Commonwealth Bank of Australia Investor presentations
Group Treasury Lyn Cobley Group Treasurer
16th and 17th November, 2010
Agenda Some reflections on the GFC Capital Funding position Outlook
2
Australian banks and the GFC
Revolution in international banking industry has been well
documented
In Australia, there has been less of a revolution. No banks have
been nationalised or bankrupted.
Australian banks have experienced major paradigm shifts,
especially in all areas of bank treasuries and in deposit funding costs.
3
Funding – a long term issue for Australia Systemic Issues
CBA Position
Credit growth > deposit growth
Like peers, step-change in funding costs
Funding task > domestic capacity
Access to debt markets remains strong
Global funding increasingly expensive
CBA well regarded and stable AA rating
Regulatory change likely manageable
Prudent management:
Assets retained on bank balance sheets
Australia to continue to attract investment: ►
Diversification
►
Extending term maturity
►
Pre-funding
AAA rated fast growing economy
►
►
Australian banks well-regarded
Working with ABA, Treasury and regulators to address systemic issues
4
Capital Tier 1 Capital Ratio 9.2%
Tier 1 capital movement All movements in basis points
9.52%
Dec 09
Organic growth
Sub total
On-market share purchase (DRP)
Jun 10
Tier 1 UK Comparison
Dec 09
Jun 10
Basel II Tier 1 Capital
14.00%
Europe Average Tier 1 : 11.4% Europe Average Core Tier 11: 9.2%
12.8%
13.00%
0.5%
12.00%
0.9%
Jun 10 CBA (UK FSA)
Tier 1 European comparison*
Tier 1 Capital
0.5%
P
0.3%
1.4%
11.00% 10.00%
Jun 09
9.15%
9.00% 8.00% June 2010 Actual (APRA)
RWA treatment (Mortgages)
Future Dividends
IRRBB
Value of in force deductions
Other
June 2010 Actual (UK FSA)
Core Tier 1
* 1
Top 15 European banks by market capitalisation as at July 1, 2010. Source: latest public disclosure and market updates Reflects Tier 1 Capital less hybrid Tier 1 Instruments
Hybrids
P
Pro-forma
5
Deposits Customer Deposit Funding
58% Deposit Funded $bn
Household Deposits – Market Share
RBS Deposit Mix Jun 10
Jun 09
$bn
$bn
Netbank saver
Investment accounts
Business online saver
Transaction accounts
Savings deposits Average balances
* Percent of funding excluding equity; no netting of surplus liquids
6
CBA – Wholesale Funding 58% Deposit Funded
Wholesale Funding by Product $bn
FY10 Issuance
Wholesale Funding by Region $m 8,406
7,938
6,994
6,675
5,846 4,585 3,117
3,051 3,023
2,627 293 616
Note: AUD, USD & EURO Public benchmark deals are fully allocated to their respective currency locations
7
Strong funding and liquidity positions Funding tenor 1
Long Term Funding 9 8 7 6 5 4 3 2 1 0
60.00 50.00 40.00
Billions
Billions
Long Term Funding Year to Date
Ye ars
30.00 20.00 10.00
Jun 09
Unguaranteed
Guaranteed
Cumulative
9%
Recent transactions
AUD
0%
17%
AUD GG USD
14%
1%
USD GG EUR JPY
16%
Other
42%
1
Jun 10
Funding Task (RHS)
FY2010 Issuance by Currency
1%
Dec 09
DATE
Amt
Tenor
Feb 2010
€1,000
10 yr
Mar 2010
A$1,500
3 yr
Mar 2010
USD3,500
3, 5 & 10yr
Apr 2010
CAD500
3 and 10yr
Apr 2010
GBP500
5.5yr
Other GG
Weighted Average Maturity. Includes all deals with first call date or contractual maturity of 12 months or greater
8
Terming out is necessary … Funded assets FY09
Deposits
Wholesale Funding +$3bn Short term
Equity
Funded assets FY10
Long term
+1.46% x 58%
$bn
Wholesale Funding*
Funded assets includes securitisation, bank acceptances of customers and accounting gross-ups * Long term and short term. Includes basis risk
Increased funding cost +1.22%
Deposit Funding
+0.89% x 42%
9
….. But expensive ….. Good volumes driving income growth
Group NIM - 12 months 6 months annualised (basis points)1 [ap p37] bpts
Total Operating Income
6%
Funding Costs higher in 2H10 bpts $m
Jun 09
Net Interest Net Interest Fee Income - Volume Income - Margin changes