 5.1% flat Operating Perform. 7,358 Investment ↑ 19% (expensed) 16 bpts in 1H18 (0.5%) Loan Impairment 596 (1.9%) Cash NPAT 4,735 1. Presented on a continuing operations basis. 2. To present an underlying view of the result, 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining investment in Visa Inc. and a $393m one-off expense for acceleration of amortisation on certain software assets; the impact of consolidation and equity accounted profits of AHL has been excluded; and 1H18 is adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 16
Underlying operating income up 4.9% $m +4.9% 2 +6.2% 0.2% +6.3% 13,028 70 4 Volumes +3.5% Margins +6 bpts Funds 96 FUA +9.4% Insurance (26) weather events 540 12,414 Lending/other 85 higher SAF income, lending fees Trading (44) reduced market volatility Commissions (37) lower interchange rates, ATM fees 1H17 Net Other Funds & 1H18 1 1 Underlying Interest Banking Insurance Underlying 1 1 Income Income 1. To present an underlying view of the result, the impact of consolidation and equity accounted profits of AHL has been excluded. 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining investment in Visa Inc. 2. Presented on a continuing operations basis. 17
Selective volume growth 3 1 Home Loan Growth Interest Only Apartment Development 12 months to Dec 17 Total exposures $bn % of total home loan flows Owner-Occupied +7.5% (23%) 11.3% Investor +0.5% 38% APRA 5.24 benchmark (30%) 4.51 4.06 6.3% 23% 5.2% 21% Group System 2 NBFIs 2 CBA System NBFIs Dec 16 Jun 17 Dec 17 Jun 17 Sep 17 Dec 17 1. System source RBA. CBA includes BWA and subsidiaries. 2. Adjusted for new market entrants/reporting changes. 3. Apartment developments >$20m. 18
Margin 1 up 6 bpts this half bpts 216 214 210 Home loan repricing 1H16 1H17 1H18 partly offset by business lending competition 216 Favourable deposit mix 3 (3) 5 1 210 Lower basis risk +1 Bank levy 2 and wholesale New Zealand +1 funding impact Decreased liquids +1 2H17 Asset Funding Portfolio Capital & 1H18 Pricing Costs Mix Other 19 1. Comparative information has been restated to conform to presentation in the current period. Presented on a continuing operations basis. 2. Bank levy impact was $180 million for 1H18.
BAU costs +2.0%, continuing to invest $m Total Operating Expenses 1 Frontline and compliance 1H18 benefit from Investment spend 3 staff, partly offset by 1H17 accelerated +19% productivity amortisation +4.7% 5,318 +2.0% 200 53 (64) 5,182 48 5,081 1H17 Staff Other 1H18 Benefit from Provision for 1H18 2 2 Underlying Subtotal accelerated expected Underlying amortisation compliance program spend 1. Presented on a continuing operations basis. 2. To present an underlying view of the result, the impact of consolidation of AHL has been excluded. 1H17 has been adjusted to exclude a $393m one-off expense for acceleration of amortisation on certain software assets. 1H18 is adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the 20 civil penalty a Court may impose in the AUSTRAC proceedings. 3. Expensed. Impacts across expense categories.
Retail Banking Services (RBS) Volume growth 1 Margins 3 Cost-to-income 3 NPAT 3 1H18 vs 1H17 Home Loan repricing Positive Jaws Balancing growth (IO, IHL) partly offset driving C:I to and returns by mix shift 4 historical lows 7.7% 12 months 31.0% 31.0% 301 System 2 6.3% 30.1% 5.7% 291 290 5.6% 4.8% 3.9% 2.4% 1H18 1H17 2H17 1H18 NPAT Home 1H17 2H17 Rev. Exp. Household Loans Deposits bpts 1. System source RBA and APRA Banking Stats. 2. Adjusted for new market entrants/reporting changes. 3. Excludes AHL, but includes equity accounted profits earned pre-consolidation of AHL. 4. To fixed rate home loans. 21
Business & Private Banking (B&PB) Volume growth Margins Revenue NPAT 1H18 vs 1H17 12 months 1H18 vs 1H17 Agri. +7% Favourable home loan Largely home lending margins – business lending Health +8% and deposits offset by Property (-2%) margins stable this half 18.3% 303 9.3% 298 297 5.6% 5.4% 6.9% 6.8% 5.6% 1.4% 0.3% 1.0% Rev. Exp. NPAT Deposits Business 1H17 2H17 1H18 RAB Private Comm- CFS SME Lending bpts Bank sec 22
Institutional Banking and Markets (IB&M) Volumes Margins Revenue NPAT Active portfolio Subdued volumes Higher funding Includes higher management – lower (returns focus) and lower costs provisions RWAs markets volatility 1,416 (15.8%) 110 110 (1.8%) (4.8%) 103 116.1 1,075 102.2 97.7 (13.2%) 591 (13.2%) 542 (1.6%) 341 $bn $m $m Dec 16 Jun 17 Institutional Dec 17 1H17 2H17 1H18 Markets Rev. Exp. NPAT banking bpts 1H18 1H18 Movements are 1H18 vs 1H17 Movements are 1H18 vs 1H17 23
Wealth (Continuing Operations) General Insurance Funds NPAT Strong markets driving Strong growth in funds Productivity General Insurance income AUM/FUA, partly offset management income focus driving impacted by higher event claims by lower margins (mix) and lower remediation positive Jaws Income Net Event Claims 33.2% $m $m 8.7% 220 108 (24.1%) 6.2% 10.4% 82 139 32 4 (2.8%) $bn Rev. NPAT Exp. AUM FUA 1H17 1H17 1H18 1H18 1H18 average balance Movements 1H18 vs 1H17 Presented on a continuing operations basis 24
Impairment expense at 16 bpts 142 Consumer CBA Group 18 18 17 (bpts) 1 Consumer 1H17 2H17 1H18 Corporate 73 Corporate Group 14 13 3 41 1H17 2H17 1H18 25 29 21 20 19 17 16 16 15 16 13 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H18 Pro Forma 1. Cash LIE as a percentage of average GLAA (bpts). FY09 includes Bankwest on a pro-forma basis and is based on LIE for the year. Statutory LIE for FY10 48 bpts and FY13 21 bpts. 25
Consumer arrears lower this half 90+ days Personal Loans 1.41% 1.21% 1.21% 1.28% Credit Cards 1.03% 0.88% 0.89% 0.88% Home Loans 1 0.60% 0.59% 0.53% 0.49% 0.47% 0.47% 0.44% 0.43% 2 Ex WA Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Consumer arrears includes retail portfolios of Retail Banking Services, Business and Private Banking, Bankwest and New Zealand. 1. Excludes Reverse Mortgage, Commonwealth Portfolio Loan 26 (CBA) and Residential Mortgage Group (CBA) loans. 2. Excludes Line of Credit (Viridian LOC/Equity Line).
Provisioning $m Collective 1 Individual 2,807 2,772 2,747 • Increased management overlays 756 Overlay 711 811 • Economic overlay 1,017 980 978 unchanged 140 145 Bankwest 139 212 184 198 195 216 1,059 211 Consumer 1,112 1,078 610 571 578 Corporate 852 779 744 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 1. Comparative information has been restated to conform to presentation in the current period 27
Impact of adoption of AASB 9 Financial Instruments Approximate pro-forma impact on 1 collective provision (Jun 17) Approximately $850m increase in +$850m collective provision due to forward- looking factors $3.60bn Individually assessed provision unchanged $2.75bn Increase to be taken through opening retained earnings with no impact on the Income Statement CET1 ratio decrease circa 25 bpts AASB 139 AASB 9 CP/ CRWA 0.73% 0.95% 1. Estimated based on actual economic conditions, future forecast economic scenarios, management judgements and assumptions as at 30 June 2017. The transition adjustment on adoption will be based on actual economic conditions, future forecast economic scenarios, management judgements and assumptions as at 1 July 2018. 28
Funding and liquidity LCR Deposit Funding NSFR Supported by strong Transaction accounts Liquid assets $139bn +14.7% deposits growth 135% 131% 110% 129% 68% 107% 67% 106% 66% CLF reduced by $10.2bn Jan 17 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 29
Wholesale funding • Favourable funding conditions – spreads have tightened in all maturities • Opportunity taken to lengthen tenor at broadly flat wholesale funding costs Indicative Funding Costs 1 Weighted Average Maturity 3 Avg Annual Maturity 3.00% 33.8 2 Avg Annual Issuance 8.9 28.2 Portfolio (yrs) 24 New Issuance (yrs) 10yr market 2.50% funding cost $bn FY19 – FY23 FY12 - FY18 5.7 2.00% 4.6 Lowest 10yr 4.2 funding market 1.50% cost since GFC 58% 63% 1.00% 5yr market Long Long funding cost Term Term 0.50% Dec 2017 Jun 2010 Jun 2012 Jun 2014 Jun 2016 Dec 16 Dec 17 1. Indicative funding costs across major currencies. Represents the spread in BBSW equivalent terms on a swapped basis. 2. Average Annual Issuance includes an assumption of ~$32bn for 30 FY18. 3. Long term wholesale funding (>12 months).
Strong CET1, leverage ratio well above minimum CET1 Leverage Ratio Organic +47 bpts International 16.3% International 6.1% (8) 10.4% 110 (8) 5.4% (9) (55) 10.1% 5.1% 4.9% Credit RWA 24 Operational RWA (17) Basel minimum 4 IRRBB RWA (15) 3% Total (8) Jun 17 Jun 17 Cash Total Colonial Other Dec 17 Dec 16 Jun 17 Dec 17 3 1 2 APRA Final Div. NPAT RWA Debt APRA (Net of DRP) 1. Includes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 2. Maturity of a further $350m of Colonial debt compressed CET1 by 8 basis points in the half. The final tranche of Colonial debt ($315m) is due to mature in the June 2018 half year, with an estimated CET1 impact of -7 basis points. 3. The sale of the Australian and New Zealand life insurance operations, which is due to be finalised in calendar year 2018, is expected to result in an uplift to CET1 (APRA) of approximately 70 basis points. 31 4. Effective from 1 January 2018.
Dividend cents per share 200 199 198 198 Cash NPAT Payout Ratio 183 Payout Ratio Net of DRP 164 137 132 120 113 113 107 72% 70% 84% 71% 71% 70% 70% 63% 63% 62% 62% 71% 1 63% 61% 59% 60% 2 59% 57% 53% 46% 46% 46% 38% 37% 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1. DRP Neutralised: 1H13 2. Assumes 1H18 DRP participation of 16% 32
Outlook ► Fundamental economic trends positive overall, globally and for Australia ► Global monetary policy carries volatility risk ► Low wage growth continues to impact confidence ► Time of renewal at CBA, with continuing focus on the long term 33
Group Overview Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
Our stakeholders Customers Shareholders 1 15.9 million ~800,000 MFI for one in three Australians + millions more via super Community People $2.0bn in 1 48,900 taxes 1 Australia’s second largest taxpayer employed in 16 countries 3 4 1. Presented on a continuing operations basis.
CBA overview People and Technology and Strength and customers innovation returns 48,900 1 people delivering Australia’s 2 nd largest company Australia’s leading technology quality service to bank and the first to offer real- by market capitalisation, with 15.9m 1 customers time banking, 24x7 strong capital levels Digital Customers 6.4m Market Capitalisation #2 Aust. NZ Total Other Customer Advocacy – ROE 1,2 14.5% #1 Customers 1 13.9 1.6m 0.4m 15.9m Internet Banking CET1 - APRA 10.4% Logons per day 6.3m Staff 1 39.9k 5.0k 4.0k 48.9k CommBank app and NetBank CET1 - International 16.3% <3 Online account opening Branches 1,121 123 76 1,320 minutes Total Assets $962bn Savings and transaction accounts ATMs 3,795 436 140 4,371 CommBank app mobile users 4.8m Credit Ratings AA-/Aa3 /AA- Refer to the slide at the back of this presentation for source information. 1. Presented on a continuing operations basis. 2. Includes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 3 5
Customer focus Our Vision Our Values Our Capabilities People Technology To excel at securing and Integrity enhancing the financial Accountability Collaboration wellbeing of Productivity Strength Excellence people, businesses and Service communities “One CommBank” Our Growth Continued growth in business and institutional banking Opportunities Disciplined capability-led growth outside Australia TSR Outperformance 3 6
Customers Net Promoter Score 1 Net Promoter Score 2 10 Retail Business +4.4 5 5 +1.8 Jan 12 Dec 17 0.0 0 0 -0.7 -3.2 -5 -5 -10 -10 -11.0 -15 Dec 08 41.0% -14.8 Dec 17 31.5% -15 -20 27.1% -15.5 19.6% -25 NPS -20 +4.4 NPS Customer NPS Rank Satisfaction -30 Promoters Detractors CBA Micro (<$1m) -16.6 #4 = #1 -25 Peers -35 Small ($1m - $10m) -10.7 #3 = #1 -21.4 Medium ($10m - $50m) +8.2 #2 = #1 -30 Dec 08 Dec 17 Large ($50m - $500m) +25.8 #1 = #1 Refer notes slide at the back of this presentation for definitions and sources. 1. Advocacy is measured on a scale of 1 to 10, with 1 being 'Very Unlikely' and 10 being 'Very Likely‘ to recommend. Promoters is defined as score of 9-10. Total Detractors is a score of 1-6. 2. Advocacy is measured on a scale of 0 to 10 (0 means ‘extremely unlikely’ and 10 means ‘extremely likely’), the 0 -6 3 7 raters (detractors) are deducted from the 9-10 raters (promoters).
Customers Serving 15.9 1 million customers Customer lifecycle by age MFI for 1 in 3 Australians Leading market shares in home lending 2 24.6% 46.2% 45.6% and household deposits 3 28.5% Highest share-of-wallet amongst peer group Dec 17 Dec 12 (3.09 products per customer) 40.4% MFI Share Overall MFI market share Products per Customer 29.7% 22.0% 28.2% 3.09 Others 34.2% 2.99 CBA 27.4% 11.9% 2.83 Peer 1 2.74 13.5% 18.4% Peer 2 Peer 3 14-17 18-24 25-34 35-49 50-64 65+ CBA Peer 1 Peer 2 Peer 3 Refer to the slide at the back of this presentation for source information. 1. Presented on a continuing operations basis. 2. System source RBA. 3. System source APRA Banking Stats 3 8
Delivering for our customers 1H18 1 NT $329m $103bn in total new lending 2 QLD 666 $9.1bn $6.9m 24k WA 178,000 new home loans 2 8k 3 $12.5bn 6 $518m $6.5bn 8k 212k 3 47k 16k 10k $4.3bn in new loans to rural customers $1.1bn 6 263k $312m SA 67k 3 219k 159k 3 110k 3 $2.7bn Insured more than 1.3m customers 3 7k 65k 365k 5 NSW 152k 349k 3 $201m 81k 552k $25.9bn 136k 573k 44k 1.9m new deposit accounts 469k $1.2bn NZ VIC $18.1bn Helped 1.8m customers invest for the future 4 38k $743m 28k 3 $869m 2k 24k 350k 3 TAS $110m 19k 1. Group totals (Australia and Offshore) for the 6 months ended 31 December 2017. 2. Home lending 405k excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans (RBS only) and Residential Mortgage Group (RBS only) loans. 3. Presented on a continuing operations basis. 4. Superannuation and 285k managed funds 5. NSW includes ACT. 6. In AUD. 39
Customers Our Branches Proprietary Home Loans Proprietary % of 76,000 customer insights each week Total Home Loan Flows ($) 64% 11,500 video-conferencing referrals in 1H18 62% 57% 62 new personal lenders in 1H18 1-in-4 new CBA home loans insured by CommInsure 1 47% 47% 44% 2 ~250 new format locations Market ~50% reduction in branch space 1H17 2H17 1H18 Home lending (CBA) 4 0 1. Home and Contents insurance policy with CommInsure. 2. Market as at Sep-17 quarter. Source: MFAA.
Technology Budgeting Made Easy Transaction Credit Card Notifications 1 Spend Tracker Spending Limits Savings Challenge 2 $11 spent at Restaurant Darling Harbour. So far this month you’ve spent $111.00 on Eating out. Instant notification Information to improve Cap a portion of your limit Making saving for every time you use your everyday spending your goals easier rather than permanently your credit card habits decreasing it 4 1 1. Transaction notifications are available for credit cards, excluding jointly held cards. 2. Savings Challenge is currently available in the CommBankLabs app.
Technology Making Payments Easier Beem Tap & Pay Wearables Android Pay Telco Telco Pay using a compatible Pay and get paid by Offered on Apple devices Secure payment Fitbit or Garmin wearable anyone securely and via PayTag sticker since experience via NFC on device linked to your instantly through a simple, January 2014 Android CommBank Credit or convenient and free app Debit card 4 2
Technology Putting Customers In Control Credit Card Insufficient Fund High Cost Transaction Alerts Alerts Alerts 1 e.g. cash advances After Due Date Without an overdraft facility At Due Date Cash advance warning: $150.00 Your account is overdrawn by spent at [BettingCompany ]. You’ll $537.00. To avoid a fee, repay be charged a fee and a higher the overdrawn amount by interest rate from today. This is a midnight (Syd/Melb time). high cost transaction. 1. High cost transactions refer to withdrawing cash or transferring funds from a credit card account. For example, from an ATM or another channel. This also includes cash equivalent transactions such as online gambling, money transfers or buying lotto tickets. 4 3
Technology Security and accessibility Face ID Lock, block & limit Ceba Live Chat Secure access to Lock and control Secure conversation Chat to an automated CommBank accounts using products via the with a customer digital banking assistant Face ID (Apple iPhone X) CommBank app service representative for simple activities Launched November 2017 4 4
Technology Albert Youth app A fun and safe way to help Giving customers 24/7 access The clever EFTPOS tablet young customers save and to insights about their 50+ apps in total spend responsibly business 60% new merchant sales to CBA 88,000+ 44,000+ >600,000 devices in market downloads users have access 4 5
Technology Innovating internationally Money Transfer (SA) Tyme Coach (SA) Indonesia 50 kiosks deployed 2 Enrol in 3 minutes +270,000 registrations to-date On the spot account creation via A financial wellness platform to improve First fully digital on-boarding process in financial fitness in South Africa Indonesia, completed in < 10 minutes 715 self-service kiosks + easy and safe money transfer 1 at over 10,000 till points Featuring an artificial intelligence 50% of all customer registrations now chatbot “Emyt”. across more than 1,400 locations. completed through kiosks Available on Android, iOS and web. Located in-branch and urban centres. 4 6 1. In association with our strategic retail partner Pick n Pay. 2. since April 2017.
Technology Leveraging CBA’s data to support small to Deploying social robots to enhance and Providing seamless mobility by trialling personalise customer experiences, in medium-sized Australian businesses with the use of payment by MasterCard on collaboration with The University of meaningful insights to support their Sydney ferries and eliminating the need for Technology Sydney prosperity in Daily IQ tickets, in partnership with the NSW Government and Cubic Strengthening the financial wellbeing of Pricing China Development Bank’s Australians by utilising machine learning, real- inaugural offshore green bond to time transaction notifications and savings support green development initiatives in challenges in the CommBank App China 4 7
Technology Net Promoter Score 1 #1 #1 Customer’s likelihood to recommend main financial institution based on use of Free Financial app Internet Banking services (via Mobile App) (Apple App Store & Google Play Store) 2 50.7% Promoters +36.6 #1 #1 Online Banking – 8 years in a row +27.3 +25.7 +23.6 (CANSTAR) 3 #1 #1 Mobile Banking – 2 years in a row (CANSTAR) 4 Peer 2 Peer 1 Peer 3 CBA #1 #1 Internet customer Satisfaction Australian Mobile Banking Benchmark 97% Satisfaction with Internet Banking Services (Website or App) (Forrester) 5 95% #1 #1 92.8% Mobile Banking Provider of the Year 93% (Money Magazine) 6 91% #1 #1 89% Digital Payment Product of the Year – CBA Better Bill Experience (AB&F) 7 87% Peers 85% Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 1, 2, 3, 4, 5, 6, 7. Refer to notes slide at back of this presentation for source information 4 8
Real time, digital banking Digital - transactions Digital - sales Repositioning branches 56% of all transactions by 29% of retail product ~50% smaller footprint value now digital sales now digital ~250 locations 56% 29% Digital transactions by value Digital contribution to total sales 1 Branch deposits & withdrawal volumes (m) 24m Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Real time banking – originate and transact in real time – anytime, anywhere, any device 1. Digital contribution to total sales includes quality new accounts (QNA) for key products: deposits, credit cards, home loans, personal loans, insurance and business accounts. QNA is 49 demonstrated by certain types of transactional activity taken by the customer e.g. deposits, loan repayment deductions etc.
Real time, digital banking CommBank app CommBank app CommBank app users Monthly unique customers (m) 1 Value of transactions per week ($bn) 2 Logons per day (m) 4.8 7.1 4.9 4.4 4.1 3.7 6.1 4.3 3.4 5.5 3.0 3.9 2.7 3.4 4.6 3.1 3.8 2 2.7 2.3 3.0 2.5 1.3 1.5 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Cardless Cash Tap & Pay Lock, Block & Limit Cumulative volume of unique transactions (m) 3 Volume of transactions (m) 4 Cumulative number of accounts enrolled (k) 5 10.2 903 22.8 716 7.0 17.3 635 6.6 541 12.6 465 4.6 363 8.5 215 5.3 0.6 0.7 1.2 1.8 1.2 26 0.1 2.7 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 1. CommBank app users are those who have logged into the CommBank app at least once for the month. 2. Total value of transactions processed by the CommBank app and CommBank Tablet app. Transactions include only transfers and BPAY payments. 3. Cumulative volume of unique Cardless Cash transactions since April 2014 launch, 4. Volume of Tap & Pay transactions for each 6 5 0 month period. Includes HCE, Paytag and Tokenisation. 5. Cumulative number of unique accounts that have enrolled for Lock, Block and Limit (excl. temp. lock) since launch.
Corporate responsibility Building a strong and A healthy & Improving our Empowering & supporting customers’ experience responsible business engaged workforce our communities • • 44.4% women in Manager Over 2,700 customers • Removed withdrawal fees • Implementing the Sedgwick and above roles accessed Domestic & from our ATMs • recommendations 1.6 percentage point Family Violence Emergency • Changed incentives for • Adopted the Task Force on decrease in gender pay gap Assistance Package some frontline staff to • Climate-related Financial for base salaries 1 $152m in community reward customer service • Disclosure Launched 2018+ Global investment • Real-time alerts for credit • recommendations Diversity and Inclusion Delivered Start Smart card repayments and high • $3.3bn lending to renewable Strategy financial education sessions cost transactions • energy Hosted our first Indigenous to ~300,000 students • New credit card feature to Placed 100 th Jawun • • Joint lead manager for Employee Conference help pay down existing • China Development Bank Launched a Financial secondee to Aboriginal and balances or large purchases $US500m green bond Wellbeing Program for our Torres Strait Islander in easy, fixed instalments people 2 organisations 5 1 1. WGEA Benchmarking Report 2017, CBA Group. 2. Currently available in Retail Banking Services
Corporate responsibility – performance data 1H18 FY17 FY16 FY15 Environment Renewable energy lending exposure ($bn) 3.3 2.8 2.2 1.4 204,317 1 Total greenhouse gas emissions (Group) (tCO 2 -e) 98,214 164,111 179,276 Emissions per FTE (Australia) Scope 1 + 2 (tCO 2 -e) 2.3 2.3 2.6 2.7 Employee Engagement Index (CBA) (%) Annual 78 77 81 Women in Manager and above roles (%) 44.4 44.4 43.6 43.2 Social Training hours per employee 21.4 39.1 34.3 31.1 Lost Time Injury Frequency Rate (LTIFR) 1.1 1.1 1.5 2.0 Total community investment ($m) 152 272 262 243 Female directors on Board (%) 33 40 33 27 Governance SpeakUP Program cases (#) 60 171 - - Whistleblower cases (#) 2 21 44 - - Training completion rate on ‘Our Commitments’ (%) 99.9 97.6 - - For metrics definitions, please refer to the 2017 Corporate Responsibility Report, available at: www.commbank.com.au/investors/corporate-responsibility. 1. From 2017 we have included data centres outside of our operational control. 2. Whistleblower cases are a subset of SpeakUP Program cases 5 2
CBA in Asia and South Africa South Africa TymeDigital by Commonwealth Bank SA: 715 kiosks Indonesia PT Bank Commonwealth (99%): 50 branches and 50 kiosks PT Commonwealth Life (80%): 25 life offices PT First State Investments China Bank of Hangzhou (18%): 201 branches Qilu Bank (18%): 131 branches CBA Beijing, Shanghai and Hong Kong branches Asia BoCommLife (37.5%): operating in 12 provinces First State Cinda JV (46%) and First State Investments Hong Kong Colonial Mutual Group Beijing Rep Office Vietnam CBA Digital Solutions Vietnam International Bank (20%): 161 branches Hanoi Representative Office Japan Singapore Tokyo CBA branch CBA branch South First State Investments First State Investments Africa Map not to scale 5 3
Financial Overview Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
Key Comparative Financial Metrics Profit Announcement Inclusive of discontinued Continuing operations, Pro-forma continuing operations & incl. AUSTRAC incl. AUSTRAC operations, ex. AUSTRAC penalty provision 2 penalty provision 2 penalty provision 3 Dec 17 v Dec 17 v Dec 17 v Half year ended (“cash basis”) 1 31 Dec 17 Dec 16 31 Dec 17 Dec 16 31 Dec 17 Dec 16 Cash net profit after tax $4,735m (1.9%) $5,110m 5.8% $4,871m (0.7%) Cost-to-income 4 43.9% 120 bpts 41.1% (160) bpts 44.2% 90 bpts Jaws 5 (3.0%) n/a 3.9% n/a (2.3%) n/a Effective tax rate 28.4% (10) bpts 29.9% 150 bpts 30.0% 150 bpts Profit after capital charge 6 $3,095m (5.7%) $3,470m 5.7% $3,126m (4.0%) Earnings per share (basic) 272.2c (3.2%) 293.7c 4.5% 280.0c (2.0%) Return on equity 14.5% (120) bpts 15.7% - 15.0% (100) bpts 1. Presented on a cash basis unless otherwise stated. 2. 1H18 includes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 3. 1H18 excludes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 4. Operating expenses to total operating income. 5. The Group uses Jaws as a key measure of financial performance. It is calculated as the difference between Total operating income growth and Operating expenses growth, compared to the prior comparative period. 6. The Group uses PACC, a risk adjusted measure, as a key measure of financial performance. It takes into account the profit achieved, the risk to capital that was taken to achieve it, and other adjustments. 5 4
1H18 – result overview 1 Financial Balance Sheet, Capital & Funding Statutory NPAT 2 ($m) Capital – CET1 (Int’l) 4 90 bpts 4,895 1.2% 16.3% Capital – CET1 (APRA) Cash NPAT 2 ($m) 10.4% 50 bpts (1.9%) 4,735 Total assets ($bn) 962 (1.0%) ROE 2 % (cash) (120) bpts 14.5 Total liabilities ($bn) 896 (1.5%) EPS 2 $ (cash) (9) cents 2.72 Average FUA 2 ($bn) 151 9.4% DPS $ 2.00 1 cent Deposit funding 2% 68% Underlying C:I 2,3 (%) 40.8 (10) bpts LT wholesale funding WAM 4.6 yrs 0.4 yrs NIM 2 (%) 2.16 6 bpts Liquidity coverage ratio (4%) 131% Op income 2,3 ($m) 13,028 4.9% Leverage ratio (APRA) 5.4% 50 bpts Op expenses 2,3 ($m) 5,318 4.7% Net stable funding ratio n/a 110% LIE to GLAA (bpts) 16 (1) bpt Credit Ratings 5 AA-/Aa3/AA- Refer footnote 5 1. All movements on prior comparative period unless stated. 2. Presented on a continuing operations basis. 3. To present an underlying view of the result, 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining investment in Visa Inc. and a $393m one -off expense for acceleration of amortisation on certain software assets; the impact of consolidation and equity accounted profits of AHL has been excluded; and 1H18 is adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 4. Internationally comparable capital - refer glossary for definition. 5. S&P, Moody’s and Fitch. S&P put major Australian Banks on “Outlook Negative” 7 Jul 16. Moody’s lowered the rating on 19 J un 17, outlook “Stable”. Fitch updated the outlook on the bank 5 5 sector to “Negative” on 2 Dec 16 – though individual CBA issuer rating remained “Stable”.
Result overview Cash NPAT 1 ($m) NIM 1 Underlying C:I 1,2 Cash ROE 1 +6 bpts +5.8% (10) bpts flat 5,110 3 4,828 ex AUSTRAC 216 15.7% 15.7% 3 ex AUSTRAC 40.9% penalty 40.8% 210 penalty provision 3 provision 3 4,735 14.5% 1H17 1H18 1H17 1H18 1H17 1H18 1H17 1H18 Cash EPS 1 (cents) CET1 (International) 4 DPS (cents) CET1 (APRA) +4.5% + 1 cent +50 bpts +90 bpts 293.7 3 200 199 10.4% ex AUSTRAC 16.3% penalty 15.4% 9.9% provision 3 281.1 272.2 1H17 1H18 1H17 1H18 Dec 16 Dec 17 Dec 16 Dec 17 1. Presented on a continuing operations basis. 2. To present an underlying view of the result, 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining inv estment in Visa Inc. and a $393m one-off expense for acceleration of amortisation on certain software assets; the impact of consolidation and equity accounted profits of AHL has been excluded; and 1H18 is adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 5 6 3. Pro-forma results excluding AUSTRAC penalty provision of $375m. 4. Internationally comparable capital - refer to glossary for definition.
Statutory NPAT 1 up 1.2% Dec 16 1 Dec 17 1 $m (1.9%) 4,828 4,735 Cash NPAT (incl. AUSTRAC penalty provision) 2 Hedging and IFRS volatility 3 8 96 NZ revenue hedge Bankwest non-cash items (1) (1) Treasury shares valuation adjustment - - Gain/(loss) on disposal and acquisition of - 65 AHL acquisition, controlled entities County Banks sale Total non-cash items 7 160 1.2% Statutory NPAT 4,835 4,895 1. Presented on a continuing operations basis. 2. The Group has provided for a civil penalty in the amount of $375 million in 1H18. The Group believes this to be a reliable estimate of the level of penalty that a Court may impose. This takes into account currently available information, including legal advice received by the Group in relation to AUSTRAC’s claims. 3. Unrealised accounting gains and losses arising from the application of “AASB 139 Financial Instruments: Recognition and Me asu rement”. 5 7
Divisional contributions 1 1H18 vs 1H17 % of Group Cost-to- Operating Cash Operating Operating 2 Business Unit NPAT LIE Income Income Expenses Performance NPAT 3 1H18 1H18 4 51.9% 5.7% 2.4% 7.2% 1.1% 7.7% 30.1% RBS 8.5% 9.3% BPB 18.8% 5.4% 0.3% (10.9%) 35.7% (6.7%) (13.2%) IB&M 11.6% (4.8%) (1.6%) Lge 38.3% 29.3% 33.2% Wealth 5.5% 6.2% (2.8%) n/a 66.1% 5 10.6% 14.5% ASB 9.9% 7.9% 3.1% (46.9%) 34.1% 6.6% 6.2% 0.3% 10.9% (40.0%) 16.9% 41.6% BW 2.4% 74.2% IFS 1.1% (5.2%) (8.9%) (36.5%) 64.0% 1. Presented on a continuing operations basis. 2. Excludes Corporate Centre and other. 3. 1H18 is adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 4. RBS result excluding impact of AHL consolidation, except for “% of Group NPAT”. 5. ASB result in NZD except 58 for “% of Group NPAT”, which is in AUD.
Divisional contributions 1 Operating Performance Cash NPAT $m $m 1H18 vs 1H17 1H18 vs 1H17 Operating Income less Operating Expenses 2 RBS +7.2% 2 277 RBS +7.7% 189 BPB +8.5% 111 BPB 82 +9.3% (6.7%) IB&M (63) (13.2%) IB&M (90) WM 82 +29.3% WM +33.2% 70 ASB ASB +10.6% 79 73 +14.5% (NZD) (NZD) BW +10.9% 51 BW 49 +16.9% IFS 2 +2.4% IFS +74.2% 23 59 1. Presented on a continuing operations basis. 2. To present an underlying view of the RBS result, the impact of AHL consolidation has been excluded.
Total income drivers 1 $m +2.3% Funds & Insurance 6.3% 13,135 12,835 Average FUA 9.4% AHL 94 107 Visa 397 Insurance income (16.0%) Invest Exp 13 421 1,175 AHL 22 1,105 Invest Exp 2 2,603 2,599 2,3 Other Banking Income 0.2% Derivative Valuation Adjustment (DVA) +$26m Trading (ex DVA) (11.3%) 2 Commissions (2.9%) 9,250 8,710 Net Interest Income 2 6.2% Volume 3.5% Margin +6 bpts 1 1 1H17 1H18 1. Presented on a continuing operations basis. 2. To present an underlying view of the result, the impact of consolidation and equity accounted profits of AHL has been excluded. 6 0 3. 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining investment in Visa Inc.
Net Interest Income 1 – balancing volume and margin $m Margin Volume +6 bpts +3.5% +6.2% (1) bpt +2 bpts +1 bpt +4 bpts 40 Home Loans +4.0% 9,253 79 (40) Bus/Corp Loans +2.8% 159 Lower basis risk +2 bpts Increased liquids (1) bpt Includes Bank 305 levy impact 3 8,710 Favourable deposit mix, Home loan repricing unfavourable lending mix partly offset by business lending competition 2 1H17 Volume Asset Funding Portfolio Mix Capital & 1H18 Pricing Costs Other 1. Presented on a continuing operations basis. 2. Average interest earning assets. 3. Bank levy impact was $180 million for 1H18. 6 1
Over 12 months, Group NIM 1 up 6 bpts bpts 216 (1) 2 2 (1) 210 4 1H17 Asset Funding Portfolio Basis Capital & 1H18 pricing costs mix risk Other 6 2 1. Comparative information has been restated to conform to presentation in the current period. Presented on a continuing operations basis.
Volume growth 1 Home Lending Household Deposits Business Lending Market share 1 Market share 1 40% 26% 24.6% CBA Peers 23.1% 28.5% 30% 21% CBA 23.4% Peers 14.9% 20% 16% 14.3% 14.6% 13.5% 10% 11% Jun 07 Dec 17 Jun 07 Dec 17 6.3% 5.6% 5.2% 4.2% 3.7% 3.2% 2.9% 2.8% 1.9% 2.0% 0.1% 0.9% 12 Months 2 6 Months 2 12 Months 2 6 Months 2 12 Months 6 Months Dec 17 Dec 17 Dec 17 Dec 17 Dec 17 Dec 17 System CBA 6 3 1. System source RBA/APRA Banking Stats. CBA includes BWA. 2. Adjusted for new market entrants/reporting changes.
Market share 1 Dec 17 Jun 17 Dec 16 % Home loans 24.6 24.8 25.0 Credit cards – RBA 2 24.4 24.4 24.4 Other household lending 3 27.0 26.6 26.1 Household deposits 28.5 28.8 29.0 Business lending – RBA 16.3 16.5 16.6 Business lending – APRA 18.4 18.6 18.6 Business deposits – APRA 20.4 20.3 19.8 Equities trading 4.0 3.9 4.0 Australian Retail – administrator view 4 15.6 15.6 15.5 FirstChoice Platform 4 10.8 10.7 10.8 Australia life insurance (total risk) 4, 5 9.8 9.9 11.1 Australia life insurance (individual risk) 4, 5 9.8 10.0 10.2 NZ home loans 6 21.8 21.7 21.9 NZ customer deposits 6 17.8 17.8 17.5 NZ business lending 6 14.5 14.4 13.9 NZ retail AUM 7 13.0 12.4 12.3 NZ annual inforce premiums 4,5 26.8 27.9 28.0 1. Comparatives have been restated in line with market updates. This does not include the impact of new market entrants in the current period. 2. As at November 2017. 3. Includes personal loans, margin loans and other forms of lending to individuals 4. As at 30 September 2017. 5. Metrics relate to discontinued operations. 6. RBNZ published data collection has changed based on a new collection template implemented with all NZ banks. Accordingly, the December 2016 comparatives have been restated. 7. Presented on a continuing operations basis. 6 4
Underlying other banking income broadly flat Other banking income 1 Trading income $m $m 2,599 2,603 Higher SAF Other 180 600 240 income 556 Trading 600 556 Trading Lower 233 163 volatility Mix shift to driving lower Lending fees 533 558 fee based Markets products performance Sales 388 388 Lower Commissions 1,286 1,249 interchange and ATM fees Derivative 5 (21) Valuation Adj. 2 2 1H17 1H18 2 2 1H17 1H18 1. To present an underlying view of the result, the impact of consolidation and equity accounted profits of AHL has been excluded. 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining investment in Visa Inc. 2. Presented on a continuing operations basis. 6 5
Strategic approach to costs Cost to Income 1 Gross investment spend 1 Investment spend 1 Underlying 2 % of total $m (%) 1,214 Branches 11% 13% & Other 40.9% 40.8% 2 nd Half 636 Risk & 36% 35% Expensed Compliance 349 Productivity 1 st Half 53% 1 st Half 627 52% 578 & Growth Expensed Expensed 313 263 1H17 1H18 FY17 1H18 1H17 1H18 1. Presented on a continuing operations basis. 2. To present an underlying view of the result, 1H17 has been adjusted to exclude a $397m gain on sale of the Group’s remaining inv estment in Visa Inc. and a $393m one-off expense for acceleration of amortisation on certain software assets; the impact of consolidation and equity accounted profits of AHL has been excluded; and 1H18 is 6 6 adjusted to exclude a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings.
Increased risk & compliance spend ($m) FY13 - 1H18 (annualised) 1 Cumulative CAGR Spend over 5.5 years 33% 3,978 Examples • AML (Anti-Money Laundering) • FATCA (Foreign Account Tax Compliance Act) 3,370 • Stronger Super • Future Of Financial Advice • 2,546 Common Reporting Standard 1,823 911 295 2 FY13 FY14 FY15 FY16 FY17 1H18 1. Comparative information has been restated to conform to presentation in the current period, and is presented on a continuing operations basis. 2. Excludes a $375 million expense provision which 6 7 the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings.
Credit Quality & Risk Management Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
CBA home loans Relatively low historical losses on the Losses manageable under a highly Group’s home loan portfolio stressed scenario 1 Losses to average gross loans Stress scenario 2.5% 3 year scenario of cumulative 31% house price decline, peak CBA Home Loans Group Total Loan Losses 11% unemployment and a reduction in the cash rate to 0.5% 2.0% Total Outcomes ($m) Year 1 Year 2 Year 3 Stressed Losses 4,165 755 1,296 2,114 1.5% Insured Losses 1,073 207 338 528 Net Losses 2 3,092 548 958 1,586 1.0% Net Losses (bpts) 61.5 10.8 18.7 32.0 1.0 1.8 2.5 0.5% PD % n/a Marginal increase in scenario potential net loss outcomes 2 compared to prior period reflects conservative assessment of potential stress from higher risk 0.0% segments (eg Western Australia, mining towns). 1983 1987 1991 1995 1999 2003 2007 2011 2015 2017 1. CBA Home Loans represents Australian Home Loans and includes Bankwest from 2009. 2. Net losses (bpts) is calculated as total net losses divided by average exposure over the three years. Net losses with consistent macro economic and LMI assumptions (50%). Scenario does not include any benefits of Excess of Loss Re-insurance. Results based on June 2017 data. 68
Home loan portfolio – Australia Portfolio 1 New Business 1 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 Total Balances - Spot ($bn) 423 436 444 Total Funding ($bn) 53 49 49 Average Funding Size ($ ’000) 6 Total Balances - Average ($bn) 416 423 440 311 309 320 Serviceability Buffer (%) 7 Total Accounts (m) 1.8 1.8 1.8 2.25 2.25 2.25 Variable Rate (%) 85 84 82 Variable Rate (%) 89 85 82 Owner Occupied (%) 63 63 64 Owner Occupied (%) 62 67 71 Investment (%) 33 33 32 Investment (%) 37 32 28 Line of Credit (%) 4 4 4 Line of Credit (%) 1 1 1 Proprietary (%) 54 54 55 Proprietary (%) 54 57 60 Broker (%) 46 46 45 Broker (%) 46 43 40 Interest Only (%) 2 Interest Only – APRA (%) 8 40 39 33 42 38 21 Lenders’ Mortgage Insurance (%) 2 Lenders’ Mortgage Insurance (%) 2 23 22 22 14 16 17 Low Doc (%) 2 0.6 0.5 0.4 1. All portfolio and new business metrics are based on balances and fundings respectively, unless stated otherwise. All new business metrics are based on 6 months to June and December, unless stated otherwise. Mortgagee In Possession (bpts) 5 5 5 2. Excludes Line of Credit (Viridian LOC/Equity Line). 3. LVR defined as current balance/current valuation. Annualised Loss Rate (bpts) 2 3 2 4. Any amount ahead of monthly minimum repayment; includes offset facilities. Portfolio Dynamic LVR (%) 3 51 50 50 5. Average number of monthly payments ahead of scheduled repayments. 6. Average Funding Size defined as funded amount / number of funded accounts. Customers in Advance (%) 4 77 77 77 7. Serviceability test based on the higher of the customer rate plus a 2.25% interest rate buffer or a minimum floor rate. Payments in Advance incl. offset 5 35 33 33 8. APRA benchmark reporting on a different basis using limits and includes all construction loans. Based on 3 months to June and December. Dec-16 value based on internal definition. Offset Balances – Spot ($bn) 36 37 41 69
Home loan portfolio – CBA Portfolio 1 New Business 1 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 Total Balances - Spot ($bn) 357 368 374 Total Funding ($bn) 47 41 42 Average Funding Size ($ ’000) 6 Total Balances - Average ($bn) 351 357 371 313 305 316 Serviceability Buffer (%) 7 Total Accounts (m) 1.5 1.5 1.5 2.25 2.25 2.25 Variable Rate (%) 85 83 82 Variable Rate (%) 90 85 82 Owner Occupied (%) 61 61 63 Owner Occupied (%) 62 65 69 Investment (%) 35 35 33 Investment (%) 37 34 30 Line of Credit (%) 4 4 4 Line of Credit (%) 1 1 1 Proprietary (%) Proprietary (%) 58 59 59 57 62 64 Broker (%) 42 41 41 Broker (%) 43 38 36 Interest Only (%) 2 Interest Only – APRA (%) 8 40 39 34 41 38 21 Lenders’ Mortgage Insurance (%) 2 Lenders’ Mortgage Insurance (%) 2 21 20 20 13 14 15 Low Deposit Premium (%) 2 Low Deposit Premium (%) 2 6 6 6 4 5 4 Low Doc (%) 2 0.6 0.5 0.5 1. RBS retail mortgages, including those originated outside of RBS. All portfolio and new business metrics are based Mortgagee In Possession (bpts) 5 5 5 on balances and fundings respectively, unless stated otherwise. New business metrics are based on 6 months to June and December, unless stated otherwise. Annualised Loss Rate (bpts) 3 3 3 2. Excludes Line of Credit (Viridian LOC). 3. Dynamic LVR defined as current balance/current valuation Portfolio Dynamic LVR (%) 3 50 49 48 4. Any amount ahead of monthly minimum repayment; includes offset facilities. 5. Average number of payments ahead of scheduled repayments. Customers in Advance (%) 4 76 76 76 6. Average Funding Size defined as funded amount / number of funded accounts. Payments in Advance incl. offset 5 7. Serviceability test based on the higher of the customer rate plus a 2.25% interest rate buffer or a minimum floor rate. 37 35 35 8. APRA benchmark reporting on a different basis using limits and includes all construction loans. Based on 3 months Offset Balances – Spot ($bn) to June and December. Dec 16 value based on internal definition. 31 33 36 70
Australian home loans – portfolio growth profile $bn Balance Growth State Profile 1H18 1H18 Balance Growth NSW/ACT VIC/TAS QLD WA SA/NT (48) 16 % of Portfolio 49 (9) 6% 444 436 16% 34% 18% 26% 2.8% 2.2% 1.3% Jun 17 New Redraw & Repayments / External Dec 17 (0.3%) Fundings Interest Other Refinance (0.4%) Includes CBA and Bankwest. State Profile exclude Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans (CBA) and Residential Mortgage Group (CBA) loans. State Profile determined by location of the underlying security 7 1
Payments in advance 1 Payments in advance (% of accounts) Residual: have less than 1 month 6% repayment buffer Structural: loans that structurally 9% restrict payments in advance e.g. fixed rate loans etc 4% New Accounts: loans that are less than one year on book 30% Investment loans: incentivised to 16% keep interest payments high for 12% negative gearing/tax purposes 8% 7% 7% 2 > 2 years 1 - 2 years 6 - 12 months 3 - 6 months 1 - 3 months < 1 month 1. CBA. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans; Includes offset facilities; Loans in arrears (1%) are excluded. 7 2 2. Consists of loans that are up-to-date (23%) and less than one month in advance (12%).
Home loan serviceability Interest rate buffers built into Key Origination Requirements 1 serviceability tests 2 Serviceability CBA 80% or lower cap on less certain income sources 10% (e.g. rent, bonuses etc.) Limits on investor income allowances e.g. RBS Income 9% restrict the use of negative gearing where LVR>90% 8% 7% Current serviceability tests include an interest Higher of declared expenses or HEM adjusted by rate buffer of 2.25% above the customer rate, 2.25% income with a minimum floor rate of 7.25% 6% Buffer applied to existing mortgage repayments Expenses Notional monthly rental commitment for applicants 5% living rent free and a minimum rental payment level 4% SVR (OO P&I) Loan serviceability buffer of 2.25% above the Interest rate customer rate, with a minimum floor rate (RBS: 3% SVR + Buffer buffer 7.25% pa, Bankwest: 7.35%) 2% Dec 14 Dec 15 Dec 16 Dec 17 Interest only IO loans assessed on principal and interest basis (IO) over the residual term of the loan 7 3 1. Australian Home Loans. 2. ‘SVR + Buffer’ excludes discounts.
Australian home loans - policy tightening • LVR restrictions on interest only and • Increased serviceability buffers • Reduced reliance on less investment lending • Limits on lending to high risk stable income sources apartment areas • LVR restrictions and reduced reliance on rental income for lending in • Restrictions on lending reliant selected postcodes and for certain on foreign income security types 2H15 1H16 1H17 1H15 2H16 2H17 1H18 • Income scaled living expense estimate • Adjustments to interest rate buffer on in serviceability test • Limits on lending in high risk areas existing mortgage commitments • Further limits on use of rental income and negative gearing 7 4
Interest only - Australia Arrears Balances 1 Arrears 1 Income Profile 1 90+ days 90+ days Applicant Gross Income Band Fundings (6 Months to Dec 17) 300 1.20% 50% Billions Interest Only Interest only 90+ day arrears balances Interest Only 45% Principal & Interest Interest only – total portfolio balances 250 Principal & Interest 1.00% 40% % of IO Portfolio 35% 200 0.80% Owner 30% occupied Investment 42% 58% 150 0.60% 25% 20% 100 0.40% 15% 10% 50 0.20% 1.0 Billions 5% 0.5 0.0 0 0.00% 0% Dec 14 Dec 15 Dec 16 Dec 17 Dec 14 Dec 15 Dec 16 Dec 17 0k to 75k to 100k to 125k to 150k to 200k to > 500k 75k 100k 125k 150k 200k 500k Pricing and policy measures have reduced IO arrears rate impacted by reducing IO Borrower profile skewed toward higher IO lending, while IO arrears balances have portfolio balances income bands remained relatively flat 7 5 1. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans.
Interest only (CBA) – switching Balance Movement ($m) 1 Scheduled IO term expiry 1 Interest Only (IO) to Principal and Interest (P&I) (% of total IO Loans) Quarterly 26% Payments in advance > 6 21% 29% 20% months 2 : accounts with a financial 19% 5,540 buffer to absorb any increased repayments 31% 2,649 34% 2,914 Customer initiated 38% 14% Investment Loans: incentivised to 38% keep interest payments high for 37% negative gearing/tax purposes 44% 46% 43% Reached end of I/O 4,559 Residual: Over 80% originated 4,092 4,110 47% period after June 2015, with increased 33% serviceability buffers 25% 20% 19% 16% Jun 17 Sep 17 Dec 17 2018 2019 2020 2021 2022+ • Pricing and policy tightening measures has encouraged switching to P&I • Interest only loans assessed on P&I basis over residual term to ensure increased repayment levels can be met • Additional serviceability buffers built into serviceability tests provide further support • Approximately 26% expected to switch in 2018 – majority are investors and those with large payment buffers 1. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans. 2. Payments in Advance defined as the number of monthly payments ahead of scheduled repayments by 6 or more months. 7 6
Investor lending Arrears 2 Income Profile 2 Growth 1 Year on year (%) Applicant Gross Income Band 90+ days 16% Fundings (6 Months to Dec 17) 40% 1.00% 35% 12% Owner Occupied 0.80% 30% 8.3% Investment Loans 8% 25% 7.5% 0.60% 20% 4.1% 4% 0.40% 15% Owner Occupied 0.5% 0% Portfolio 10% Investment Loans 0.20% 5% -4% Dec 15 Jun 16 Dec 16 Jun 17 Dec-17 CBA Owner Occupied CBA Investment Loans 0% 0.00% System Owner Occupied System Investment Loans 0k to 75k to 100k to 125k to 150k to 200k to > 500k Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 75k 100k 125k 150k 200k 500k Investment home loan growth running Investor borrowers skewed to higher Investment loan arrears below that of below APRA 10% cap income bands overall portfolio 1. System source RBA. CBA includes BWA, securitisation and subsidiaries. 2. Australian Home Loans. Includes CBA and Bankwest except where noted. Income Bands, Arrears and Profile: excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loan (CBA) and Residential Mortgage Group (CBA) loans except where noted. Fundings based on dollars. 77
Home loan portfolio arrears Arrears by BU Arrears by Year Arrears by Vintage Australia 2 90+ days Group 90+ days 1 Group 90+ days 1 1.8% 1.8% 2.0% Group Bankwest CBA ASB 2013 2014 2015 2016 2017 1.5% 1.2% 1.2% FY07-FY10 FY13 FY12 1.0% FY14 0.6% 0.6% FY11 0.5% FY15 Excluding WA FY16 FY17 0.0% 0.0% 0.0% 0 6 12 18 24 30 36 42 48 54 60 66 72 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Months on Book 78 1. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loan (CBA only) and Residential Mortgage Group (CBA only) loans. 2. Bankwest included from FY08.
Australian home loans arrears by State Home loan arrears Western Australia 90+ days 1.50% Rigorous stress testing % of Portfolio 16% WA 34% Credit policy tightening e.g. LVR caps, insurance 18% 6% requirements 26% QLD 1.00% SA/NT Tailored treatments by segment National Early engagement with IHL accounts secured by National (ex WA) 0.50% multiple properties VIC/TAS NSW/ACT Increased provisions 0.00% Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 79 Includes CBA and Bankwest. Arrears exclude Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans (CBA only) and Residential Mortgage Group (CBA only) loans.
Loan to Value Ratio (LVR) and portfolio insurance Portfolio Insurance Profile 2 Home Loan Dynamic LVR 1 % of Australian Home Loan portfolio Insurance with Genworth or QBE 70% for higher risk loans above 80% Excess of Loss Average LVR Re-insurance Dynamic 60% LVR 22% % of Total Portfolio Accounts Dec 16 51% 5% 50% Jun 17 50% Dec 17 50% 73% 40% 30% 20% LMI – Genworth / QBE 10% Low Deposit Premium Segment Lower risk profile 0% e.g. low LVR Insurance not required 0% to 60% 60% to 80% 80% to 90% 90% to 95% >95% Dynamic LVR Band 1. Australian Home Loans. Dynamic LVR is current balance / current valuation. 2. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans. 8 0
Consumer arrears Personal Loans Credit Cards Group 90+ days 1.8% Group 90+ days 1.8% 1.2% Group 1.2% Bankwest CBA 0.6% 0.6% ASB 0.0% 0.0% Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Credit Cards Personal Loans 3.0% 4.0% Group 30+ days Group 30+ days 2.8% 2013 3.5% 2014 2.6% 2015 3.0% 2.4% 2016 2017 2.5% 2.2% 2.0% 2.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Consumer arrears includes retail portfolios of CBA (RBS and BPB), Bankwest and ASB. ASB write-off Credit Card and Personal Loans typically around 90 days past due if no agreed repayment 8 1 plan.
Regulatory exposure mix Regulatory Credit Exposure Mix Portfolio CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 56% 41% 47% 57% Corporate, SME, Specialised Lending 27% 31% 38% 29% 5% 5% 2% Bank 4% Sovereign 9% 15% 8% 8% 3% 1% 2% Qualifying Revolving 3% 5% 1% 2% Other Retail 1% Total 100% 100% 100% 100% Pillar 3 disclosures for CBA as at December 2017 and Peers as at September 2017. Excludes Standardised (including Other Assets, CVA) and Securitisation, which represents 5% of CBA, 5% of 8 2 Peer 1, 6% of Peer 2 and 5% of Peer 3 before exclusions.
Sector exposures Exposures by Industry Top 20 Commercial Exposures AAA A+ BBB+ TCE $bn Other Dec 17 A- to AA- to A- to BBB- BBB A- Sovereign 96.8 7.5 0.5 0.1 104.9 AAA Property 2.1 6.4 13.6 45.7 67.8 BBB+ BBB- Banks 26.5 22.2 4.5 2.4 55.6 BBB- BBB Finance - Other 21.9 21.8 8.2 2.6 54.5 A+ A Retail & Wholesale Trade - 2.0 6.0 14.9 22.9 A- Agriculture - 0.3 2.8 18.4 21.5 A+ A Manufacturing - 2.7 5.4 7.2 15.3 A- A- Transport 0.1 1.5 8.7 5.7 16.0 BBB+ Mining 0.1 3.8 5.9 4.0 13.8 BBB BBB- Energy 0.3 1.5 8.3 1.6 11.7 1 BB BBB- All other excl. Consumer 1.3 6.4 20.6 42.9 71.2 TCE - 500 1,000 1,500 2,000 2,500 Total 149.1 76.1 84.5 145.5 455.2 $m 8 3 CBA grades in S&P equivalents. 1. BB exposure fully secured by property.
Credit exposures by industry Corporate Portfolio Quality Group TCE 1 TIA % of TCE 1 TIA $m % of book rated investment grade Jun 17 Dec 17 Jun 17 Dec 17 Jun 17 Dec 17 68.7 69.2 68.0 TCE ($bn) 500 Consumer 55.4% 56.6% 1,578 1,581 0.26% 0.26% Sovereign 9.7% 9.7% - - - - Other 400 Property 6.4% 6.3% 693 586 0.99% 0.86% 300 BBB Banks 6.1% 5.2% 9 9 0.01% 0.02% 200 Finance – Other 5.0% 5.1% 50 35 0.09% 0.06% A Retail & Wholesale 2.2% 2.1% 474 488 2.00% 2.13% 100 Trade AAA/AA Agriculture 2.0% 2.0% 1,019 876 4.70% 4.07% AAA/AA 0 Manufacturing 1.6% 1.4% 430 290 2.47% 1.90% Dec 16 Jun 17 Dec 17 Transport 1.6% 1.5% 436 399 2.51% 2.49% CBA grades in S&P equivalents. Mining 1.4% 1.3% 477 409 3.23% 2.97% Group TCE by Geography Business Services 1.3% 1.3% 165 349 1.13% 2.56% Dec 16 Jun 17 Dec 17 Energy 1.1% 1.1% 90 9 0.72% 0.08% Construction 0.7% 0.8% 290 223 3.70% 2.73% Australia 76.4% 76.9% 77.7% Health & 0.8% 0.9% 197 225 2.27% 2.42% Community New Zealand 9.7% 9.7% 9.9% Culture & 0.7% 0.7% 54 47 0.73% 0.66% Recreation Europe 5.8% 5.5% 4.9% Other 4.0% 4.0% 538 509 1.24% 1.18% Other 8.1% 7.9% 7.5% Total 100.0% 100.0% 6,500 6,035 0.60% 0.56% 8 4 1. Comparatives have been restated to conform to treatment in current period.
Mining, oil & gas – lower exposure Overview Group Exposure Dec 16 73 71 Exposure of $13.8bn (1.3% of Group TCE), $0.9bn 70 reduction on prior half due to repayments and lower Jun 17 uncommitted facility utilisations. Dec 17 Relatively stable performance over the past 12 months: 14.9 14.7 13.8 71% investment grade. Diversified by commodity/customer/region. 378 3.6 252 3.2 3.0 236 1.7 2.8 1.4 1.4 1.3 1.6 Focus on quality, low cost projects with strong % of portfolio Portfolio % of portfolio % of portfolio TCE ($bn) % of Group TCE graded TIA impaired $m Impaired fundamentals and sponsors. investment grade Mining services exposure remains modest (4% of total). Group Exposure by Sector Oil and Gas Extraction is the largest sub-sector (62% of Dec 16 9.0 total): 74% investment grade with 31% related to LNG ($bn) Terminals – typically supported by strong sponsors with 8.0 Jun 17 significant equity contribution and offtake contracts from 7.0 Dec 17 well-rated counterparties. 6.0 5.0 Portfolio impaired level increased to 2.8% due to the migration of one client from Troublesome to Impaired. 4.0 3.0 Better trading conditions across the sector and stronger 2.0 commodity prices in general during 1st half of FY18. 1.0 Improved outlook, however remain cautious of risk of - commodity price pull back. Oil & Gas Iron Ore Metals Mining Gold Ore Mining Black Coal Other Mining Extraction Mining Mining Services Mining 8 5
Commercial property – lower exposure Group Exposure Overview Dec 16 70.2 71.8 67.8 Exposure has reduced in the half year. Remains diversified across Jun 17 sectors and by counterparty. Dec 17 Composition remains steady in last 6 months with 86.2% of Commercial Property exposure to investors and REITS, 13.8% to 33 33 Developments. 31 6.5 6.3 Top 20 counterparties primarily investment grade (weighted 6.7 111 167 90 0.8 1.0 0.9 0.13 0.16 0.22 average rating of BBB equivalent) and account for 14.8% of % of Group % of portfolio Commercial property exposure. TCE ($bn) % of portfolio Portfolio % of portfolio TCE graded TIA investment grade impaired $m Impaired 33% of the portfolio investment grade, majority of sub-investment grade exposures secured (97%). Profile Impaired exposures remain low (0.1% of the portfolio). Sector Geography SA Other Geographical weighting remaining steady during the half. 4% Industrial 2% Other 10% QLD Development exposure continues to reduce due to repayments 13% 7% Residential from completed projects and active management of risk appetite in WA REIT 16% 13% areas of concern. 16% NSW 55% Ongoing comprehensive market, exposure and underwriting VIC Office monitoring on the portfolio. Retail 19% 21% 24% Sector profile is Group wide Commercial Property. Geographic profile is domestic Commercial Property. Comparatives have been restated to conform to treatment in current period. 8 6
Residential apartments – weighted to Sydney Overview 1 Profile (Dec 17) Total Residential Apartment Development 1 Apartment Development exposure reduced $10.9bn (16% of CP) $4.1bn (0.4% of TCE) $0.4bn for the half. Other Perth $0.2bn $0.2bn Facilities being repaid on time from pre-sale Investment Apartment Brisbane settlements. 34% $0.2bn development 1 Sydney Weighting to Sydney increasing as exposures to 37% 68% Melbourne ($4.1bn) other capital cities reducing proportionally ($2.8bn) Other $0.7bn development quicker. 29% Qualifying pre-sales of 109.9% 2 . Exposure Maturity Profile 1 Lower Portfolio LVR of 57.0%. 2.5 ($bn) Sydney developments are diversified across the metropolitan area. Ongoing comprehensive market, exposure and settlement monitoring on the portfolio. 0.9 0.4 0.3 1. Apartment Developments > $20m. Brisbane, Melbourne and Perth defined as all postcodes within a 15km radius of the capital city and Sydney is all metropolitan Sydney based on location of the development. Other is all other locations. 2. QPS refers to level of Qualifying Pre-Sales accepted as a pre-condition to loan 2018 2019 2020 2021 87 funding. QPS Cover is level of QPS held to cover the exposure.
Retail trade Overview Group Exposure Dec 16 12.6 Exposure of $12.2bn (1.1% of Group TCE), stable on prior half 12.2 12.2 Jun 17 Personal and household good retailing accounts for $6.1bn 35 Dec 17 31 31 (0.6% of Group TCE) Volume and margin competition continues to effect the Discretionary Retail sector in particular 2.8 49 2.2 1.9 34 29 Despite pressures in the sector, portfolio health remains sound 0.4 1.2 1.1 1.1 0.2 0.3 Portfolio % of portfolio % of portfolio TCE ($bn) % of portfolio % of Group TCE impaired $m investment grade graded TIA Impaired Group Exposure by Sector Personal and Household Good Retailing ($bn) Dec 16 Dec 16 6.3 6.2 6.1 Jun 17 Jun 17 Dec 17 Dec 17 4.4 6.3 6.2 6.1 4.0 3.8 38 33 2.1 2.1 31 2.0 3.6 2.1 2.1 0.6 0.6 0.6 29 0.5 0.4 25 0.3 16 % of portfolio % of portfolio Portfolio % of portfolio Personal and Household Good Food Retailing Motor Vehicle Retailing and TCE ($bn) % of Group graded TIA investment grade impaired $m Retailing Services Impaired TCE 88
Agriculture – NZ Dairy portfolio quality generally improving Overview Group Exposure Dec 16 21.7 Exposure of $21.5bn (2.0% of Group TCE) is well diversified 21.5 21.2 Jun 17 by geography, sector and client base. Dec 17 Australian agriculture portfolio performing well. 14 14 12 NZ dairy portfolio: Represents 0.7% of Group TCE. 5.2 4.7 510 2.0 4.1 2.0 Outlook is dependent on milk price. 2.0 458 389 2.4 2.2 1.8 % of portfolio % of portfolio Portfolio % of portfolio TCE ($bn) % of Group graded TIA investment grade impaired $m Impaired TCE Group Exposure by Sector NZ Dairy Exposure ($bn) Dec 16 Dec 16 9.0 Jun 17 Jun 17 8.0 Dec 17 Dec 17 7.0 7.6 7.6 7.3 6.0 5.0 10.0 9.8 4.0 8.0 7.7 7.3 3.0 5.5 4.6 399 4.4 2.0 333 3.2 239 1.0 0.7 0.7 0.7 - % of portfolio % of portfolio Portfolio % of portfolio Dairy Farming Grain Growing Sheep and Forestry, Horticulture Other TCE ($bn) % of Group graded TIA investment grade impaired $m Beef Farming Fishing and and Other Livestock Impaired TCE Services Crops 89 New Zealand dairy exposure (AUD) included in Group exposure.
Capital, Funding & Liquidity Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
Capital drivers Capital – CET1 (APRA) Capital – CET1 (APRA) bpts 24 (15) 110 (17) (8) (9) 10.4% (55) 10.1% Jun 17 Dividends Cash Credit IRRBB Operational Colonial Other Dec 17 1 APRA (Net of DRP) NPAT RWA RWA RWA Debt APRA Credit Risk Weighted Assets Total Risk Weighted Assets $bn $bn 441 377 0.2 (3.1) 6.5 437 (10.3) (2.9) 7.3 (2.1) (1.6) 367 (0.6) CET1 CET1 7 7 5 4 1 24 24 (17) (15) - (8) impact impact bpts bpts Jun 17 Credit Risk Operational IRRBB Traded Dec 17 Jun 17 Volume Quality FX Regulatory Data & Dec 17 Risk Market Risk Treatments Methodology Basis points contribution to change in APRA CET1 ratio. 1. Includes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in 9 0 the AUSTRAC proceedings.
Interest rate risk in the banking book bpts 13 27 48 20 56 52 71 2,235 1,880 Optionality Risk 1,712 1,401 Optionality Risk Basis Risk Basis Risk Repricing & Yield 868 596 Curve Risk 388 Repricing & Yield Curve Risk $m Embedded Gain Embedded Gain (offset to capital) (offset to capital) Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 9 1 Capital ($2.2bn) assigned to interest rate risk in banking book per APS117. Bpts (basis points) of APRA CET1 ratio.
Dividends over time Payout ratio (cash) 75.0% 78.2% 73.9% 73.2% 75.8% 75.9% 75.1% 75.2% 1 76.5% 74.2% 75.0% 80% 81% 82% 81% 81% 71% 72% 70% 70% 90% 84% 70% 84% 71% 87% 88% 62% 62% 84% 74%63% 63% 61% 200 230 153 199 113 113 115 120 170 132 188 137 197 164 200 183 218 198 222 198 107 149 cents 222 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Final Interim 1. Comparative information has been restated to conform to presentation in the current period. 9 2
International CET1 ratios 21.7 G-SIBs in dark grey 16.3 16.2 15.8 15.5 15.0 14.9 14.8 14.6 14.5 14.3 14.2 13.9 13.9 13.4 13.3 13.1 12.9 12.8 12.7 12.3 12.3 12.2 12.1 12.1 11.9 11.9 11.5 11.5 11.5 11.3 11.2 11.2 10.9 10.8 10.7 10.6 China Construct. Bank China Merchants Bank Standard Chartered 2 Agri. Bank of China Credit Agricole SA 2 Intesa Sanpaolo 2 Sumitomo Mitsui 2 Toronto Dominion Bank of America Bank of Comm. Mitsubishi UFJ Credit Suisse 2 BNP Paribas 2 Bank of China Nordea 2 Wells Fargo Deutsche 2 Scotiabank JP Morgan Lloyds 2 UniCredit 2 WBC 1 ANZ 1 HSBC NAB 1 Barclays 2 ING 2 UBS 2 SocGen 2 RBS CBA Santander Mizuho BBVA 2 ICBC RBC Citi Source: Morgan Stanley and CBA. Based on last reported CET1 ratios up to 1 February 2018 assuming Basel III capital reforms fully implemented. Peer group comprises listed commercial banks with total assets in excess of A$750 billion and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure for a Morgan Stanley estimate. 1. Domestic peer figures as at 30 September 2017 2. Deduction for accrued expected future dividends added back for comparability 9 3
APRA and International comparison The following table provides details on the differences, as at 31 December 2017, between the APRA Basel III capital requirements and internationally comparable capital ratio 1 . CET1 APRA 10.4% Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements. Equity investments 1.0% Balances are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements. Capitalised expenses 0.1% Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements. Deferred tax assets 0.3% APRA requires capital to be held for Interest Rate Risk in the Banking Book (IRRBB). The BCBS does not have any capital IRRBB RWA 0.7% requirement. Loss Given Default (LGD) of 15%, compared to the 20% LGD floor under APRA’s requirements and adjustments for higher Residential mortgages 1.9% correlation factor applied by APRA for Australian residential mortgages. Risk- weighting of 75%, rather than 100% under APRA’s requirements. Other retail standardised exposures 0.1% LGD of 45%, compared to the 60% or higher LGD under APRA’s requirements. Unsecured non-retail exposures 0.5% Credit conversion factor of 75%, compared to 100% under APRA’s requirements. Non-retail undrawn commitments 0.4% Use of AIRB probabilities of default (PD) and LGDs for income producing real estate and project finance exposures, reduced Specialised lending 0.8% by application of a scaling factor of 1.06. APRA applies higher risk weights under a supervisory slotting approach, but does not require the application of the scaling factor. Increase in the A$ equivalent concessional threshold level for small business retail and small/medium enterprise corporate Currency conversion 0.1% exposures. Total adjustments 5.9% CET1 Internationally Comparable 16.3% Tier 1 Internationally Comparable 18.7% Total Capital Internationally Comparable 21.5% 1. Analysis aligns with the APRA study entitled “International capital comparison study” (13 July 2015 ). 9 4
CET1 – Internationally comparable (bpts) Internationally Comparable 1 CET1 (35) 40 (4) (4) 147 16.3% (74) 15.6% Jun 17 Jun 17 Cash Credit Operational Colonial Other Dec 17 2 Int'l Final Dividend NPAT RWA RWA Debt Int'l (Net of DRP) 1. Internationally comparable capital - refer glossary for definition. 2. Includes a $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 9 5
Regulatory expected loss Dec 16 Jun 17 Dec 17 $m Regulatory Expected Loss (EL) 4,698 4,736 4,592 Eligible Provisions (EP) Collective Provisions 1 2,561 2,486 2,525 Specific Provisions 1,2 1,900 1,856 1,813 General Reserve for Credit Losses adjustment 532 589 554 Less: ineligible provisions (standardised portfolio) (268) (257) (253) Total Eligible Provisions 4,725 4,674 4,639 Regulatory EL in Excess of EP (27) 62 (47) Common Equity Tier 1 Adjustment 3 220 218 99 1. Includes transfer from collective provision to specific provisions (Dec 17: $247m, Jun 17: $261m, Dec 16: $246m). 2. Specific provisions includes partial write offs (Dec 17: $588m, Jun 17: $615m, Dec 16: $637m). 3. Excess of eligible provisions compared to expected loss for defaulted exposures (Dec 17: $146m, Jun 17: $156m, Dec 16: $247m), not available to reduce the shortfall 96 for non-defaulted exposures.
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