Banks. Commonwealth Bank of Australia. Australia. Full Rating Report. Key Rating Drivers. Rating Sensitivities. Ratings

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1 Australia Full Rating Report Ratings Foreign Currency Long-Term IDR AA Short-Term IDR F1+ Viability Rating aa Support Rating 1 Support Rating Floor A Sovereign Risk Long-Term Foreign-Currency IDR Long-Term Local-Currency IDR Outlooks Long-Term Foreign-Currency IDR Sovereign Long-Term Foreign- Currency IDR Sovereign Long-Term Local- Currency IDR Financial Data AAA AAA Stable Stable Stable 31 Dec Jun 14 Total assets (USDm) 697, ,527 Total assets (AUDm) 850, ,451 Total equity (AUDm) 50,092 48,409 Operating profit 6,322 12,009 (AUDm) Published net income 4,545 8,650 (AUDm) Comprehensive 5,242 9,303 income (AUDm) Operating ROAA (%) Operating ROAE (%) Internal capital generation (%) Fitch Core Capital/ weighted risks (%) Tier 1 ratio (%) Related Research - Ratings Navigator (May 2015) Fitch: RBA Rate Cut Increases Need for Greater Macro-Prudential Response (May 2015) 2015 Outlook: Australian Banks (January 2015) Fitch: Australia FSI Report to Strengthen Banking System (December 2014) Analysts Andrea Jaehne andrea.jaehne@fitchratings.com Tim Roche tim.roche@fitchratings.com Key Rating Drivers Dominant Franchise Supports Ratings: s (CBA) Long- Term and Short-Term Issuer Default Ratings and Viability Rating reflect the strength of its leading retail franchise in its home markets of Australia and New Zealand, and a transparent business model, which supports profitability, asset quality, funding and capitalisation. Modest Risk Appetite: Fitch Ratings expects CBA to maintain its conservative risk appetite. Its strong market positon allows a focus on low-risk residential mortgages, which accounted for more than half of exposures at default (EAD) as of 31 December 2014 (1H15). Fitch expects controlled asset growth in Australia and New Zealand, driven mainly by mortgages, although CBA also intends to expand its franchise in business and institutional lending in financial year 2016 (FY16, to June 2016). Concentration risk is low relative to domestic peers. Improved Funding, Weakness Remains: Offshore wholesale funding is likely to remain a key component of CBA s funding mix due to a general lack of deposits in Australia. However, Fitch expects further funding improvements in FY16, although at a slower pace than in FY15. CBA is likely to focus on longer term wholesale funding and increasing high-quality deposits. Capital Improvements Expected: CBA s capitalisation is likely to improve significantly as a result of potential new regulatory capital rules, although improvements in capital ratios may be less substantial. This is because some of the proposals revolve around increased minimum average risk-weights for residential mortgages. CBA should be able to meet the potential capital shortfall through a higher level of retained earnings, although this depends on the implementation timeframe. Strong Profitability Despite Challenges: CBA s operating profitability should remain strong relative to international peers in FY16. However, profit growth may slow due to a softer operating environment, historically low interest rates and fierce lending competition. In contrast to its domestic peers, CBA should benefit from its large technology investments which provide the bank with a competitive advantage. Systemic Importance: CBA s Support Rating and Support Rating Floor reflect its systemic importance and an extremely high probability of support from the Australian authorities, if needed. Rating Sensitivities China Hard Landing: CBA s ratings could be pressured in the event of a major slowdown in China, as this may result in significant asset-quality deterioration, reduced profitability and lower capitalisation. Excessive Growth: CBA s ratings may be downgraded if underwriting standards were to weaken in the pursuit of loan growth. This risk may be exacerbated if house prices were to continue growing strongly in Australia and New Zealand. Funding, Liquidity Deterioration: A substantial deterioration in CBA s funding and liquidity profile may place downward pressure on ratings. Upside Limited: The ratings are unlikely to be upgraded in light of their high level, and a funding profile weaker than that of international peers. 12

2 Figure 1 Australian Market Share (%) ANZ CBA NAB WBC Source: APRA Housing loans Commercial loans Household deposits Total resident assets Operating Environment Australian real GDP growth is likely to remain solid in 2015, while growth in New Zealand is likely to remain robust despite slowing from its 2014 pace. A sudden and severe slowdown in China appears the biggest threat to this base case, but is not expected by Fitch. Australian household debt as a percentage of disposable income remains high by global standards, and had moved to a record high of 154% by 31 December The household savings rate has remained high at the same time, providing some offset to the indebtedness. Nevertheless, households remain susceptible to rising interest rates and/or rising unemployment. The Reserve Bank of Australia (RBA) lowered the cash rate by 25bp to 2.00% in May 2015, which followed a 25bp cut in February Australian dwelling-price growth was strong through 2014, although the rate of growth peaked in April 2014 and has declined since. Nevertheless, the continued strength in house-price growth, particularly in Sydney, may lead to heightened risk for banks in their mortgage portfolios. The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission are closely monitoring bank mortgage lending, focusing on higher-risk categories such as investor loans, interest-only loans, and high loan-to-value ratio loans, as well as banks serviceability testing. Fitch expects the regulators to tighten scrutiny on bank mortgage lending as interest rates fall and Sydney house prices continue to rise. New Zealand GDP growth is likely to slow from the strong levels in 2014, but should remain robust. The economy is benefiting from construction linked to the Canterbury earthquake rebuild and housing in Auckland, although the unemployment rate appears to be stabilising after a period of decline. Recent softness in global dairy prices is placing some pressure on growth, and inflation remains low with the next change in the official cash rate likely to be a cut. Auckland house price growth remains strong, prompting the Reserve Bank of New Zealand to implement an additional macro-prudential tool targeting investors in this market. Household debt also remains high relative to international peers. Figure 2 CBA Segment Reporting Operating proft at end-1h15 100%=AUD6.3bn Wealth Bank management west 7.39% 8.49% Others 0.09% Company Profile Leading Domestic Franchise CBA is the second-largest Australian banking group by total assets, with a dominant position in the consumer segment (see Figure 1). The bank is also one of Australia s largest fund managers, with funds under management of AUD192bn at end-1h15. A total of 80% of CBA s operations were in Australia at end-1h15 on an EAD basis, with New Zealand accounting for a further 9%. CBA owns ASB Bank Limited (ASB; AA /Stable/a), one of the four largest New Zealand banks, with a home loan market share of 22% at 31 December It also has stakes in a number of banks and wealth-management businesses in Asia Pacific. Further growth in the region is likely, although at a measured pace. CBA s significant investment in technology leaves the bank well placed to improve productivity and increase product innovation compared with domestic peers, and is likely to further strengthen the group s franchise in Australia. New Zealand 9.20% Institutional banking and markets 13.53% Source: CBA Business and private banking 16.70% Retail banking 44.61% Transparent Business Model CBA has a simple, transparent business model, with a focus on traditional commercial banking. Trading and investment banking activities are limited. Australian retail operations contribute the largest proportion of net profit before tax (43% in 1H15), reflecting the focus on consumers. The business and private banking, and institutional banking and markets divisions were the next largest contributors to operating profit in 1H15 at 17% and 14%, respectively. The bank s Asian operations are a small part of the overall business, at 1% of cash net profit after tax. Related Criteria Global Bank Rating Criteria (March 2015) 2

3 FYE11 FYE12 FYE13 FYE14 End- 1H15 Banks Figure 3 CBA Credit Exposure By industries, at end-1h15 Manufacturing Construction 2% 1% Mining 2% Agriculture 2% Transport & Storage 2% Trade 2% CRE 6% Finance & insurance 8% Source: Westpac Others 16% House holds 60% Risk Appetite Conservative Underwriting and Risk-Control Practices CBA s underwriting standards are conservative, which is reflected in sound and stable asset quality. Credit risk remains the bank s largest risk, accounting for 88% of risk-weighted assets at end-1h15. This resides primarily in loan portfolio, which accounted for 73% of total assets at end-1h15 this is higher than most international peers. Cash flow/serviceability is the main form of loan assessment, with collateral assumed to be a secondary source of loan repayment. CBA s non-lending assets are mainly held for liquidity and hedging purposes, consisting of available-for-sale (AFS) securities (8% of total assets at end-1h15), derivatives (6%), cash and due from banks (4%), trading and fair-value securities (4%), and insurance assets (2%). A considerable portion of AFS and trading securities are central bank repo-eligible liquid assets and include government securities. Off-balance-sheet exposures consist mainly of committed credit facilities (AUD163bn at end-1h15). Figure 4 Impaired Loan Ratio ANZ CBA (%) NAB WBC aa range avg CBA s risk controls follow a three lines of defence model, similar to domestic peers. A board risk committee is responsible for setting CBA s risk appetite and overseeing the overall risk management framework. Responsibility for the day-to-day implementation of the framework resides with management. An internal audit function is tasked with providing independent assurance that the framework and policies are implemented in full. Concentration limits are in place and tightly managed. Single-name concentrations are small, with the top 20 exposures accounting for 67% of Fitch Core Capital at FYE14. The largest nonfinancial corporate sector is commercial property, which represented 6% of EAD at end-1h15 this is low relative to international peers. Controlled Asset Growth Fitch expects CBA to grow in line with banking system focussing mainly on organic growth. Its target markets are Australia and New Zealand. Growth is likely to be driven by residential mortgages, although CBA intends to expand its business and institutional exposures as these are areas where the bank could improve its franchise. An adequate capital position and access to funding should support further asset growth. Limited Market Risk CBA s market risk is small. Traded market risk accounted for 1.8% of risk-weighted assets, and arises primarily from client trades, with CBA undertaking very little proprietary trading. As a result, traded market risk measures such as value-at-risk (VaR) are modest. Non-traded interest-rate risk in the banking book accounted for 1.4% of risk-weighted assets at end-1h15. Non-traded foreign-exchange risk is hedged, with the exception of CBA s long-term investments in its offshore subsidiaries. The group s only significant non-traded foreignexchange exposure arises as a result of its capitalisation of ASB. Financial Profile Asset Quality Figure 5 Stable Asset Quality (%) 1H15 FY14 FY13 FY12 Growth of gross loans Impaired loans /gross loans Reserves for impaired loans/impaired loans Impaired loans less reserves for impaired loans/fitch Core Capital Loan-impairment charges/average gross loans

4 FYE11 FYE12 FYE13 FYE14 End-1H15 Banks Figure 6 Operating Return on Risk Weighted Assets (%) FY11 FY12 FY13 FY14 1H15 ANZ NAB aa range avg CBA WBC Fitch expects CBA s asset quality to remain sound in FY15. An increase in impaired loans is possible, although from a low base, and should remain manageable. The deterioration reflects the softer operating environment in Australia and a rise in interest rates during 2014 in New Zealand. However, historically low interest rates in Australia combined with low inflation should help offset this pressure. A severe deterioration in CBA s asset quality could be triggered in the event of a hard-landing in China however, this is not Fitch s base scenario. Nevertheless, prolonged low commodity prices could have an impact on the asset quality of certain parts of the portfolio (agriculture, mining). CBA s exposure to these industries is limited, although the wider impact on service industries and households could affect asset quality. CBA s asset quality has remained sound its impaired-loan ratio and impaired-loan reserve coverage have remained stable. Around one-third of impaired exposures related to households while the remainder reflected corporate and business exposures. Asset quality in most industries with the exception of agriculture improved in 1H15. Earnings and Profitability Figure 7 Strong Franchise Supports Profitability (%) 1H15 FY14 FY13 FY12 Net interest income/average earning assets Non-interest expense/gross revenues Loans and securities impairment charges/ pre-impairment operating profit Operating profit/average total assets Operating profit/risk-weighted assets Net income/average equity CBA s operating profitability is expected to remain solid, although profit growth is likely to be pressured in FY16 as a result of fierce asset competition combined with a low-interest-rate environment. However, CBA s strong franchise should provide some pricing advantages to protect its strong net interest margin relative to international peers. Profit growth may also be affected by a small increase in loan-impairment charges due to softer economic conditions in CBA s home markets. CBA s sound cost management benefits from technology improvements in the last four years, and could offset some of the revenue pressures. Capitalisation and Leverage Figure 9 Fitch Core Capital (%) ANZ NAB aa range avg CBA WBC Figure 8 Capitalisation Likely to Improve (%) 1H15 FY14 FY13 FY12 Fitch Core Capital/weighted risk Fitch Eligible Capital/weighted risks Tangible common equity/tangible assets Core Tier 1 regulatory capital ratio Internal capital generation Fitch expects CBA to improve its absolute capital base in preparation for likely changes to prudential capital rules by APRA, which could include the introduction of a minimum average risk-weighting for residential mortgages for IRB-banks. Fitch expects CBA to increase its absolute capital base most likely through retained earnings. CBA s risk-weighted capital ratios are unlikely to benefit from the increase due to the higher risk-weighted assets, although the bank s tangible common equity/ tangible assets ratio should improve. CBA s capitalisation also benefits from hybrid instruments, which increases the bank s lossabsorption buffer. Fitch typically assigns 50% equity credit to Additional Tier 1 instruments but 4

5 FYE11 FYE12 FYE13 FYE14 End-1H15 Banks Figure 10 Customer Deposits as Percentage of Total Funding (%) ANZ CBA NAB WBC aa range avg no equity credit to Tier 2 instruments, although they do provide a cushion for senior creditors. As of end-1h15, CBA held AUD8.4bn Additional Tier 1 capital which received 50% equity credit and contributed to the 11.39% Fitch Eligible Capital ratio. CBA s reported capital ratios lag those of its international peers, in part reflecting APRA s conservative implementation of the Basel III framework. CBA s APRA common equity Tier 1 (CET1) ratio was 9.2% end-1h15. CBA s Fitch Core Capital ratio is toward the upper end of domestic peers 10.2% at end-1h15 (FYE14: 10.3%). Funding and Liquidity Figure 11 Risks Remain Despite Improvements (%) 1H15 FY14 FY13 FY12 Loans/customer deposits Interbank assets/interbank liabilities Customer deposits/total funding (excluding derivatives) CBA s funding relative to international peers remains a weakness despite significant improvements since Fitch expects the funding position to continue to improve in FY16, although the speed of improvements may slow. CBA is most likely to focus on lengthening its wholesale funding maturity profile and improving deposit quality. However, a general lack of deposits means CBA, along with its major Australian bank peers, is likely to remain reliant on wholesale funding, particularly from overseas, relative to similarly rated international peers. Customer deposits have remained the largest source for funding, accounting for 64% of nonequity funding. Around half were sourced from households, with the remainder representing deposits from businesses and corporates. Wholesale funding represented the remainder. Around 58% of total wholesale funds are due to mature within 12 months of end-1h15 liquid assets covered all of these maturities. CBA s pro-forma LCR at 31 December 2014 was 115%, a buffer of AUD18bn over the regulatory minimum. Total liquid assets were AUD140bn, of which 50% were classified as HQLA (AUD70bn) which includes RBNZ repo-eligible securities of AUD5.6bn. The remainder reflects CBA s access to the RBA s committed liquidity facility. CBA s weighted average maturity of wholesale funds was 3.9 years (FY14:3.8 years). CBA s covered bonds programme provides the ability to issue longer-term wholesale funding (relative to senior unsecured) especially in more difficult market conditions. CBA can issue up to AUD55.8bn in covered bond under APRA s 8% limit. At end-1h15, it had issued AUD25.2bn in covered bonds, leaving 55% unused capacity. 5

6 Peer Analysis Figure 12 Domestic Peer Data (%) ANZ a, c CBA b NAB a, c WBC a, c Earnings and profitability Net interest income/average earning assets Non-interest income/gross revenues Non-interest expense/gross revenues Loans and securities impairment charges/preimpairment op. profit Operating profit/average total assets Operating profit/risk weighted assets Net income/average total equity Capitalisation and leverage Fitch Core Capital/risk weighted assets Fitch Eligible Capital/risk weighted assets n.a Tangible common equity/tangible assets Core Tier 1 regulatory capital ratio Internal capital generation Asset quality Growth of gross loans Impaired loans/gross loans Reserves for impaired loans/impaired loans Impaired loans less reserves for impaired loans/fitch (4.15) (1.76) (3.86) (3.19) core capital Loan-impairment charges/average gross loans Funding and liquidity Loans/ customer deposits Interbank assets/interbank liabilities n.a Customer deposits/total funding (excluding derivatives) a 1H15 numbers at 31 March 2015 b 1H15 numbers at 31 December 2014 c ANZ = Australia and New Zealand Banking Group Limited (AA-/ Stable); National Australia Bank Limited (AA-/ Stable); WBC = Westpac Banking Corporation (AA-/ Stable) Source: Bank financials, Fitch 6

7 Income Statement 31 Dec Jun Jun Jun Months - Interim Months - Interim As % of Year End As % of Year End As % of Year End As % of USDm AUDm AUDm Earning AUDm Earning AUDm Earning Unaudited Unaudited Earning Assets Unqualified Assets Unqualified Assets Unqualified Assets 1. Interest Income on Loans 13, , , , , Other Interest Income 1, , , , , Dividend Income Gross Interest and Dividend Income 14, , , , , Interest Expense on Customer Deposits 5, , , , , Other Interest Expense 2, , , , , Total Interest Expense 7, , , , , Net Interest Income 6, , , , , Net Gains (Losses) on Trading and Derivatives Net Gains (Losses) on Other Securities (10.0) (0.00) Net Gains (Losses) on Assets at FV through Income Statement (6.0) (0.00) (1.0) (0.00) Net Insurance Income , , Net Fees and Commissions 1, , , , , Other Operating Income Total Non-Interest Operating Income 2, , , , , Personnel Expenses 2, , , , , Other Operating Expenses 1, , , , , Total Non-Interest Expenses 3, , , , , Equity-accounted Profit/ Loss - Operating Pre-Impairment Operating Profit 5, , , , , Loan Impairment Charge , , Securities and Other Credit Impairment Charges Operating Profit 5, , , , , Equity-accounted Profit/ Loss - Non-operating Non-recurring Income Non-recurring Expense Change in Fair Value of Own Debt Other Non-operating Income and Expenses Pre-tax Profit 5, , , , , Tax expense 1, , , , , Profit/Loss from Discontinued Operations Net Income 3, , , , , Change in Value of AFS Investments (308.0) (0.04) 34. Revaluation of Fixed Assets Currency Translation Differences Remaining OCI Gains/(losses) (96.0) (0.01) Fitch Comprehensive Income 4, , , , , Memo: Profit Allocation to Non-controlling Interests Memo: Net Income after Allocation to Non-controlling Interests 3, , , , , Memo: Common Dividends Relating to the Period 2, , , , , Memo: Preferred Dividends Related to the Period Exchange rate USD1 = AUD USD1 = AUD USD1 = AUD USD1 = AUD

8 Balance Sheet 31 Dec Jun Jun Jun Months - Interim onths - Interim As % of Year End As % of Year End As % of Year End As % of USDm AUDm Assets AUDm Assets AUDm Assets AUDm Assets Assets A. Loans 1. Residential Mortgage Loans 337, , , , , Other Mortgage Loans Other Consumer/ Retail Loans , , Corporate & Commercial Loans Other Loans 174, , , , , Less: Reserves for Impaired Loans 3, , , , , Net Loans 508, , , , , Gross Loans 511, , , , , Memo: Impaired Loans included above 2, , , , , Memo: Loans at Fair Value included above B. Other Earning Assets 1. Loans and Advances to Banks 6, , , , , Reverse Repos and Cash Collateral , , , Trading Securities and at FV through Income 25, , , , , Derivatives 43, , , , , Available for Sale Securities 57, , , , , Held to Maturity Securities Equity Investments in Associates 1, , , , , Other Securities Total Securities 127, , , , , Memo: Government Securities included Above , , , Memo: Total Securities Pledged , , , Investments in Property Insurance Assets 11, , , , , Other Earning Assets Total Earning Assets 655, , , , , C. Non-Earning Assets 1. Cash and Due From Banks 24, , , , , Memo: Mandatory Reserves included above , Foreclosed Real Estate Fixed Assets 2, , , , , Goodwill 6, , , , , Other Intangibles 1, , , , , Current Tax Assets Deferred Tax Assets Discontinued Operations Other Assets 7, , , , , Total Assets 697, , , , , Liabilities and Equity D. Interest-Bearing Liabilities 1. Customer Deposits - Current 11, , , , , Customer Deposits - Savings 217, , , , , Customer Deposits - Term 146, , , , , Total Customer Deposits 375, , , , , Deposits from Banks 27, , , , , Repos and Cash Collateral 7, , , , , Commercial Paper and Short-term Borrowings 46, , , , , Total Money Market and Short-term Funding 456, , , , , Senior Unsecured Debt (original maturity > 1 year) 125, , , , , Subordinated Borrowing , Covered Bonds Other Long-term Funding , , , Total LT Funding (original maturity > 1 year) 125, , , , , Derivatives 35, , , , , Trading Liabilities 5, , , , , Total Funding 623, , , , , E. Non-Interest Bearing Liabilities 1. Fair Value Portion of Debt Credit impairment reserves Reserves for Pensions and Other 1, , , , , Current Tax Liabilities , , Deferred Tax Liabilities Other Deferred Liabilities Discontinued Operations Insurance Liabilities 10, , , , , Other Liabilities 10, , , , , Total Liabilities 646, , , , , F. Hybrid Capital 1. Pref. Shares and Hybrid Capital accounted for as Debt 9, , , , , Pref. Shares and Hybrid Capital accounted for as Equity G. Equity 1. Common Equity 38, , , , , Non-controlling Interest Securities Revaluation Reserves (63.0) (0.01) 4. Foreign Exchange Revaluation Reserves (42.0) (0.01) (427.0) (0.06) (893.0) (0.12) 5. Fixed Asset Revaluations and Other Accumulated OCI 1, , , , , Total Equity 41, , , , , Total Liabilities and Equity 697, , , , , Memo: Fitch Core Capital 29, , , , , Memo: Fitch Eligible Capital 32, , , , , USD1 = AUD USD1 = AUD USD1 = AUD USD1 = AUD Exchange rate 8

9 Summary Analytics 31 Dec Jun Jun Jun Months - Interim Year End Year End Year End A. Interest Ratios 1. Interest Income on Loans/ Average Gross Loans Interest Expense on Customer Deposits/ Average Customer Deposits Interest Income/ Average Earning Assets Interest Expense/ Average Interest-bearing Liabilities Net Interest Income/ Average Earning Assets Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets B. Other Operating Profitability Ratios 1. Non-Interest Income/ Gross Revenues Non-Interest Expense/ Gross Revenues Non-Interest Expense/ Average Assets Pre-impairment Op. Profit/ Average Equity Pre-impairment Op. Profit/ Average Total Assets Loans and securities impairment charges/ Pre-impairment Op. Profit Operating Profit/ Average Equity Operating Profit/ Average Total Assets Operating Profit / Risk Weighted Assets C. Other Profitability Ratios 1. Net Income/ Average Total Equity Net Income/ Average Total Assets Fitch Comprehensive Income/ Average Total Equity Fitch Comprehensive Income/ Average Total Assets Taxes/ Pre-tax Profit Net Income/ Risk Weighted Assets D. Capitalization 1. Fitch Core Capital/ Risk Weighted Assets Fitch Eligible Capital/ Risk Weighted Assets Tangible Common Equity/ Tangible Assets Tier 1 Regulatory Capital Ratio Total Regulatory Capital Ratio Core Tier 1 Regulatory Capital Ratio Equity/ Total Assets Cash Dividends Paid & Declared/ Net Income Internal Capital Generation E. Loan Quality 1. Growth of Total Assets Growth of Gross Loans Impaired Loans/ Gross Loans Reserves for Impaired Loans/ Gross Loans Reserves for Impaired Loans/ Impaired Loans Impaired loans less Reserves for Impaired Loans/ Fitch Core Capital (1.76) (2.01) (1.57) (0.93) 7. Impaired Loans less Reserves for Impaired Loans/ Equity (1.26) (1.44) (1.05) (0.65) 8. Loan Impairment Charges/ Average Gross Loans Net Charge-offs/ Average Gross Loans Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets F. Funding and Liquidity 1. Loans/ Customer Deposits Interbank Assets/ Interbank Liabilities Customer Deposits/ Total Funding (excluding derivatives) Liquidity Coverage Ratio n.a. n.a. n.a. n.a. 5. Net Stable Funding Ratio n.a. n.a. n.a. n.a. 9

10 Reference Data 31 Dec Jun Jun Jun Months - Interim onths - Interim As % of Year End As % of Year End As % of Year End As % of USDm AUDm Assets AUDm Assets AUDm Assets AUDm Assets A. Off-Balance Sheet Items 1. Managed Securitized Assets Reported Off-Balance Sheet Other off-balance sheet exposure to securitizations Guarantees 5, , , , , Acceptances and documentary credits reported off-balance sheet 1, , , , , Committed Credit Lines 134, , , , , Other Contingent Liabilities 1, , , , , Total Assets under Management 841, ,026, , , , B. Average Balance Sheet Average Loans 502, , , , , Average Earning Assets 605, , , , , Average Assets 660, , , , , Average Managed Securitized Assets (OBS) Average Interest-Bearing Liabilities 570, , , , , Average Common equity 38, , , , , Average Equity 40, , , , , Average Customer Deposits 367, , , , , C. Maturities Asset Maturities: Loans & Advances < 3 months Loans & Advances 3-12 Months Loans and Advances 1-5 Years Loans & Advances > 5 years Debt Securities < 3 Months Debt Securities 3-12 Months Debt Securities 1-5 Years Debt Securities > 5 Years Loans & Advances to Banks < 3 Months Loans & Advances to Banks 3-12 Months Loans & Advances to Banks 1-5 Years Loans & Advances to Banks > 5 Years Liability Maturities: Retail Deposits < 3 months Retail Deposits 3-12 Months Retail Deposits 1-5 Years Retail Deposits > 5 Years Other Deposits < 3 Months Other Deposits 3-12 Months Other Deposits 1-5 Years Other Deposits > 5 Years Deposits from Banks < 3 Months Deposits from Banks 3-12 Months Deposits from Banks 1-5 Years Deposits from Banks > 5 Years Senior Debt Maturing < 3 months Senior Debt Maturing 3-12 Months Senior Debt Maturing 1-5 Years Senior Debt Maturing > 5 Years Total Senior Debt on Balance Sheet n.a. n.a. - n.a. - n.a. - n.a. - Fair Value Portion of Senior Debt Subordinated Debt Maturing < 3 months Subordinated Debt Maturing 3-12 Months Subordinated Debt Maturing 1-5 Year Subordinated Debt Maturing > 5 Years Total Subordinated Debt on Balance Sheet n.a. n.a. - n.a. - n.a. - 4, Fair Value Portion of Subordinated Debt D. Risk Weighted Assets 1. Risk Weighted Assets 289, , , , , Fitch Adjustments to Risk Weighted Assets Fitch Adjusted Risk Weighted Assets 289, , , , , E. Equity Reconciliation 1. Equity 41, , , , , Add: Pref. Shares and Hybrid Capital accounted for as Equity Add: Other Adjustments Published Equity 41, , , , , F. Fitch Eligible Capital Reconciliation 1. Total Equity as reported (including non-controlling interests) 41, , , , , Fair value effect incl in own debt/borrowings at fv on the B/S- CC only Non-loss-absorbing non-controlling interests Goodwill 6, , , , , Other intangibles 1, , , , , Deferred tax assets deduction Net asset value of insurance subsidiaries 3, , , , , First loss tranches of off-balance sheet securitizations Fitch Core Capital 29, , , , , Eligible weighted Hybrid capital 3, , , , , Government held Hybrid Capital Fitch Eligible Capital 32, , , , , Exchange Rate USD1 = AUD USD1 = AUD USD1 = AUD USD1 = AUD

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