Commonwealth Bank of Australia

Hello and welcome to the results briefing for the Commonwealth Bank of Australia for the full year ended 30 June 2026. I'm Melanie Kirk and I'm Head of Investor Relations. Thank you for joining us for this briefing. We will have presentations from our CEO, Matt Common, with an overview of the business and the financial results. Our CFO, Alan Docherty, will provide details of the financial results. Matt will then come back and provide a summary and outlook. The presentations will be followed by the opportunity for analysts and investors to ask questions. I'll now hand over to Matt. Thank you, Matt.

Thank you very much, Mel. And good morning, everyone. This is a strong four-year result, which has enabled us to continue to support customers, protect communities and invest in Australia. This year, we delivered disciplined growth across all domestic franchises while maintaining stable underlying margins and strong capital funding and liquidity. Cash net profit after tax increased by 7% and statutory profit increased by 8%. Cash earnings per share increased by 44 cents. This allowed the board to declare a fully franked dividend of $2.70, taking the full year dividend to $5.05 per share. Conditions became more challenging through the second half for our customers, with higher rates affecting household spending and savings, housing activity moderating, and arrears increasing from low levels. In a demanding environment, we enter the 2027 financial year from a position of strength, but with a clear focus on execution and continuing to support our customers. CBA grew at or above system in all five core product categories, home lending, business lending, consumer finance, household deposits, and business deposits. This is the first time any major Australian bank has done this in the past 15 years. Importantly, it was not achieved by sacrificing margin. Our underlying interest margin has remained stable, supporting consistent pre-provisioned profit growth and reinvestment. That performance was delivered in an intensely competitive market. We remain focused on continuing to convert our strong franchise position into sustainable, risk-adjusted returns while preserving margin, credit and capital discipline. Volume growth and stable underlying margins drove operating income growth of 6.2%. Operating expenses increased by 5.6%. This reflected inflationary pressures as well as deliberate investment in technology, resilience, customer protection and service capability. Our pre-provision profit increased by 6.5%. We were able to grow earnings while continuing to invest materially in the future capacity of the bank. Our competitive advantage begins with trusted primary customer relationships. Each wave of technology has allowed us to better serve our customers. Digital increased the frequency and convenience of engagement. Data and analytics improved personalisation, protection and risk decisions. And we believe AI could be the most significant technology shift we've seen. As customers increasingly use AI to search, compare, decide and transact, we believe the value of a trusted primary relationship will increase. By using AI safely and at scale, we can provide more personalised trusted support, protect customers more effectively and help them make better financial decisions. Realising that opportunity will also require regulation to keep pace. Similar financial activities and risks should attract equivalent customer protections and obligations, whether they are delivered by a regulated bank or through an AI platform. Disciplined execution of our strategy over many years has delivered sustainable performance. Customer advocacy is an important measure. We also assess franchise strength through a broader set of measures which includes the number of customers who choose us as their main bank, active transaction relationships, engagement and retention, deposits and risk-adjusted earnings generated by those relationships. Over the past decade, household and business deposit balances have doubled. More than 97% of home lending customers and more than 90% of business lending customers also hold a Commonwealth Bank transaction account. Business lending balances have also more than doubled over the decade, while home loan balances have increased by approximately two thirds. The growth in business lending is particularly important because it supports investment, employment and productive capacity across the economy. The result is a bank that is larger and stronger, but also more digitally capable and more deeply engaged with our customers. Customer focus, disciplined execution and investment in the franchise continues to deliver better outcomes. We've held the leading consumer net promoter score for 44 consecutive months. We also retain leading positions in institutional banking and for retail and business digital banking. more Australians choose us as their main bank during the year. We added 655,000 retail and 90,000 business transaction accounts. Proprietary channels represent 65% of home lending flows and 79% of business lending balances. We also improved lending turnaround times, automated more decisions, increase the speed at which we deliver technology change, and reduce the incidence and duration of technology disruption. The retail bank performed well, with operating performance increasing by 6%. More than one in three Australians identify CBA as their main financial institution, with retail MFI share increasing to 34.2%. Retail transaction accounts increased by 6% and home lending balances by 7%. More than 9.6 million customers now use the CommBank app, generating more than 14 million logins each day. That engagement creates an opportunity to make the bank more useful in customers' everyday financial lives. ComBank Companion is an early example. It is a secure AI powered conversational experience designed to help customers better understand their finances and make better decisions about spending and saving. Our priorities are to deepen those main bank relationships, make the app the place customers manage more of their financial lives and keep improving our service offering. the business bank delivered another strong year. Operating performance increased by 10% and business banking now contributes over 40% of the group's cash profit. Over the past 12 months, we've reduced time to credit decision by 30% and increased funding per banker by 15%. We've extended CommBank Companion to more small business customers, and we've started using agentic capability across our lending process, including our first controlled end-to-end business loan pilot. The opportunity here is to make better, faster decisions, reduce administrative work for our customers and our bankers, and allow our people to spend more time helping businesses invest and grow. Institutional banking and markets had another solid year with operating performance up 5%. We hold the leading institutional net promoter score among the major banks, added 33 transaction banking mandates and grew operational deposits by 13%. The institutional franchise also contributes $70 billion of net deposit funding while supporting customers financing and risk management needs. ComBank IQ, our data and analytics venture, continues to deepen client insights with five times more client engagement compared with 2022. Momentum moderated in the second half as markets income softened and competition and mix affected margins. Our focus is to convert client activity into deeper relationships, greater cross-sell and better capital efficiency. ASB continued to grow its customer franchise with more lending and customer deposits, both increasing by approximately 6%. Full year operating performance was broadly stable, although earnings conversion weakened through the second half as margins declined and loan impairment expenses increased. ASB retains a strong customer franchise and a leading reputation in New Zealand. Technology leadership is fundamental to how we serve and protect customers, how we operate efficiently, and how quickly we can adapt. We've been investing heavily to better protect our customers, improve customer experiences, and to modernise technology and automate processes. We've committed significant resources to cyber and security, including in safely deploying frontier cyber models and automated patching tools. We're using AI to help customers take more control over their banking activity. We recently expanded access to a new agentic feature called Companion in the CommBank app. And one third of customers that have been given access have adopted it. And half of their queries relate to managing their spending and saving. Our virtual messaging now handles 86% of conversations end to end. We've launched a range of tools to help our frontline teams better serve customers and have seen improvements in banker productivity. New AI tools and greater investment have also accelerated our technology modernisation agenda. This year we moved our core banking system to the cloud, replatformed our data estate and built a range of new modern applications that support key customer systems. In financial year 2027, we're pursuing three outcomes. Stronger protection for customers and the community, faster and more personalised service to deepen primary relationships and better performance through lower unit costs, greater capacity and faster change. We will measure progress through customer engagement, service quality and resolution times, losses prevented, delivery speed, unit costs, realised financial benefits and risk-adjusted earnings. We're already seeing value from our AI agenda and expect gross benefits to exceed investment levels next financial year. We'll continue to calibrate our investment settings to the external context, overall capacity and to the financial and non-financial benefit realisation. Loan losses remain low, although leading indicators soften during the second half. Troublesome and non-performing exposures were 0.94% of total committed exposures, higher than December but lower than a year ago. The number of home loan customers in hardship increased in the past six months but remains 15% below its recent peak. We remain well provisioned for a range of economic scenarios. Total provisions are $6.5 billion, which is $2.7 billion above our central economic scenario. Our balance sheet remains strong with 79% deposit funding. The weighted average maturity of long-term funding is 5.2 years and we hold $191 billion of liquid assets. Our common equity tier one capital ratio is 12%, comfortably above the regulatory minimum. This strong position allows us to continue to support our customers to fund growth and invest for the long term. The effects of inflation and higher interest rates have been substantial, but they've not been evenly distributed. Global shocks and low productivity have led to persistent inflation. As a result, the cash rate has increased 425 basis points since May 2022. and the impact on households has been significant. Compared with five years ago, Australian banks pay an additional $164 billion in interest to depositors and wholesale funding providers and receive approximately $139 billion more in interest on loans. This represents a significant redistribution of interest income across the economy. The increase in mortgage repayments has been concentrated among households aged approximately 25 to 55. These households are consuming fewer goods and services than five years ago. Our retail offset balances also declined during the half as some customers drew on accumulated savings. There's been a lot of interest in home loan application volumes. We've seen application levels decrease by 15% since May, but subsequently have stabilised. National dwelling prices have fallen by approximately 2.8% since their March 2026 peak, having increased nearly 70% in the past seven years. We've stayed focused on supporting customers, protecting communities and investing in Australia. We've helped our customers buy more than 150,000 homes and provided $17 billion in finance for new housing supply. For customers experiencing difficulty, we've established 147,000 payment arrangements during the year. We've provided $50 billion of new lending to businesses, supporting investment, growth, productive capacity and employment across the economy. We're also helping our employees build skills for the future, This year we announced the three-year $90 million program to help our teams build skills and capabilities as technology reshapes the way we work and the way we serve our customers. Before I hand to Alan, I want to give some sense of the scale and complexity that our people support. Each day we process approximately 25 million payments, analyse 38 billion signals for potential cyber threats, lend $135 million to businesses and help 600 customers settle a home purchase. The other figures on the slide show the breadth of our responsibilities across customer support, financial crime, fraud, scams, cyber security and the operation of the payment system. Thank you. Thank you. Meeting those expectations requires sustainable returns, pricing that reflects cost and risk, the capacity to continue investing, and the ability to evolve how we serve customers as their needs continue to change. We aim for very high reliability, but when issues do arise, we focus on how quickly the issue is identified and how effectively it is resolved, rather than an assumption that every risk can be eliminated or prevented. Equivalent obligations must be applied to all market participants. This balance is essential if we are to continue serving all Australians, investing at scale and financing productive growth. And with that, I'll hand to Alan to go through the results in more detail.

Thank you, Matt, and good morning, everyone. Starting with the results overview, we've set out here the aspects of our current operating context that are front of mind, how we are responding to changes in our context, and the long-term franchise implications of our actions. At a macro level, household disposable incomes are under increasing pressure, and we have seen a softening in housing credit applications. technological innovations are accelerating rapidly creating both new risks and new opportunities and geopolitical developments remain a source of risk to the global and domestic economies. Against that backdrop, our response continues to be deliberate and disciplined. we have again carefully managed volume and margin trade-offs and our operational and financial performance helps us create the capacity to invest in maintaining and extending our competitive advantage in technology and deepening customer relationships. This approach has yielded consistently strong financial outcomes and that has again been the case over this most recent financial year. we are acutely aware of the risks inherent in our current operating environment. For some time we have been alert to the risk of an exogenous global event and more recently we have seen some risks emerge in the domestic macro outlook. That's why we continue to strengthen our balance sheet in order to both support customers and protect shareholder returns under a broad range of economic scenarios. As set out in the bottom right chart, we are carrying historically low levels of refinancing risk in our funding stack. Our credit provisions have capacity to absorb losses. And through our interest rate hedging, we are balancing short-term consumption of capital against long-term earnings stability. This slide sets out the usual reconciliation between statutory and cash profits for the year. There were modest movements in the usual non-cash items during the period, which resulted in statutory profits of $10.9 billion and a slightly higher cash profit of $11 billion. Breaking down the components of cash profit, operating income grew 6.2% over the year, reflecting strong operational outcomes in lending and deposit growth. This allowed us to continue to invest in the franchise with underlying operating expenses increasing 5.6% over the year. Notable expense items of $170 million were recognised in the first six months of the financial year, largely due to the settlement of a long-standing legal proceeding in New Zealand during the September quarter. Loan impairment expense increased 8.5% over the year, with a larger increase in the second half, reflecting higher collective provisioning for forward-looking risks, with incurred losses remaining low as our retail and business customers continue to demonstrate resilience despite softening economic conditions. The effective tax rate for the year was 30%, and that is also our expectation for the 2027 financial year. This resulted in cash profit growth of 7.1% over the year. Looking firstly at operating income, we delivered growth of 6.2% over the year. Net interest income increased strongly, up approximately $1.6 billion, supported by strong and profitable growth in lending and deposits. Other operating income also contributed, growing $196 million over that period. Revenue momentum was slightly weaker in the sequential half, growing 1.2% at the headline level or 2.9% after adjusting for a lower second half day count. Other operating income reduced slightly in the second half, largely due to weaker retail foreign exchange revenues and lower trading income. Turning to the net interest margin and looking at the movement over the most recent six month period, Margins increased two basis points over the half, of which one basis point related to treasury and markets. Underlying margins were one point higher, with the benefits from deposit hedging and portfolio mix more than offsetting lower lending margins. The pressure on lending margins over the sequential half was a combination of cash rate lag, competition, and the effect of new business mix. In home lending, we have written more fixed rate loans, which are at tighter spreads to floating rate loans. And in the institutional bank, our loan origination was skewed to lower risk investment grade borrowers with a commensurately lower margin. Operating expenses increased 5.6% over the year. The drivers are largely unchanged over recent years. We are seeing inflationary impacts on wages. IT vendor cost inflation continues to run at mid single digits and cloud computing volumes have increased. At the same time, we continue to invest in technology infrastructure and AI capabilities alongside enhanced frontline capacity and operational resilience. We continue to self-fund much of that investment through productivity initiatives, realising approximately $400 million in incremental cost savings over the past 12 months. As a management team, we have long been mindful of our responsibility to ensure not just that we grow the franchise, but that we grow in a sustainable and profitable manner. Over the last five years, while we have seen a variety of operating conditions and changes in competitors' postures, we have sought to maintain discipline on volume and rate trade-offs and, as a result, have grown our share of industry net interest income. We have also built strong management accountabilities and rigour around the identification and delivery of productivity savings. These two elements combined have created the capacity for us to invest in the franchise. Annual investment spent has grown approximately 30% over the last five years, and this has made a demonstrable contribution to our strong growth in operating profitability. It's important to stress that our appetite for discretionary spending is contingent upon the creation of that capacity. in the event of deterioration in operating conditions and weaker top line outcomes, we retain the flexibility to manage our cost envelope and pre-provision profit outcomes. Turning to credit risk, loan and permanent expense was $788 million, representing a loan loss rate of eight basis points. This compares with seven basis points in the prior financial year. Home loan arrears have increased over the course of the last six months, up 10 points to 73 basis points. Some of that increase is seasonal. However, there are clearly pockets of customer stress given cost of living pressures and higher interest rates. If we take a longer view, our current mortgage arrears are only five basis points higher than pre-COVID levels, at which time the cash rate was approximately 300 basis points lower. This is reflective of strong portfolio credit quality and customer resilience. As ever, the key variable for consumer credit quality is the overall health of the jobs market, which remains in robust condition. Personal loan arrears increased noticeably, up 31 basis points in the last six months. This reflects pressure on household disposable incomes, as well as our deliberate portfolio risk appetite settings, and the risk-adjusted returns for this portfolio have increased strongly over the course of the year. In the corporate portfolio, troublesome exposures increased by approximately $600 million over the last six months, while non-performing exposures remained relatively stable. The increase in troublesome largely relates to downgrades to six single names across a variety of industry sectors. We do not expect to incur losses given either our high level of security coverage or the strong equity position of the underlying counterparty. Overall, corporate troublesome and non-performing exposures as a percentage of our portfolio remain modest at 95 basis points, still below the levels we have seen over each of the last two financial years. Given the softening domestic macro environment and continued global geopolitical uncertainty, we've maintained strong loan loss provisions, increasing collective provisioning by $140 million over the last six months. Individually assessed provisions remain unchanged over the period. Total recognised provisions are now $6.5 billion and we continue to hold the material buffer above our central economic scenario. Thank you very much. This provides us with a relatively longer tenor and more stable base of liabilities, which provides additional protection should credit spreads widen from the benign levels that exist today. On capital, our common equity tier one ratio reduced by 30 basis points to 12.0%, with strong capital generation net of dividends offset by the high level of franchise lending growth. IRRBB risk-weighted assets increased by $6.5 billion over the last six months, consuming 16 basis points of Common Equity Tier 1. Over the year, in adjusting for the impact of the new regulatory standard, the impact was 28 basis points. This was a result of our approach to structural hedging that aims to provide earning stability through the cycle at the cost of short-term capital headwinds and periods of rising rates. The final dividend increased 10 cents to $2.70, taking the full-year dividend to $5.05. This represents a payout ratio of 77%. The dividend will be fully franked and the dividend reinvestment plan will be offered with no discount and fully neutralised. On the top right chart, you can see our headline payout ratio is moderating back towards the middle of our payout range. On the bottom right chart, you can see that periods of stronger credit growth have traditionally involved activation of share issuance under our dividend reinvestment plan. Given strong capital surpluses, that hasn't been the case in recent years, but it's a tool that remains available to us in the years ahead. In closing, this slide sets out our long-term approach to support growth and returns. Our balance sheet strength lays the foundation to support franchise growth and investment. That investment and continued discipline in the management of our capital base positions as well to continue to deliver sustainable returns to our investors. I'll now hand back to Matt for the economic outlook and closing remarks. Thank you.