COMMONWEALTH BANK OF AUSTRALIA SHAREHOLDER
REVIEW
2015
COMMONWEALTH BANK OF AUSTRALIA | ACN 123 123 124
$9,063m statutory NPAT
Up 5% on prior year
$4.20 full year dividend per share - fully franked Up 5% on prior year
$1.2bn investment spend Continued investment in technology and productivity
9.1% capital ratio (CET1)
2015 HighlightsFunding and provisioning all remain strong
$478bn customer deposits
Up $39bn on prior year
$243m community investment Supporting the communities in which we operate
#1 Australian company on G100 Global Index
G100 is the global index for the world's most sustainable corporations
38% reduction in carbon emissions Combined CBA and Bankwest reduction, between 2009 - 2015
Dear Shareholders
David Turner
CHAIRMAN
Ian Narev
MANAGING DIRECTOR & CEO
2015:
$9,137m
Net profit after tax (cash)
561cents
Earnings per share (cash)
18.2%
Return on equity (cash)
We are pleased to deliver a solid result for the year ended 30 June. Statutory net profit after tax (NPAT) increased 5% to
$9,063 million. Net profit after tax on a cash basis was $9,137 million, up 5% on the prior year.
The Board declared a final dividend of
$2.22 per share, bringing the total dividend to $4.20 per share, an increase of 5% on the prior year. This represents a dividend payout ratio of 75.1% and results in $6.8 billion being returned to our 800,000 shareholders and superannuation funds.
Shareholder Review 2015 1
The CommBank Innovation Lab is a cutting edge space to introduce clients and staff to our innovation process. It allows visitors to explore the Bank's latest
products, while also providing the tools to work together and create the next generation of products.
CUSTOMER FOCUS
This result reflects our continued focus on our customers, through our long-term strategic priorities - people, productivity, technology and strength.
We are pleased to report that during the period we regained the number one position in customer satisfaction among the major Australian banks in our Australian retail banking business, while maintaining equal first position in business customer satisfaction.
TECHNOLOGY
Technology and innovation continue to be a focus for the Group. We are focused on the use of technology for the benefit of our customers, such as the launch of the Group's Innovation Lab at Commonwealth Bank Place in Sydney this year. The Lab provides a creative space for our people and customers to cultivate ideas and we have received very positive feedback about
how the Lab has assisted the development of market-leading solutions and services for our customers.
More information can be found on page 8.
STRENGTH
Financial strength, including a strong capital position, is a pillar of our strategy.
Throughout the year, the Group maintained a strong Balance Sheet, including high levels of capital with all ratios well in excess of regulatory minimum capital adequacy requirements.
During the year, APRA announced changes to capital requirements. As a result, your Board decided to undertake a $5 billion entitlement offer. This offer is expected to boost the Group's pro forma Common Equity Tier 1 (CET1) capital ratio to 14.3% on an internationally comparable basis, or 10.4% on an APRA basis. This positions us comfortably within the top quartile of international peers in relation to capital levels.
2 Commonwealth Bank of Australia
VISION AND VALUES
We remain committed to our long-term vision
- to secure and enhance the financial wellbeing of people, businesses and communities. We seek to be not only the best performing but also a highly trusted financial institution in all of our activities.
In seeking to operate at the highest levels of ethical behaviour, we are very focused on strengthening our values-based culture built around integrity, collaboration, excellence, accountability and service. Over the last 12 months, the Group undertook an extensive review of our culture, assisted by external advisers, The Ethics Centre, KPMG and Gilbert & Tobin.
COMMONWEALTH FINANCIAL PLANNING
In last year's Shareholder Review, we referred to the shortcomings in our financial advice business in the past and the
announcement of our Open Advice Review program. The program was open for registrations for one year from 3 July 2014 to any Commonwealth Financial Planning or Financial Wisdom customer who had received advice between 1 September 2003 and 1 July 2012. We have designed the program to empower and give confidence to our customers. We adopted a fair and consistent approach to advice reviews, underpinned by several layers of independence. Due to the complexity of the issues and the overriding need to get to the right answer for our customers, we expect the program to take about two years to complete.
THE ENVIRONMENT
We fully understand our role in addressing the challenge of climate change. We have robust, responsible lending practices in place, helping organisations to transition to a low carbon economy, investing in the renewable energy sector and measuring
Number 1 in Retail Customer Satisfaction
% Satisfied ('Very Satisfied' or 'Fairly Satisfied')
90%
85%
CBA #1
84.2%
CBA
Peers
80%
75%
70%
65%
Jun 07
Dec 07
Jun 08
Dec 08
Jun 09
Dec 09
Jun 10
Dec 10
Jun 11
Dec 11
Jun 12
Dec 12
Jun 13
Dec 13
Jun 14
Dec 14
Jun 15
60%
Source: Roy Morgan Research | 6 month rolling average
Shareholder Review 2015 3
and reducing our own environmental footprint.
We take a responsible approach to the way we provide financial products and services. Part of that approach has been the development and implementation of our Environmental, Social & Governance (ESG) Lending Commitments. Our ESG Lending Commitments set out how we approach the assessment and management of ESG risks and opportunities associated with client activities, such as carbon intensity, human rights and corruption. The Group has commenced reporting publicly on the progress of the implementation of these Lending Commitments.
More information can be found on page 12.
ECONOMIC OUTLOOK
Looking ahead, we remain positive about the long-term performance of the Australian economy although there are inevitably short-term economic challenges. Whilst there are signs that the transition from the mining boom to non-mining led growth is occurring, we are yet to see the full transition.
As the country moves to a more balanced economy, we believe there are opportunities
that Australia can harness given our close proximity to Asia. To support the transition, we need to focus on consistent policies, support for long-term investment and encouragement for business.
We will remain conservative and we will stay focused on our long-term strategic priorities - people, productivity, technology and strength. We will strive to continue to deliver long-term value to our customers, shareholders, people and the broader community in which we operate.
Finally, we would like to thank you, our shareholders, our customers and our people for your continuing support for the Commonwealth Bank of Australia.
David J Turner
CHAIRMAN
12 AUGUST 2015
Ian Narev
CHIEF EXECUTIVE OFFICER
12 AUGUST 2015
Our vision - to excel at securing and enhancing the
financial wellbeing of people, businesses and communities
- is at the centre of everything we do as an organisation. We seek to not only be the best performing but also a highly trusted financial institution in all of our activities.
4 Commonwealth Bank of Australia
Delivering Results
JUN 15 | VS JUN 14 | |
OPERATING INCOME ($M) | $23,368 | 5% |
OPERATING EXPENSES ($M) | $9,993 | 5% |
CASH NPAT ($M) | $9,137 | 5% |
STATUTORY NPAT ($M) | $9,063 | 5% |
RETURN ON EQUITY - CASH (%) | 18.2% | (50) bpts |
CASH EPS (CENTS) | 561 | 5% |
DIVIDEND PER SHARE - FULLY FRANKED (CENTS) | 420 | 5% |
Cash NPAT Contribution
BPB
IB&M
WM
NZ
Key Financials
RBS: RETAIL BANKING SERVICES
BPB: BUSINESS
& PRIVATE BANKING
IB&M: INSTITUTIONAL BANKING & MARKETS
WM: WEALTH MANAGEMENT
$3,867m (42%)
$1,459m (16%)
$1,268m (14%)
$650m (7%)
RBS
IFS & OTHER
BWA
NZ: NEW ZEALAND $865m (10%)
BWA: BANKWEST $752m (8%)
IFS & OTHER: GROUP TREASURY, CENTRE FUNCTIONS, IFS ASIA
$276m (3%)
Fully Franked Dividends (cents)
188
197
200
218
222
6,835
7,039
7,760
8,680
9,137
FIRST HALF SECOND HALF
132
FY11
137
FY12
164
FY13
183
FY14
198
FY15
Cash NPAT ($m)
FY11
FY12
FY13
FY14
FY15
Shareholder Review 2015 5
Our Strategy
Our strategy remains focused on creating long-term value for our customers, our shareholders and our people. Our overarching priority is customer focus. This means we are committed to putting customers at the centre of everything we do, to secure and enhance their financial wellbeing.
6 Commonwealth Bank of Australia
Strategic Priorities
Our customer-focused strategy is supported by four key strategic priorities to enhance business performance and future growth.
Customer Focused | PEOPLE Our people are central to our success. We remain focused on attracting, retaining and developing good quality people. We are committed to fostering a culture where our people are engaged, passionate and valued, as success with our people will lead to success with our customers, shareholders and our community over the long-term. |
STRENGTH Throughout the year the Group maintained a strong Balance Sheet, including high levels of capital, with all ratios well in excess of regulatory minimum capital adequacy requirements. A strong and flexible Balance Sheet is important to ensuring we can continue to support our customers and capitalise on opportunities. | |
PRODUCTIVITY We continue to build a productivity-focused culture within the organisation. More of our people were trained in productivity- enhancing skills over the year and we can see that our people are adopting a 'continuous improvement' mindset to create more simplified processes. This ensures we make it easier for our customers to interact with us. | |
TECHNOLOGY We aspire to become a global leader in the application of technology to financial services. Over the past year we have again made significant progress towards this goal, launching a number of new innovative technologies and services that fundamentally change the way our customers access and manage their finances. |
Shareholder Review 2015 7
Leading
Technology
We continue to invest in innovative technologies to create an outstanding service experience for our customers.
Meet AlbertA GLOBAL FIRST-TO-MARKET EFTPOS TABLET
HELPS BUSINESSES IMPROVE AND TAILOR THEIR CUSTOMER OFFERING
PORTABLE, USER-FRIENDLY, SECURE
POINT-OF-SALE DEVICE
CUSTOMERS CAN SPLIT PAYMENTS, ADD TIPS, EMAIL RECEIPTS
Temporary Lock
Portfolio View
ONE COMPLETE VIEW OF YOUR ASSETS AND LIABILITIES IN NETBANK
SUPPORT TOOLS TO MAKE MORE INFORMED FINANCIAL DECISIONS
TEMPORARILY LOCK AND UNLOCK COMMBANK CREDIT CARDS VIA THE COMMBANK APP AND NETBANK
CARDS CAN ALSO BE CANCELLED AND REPLACED
8 Commonwealth Bank of Australia
CommBank appFor smartwatches
COMMBANK APP FOR ANDROID AND APPLE SMARTWATCHES
ATM locator
View account balances
Transactional capability with Cardless Cash
COMMSEC APP FOR APPLE WATCH
View live sharemarket information
View share portfolio and share holdings
Receive share price, volume and news alerts
New features for mobile
TOUCH ID NOW AVAILABLE
Sign in with your fingerprint
TAP & PAY WITH ANDROID PHONE
Make purchases on the go
VIEW AND MAINTAIN TRAVEL MONEY CARD
Lock in exchange rates and reload in real time, wherever you are
COMMBANK APP NOW AVAILABLE ON TABLET
Take Your Money Everywhere (TYME)
THE GROUP ACQUIRED TYME, A SOUTH AFRICAN BASED FINANCIAL SERVICES TECHNOLOGY COMPANY
ALLOWS CUSTOMERS TO OPEN AND MANAGE REGULATED BANK ACCOUNTS USING A MOBILE PHONE
THE GROUP IS EXPLORING HOW TYME CAN PROVIDE BANKING SERVICES TO UNDER-SERVED COMMUNITIES IN DEVELOPING MARKETS SUCH AS ASIA
Shareholder Review 2015 9
The Group
at a glance
Our diversified business segments ensure the Group is able to achieve profitable growth and support
our customers.
CASH NET PROFIT AFTER TAX FOR THE YEAR ENDED 30 JUNE 2015 WAS
$3,867m 5%
RETAIL BANKING SERVICES (RBS)
Retail Banking Services provides home loan, consumer finance and retail deposit products and servicing to all Retail bank customers and non-relationship managed small business customers. In addition, commission is received for the distribution of Wealth Management products through the retail distribution network.
CASH NET PROFIT AFTER TAX FOR THE YEAR ENDED 30 JUNE 2015 WAS
$1,459m 10%
CASH NET PROFIT AFTER TAX FOR THE YEAR ENDED 30 JUNE 2015 WAS
$1,268m 1%
BUSINESS & PRIVATE BANKING (BPB)
Business and Private Banking provides specialised banking services to relationship managed business and Agribusiness customers, private banking to high net worth individuals and margin lending and trading through CommSec.
INSTITUTIONAL BANKING & MARKETS (IB&M)
Institutional Banking and Markets services the Group's major corporate, institutional and government clients using a relationship management model based on industry expertise and local insights. The client offering includes debt and equity capital raising, financial and commodities price risk management and transactional banking capabilities. Institutional Banking and Markets has international operations in New Zealand, Japan, Singapore, Hong Kong, Shanghai, London, Malta, New York and Houston.
10 Commonwealth Bank of Australia
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