ASX Announcement
CBA 3Q17 Trading Update
For the quarter ended 31 March 20171
Reported 9 May 2017
Summary
• Unaudited cash earnings2 of approximately $2.4 billion in the quarter.
• Unaudited statutory net profit of approximately $2.6 billion in the quarter.
• Result supported by income growth, continued cost discipline and sound credit quality.
• Strong funding and liquidity positions maintained, with deposit funding at 67% and the LCR at 124%.
• Common Equity Tier 1 (CET1) capital ratio of 9.6% on an APRA basis, up 37 basis points since
December 2016 after allowing for the impact of the 2017 interim dividend.
• CET1 of 15.2% on an internationally comparable basis.
Business Performance
Volume growth – 12 Months to Mar 17
7.4%
6.6%
7.0%
CBA Group
System
7.8%
3.4%
Household deposits
Home lending
3.7%
Business lending3
Source: APRA/RBA
•
Net interest income growth (pcp)1 supported by volume growth in key markets, offsetting margin pressures.
•
In home lending, growth continued to be underpinned by strong proprietary channel performance.
•
Business lending growth overall remained subdued, with strongest growth in Business and Private Banking.
•
In Wealth Management, Average Assets Under Management and Funds Under Administration rose by 6%
and 7% respectively, reflecting stronger investment markets, partly offset by exchange rate movements.
•
In ASB, volume growth remained strong, with lending up 10% and deposits up 8% (12 months to Mar 17).
•
Group Net Interest Margin slightly lower in the quarter4 due to higher average liquids and competition effects.
•
Other Banking Income stable with higher commissions and lending fees offset by lower trading income.
•
Insurance income impacted by weather events during the quarter, including Cyclone Debbie.
•
Continued cost discipline enabling ongoing investment.
¹ Unless otherwise indicated all comparisons are to the prior comparative period (pcp), the quarter ended 31 March 2016.
2 Cash earnings is used by management to present a clear view of the Group’s underlying operating results, excluding certain items that
introduce volatility and/or one-off distortions of the Group’s current period performance. These items, such as hedging and IFRS volatility, are
calculated consistently period on period and do not discriminate between positive and negative adjustments. For a more detailed description of
these items, please refer to page 15 of the Group’s 31 December 2016 profit announcement.
3 Domestic lending balance growth (ex Cash Management Pooling Facilities).
4 Movement in Group Net Interest Margin from 1H17 (period ended December 2016).
Commonwealth Bank of Australia | ACN 123 123 124
068/2017
Credit quality
Loan impairment expense
Troublesome and impaired assets
Group (basis points)
$bn
Group impaired
Corporate troublesome
73
8.2
7.0
6.5
6.0
5.9
3.4
2.9
2.8
3.1
3.1
3.1
3.9
41
3.4
Quarter
25
21
20
16
16
19
17
4.3
11
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 1H17 3Q17
Pro Forma
90+ days
Credit cards
1,017 984
212
0.98%
209
169
1.00%
3.4
3.3
3.5
3.4
3.4
2,818 2,807 2,754
944
1.20%
3.1
Collective Provisions
1.40%
Home loans
6.7
$m
Individual Provisions
Personal loans
6.8
Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Mar 17
Provisions
Consumer arrears
195
215
200
Overlay
695
756
708
Bankwest
187
181
184
1,077
1,059
1,093
859
811
769
Jun 16
Dec 16
Mar 17
Consumer
0.57%
0.53%
Mar 14
3.6
6.6
566
Sep 14
Mar 15
Sep 15
Mar 16
Sep 16
Mar 17
Jun 16
610
Dec 16
569
Mar 17
Corporate
•
The credit quality of the Group’s lending portfolios remained sound.
•
Loan Impairment Expense (LIE) of $202 million in the quarter equated to 11 basis points of Gross Loans and
Acceptances, compared to 17 basis points in 1H17.
•
Corporate LIE was substantially lower in the quarter. Troublesome and impaired assets were slightly lower at
$6.7 billion, with broadly stable outcomes across most sectors. Apartment development5 exposures reduced
in the quarter.
•
Consumer arrears increased in line with seasonal expectations and continued to be elevated in Western
Australia. In the home lending portfolio, investment lending reduced as a proportion of total new lending6 in
the quarter and new interest only lending is being closely managed, consistent with regulatory guidance.
•
Prudent levels of provisioning maintained, with Total Provisions at $3.7 billion and no change to overlays for
economic conditions.
5
6
Domestic residential apartment developments >$20m.
Movement from 1H17 (period ended December 2016).
Commonwealth Bank of Australia | ACN 123 123 124
068/2017
Funding and liquidity
Wholesale funding
Deposit funding
% of total funding
66%
Liquidity
$bn
Portfolio Tenor (years)
4.2
67%
135%
4.2
155
124%
143
LCR
Liquid
Assets
Committed Liquidity
Facility reduced by
$10.2bn on
1 January 2017
Dec 16
Mar 17
Dec 16
Mar 17
Dec 16
Mar 17
Capital
Common Equity Tier 1
+37 bpts
bpts
9.9%
(67)
57
14
(23)
Dec 16
APRA
Dividend
(net of DRP)
Cash
NPAT
RWAs
Colonial
Debt
•
15.2%
(11)
9.6%
Other
Mar 17
APRA
Mar 17
Int'l
Funding and liquidity positions remained strong, with customer deposit funding at 67% and the average tenor
of the wholesale funding portfolio at 4.2 years.
•
Liquid assets totalled $143 billion7 with the Liquidity Coverage Ratio (LCR) standing at 124%. The Group
issued $14.6 billion of long term funding in the quarter, and $37 billion year to date.
•
The Group’s Basel III Common Equity Tier 1 (CET1) APRA ratio was 9.6% as at 31 March 2017. After
allowing for the impact of the 2017 interim dividend (which included the issuance of shares in respect of the
Dividend Reinvestment Plan), the CET1 (APRA) ratio increased by 37 basis points in the quarter. This was
primarily driven by capital generated from earnings, and lower risk weighted assets, partially offset by the
maturity of a further $1 billion of Colonial debt8. The Group’s Basel III Internationally Comparable CET1 ratio
as at 31 March 2017 was 15.2%.
•
The Group’s Leverage Ratio was 4.9% on an APRA basis (unchanged from Dec 16) and 5.6% on an
internationally comparable basis.
7
8
Spot balance as at 31 Mar 17.
The final tranches of the Colonial debt are due to mature in FY18 ($665m, approximately -15 basis points of CET1).
Commonwealth Bank of Australia | ACN 123 123 124
068/2017
Note
The material in this announcement is general background information about the Group and its activities current
as at the date of the announcement, 9 May 2017. It is information given in summary form and does not purport
to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take
into account the investment objectives, financial situation or needs of any particular investor. Investors should
consult with their own legal, tax, business and/or financial advisors in connection with any investment decision.
Contacts
Investor Relations
Media
Shareholders
Melanie Kirk
Head of Investor Relations
02 9118 7166
[email protected]
Kate Abrahams
General Manager Communications
02 9118 6919
[email protected]
For more information, visit
commbank.com.au/shareholder
Commonwealth Bank of Australia | ACN 123 123 124
068/2017