March Quarter 2008 Trading Update - CommBank · Market share outcomes remain positive ... Avoiding...

Commonwealth Bank of Australia ACN 123 123 124

Investor Information Pack15 May 2008

Commonwealth Bank of Australia

March Quarter 2008 Trading Update



2

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

Executive Summary

3

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

Executive Summary

4

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

Executive Summary

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

6

Market share outcomes remain positive

13.84

12.73

29.04

18.97

Mar-08%

1.38

0.09

0.27

0.61

Mvt%

12.46

12.64

28.77

18.36

Mar-07%

FirstChoice

Business Lending

Business Deposits

Household Deposits

Home Lending

Market Shares

8.39 9.60 1.21

Note: FirstChoice data compares Dec-07 to Mar-07 (Mar-08 market share data not yet available)

7

15.9%

4.5%

9.8%

5.0%Big 4Market

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

CBA Peer 1 Peer 2 Peer 3

Source: APRA – Deposits non financial corporations

YTD Mar-08

Competitive snapshot

Non-ADI share of home loan system growth was negative in the quarter to March 2008

The Bank’s home loan market share has increased in 12 consecutive months to Mar-08

Institutional growth remains strong, assisted by both organic growth and re-intermediation

Business deposits are growing at around twice the rate of the peer group average

18.8%

18.5%

18.4%

18.7%

18.8%

19.0%19.0%

18.00%

18.20%

18.40%

18.60%

18.80%

19.00%

19.20%

Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

-14.3%

17.8%

-20.00%

-10.00%

0.00%

10.00%

20.00%

Q307 Q308

Institutional BankingRBA Business Market

0.901.001.101.201.301.401.501.60

Jun-

06

Sep-

06

Dec

-06

Mar

-07

Jun-

07

Sep-

07

Dec

-07

Mar

-08

Inde

x

CBA home loan market shareNon-bank share of home loan growth

Institutional lending growth Business deposits growthSource: RBA/APRA Source: RBA/APRA

Source: RBA

8

5%

11%

17%15%

18%

11%

0%

5%

10%

15%

20%

25%

N S W V IC Q ld S A W A T o ta l

Home Lending

18.8%

18.5%

18.4%

18.7%

18.8%

19.0%19.0%

18.00%

18.20%

18.40%

18.60%

18.80%

19.00%

19.20%

Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

YTD Mar-08

Book % 38% 29% 17% 5% 11% 100%

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

11.315.212 Months to March

2.13.1March Quarter

SystemCBABalance Growth %

Home Loan Market Share

Home Loan Growth by State

Source: RBA/APRA

9

Home Loan Growth by Channel

5.1%

8.2%

6.3%

2.1%

3.2%2.7%

0.5% 0.4%

2.5%

4.0%

3.1%2.7%

2.1%

1.1%

2.7%

Quarter to Mar-07 Quarter to Dec-07 Quarter to Mar-08

Brokers Branch Premium Total CBA Total Market

Branch channel continues to grow faster than system

Note: Broker, Branch and Premium Channel figures exclude MISA balances

10

Retail Deposits

Above system balance growth continues

Market share now over 29% - twice that of next largest competitor

Growth profile being maintained despite competitive environment – March quarter growth of 3.1% vs system 2.5%

Minimal change in portfolio balance mix

Frontline changes underpin performance:

“Deposit Specialists”

New KPIs

Branch Contribution Statements


2.53.1March Quarter

SystemCBABalance Growth %Netbank Saver Investment AccountsSavings Deposits Business Online SaverTransaction Accounts

2bn 19bn11bn

42bn33bn

Dec 07$

Mar 08$

2bn 18bn 13bn

46bn32bn

29%

14%11%

14%

10%

0%

5%

10%

15%

20%

25%

30%

CBA Peer 1 Peer 2 Peer 3 Peer 4

Household Deposits Market Share

Balance Mix

Source: APRA

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

Focus of credit card marketing on existing customer base - cross-sell opportunity to 9 million customers

Enhanced data-base marketing and analytics driving stronger net account growth

12 Months to Mar-08

5.6% 5.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

CBA Top 5

Mar-07Qtr

Mar-08Qtr

Credit Card Balance Growth

Credit Card Net Account Growth

-2,200 27,000

75% existing

customers

12

Business Lending

Balance Lending growth broadly in line with system

Combination of organic growth and re-intermediation as debt markets have become constrained

Emphasis on market share growth onlyat the right price

Positive margin outcomes

System growth showing signs of slowing 21.422.212 Months to March

2.82.4March Quarter


Business Lending Growth

Source: RBA Business Lending

18.5% 18.6%

21.0%

12.8%

MarketBig 4

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%


YTD Mar-08

Source: APRA Lending to Non-Financial Corporations

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

15.9%

4.5%

9.8%

5.0%Big 4Market

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%


YTD Mar-08


-0.50.4March Quarter


Source: APRA Deposits from Non Financial Corporations

Business Deposits Growth

14

Wealth Management

March Quarter FUA and FUM outcomes impacted by global market downturn

Flows positive and relatively strong at $2.1bn

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%

Inforce continues to grow solidly with General Insurance experiencing strong growth

FUA Movements Mar-08 Qtr

Inforce Movements Mar-08 Qtr

Dec-07 Net Flow s InvestmentReturns/Other

Mar-08

$200bn$2bn ($13b)

$189b

Dec-07 GeneralInsurance

Personal Life Wholesale Life Mar-08

$1,094m

$27m$17m

$18m $1,156m

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

Business and commercial lending share increased in a strong market

Five new branches opened

ASB strengthened position as number one on overall main bank satisfaction

Source: Auckland Business School’s 2007 Retail Banking Customer Survey

6.6

6.8

7

7.2

7.4

7.6

7.8

ASB Peer 1 Peer 2 Peer 3 Peer 4

11.111.4Home Lending

12.013.8Retail Funding

SystemASB12m Growth %

Overall Satisfaction with Main Bank

16







17

Summary – funding & liquidity

“AA” credit rating – globally respectedCompetitive Position

Surplus of almost $10bn Liquidity

Highly diversified wholesale funding Diversification

No reliance

Similar to FY08 (no “bubble”)

Portfolio duration maintained

At the upper end of the peer group

Securitisation

FY09 Programme

Long Term Maturity

Retail Funding

18

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

A disciplined approach in the current environment

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

Wholesale funding approach widely recognised and highly awarded in Australia and internationally

“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” 2007Nikkei Bonds &Financial Weekly

“Australian Securitisation Deal of the Year” 2006

20

20

40

60

80

100

42 42

bpts

15%

%

%

%

%

%

1 Ju

l 06

1 Au

g 06

1 Se

p 06

1 O

ct 0

6

1 N

ov 0

6

1 D

ec 0

6

1 Ja

n 07

1 Fe

b 07

1 M

ar 0

7

1 Ap

r 07

1 M

ay 0

7

1 Ju

n 07

1 Ju

l 07

1 Au

g 07

1 Se

p 07

1 O

ct 0

7

1 N

ov 0

7

1 D

ec 0

7

1 Ja

n 08

1 Fe

b 08

1 M

ar 0

8

1 Ap

r 08

Jul 06 Dec 06 Jul 07 Dec 07 Mar 08

60

15

60

17141383

5061

38

23

68

110103

95

75

30

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1 year 2 year 3 year 4 year 5 year

Mar

gin

to B

BSW

31 Dec 07

1 Jul 07

20

40

60

80

100

120

bpts

28 Apr 08

After reaching a peak of 100bp’s, basis spreads have settled at approximately 60bps

Long term funding costs have increased significantly since December

Funding costs have remained high

Basis Risk Long Term Funding Costs

21

8% 10% 12%

10% 27 25 22

12% 28 26 24

14% 29 28 25

Ass

et

Gro

wth

Retail Deposit Growth$bn

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 commencedLikely range

FY08 Key Deals

FY09 Long Term Funding Programme

Market Investor Tenor Currency m

EMTN Lower Tier 2 Canada 10yr non call 5 CAD 300 144A - Fixed Global 5yr USD 1,000 144A - 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

22

-

2

4

6

8

10

12

14

16

18

20

1 to 2 2 to 3 3 to 4 4 to 5 5+

Maturity

AU

D (b

il)

June 07 April 08

Weighted Average MaturityJun-07: 4.0 yearsApr-08 4.1 years

Long term maturity profile maintained

Long Term Weighted Average Maturity Profile maintained (currently 4.1 years)

Disciplined approach from “Day-One”

Continuing to issue across a range of durations throughout the period – over 1,000 transactions completed

No FY09 funding “bubble” –similar requirement to FY08.

Long Term Maturity Profile

23

Continued focus on diversification

as at 31 March 2008Very strong retail funding position

Highly diversified wholesale funding programme

No reliance on securitisation

Approx. 68% private deals, 32% public

25%

18%

3%

54%

Short term wholesale

Long term wholesale

Securitisation

Retail

11%

18%

8%

7%6%

21%

7%

7%

12%3% Structured M TN

Vanilla M TN

Commercial Paper

Structured Finance Deals

Debt Capital

CDs

Securitisation

Bank Acceptance

Deposits from other financial institutions

Repo, short sell liabilities & other

Source of funding

Wholesale funding by Product

44%

13%

12%

16%

5%

4%3%

3%

Australia

Other Asia

Europe

United States

Japan

United Kingdom

Hong Kong

Misc

Geographic distributionas at 31 March 2008as at 31 March 2008

24

Very strong retail funding position

0

50

100

150

200

250$A

bn

Household deposits

Corporate deposits

Financial corporations

Certificates of Deposit (mainly wholesale deposits)

Other

CBA Peer 1 Peer 3Peer 2

Source: APRA

Deposit Mix

Deposit mix weighted towards Household Deposits

25

Prudent liquidity buffer maintained as a contingency

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 repo-eligible with RBA and BoE –applications pending with ECB and Fed

Minimum prudential

requirement

35% or $9.8bn excess

Holdings of Medallion RMBS for contingent

liquidity purposes, as at May 2008

Liquid Assets

0

10

20

30

40

50

60

A$

bn L

iqui

d A

sset

s

Jun-07 Mar-08 Qtr

26







27

CBA is in a strong capital position

No current plans to raise additional capital

Capital ratios above peer group

Capital ratios well above internal target levels

Lower RWA’s reflects favourable portfolio composition

Basel II advanced accreditation

28^ 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

Dec 06

Adjusted Common EquityTier one capital

Total CapitalTarget Range

Jun 07 Dec 07

Basel I

Total Capital Target Range

Tier 1 Target Range

ACE Target Range

Proforma Basel IIafter cessation of

DRP share purchase

1 Jan 08

^

7.06% 7.14% 7.41% 7.60%

9.78% 9.76% 9.82%

11.25%

4.70% 4.79%6.60%

4.77%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

*

Capital ratios are at the upper end of target ranges

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)

4.8%Peer 2

6.0%Peer 1

6.6%CBA

Ratio

CBA as at 1 Jan-08. Peers as at Mar-08.

ACE Ratios

30

Ratios compare more than favourably to the peer group –even stronger on a “like-for-like” basis

1. Effective 1 July 2008 – refer next slide. Note: CBA ratios reflect position after the cessation of the DRP share purchase.

CBA Peer 1 Peer 2 Peer 3 Peer 4Advanced

AccreditationAdvanced

AccreditationAdvanced

Accreditation Basel I Basel I1-Jan-08 Mar-08 Mar-08 Mar-08 Mar-08

Capital ($m)

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 Book1 14,788 Operational Risk 12,018 Other Total Risk Weighted Assets 213,016 Ratios Tier 1 Ratio (including1) 7.60%

Tier 1 Ratio (excluding1) 8.17% 6.9% 7.4% 7.0% 6.51% Total Capital Ratio (including1) 11.25%

Total Capital Ratio (excluding1) 12.09% 10.1% 10.1% 10.1% 9.71%

31

Risk Weighted Assets

Diff1-Jan-0831-Dec-07$m

(59,593)213,016272,609Total12,01812,018-Operational Risk14,78814,788-Market Risk – Non-Traded

-4,3744,374Market Risk – Traded(86,398)181,837268,235Credit Risk

Basel IIBasel 1

The Bank’s Interest Rate Risk in the Banking Book (IRRBB) component of RWA as at 1 January 2008 was $14,788m.

This is built up from a risk assessment of the following items:

Yield curve repricingOptionalityBasis RiskEmbedded gains and losses

The Bank is awaiting advanced accreditation from APRA in relation to this measure (expected to be effective 1 July 2008).

Interest Rate Risk in the Banking Book Risk Weighting adjustments BI vs BII

32

Regulatory Expected Loss in excess of Eligible Provisions

CBAJan 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

33







34


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

35

Outlook

Expect Full Year outcome of

approximately 0.23%

Annualised Loan Impairment Expense to average Gross Loans and Acceptances

Commercial and Consumer

Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07

0.13%0.15% 0.15% 0.16%

0.13%0.16%

0.15% 0.14%0.14%0.20%

36

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

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

Dec-07

Jan-08

Feb-08

Mar-08

NSW/ACT Qld SA/NT Vic/Tas WA

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

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

90+Days %30+ Days %

Home loan quality remains very sound

Small up-tick in Q3 arrears rates consistent with seasonal trends – close monitoring for any further deterioration

Up-tick broadly consistent across States

Arrears rates remain low by historical standards

Interest rate buffer built into all customer serviceability tests

60% of customers two or more payments in advance

Not participating in higher risk segments

No sub-prime or non-recourse mortgages

30+ Days %

Home loan arrears

Home loan arrears by State

37

Home Lending

0

20

40

60

80

100

Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08

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

39%

61%

3%

3%

32%

65%

11%

34%

55%

Dec-07

3%Low Doc %

Balance Mix

Originations

62%Proprietary

38%Third Party

33%Fixed

65%Variable

2%Honeymoon

11%Line-of-Credit

34%Investment

55%Owner-Occupied

Mar-08

Portfolio Profile

New mortgagee in possession cases

38

0.00%

0.40%

0.80%

1.20%

1.60%

2.00%

2.40%

2.80%

3.20%

3.60%

4.00%

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

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

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

90+Days %30+ Days %

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

Not participating in zero rate balance transfer segment

Enhanced scorecards enabling more sophisticated risk/volume decisioning

Pricing for risk providing volume upside without portfolio deterioration

Poorer quality older accounts being replaced by better quality newer accounts

Credit card arrears

Personal loan arrears

39

Unsecured personal lending – vintage analysis

0%

2%

4%

6%

8%

10%

12%

14%

16%

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

Origination Month

% 3

0+ D

ays

Arr

ears

3 Months on Books 6 Months on Books12 Months on Books

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07

Origination Month

% 3

0+ D

ays

Arr

ears

3 Months on Book 6 Months on Book12 Months on Book

General trend shows improved arrears rates over recent yearsSteepest declines in arrears correspond to dates new scorecards were introducedAnalysis shows slight increase in early arrears from new business booked post Aug-07 –

being closely monitoring

Personal LoansCredit Cards

40

Margin Lending

Portfolio Size ~$8bn

Aggregate Gearing 35%

Margin Calls ~16,000

Forced sales <4%

Mar-08 Quarter

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:

Relatively small number

Few customers impacted

Forced sales in less than 4% of margin calls

Margin Lending Summary

41

Impaired Assets

Total and New Impaired Assets

Includes both Consumer and Commercial portfolios

$m #

0

100

200

300

400

500

600

700

Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-080

20

40

60

80

100

120

140

160

180

200

Total Impaired Assets New Impaired Assets (LHS) New Impaired Assets > $1m (LHS)Number of Clients > $1m (RHS) Total Number of New Clients (RHS)

42

Impaired Assets and Provision Coverage

-

200

400

600

800

1,000

1,200

1,400

1,600

CBA Peer 1 Peer 2 Peer 30.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Gross Impaired Assets

Net Impaired AssetsIndividually assessed provision as % of impaired assets (RHS)

as at Mar-08$m

43

Portfolio Composition

100%100%100%100%Total

45%39%32%30%Overseas and Other

21%23%24%18%Australian Commercial

29%33%37%46%Australian Home Loans

1%1%1%2%Margin Lending

5%4%5%3%Unsecured Retail

Peer 3Peer 2Peer 1CBA

44

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

HY06 FY06 HY07 FY07 HY08 3Q08

Period

$m

Expected Loss IAP Charge - annualised

Retail Banking Services 0.23%Premium Business Services 0.27%International Financial Services 0.21%Group 0.24%

As at Mar-08

Expected loss

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.

Expected Loss by Business Unit EL vs Individual Provision Charge

Reflects through-the-cycle average LGD’s

45

Top 20 commercial exposures all investment grade

$m as at Mar-08

Top 20 Commercial Exposures Top 20 as % of Total Committed Exposures

0 200 400 600 800 1,000 1,200 1,400

BBB+

A-

A-

BBB-

A

AA-

A-

A-

A

A-

BBB-

A+

BBB

BBB

BBB-

BBB-

BBB-

A

BBB+

BBB-

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Jun-

03

Jun-

04

Jun_

05

Jun-

06

Jun-

07

Dec-

07

Mar

-08

46

Over 70% of commercial risk-rated exposures are investment grade

30% 32% 31% 33%

18% 18% 19% 19%

20% 20% 20% 19%

31% 29% 30% 29%

0%

20%

40%

60%

80%

100%

31/12/2006 30/06/2007 31/12/2007 31/03/2008

AAA to AA- A+ to A- BBB+ to BBB- other

71% investment

grade

Commercial Risk-Rated Exposures

*Total exposures = balance for uncommitted facilities; greater of limit or balance for committed facilities. Includes settlement risk.

Australia 74%

International 13%

New Zealand 13%

Australia 72%

New Zealand 12%

International 16%

Total Exposures by Geography

Dec 07 Mar 08Commercial & Consumer

47

Total exposures by industry

Property 6.9%

Transport & storage, 1.70%

Retail & Wholesale, 2.80%

Other, 5.40%

Mining 1.4%

Finance - Banks 11.5%

Government 3.3%

Health 1.0%

Finance - other 9.5%

Manufacturing 2.9%

Consumer 46.9%

Energy 1.8%

Business Services 0.8%

Agriculture 2.2% Construction 0.9%

Culture & Recreation 1.0%

Dec-07 Mar-08

Property 6.9%

Transport & storage, 1.70%

Retail & Wholesale, 2.7%

Other, 4.00%

Mining 1.4%

Finance - Banks 13.2%

Government 3.3%

Health 0.9%

Finance - other 9.0%

Manufacturing 3.0%

Consumer 45.9%

Energy 1.7%

Business Services 0.9%

Agriculture 2.3% Construction 0.9%

Culture & Recreation 1.0%

*Total exposures = balance for uncommitted facilities; greater of limit or balance for committed facilities. Includes settlement risk.

48

Counterparty and other exposures

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

Hedge Funds

Mortgage insurance is outsourced to Genworth (98%) and PMI (2%)

Under “extreme stress” conditions, insured loan expected loss would be ~$300m. Lenders Mortgage

Insurance

No material exposure to stock-lending sectorStock Lending

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

Asset Backed

Commercial Paper

(ABCP) Conduits

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

CDOs

No direct exposures

Like peers, the Bank has an indirect exposure to Country-Wide in the U.S (~$300m).US Sub-prime

49







50

Customer Service Customer satisfaction continuing to trend higher through Mar-08Overall satisfaction at 10 year highsNew design branches achieving peer group best practice satisfaction

Business Banking Good volume and market share outcomesVery 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 trackCore Banking Modernisation announced April 28

Trust and Team Spirit Culture survey gains consolidatedContinued focus on engagement

Profitable Growth Net FUM flows impacted by markets, but still relatively strongEncouraging improvements in group-wide referralsBranch licence in Vietnam

Recent highlights

51

Customer Satisfaction levels improving, but with significant scope for further gains

60%

65%

70%

75%

80%

85%

Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08

6 monthly average

% m

ain

finan

cial

inst

itutio

n cu

stom

ers

CBA

4.94.284.2St George

6.25.077.7All Financial Institutions

8.15.877.0Westpac

12 Months

6 MonthsMar 08 %

73.3

71.1

80.2

Customer Satisfied

2.7

9.3

4.1

Movement

4.2NAB

11.9Commonwealth

3.0ANZ

Largest improvement over the past 12 months

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

1. Source: Roy Morgan Research. Aust MFI Population 14+, % “Very" or "Fairly Satisfied"

Customer satisfaction continues to improve

Overall Customer Satisfaction1 Business Customer Satisfaction2

52

Economic Indicators

Appendix

53

Key Economic Forecasts2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

(a) (a) (a) (a) (f) (f)

Economic Activity

Private final demand 5.9 4.6 4.3 4.1 5.1 4.1Of which: Household spending 5.4 4.4 2.6 3.6 4.5 2.5

Dwelling investment 3.1 -0.8 -4.3 2.4 3.1 6.8Business investment 9.9 12.5 16.3 8.2 8.3 8.4

Public final demand 4.6 4.6 3.7 4.0 4.5 4.1Domestic final demand 5.6 4.6 4.1 4.1 5.0 4.1

Inventories (contrib to GDP) 0.4 0.0 -0.6 0.2 0.4 -0.2GNE 6.1 4.6 3.6 4.2 5.4 3.9

Exports 2.1 3.1 2.2 3.8 3.7 7.9Imports 13.0 12.1 7.2 8.9 11.0 10.2

Net exports (contrib to GDP) -1.9 -1.7 -1.1 -1.2 -1.8 -0.9GDP 4.0 2.8 3.0 3.2 3.6 3.1

Prices & WagesCPI 2.4 2.4 3.2 2.9 3.1 3.0

Underlying CPI 2.6 2.5 2.6 2.9 3.5 3.1AWOTE 4.9 4.6 4.8 3.6 4.5 3.9

WPI 3.6 3.8 4.1 4.0 4.2 3.9Real h/hold disposable income 4.9 5.6 4.4 4.9 6.0 3.8

Labour MarketEmployment 1.8 2.8 2.4 2.7 2.5 2.0

Unemployment rate 5.7 5.2 5.0 4.5 4.3 4.6

External AccountsCurrent Account: $bn -46.2 -55.4 -54.5 -59.6 -70.7 -61.8 % of GDP -5.5 -6.2 -5.6 -5.7 -6.3 -5.1

54

Economic Indicators - Housing

H O U S I N G I N D I C A T O R S( a n n u a l % c h a n g e )

- 10

0

10

2 0

3 0

S e p - 9 0 S e p - 9 4 S e p - 9 8 S e p - 0 2 S e p - 0 6- 3

0

3

6

9R e n t s( r h s )

H o u s e p r i c e s( lh s )

% %

0

5

10

15

2 0

2 5

S e p - 9 6 S e p - 9 9 S e p - 0 2 S e p - 0 5 S e p - 0 80

5

10

15

2 0

2 5% %

H O U S I N G C R E D I T( % c h a n g e )

Q u a r t e r l y

A n n u a l

H O U S I N G D E M A N D & S U P P L Y

10 0

15 0

2 0 0

S e p - 9 0 S e p - 9 4 S e p - 9 8 S e p - 0 2 S e p - 0 610 0

15 0

2 0 0D e m a n d

S u p p l y

' 0 0 0 ' 0 0 0

D E B T & H O U S E S A L E S

- 4 0

- 10

2 0

5 0


- 3 . 0

- 1.0

1.0

3 . 0

% p a A n nc h

" S a l e s "a c t i v i t y

( l h s )

H / h o l d i n t e r e s t p a y m e n t s( % o f i n c o m e , i n v e r t e d )

( a d v 2 q t r s , r h s )

7 . 5 %c a s h

55

Economic Indicators - Business

F I N A N C E( n e t % r e p o r t i n g h a r d e r t o o b t a i n )

- 2 0

0

2 0

4 0

S e p - 9 6 S e p - 9 9 S e p - 0 2 S e p - 0 5- 2 0

0

2 0

4 0% %

* S o u r c e : A C C I- W B C

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 )

- 8

0

8

16

2 4

S e p - 8 8 S e p - 9 2 S e p - 9 6 S e p - 0 0 S e p - 0 4 S e p - 0 8- 3 0

- 11

8

2 6

4 5% %

B u s i n e s sc r e d i t

( l h s )

C B A ( f )

B u s i n e s si n v e s t m e n t

( r h s )

C A P E X & C A P A C I T Y U S E

- 2 0

- 10

0

10

2 0

19 5 9 / 6 0 19 6 8 / 6 9 19 7 7 / 7 8 19 8 6 / 8 7 19 9 5 / 9 6 2 0 0 4 / 0 57 0

7 5

7 9

8 4

8 8% p a %

* S o u r c e : A B S / C B A / N A B / W B C

C a p a c i t y u t i l i s a t i o n

( r h s )

T o t a lc a p e x

( l h s )

4 0

5 0

6 0

S e p - 0 0 S e p - 0 2 S e p - 0 4 S e p - 0 64 0

5 0

6 0

P l a n t & e q u i p

B u i l d i n g & s t r u c t u r e s

C B A - A C C I S U R V E Y : C A P E X P L A N S( i n d e x > 5 0 i n d i c a t e s r i s e ) In d e xIn d e x

E x p e c t e d e c o n o m i c

p e r f o r m a n c e

56

Economic Indicators – Other Personal

C O N S U M E R F U N D I N G( c h a n g e s a s a % o f G D P )

- 8

- 4

0

4

8

12

19 8 9 / 9 0 19 9 3 / 9 4 19 9 7 / 9 8 2 0 0 1/ 0 2 2 0 0 5 / 0 6 2 0 0 9 / 10- 8

- 4

0

4

8

12

% %

C o n s u m e rs p e n d i n g

C r e d i t

S a v i n g( ( + ) r u n d o w n / ( - ) b u i l d u p )

C B A( f )In c o m e

& " o t h e r "

D E B T & P E R S O N A L C R E D I T

- 10

0

10

2 0

3 0


- 3 .0

- 1.5

0 .0

1.5

3 .0

% p a A n nc h

O t h e r p e rs o n a lc re d it( lh s )

H / h o ld i n t e r e s t p a y m e n t s( % o f in c o m e , i n v e r t e d )

( a d v 7 q t r s , r h s )

7 .5 %c a s h

I S N O W A G O O D T I M E T O B U Y( n e t % s a y i n g y e s )

- 2 5

0

2 5

5 0

7 5

S e p - 9 7 S e p - 0 1 S e p - 0 5

S o u r c e : M e l b o u r n e I n s t i t u t e

- 2 5

0

2 5

5 0

7 5% %

ac a r ?

a m a j o r h o u s e h o l d

i t e m ?

U S E O F " S A V I N G S "( % s a y i n g p a y o f f d e b t )

0

6

12

18

2 4

S e p - 9 7 S e p - 9 9 S e p - 0 1 S e p - 0 3 S e p - 0 5 S e p - 0 7

S o u r c e : M e l b o u r n e I n s t i t u t e0

6

12

18

2 4% %

2 0 0 0 - 2 0 0 4a v e r a g e

Commonwealth Bank of Australia ACN 123 123 124

Investor Information Pack15 May 2008





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