Commonwealth Bank of Australia Investor presentations Risk Management Credit Risk Alden Toevs Group Ross Griffiths Chief Credit Officer 16 th and 17 th November, 2010
Business Description Risk Management is a distinct Business Unit which reports to the CEO (and also Board Risk Committee). Risk teams embeded in BU led by BU CRO. BU CRO s and Functional heads (Credit, Market and Operational Risk) report to Group CRO. Risk Governance Structure shown in Attachment 1. 2
Credit Portfolio 30 September 2010 $m Home Loans 381,986 Other Retail 21,209 Corporate 174,415 Sovereign 33,373 Bank 36,802 647,785 3
Credit Portfolio Exposure Trends Increasing Home Loans Sovereign Bank Reducing Corporate 4
Credit Decisions Non Retail Executive Risk Committee [CEO, Group CRO, Group CFO and CCO] Review panel oversight Personal Credit Approval Authority risk officers Retail Auto decision tools Personal Credit Approval Authority risk officers 5
Credit Quality bpts 1 86 28 58 Total and New impaired assets to GLA 96 35 102 40 51 49 46 61 62 107 39 68 22 Quarter only $4,210m $4,823m $5,216m $5,464m Jun 09 Dec 09 Jun 10 Sep 10 CBA Bankwest New CBA Includes ASB 1 Bpts is for the three months to Sep 2010. Prior periods are six-monthly figures. 6
Credit Quality 2.00% 1.75% 1.50% 1.25% 1.00% 0.75% 0.50% 0.25% Impaired Assets to GLAA 0.00% 2006 HY 2006 FY 2007 HY 2007 FY 2008 HY 2008 FY 2009 HY 2009 FY 2010 HY 2010 FY CBA (ex Bankwest) NAB ANZ WBC CBA incl BankWest CBA June, Other Banks September 7
Credit Quality CBA June, Other Banks September 8
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Arrears Rate (%) Credit Quality 2.5% Home Loans 30+ Arrears 2.0% 1.5% 1.0% 0.5% 0.0% CBA 30+ (%) ASB 30+ (%) BW 30+ (%) 9
Dec-08 Jun-09 Dec-09 Jun-10 Arrears Rate (%) Credit Quality 1.2% Home Loans 90+ Arrears 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% CBA 90+ (%) ASB 90+ (%) BW 90+ (%) 10
Credit Quality Top 20 Commercial Exposures June 2010 Note 1 Note 2 Note 3 BB- A- BBB+ AA+ BBB+ BB BBB+ A- BBB A- A A A+ BBB+ A- BB+ A- BBB A A+ - 200 400 600 800 1,000 1,200 11
Number of people/ Entites Economic Conditions Insolvencies and Bankruptcies National Bankruptcy and Insolvency Trends 8000 7000 7058 6693 6649 7164 7014 7329 6770 6568 6842 6260 6000 5000 4000 3000 2000 2221 2475 2671 2408 2451 2353 2225 2204 2499 2502 1000 0 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Bankruptcies (Part IV and XI) Companies Entering External Administration 12
Economic Conditions Mining sector v other SME/Small corporate Commercial property Hot spots 13
General Bankwest non retail exposure Basle II accreditation extend for Bankwest Non-retail exposure migration Watch list S&P B- or better Troublesome S&P CCC+ to C plus D where no loss expected Impaired S&P D where loss anticipated Stress Testing 14
Risk Governance Structure Attachment 1 Risk Governance Structure Board & Committees CBA Board People & Remuneration Committee Board Performance & Renewal Committee Managing Director & Chief Executive Officer Risk Committee Audit Committee Executive Committee Group Head of Strategy Group Executive Business & Private Banking Group Executive Institutional Banking & Markets Group Executive Retail Banking Services Group Executive International Financial Services Group Executive Wealth Management Group Executive ASB Group Executive Human Resources and Group Services Group Group Executive, Enterprise Services & Chief Information Officer Chief Financial Officer General Counsel Risk Management Oversight Business Unit Risk Management Teams Risk Management Centre Audit & Assurance ALCO Institutional & Business Banking Retail Banking Services International Financial Services Wealth Management ASB Executive General Manager Market Risk Management Chief Credit Officer Internal Audit Teams Executive Risk Committee Business & Private Banking Bankwest Head of Risk Management International Financial Services Executive General Manager Portfolio Risk Management Chief Operational Risk Officer Portfolio Credit Assurance Board Committees Reporting line Head of Transformation Projects Retail Network Assurance Management Committees Functional reporting line to support the business/cfo Risk Management 15