March Quarter 2008 Trading Update

Transcription

1 Commonwealth Bank of Australia March Quarter 2008 Trading Update Investor Information Pack 15 May 2008 Commonwealth Bank of Australia ACN

2 Executive Summary Environment Global credit markets remain significantly constrained US economy continues to slow Domestic economic conditions remain resilient Credit growth slowing but still at reasonably high levels Domestic competitive conditions continue to favour larger players 2

3 Executive Summary Operating Performance Funding costs remain high, but with ongoing customer pricing adjustments FY08 funding programme completed mid-april - maturity duration maintained Good volume growth, but with system growth showing signs of slowing Market share outcomes remain positive Cost challenges continue in a tight labour market Continuing to invest for medium term growth and productivity No systemic issues in credit quality ongoing management of single names Wealth Management results impacted by market conditions 3

4 Executive Summary Outlook Conditions in global credit markets likely to remain difficult through calendar 2008 Domestic economy remains strong, but impact of global slowdown an issue Credit growth likely to moderate from high levels, but remain reasonably strong Changing competitive dynamics set to continue Material deterioration in credit cycle a key risk no signs at this stage 4

5 CBA strength in uncertain times Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 5

6 Market share outcomes remain positive Mar-07 Mar-08 Mvt Market Shares % % % Home Lending Household Deposits Business Lending Business Deposits FirstChoice Note: FirstChoice data compares Dec-07 to Mar-07 (Mar-08 market share data not yet available) 6

7 Competitive snapshot Non-bank share of home loan growth Non-ADI share of home loan system growth was negative in the quarter to March 2008 CBA home loan market share The Bank s home loan market share has increased in 12 consecutive months to Mar % 10.00% 17.8% 19.20% 19.00% 18.80% 19.0% 18.8% 18.7% 18.8% 19.0% 0.00% 18.60% 18.4% 18.5% % -14.3% 18.40% 18.20% % Q307 Q % Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Source: RBA/APRA Index Institutional growth remains strong, assisted by both organic growth and re-intermediation Jun-06 Source: RBA Institutional lending growth Sep-06 Institutional Banking RBA Business Market Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Source: RBA/APRA Business deposits are growing at around twice the rate of the peer group average 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Business deposits growth 15.9% YTD Mar % 9.8% Market Big 4 4.5% CBA Peer 1 Peer 2 Peer 3 Source: APRA Deposits non financial corporations 7

8 Home Lending Above system balance growth continued through March 12 consecutive monthly share gains Branch channel continues to grow faster than system Tier 1 branch sales outperforming Non-bank s experienced negative growth in March quarter Balance Growth % March Quarter 12 Months to March CBA System % 19.0% 19.00% 19.0% 18.8% 18.8% 18.80% 18.7% 18.60% 18.5% 18.4% 18.40% 18.20% 18.00% Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Source: RBA/APRA Home Loan Market Share Home Loan Growth by State YTD Mar-08 25% 20% 17% 18% 15% 15% 11% 11% 10% 5% 5% 0% NSW VIC Qld SA WA Total Book % 38% 29% 17% 5% 11% 100% 8

9 Home Loan Growth by Channel Branch channel continues to grow faster than system 8.2% 6.3% 5.1% 4.0% 2.1% 2.5% 2.7% 3.2% 2.7% 2.7% 3.1% 2.1% 0.5% 0.4% 1.1% Quarter to Mar-07 Quarter to Dec-07 Quarter to Mar-08 Brokers Branch Premium Total CBA Total Market Note: Broker, Branch and Premium Channel figures exclude MISA balances 9

10 Retail Deposits Above system balance growth continues Market share now over 29% - twice that of next largest competitor 30% 25% 20% Household Deposits Market Share 29% Growth profile being maintained despite competitive environment March quarter growth of 3.1% vs system 2.5% 15% 10% 5% 14% 11% 14% 10% Minimal change in portfolio balance mix Frontline changes underpin performance: 0% CBA Peer 1 Peer 2 Peer 3 Peer 4 Balance Mix Deposit Specialists Dec 07 $ Mar 08 $ New KPIs Branch Contribution Statements 2bn 19bn 11bn 2bn 18bn 13bn 33bn 42bn 32bn 46bn Balance Growth % CBA System March Quarter 12 Months to March Netbank Saver Savings Deposits Transaction Accounts Investment Accounts Business Online Saver Source: APRA 10

11 Unsecured personal lending Emphasis on profitable growth Avoiding higher risk segments such as zero rate balance transfers Pricing for risk more sophisticated decisioning around volume/risk trade-offs 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Credit Card Balance Growth 12 Months to Mar % 5.8% CBA Top 5 Focus of credit card marketing on existing customer base - cross-sell opportunity to 9 million customers Credit Card Net Account Growth Enhanced data-base marketing and analytics driving stronger net account growth -2,200 27,000 Mar-07 Qtr Mar-08 Qtr 75% existing customers 11

12 Business Lending Balance Lending growth broadly in line with system Combination of organic growth and reintermediation as debt markets have become constrained 25.0% 20.0% 15.0% 10.0% 5.0% Business Lending Growth YTD Mar % 18.5% 18.6% Market Big % Emphasis on market share growth only at the right price 0.0% CBA Peer 1 Peer 2 Peer 3 Source: APRA Lending to Non-Financial Corporations Positive margin outcomes Balance Growth % CBA System March Quarter System growth showing signs of slowing 12 Months to March Source: RBA Business Lending 12

13 Business Deposits Business Deposits continuing to grow ahead of system Particularly good growth from Local Business Banking System growth negative during the March quarter with signs of slowdown 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Business Deposits Growth 15.9% YTD Mar % 9.8% 4.5% CBA Peer 1 Peer 2 Peer 3 Market Big 4 Balance Growth % March Quarter 12 Months to March CBA System Source: APRA Deposits from Non Financial Corporations 13

14 Wealth Management March Quarter FUA and FUM outcomes impacted by global market downturn $200bn FUA Movements Mar-08 Qtr $2bn ($13b) Flows positive and relatively strong at $2.1bn $189b Funds Under Management declined 4.9% over the quarter with Australian and International Equities impacted by volatile markets (ASX200 down 16%, MSCI World Index AUD (net) down 13%) Funds Under Administration down 5.4% Dec-07 Net Flow s Investment Returns/Other $1,094m Inforce Movements Mar-08 Qtr $27m $17m Mar-08 $18m $1,156m Inforce continues to grow solidly with General Insurance experiencing strong growth Dec-07 General Insurance Personal Life Wholesale Life Mar-08 14

15 New Zealand - ASB Home lending growth and share maintained in a slowing market Good retail funding volume and share growth as savers seek competitive products, higher interest rates, and lower risk Overall Satisfaction with Main Bank ASB Peer 1 Peer 2 Peer 3 Peer 4 Business and commercial lending share increased in a strong market Source: Auckland Business School s 2007 Retail Banking Customer Survey Five new branches opened 12m Growth % ASB System ASB strengthened position as number one on overall main bank satisfaction Retail Funding Home Lending

16 CBA strength in uncertain times Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 16

17 Summary funding & liquidity Retail Funding Long Term Maturity FY09 Programme Securitisation Liquidity Competitive Position Diversification At the upper end of the peer group Portfolio duration maintained Similar to FY08 (no bubble ) No reliance Surplus of almost $10bn AA credit rating globally respected Highly diversified wholesale funding 17

18 A disciplined approach in the current environment Funding & liquidity policies approved by CBA Board and agreed with regulator (APRA) Asset and Liability Committee oversees compliance Funding management framework: Focus on diversity and flexibility Multiple funding programmes across major domestic and international markets Maturities managed to minimise future funding concentrations Limits on FX forwards market and compliance with ratio based limits Liquidity management framework: Limits based on scenario models calibrated with very conservative assumptions Wide range of liquid assets held and managed in Group Treasury Prudent liquidity buffer being maintained as a contingency in current environment 18

19 A respected name in global funding markets AA credit rating Australia s most recognised wholesale funding franchise Market leading international funding programmes Award winning Medallion securitisation programme Nikkei Bonds & Financial Weekly International Issuer of the Year 2006 International Issuer of the Year Runner Up 2007 Australian Issuer of the Year (International Bond Market) 2006 International Best Overall Borrower 2007 International Best Issuer of Structured MTNs 2007 International Best Financial Institution Borrower 2007 International Best Samurai Deal of the Year 2007 Wholesale funding approach widely recognised and highly awarded in Australia and internationally Australian Securitisation Deal of the Year

20 Funding costs have remained high Basis Risk After reaching a peak of 100bp s, basis spreads have settled at approximately 60bps Long Term Funding Costs Long term funding costs have increased significantly since December 60 bpts % 100 % 80 60% % 40 % % 1 Jul 06 1 Aug 06 1 Sep 06 1 Oct 06 1 Nov 06 1 Dec 06 1 Jan 07 1 Feb 07 1 Mar 07 1 Apr 07 1 May 07 1 Jun 07 1 Jul 07 1 Aug 07 1 Sep 07 1 Oct 07 1 Nov 07 1 Dec 07 1 Jan 08 1 Feb 08 1 Mar 08 1 Apr Jul 06 Dec 06 Jul 07 Dec 07 Mar bpts % % 0.80% Margin to BBSW 0.60% 0.40% % % Apr Dec Jul year 2 year 3 year 4 year 5 year 20

21 FY08 funding programme completed Globally respected funding operation Continued favourable access to major domestic and international markets Total FY08 long term funding requirement of $25bn - completed mid-april Continuing to execute structured deals to lower total funding costs + vanilla deals at levels considered reasonable Retail Samurai CBA the first worldwide since 2003 two transactions, over 20,000 investors FY09 funding task expected to be at similar levels to FY08 Pre-funding FY09 commenced Asset Growth $bn FY08 Key Deals Market Investor Tenor Currency m EMTN Lower Tier 2 Canada 10yr non call 5 CAD A - Fixed Global 5yr USD 1, A - Extendible USA 5yr (min 16mths) USD 2,500 Domestic Fixed & Floating Rate Australia 1yr AUD 1,750 Domestic Fixed & Floating Rate Australia 3yr AUD 1,500 EMTN Fixed Rate UK/Europe/Asia 3yr GBP 450 EMTN Floating Rate Switzerland 3yr CHF 325 Samurai Fixed & Floating Japan W'sale 5yr JPY 60,000 Samurai Fixed & Floating Japan W'sale 5yr JPY 107,100 Samurai Fixed Japan Retail 3yr JPY 80,000 FY09 Long Term Funding Programme Retail Deposit Growth 8% 10% 12% 10% % % Likely range 21

22 Long term maturity profile maintained Long Term Weighted Average Maturity Profile maintained (currently 4.1 years) Disciplined approach from Day-One Long Term Maturity Profile Weighted Average Maturity Jun-07: 4.0 years Apr years Continuing to issue across a range of durations throughout the period over 1,000 transactions completed AUD (bil) No FY09 funding bubble similar requirement to FY to 2 2 to 3 3 to 4 4 to 5 5+ Maturity June 07 April 08 22

23 Continued focus on diversification Very strong retail funding position Highly diversified wholesale funding programme No reliance on securitisation Approx. 68% private deals, 32% public 54% Source of funding as at 31 March % Short term wholesale Long term wholesale Securitisation 18% Retail 3% Geographic distribution Wholesale funding by Product as at 31 March 2008 as at 31 March % 5% 16% 12% 3% 3% 13% 44% Australia Other Asia Europe United States Japan United Kingdom Hong Kong Misc 12% 3% Structured M TN 11% 7% 18% 7% 8% 21% 7% 6% Vanilla M TN Commercial Paper Structured Finance Deals Debt Capital CDs Securitisation Bank Acceptance Deposits from other financial institutions Repo, short sell liabilities & other 23

24 Very strong retail funding position Deposit Mix 250 Deposit mix weighted towards Household Deposits 200 Other $A bn Certificates of Deposit (mainly wholesale deposits) Financial corporations Corporate deposits 50 Household deposits 0 CBA Peer 1 Peer 2 Peer 3 Source: APRA 24

25 Prudent liquidity buffer maintained as a contingency Liquid Assets Holding approximately $39bn in liquid assets, almost $10bn surplus to prudential requirements Supplemented by $12.25bn capacity within Medallion RMBS in May Nearly all liquid assets repoeligible with RBA and BoE applications pending with ECB and Fed A$ bn Liquid Assets Jun-07 Mar-08 Qtr Holdings of Medallion RMBS for contingent liquidity purposes, as at May % or $9.8bn excess Minimum prudential requirement 25

26 CBA strength in uncertain times Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 26

27 CBA is in a strong capital position Basel II advanced accreditation Lower RWA s reflects favourable portfolio composition Capital ratios well above internal target levels Capital ratios above peer group No current plans to raise additional capital 27

28 Capital ratios are at the upper end of target ranges 12% 11% 10% 9% Basel I 9.78% 9.76% 9.82% Proforma Basel II after cessation of DRP share purchase 11.25% Total Capital Target ^ Range 8% 7% 6% 7.06% 7.14% 7.41% 7.60% Tier 1 Target Range 5% 4% 3% 2% 4.70% 4.79% 4.77% 6.60% * ACE Target Range 1% 0% Dec 06 Jun 07 Dec 07 1 Jan 08 Adjusted Common Equity Tier one capital Total Capital Target Range ^ Total Capital Target Range amended from 9-11% to 10-12% to align with US Financial Holding Company (FHC) requirements. * Pro-forma Basel II ACE ratio 28

29 ACE Ratios CBA continues to measure ACE under Basel I S&P do not measure ACE under Basel II S&P moving to a new methodology timeframe unclear CBA ratio adjusted on a comparative basis (see table) ACE Ratios Ratio CBA 6.6% Peer 1 6.0% Peer 2 4.8% CBA as at 1 Jan-08. Peers as at Mar

30 Ratios compare more than favourably to the peer group even stronger on a like-for-like basis Capital ($m) Advanced Accreditation Tier 1 Capital 16,199 Total Capital 23,956 Risk Weighted Assets ($m) Credit Risk 181,836 Market-Traded Risk 4,374 Interest Rate Risk in Banking Book 1 14,788 Operational Risk 12,018 Other Total Risk Weighted Assets 213,016 Ratios Tier 1 Ratio (including 1 ) 7.60% CBA Peer 1 Peer 2 Peer 3 Peer 4 Advanced Accreditation Advanced Accreditation Basel I Basel I 1-Jan-08 Mar-08 Mar-08 Mar-08 Mar-08 Tier 1 Ratio (excluding 1 ) 8.17% 6.9% 7.4% 7.0% 6.51% Total Capital Ratio (including 1 ) 11.25% Total Capital Ratio (excluding 1 ) 12.09% 10.1% 10.1% 10.1% 9.71% 1. Effective 1 July 2008 refer next slide. Note: CBA ratios reflect position after the cessation of the DRP share purchase. 30

31 Risk Weighted Assets Interest Rate Risk in the Banking Book Risk Weighting adjustments BI vs BII The Bank s Interest Rate Risk in the Banking Book (IRRBB) component of RWA as at 1 January 2008 was $14,788m. $m Basel 1 31-Dec-07 Basel II 1-Jan-08 Diff This is built up from a risk assessment of the following items: Credit Risk Market Risk Traded Market Risk Non-Traded 268,235 4, ,837 4,374 14,788 (86,398) - 14,788 Yield curve repricing Optionality Basis Risk Embedded gains and losses Operational Risk Total - 272,609 12, ,016 12,018 (59,593) The Bank is awaiting advanced accreditation from APRA in relation to this measure (expected to be effective 1 July 2008). 31

32 Regulatory Expected Loss in excess of Eligible Provisions CBA Jan 08 $m Regulatory Expected Loss (BII) - before tax 2,087 Eligible Provision Collective provision 1,084 Specific provisions 268 Other credit provisions 28 Fair value credit adjustments 22 1,402 less tax effect impact (421) other 34 Total Eligible Provision 1,015 Regulatory Expected Loss in excess of Eligible Provision 1,072 Tier 1 deduction - 50% 536 Tier 2 deduction - 50% 536 Total Capital deduction 1,072 Reflects downturn LGD s and APRA requirements for regulatory capital 32

33 CBA strength in uncertain times Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 33

34 Sound risk management Consumer: Portfolio quality remains sound Q3 arrears up-tick likely seasonal Indicators remain under close review Commercial: Underlying portfolio quality remains sound No systemic or sector-specific issues Increased provisioning levels consistent with cycle Single-name exposures remain under close attention 34

35 Outlook Annualised Loan Impairment Expense to average Gross Loans and Acceptances 0.14% Commercial and Consumer 0.15% 0.14% Expect Full Year outcome of approximately 0.23% 0.20% 0.13% 0.15% 0.15% 0.16% 0.13% 0.16% Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 35

36 Home loan quality remains very sound Small up-tick in Q3 arrears rates consistent with seasonal trends close monitoring for any further deterioration 1.60% 1.40% 1.20% Home loan arrears Up-tick broadly consistent across States 1.00% 0.80% 0.60% Arrears rates remain low by historical standards 0.40% 0.20% 0.00% Interest rate buffer built into all customer serviceability tests Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar Days % 90+Days % Home loan arrears by State Jun-07 Sep-07 Dec-07 Mar-08 60% of customers two or more payments in advance 1.60% 1.40% 1.20% 30+ Days % 1.00% Not participating in higher risk segments 0.80% 0.60% 0.40% No sub-prime or non-recourse mortgages 0.20% 0.00% Nov- 06 Dec- 06 Jan- 07 Feb- 07 Mar- 07 Apr- 07 May- 07 Jun- 07 Jul-07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 NSW/ACT Qld SA/NT Vic/Tas WA Dec- 07 Jan- 08 Feb- 08 Mar

37 Home Lending Portfolio LVR ~50% based on original property value, or ~40% based on current property value. LVR on new loans ~65% Low-doc loans: ~3% of portfolio balances Loans >60% LVR must be insured No loans >80% LVR New mortgagee in possession cases Portfolio Profile Dec-07 Balance Mix Owner-Occupied 55% Investment 34% Line-of-Credit 11% Variable 65% Fixed 32% Honeymoon 3% Low Doc % 3% Originations Proprietary 61% Third Party 39% Mar-08 55% 34% 11% 65% 33% 2% 3% 62% 38% 0 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 37

38 Unsecured personal lending Small seasonal increases in Q3 arrears rates in both the credit card and personal loan portfolios close monitoring for any further deterioration 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% Credit card arrears 1.00% Not participating in zero rate balance transfer segment 0.50% 0.00% Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Enhanced scorecards enabling more sophisticated risk/volume decisioning 4.00% 30+ Days % 90+Days % Personal loan arrears 3.60% Pricing for risk providing volume upside without portfolio deterioration 3.20% 2.80% 2.40% 2.00% 1.60% Poorer quality older accounts being replaced by better quality newer accounts 1.20% 0.80% 0.40% 0.00% Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 38

39 Unsecured personal lending vintage analysis Credit Cards Personal Loans 16% 7.0% 14% 6.0% 12% 5.0% % 30+ Days Arrears 10% 8% 6% % 30+ Days Arrears 4.0% 3.0% 4% 2.0% 2% 1.0% 0% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec % Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 Origination Month Origination Month 3 Months on Books 6 Months on Books 12 Months on Books 3 Months on Book 6 Months on Book 12 Months on Book General trend shows improved arrears rates over recent years Steepest declines in arrears correspond to dates new scorecards were introduced Analysis shows slight increase in early arrears from new business booked post Aug-07 being closely monitoring 39

40 Margin Lending No exposure to stock lending sector In-house margin lending book is good quality - comprehensive portfolio review conducted mid-2007 with regular updates Robust processes and management systems in place Low gearing levels Margin calls Mar-08 Qtr: Margin Lending Summary Mar-08 Quarter Portfolio Size ~$8bn Aggregate Gearing 35% Margin Calls ~16,000 Forced sales <4% Relatively small number Few customers impacted Forced sales in less than 4% of margin calls 40

41 Impaired Assets Total and New Impaired Assets $m # Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Total Impaired Assets New Impaired Assets (LHS) New Impaired Assets > $1m (LHS) Number of Clients > $1m (RHS) Total Number of New Clients (RHS) Includes both Consumer and Commercial portfolios 41

42 Impaired Assets and Provision Coverage $m 1,600 as at Mar % 1, % 1, % 1, % % % % % - CBA Peer 1 Peer 2 Peer 3 Gross Impaired Assets Net Impaired Assets Individually assessed provision as % of impaired assets (RHS) 0.0% 42

43 Portfolio Composition CBA Peer 1 Peer 2 Peer 3 Unsecured Retail 3% 5% 4% 5% Margin Lending 2% 1% 1% 1% Australian Home Loans 46% 37% 33% 29% Australian Commercial 18% 24% 23% 21% Overseas and Other 30% 32% 39% 45% Total 100% 100% 100% 100% 43

44 Expected loss Expected Loss by Business Unit EL vs Individual Provision Charge As at Mar-08 1,400.0 Expected Loss IAP Charge - annualised 1, ,000.0 Retail Banking Services 0.23% Premium Business Services 0.27% $m International Financial Services 0.21% Group 0.24% HY06 FY06 HY07 FY07 HY08 3Q08 Period Note: Expected loss focuses on the anticipated longer term loss rates and is less volatile than IFRS credit loss provisioning. Factors are under review to further incorporate enhancements from Basel II work and modelling on through-the-cycle losses. Reflects through-the-cycle average LGD s 44

45 Top 20 commercial exposures all investment grade Top 20 Commercial Exposures Top 20 as % of Total Committed Exposures $m as at Mar-08 BBB+ A- A- 4.0% BBB- A AA- A- A- 3.5% 3.0% 2.5% 2.0% A A- BBB- A+ BBB 1.5% 1.0% 0.5% 0.0% BBB BBB- Jun-03 Jun-04 Jun_05 Jun-06 Jun-07 Dec-07 Mar-08 BBB- BBB- A BBB+ BBB ,000 1,200 1,400 45

46 Over 70% of commercial risk-rated exposures are investment grade 100% Commercial Risk-Rated Exposures 80% 60% 40% 20% 0% 31% 29% 30% 29% 20% 20% 20% 19% 18% 18% 19% 19% 30% 32% 31% 33% 31/12/ /06/ /12/ /03/2008 International 13% AAA to AA- A+ to A- BBB+ to BBB- other Total Exposures by Geography Commercial & Consumer Dec 07 Mar 08 International 16% 71% investment grade New Zealand 13% New Zealand 12% Australia 74% Australia 72% *Total exposures = balance for uncommitted facilities; greater of limit or balance for committed facilities. Includes settlement risk. 46

47 Total exposures by industry Dec-07 Mar-08 Other, 5.40% Transport & storage, 1.70% Retail & Wholesale, 2.80% Property 6.9% Mining 1.4% Business Services 0.8% Agriculture 2.2% Construction 0.9% Culture & Recreation 1.0% Finance - Banks 11.5% Energy 1.8% Government 3.3% Health 1.0% Agriculture 2.3% Construction 0.9% Other, 4.00% Transport & storage, 1.70% Retail & Wholesale, 2.7% Property 6.9% Mining 1.4% Business Services 0.9% Culture & Recreation 1.0% Finance - Banks 13.2% Energy 1.7% Government 3.3% Health 0.9% Finance - other 9.5% Finance - other 9.0% Consumer 46.9% Manufacturing 2.9% Consumer 45.9% Manufacturing 3.0% *Total exposures = balance for uncommitted facilities; greater of limit or balance for committed facilities. Includes settlement risk. 47

48 Counterparty and other exposures US Sub-prime CDOs Asset Backed Commercial Paper (ABCP) Conduits Stock Lending Lenders Mortgage Insurance Hedge Funds No direct exposures Like peers, the Bank has an indirect exposure to Country-Wide in the U.S (~$300m). No direct exposure to unhedged CDO or CLO transactions Small number of low $ value exposures which are fully hedged Single AUD$75m AAA CDO held indirectly via its conduit, PIE, maturing Jun-08 Two Bank sponsored ABCP conduits with standby facilities drawn to $1.4bn Highly rated assets predominantly AAA, some AA Standby facilities to other conduits of $1.2bn, currently drawn to $356m No material exposure to stock-lending sector Mortgage insurance is outsourced to Genworth (98%) and PMI (2%) Under extreme stress conditions, insured loan expected loss would be ~$300m. No direct lending exposure to hedge funds Limited exposure to hedge funds via FX and interest rate swap products Fund of hedge funds exposure to diversified funds that invest in hedge funds of ~$160m 48

49 CBA strength in uncertain times Strong competitive position Prudent funding and liquidity management Strong capital position Sound risk management Low-risk, domestically focussed strategy 49

50 Recent highlights Customer Service Customer satisfaction continuing to trend higher through Mar-08 Overall satisfaction at 10 year highs New design branches achieving peer group best practice satisfaction Business Banking Good volume and market share outcomes Very strong customer satisfaction gains over 12 months to March Strong growth in business deposits Technology and Operational Excellence IT cost savings and efficiency targets on track Core Banking Modernisation announced April 28 Trust and Team Spirit Culture survey gains consolidated Continued focus on engagement Profitable Growth Net FUM flows impacted by markets, but still relatively strong Encouraging improvements in group-wide referrals Branch licence in Vietnam 50

51 Customer satisfaction continues to improve Overall Customer Satisfaction 1 Business Customer Satisfaction 2 Customer Satisfaction levels improving, but with significant scope for further gains Largest improvement over the past 12 months % main financial institution customers 85% 80% 75% 70% 65% CBA ANZ Commonwealth NAB Westpac Customer Satisfied Mar 08 % Months Movement 12 Months % Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 6 monthly average St George All Financial Institutions Source: Roy Morgan Research. Aust MFI Population 14+, % Very" or "Fairly Satisfied" 2 Source: TNS Business Finance Monitor Mar 08. Customer satisfaction with MFI businesses with annual turnover to $100m (ex Agribusinesses). All time periods refer to a 12 month rolling average. Percentage point change refers to the increase / decrease of each bank s customers who are satisfied. Satisfaction is based on business customers who said they were Very or Fairly Satisfied with their relationship with their MFI 51

52 Appendix Economic Indicators 52

53 Key Economic Forecasts 2003/ / / / / /09 (a) (a) (a) (a) (f) (f) Economic Activity Private final demand Of which: Household spending Dwelling investment Business investment Public final demand Domestic final demand Inventories (contrib to GDP) GNE Exports Imports Net exports (contrib to GDP) GDP Prices & Wages CPI Underlying CPI AWOTE WPI Real h/hold disposable income Labour Market Employment Unemployment rate External Accounts Current Account: $bn % of GDP

54 Economic Indicators - Housing H O U S I N G C R E D I T % ( % c h a n g e ) % A nnual HOUSING INDICATORS (annual % change) % % 30 9 R e n t s (rh s ) Q uarterly 5 0 Sep-96 Sep-99 Sep-02 Sep-05 Sep H o use prices (lh s ) Sep-90 Sep-94 Sep-98 Sep-02 Sep H O U S I N G D E M A N D & S U P P L Y '0 0 0 ' D e m a n d %pa 50 D E B T & H O U S E S A L E S H /ho ld interest paym ents (% o f in c o m e, in v e rte d ) (adv 2 qtrs, rhs) A n n ch S u p p ly S e p S e p S e p S e p S e p "Sales" ac tiv ity (lh s ) Sep-79 Sep-85 Sep-91 Sep-97 Sep % cash

55 Economic Indicators - Business B U S I N E S S C R E D I T ( a n n u a l % c h a n g e ) % % B usiness credit (lh s ) 26 CAPEX & CAPACITY USE %pa % C a p a c it y u t ilis a t io n (rh s ) B u s in e s s in v e s t m e n t (rh s ) C B A (f) Sep-88 Sep-92 Sep-96 Sep-00 Sep-04 Sep-08 C B A -A C C I S U R V E Y : C A P E X P L A N S Index ( in d e x > 5 0 in d ic a t e s r is e ) In d e x 60 B uilding & structures P la n t & equip * S o u r c e : A B S / C B A / N A B / W B C T o t a l capex (lh s ) 1959/ / / / / /05 FINANCE (net % reporting harder to obtain) % % *So urce: A C C I-W B C Expected eco no m ic perfo rm ance Sep-00 Sep-02 Sep-04 Sep Sep-96 Sep-99 Sep-02 Sep

56 Economic Indicators Other Personal 12 8 CONSUM ER FUNDING (change s as a % of GDP) % % C o nsum er spending In c o m e & "o ther" C B A (f) 12 8 %pa DEBT & PERSONAL CREDIT H /ho ld interest paym ents (% o f in c o m e, in v e rt e d ) (adv 7 qtrs, rhs) Ann ch C redit Saving ((+) ru n d o w n /(-)b u ild u p ) 1989/ / / / / / O ther pers o nal credit (lhs ) Sep-79 Sep-85 Sep-91 Sep-97 Sep % cash IS NOW A GOOD TIM E TO BUY ( n e t % s a y in g y e s ) % % a car? USE OF "SAVINGS" (% s aying pay off de bt) % % average S o u r c e : M e lb o u r n e In s t it u t e a m ajo r ho useho ld it e m? Sep-97 Sep-01 Sep So urce: M elb o urne Institute 0 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep

57 Commonwealth Bank of Australia March Quarter 2008 Trading Update Investor Information Pack 15 May 2008 Commonwealth Bank of Australia ACN