Debt Investor Update For the half year ended 31 December 2017 Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
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 $375 million expense provision which the Group believes to be a reliable estimate of the civil penalty a Court may impose in the AUSTRAC proceedings. 2
Result overview – Half year ended 31 Dec 2018 Cash NPAT 1 ($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% 3 ex AUSTRAC 15.7% 40.9% penalty 40.8% 210 penalty provision 3 provision 3 4,735 14.5% 1H17 1H18 1H17 1H18 1H17 1H18 1H17 1H18 CET1 (International) 4 CET1 (APRA) LCR NSFR +90 bpts (4.0%) +4.0% +50 bpts 10.4% 135% 16.3% 131% 15.4% 9.9% 110% 106% Dec 16 Dec 17 Dec 16 Dec 17 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 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. 3 3. Pro-forma results excluding AUSTRAC penalty provision of $375m. 4. Internationally comparable capital - refer to glossary for definition.
Divisional contributions 1 Cash NPAT ($m) Cost-to- income 1H18 2 Retail Banking Services +7.7% 2,653 30.1% Business & PB +9.3% 960 35.7% Inst. Bank & Markets 38.3% 591 (13.2%) Wealth Mgt 281 +33.2% 66.1% 34.1% ASB (NZD) 575 +14.5% Bankwest 41.6% 339 +16.9% Int'l Fin Services 64.0% 54 +74.2% 4 1. Presented on a continuing operations basis. 2. To present an underlying view of the RBS result, the impact of Aussie Home Loans consolidation has been excluded.
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 1. System source RBA/APRA Banking Stats. CBA includes BWA. 2. Adjusted for new market entrants/reporting changes. 5
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. 6
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 7 civil penalty a Court may impose in the AUSTRAC proceedings. 3. Expensed. Impacts across expense categories.
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 8 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.
Loan Impairment Expense / Consumer arrears LIE (bpts) 1 Consumer arrears (90+ days) Personal Loans 1.41% Consumer Consumer Corporate 18 18 17 1.21% 1.21% Group 1.28% Credit Cards 73 1H17 2H17 1H18 1.03% Corporate 14 13 0.88% 0.89% 3 0.88% 41 1H17 2H17 1H18 Home Loans 2 0.60% 0.59% 0.53% 25 21 0.49% 19 20 0.47% 0.47% 17 16 16 0.44% 15 16 0.43% Ex WA 2 13 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H18 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 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 9 Consumer arrears includes retail portfolios of Retail Banking Services, Business and Private Banking, Bankwest and New Zealand. 2. Excludes Reverse Mortgage, Commonwealth Portfolio Loan (CBA) and Residential Mortgage Group (CBA) loans. 2. Excludes Line of Credit (Viridian LOC/Equity Line).
Provisioning $m Collective 1 Individual • Increased management 2,807 2,772 overlays 2,747 • Economic overlay 756 Overlay unchanged 711 811 1,017 980 978 140 145 Bankwest 139 212 Approximate pro-forma impact on 184 198 collective provision (Jun 17) +$850m 195 216 1,059 211 Consumer 1,112 1,078 $3.60bn $2.75bn 610 578 571 Corporate 852 779 744 AASB 139 AASB 9 CP/CRWA 0.73% 0.95% CET1 ratio decrease circa 25bps Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 1. Comparative information has been restated to conform to presentation in the current period 10
Regulatory update Committed to investment in AUSTRAC strengthening compliance ► Progress over recent years, including Program of Action ► Strengthened policies, systems and processes ($m) ► No evidence of misconduct or unethical behaviour 3,978 CAGR 1 33% 3,370 APRA Inquiry ► Progress report released – final report by 30 April 2018 2,546 1,823 ASIC review ► Engaging constructively with ASIC on all matters 911 295 Royal Commission ► Engaging actively 2 FY13 FY14 FY15 FY16 FY17 1H18 ► Improvements undertaken and ongoing at CBA Risk and Compliance Spend Cumulative 3 1. FY13 – 1H18 (annualised). 2. 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. 11 3. Comparative information has been restated to conform to presentation in the current period, and is presented on a continuing operations basis.
Capital, Funding & Liquidity Commonwealth Bank of Australia | ACN 123 123 124 | 7 February 2018
Capital, Funding and Liquidity LCR Deposit Funding CET1 NSFR “unquestionably Transaction Supported by strong Liquid assets $139bn strong” 10.5% accounts +14.7% deposits growth 135% 16.3% 131% 15.6% 110% 129% 15.4% 68% 107% 106% 67% International 66% CLF reduced 10.4 10.1 9.9 by $10.2bn Jan 17 APRA Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 Dec 16 Jun 17 Dec 17 13
Funding overview 6 months to December 2017 $bn Use of funds Source of funds New 8.9 yrs Portfolio 4.6 yrs 68% Deposit Funded 131% (12) LCR 16 Core Funding Surplus $3bn (4) (3) 3 3 (11) 7 1 Equity Long Term Long Term Short Term Collateral Customer Lending HQLA assets Other Assets 1 Issuances Maturities Funding Deposits Deposits 14 1. Reported at historical FX rates.
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