Commonwealth Bank of Australia (CMWAY) 6-K/A Current report (foreign) (amended)

Profit Announcement

For the Half Year ended 31 December 2006

Appendix 4D

Results for announcement to the market⁽¹⁾

Report for the half year ended 31 December 2006	$M
Revenues from ordinary activities	Up 13% to $16,324
Profit (loss) from ordinary activities after tax attributable to members	Up 10% to $2,191
Net profit (loss) for the period attributable to members	Up 10% to $2,191
Dividends (distributions)
Interim Dividend – fully franked (cents per share)		107
Record date for determining entitlements to the dividend	23 February 2007

(1) Rule 4.2.C.3

Refer to Appendix 13 ASX Appendix 4D for disclosures required under ASX Listing Rules on page 65.

This report should be read in conjunction with the 30 June 2006 Annual Financial Report of the Group and any public announcements made in the period by the Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

Important Dates for Shareholders
Interim Result and Interim Dividend Announcement	14 February 2007
Ex-dividend Date	19 February 2007
Record Date	23 February 2007
Interim Dividend payment Date	5 April 2007
Full Year Results Announcement	15 August 2007
Ex-dividend Date	20 August 2007
Record Date	24 August 2007
Final Dividend Payment Date	5 October 2007
Annual General Meeting	7 November 2007

For further information contact:

Investor Relations

Warwick Bryan
Phone: 02 9378 5130
Facsimile: 02 9378 2344
Email: ir@cba. com. au

Except where otherwise stated, all figures relate to the half year ended 31 December 2006 and comparatives to the half year ended 30 June 2006. The term “prior comparative period” refers to the half year ended 31 December 2005, while the term “prior half” refers to the half year ended 30 June 2006, unless otherwise stated.

Highlights	2
Financial Performance and Business Review	2
Group Performance Summary	3
Shareholder Summary	3
Balance Sheet Summary	4
Key Performance Indicators	4
Banking Analysis	6
Financial Performance and Business Review	6
Key Performance Indicators	7
Total Banking Assets and Liabilities	9
Australian Retail	10
Business, Corporate and Institutional	12
Asia Pacific	14
Funds Management Analysis	16
Financial Performance and Business Review	16
Key Performance Indicators	17
Funds Under Administration	18
Insurance Analysis	20
Financial Performance and Business Review	20
Key Performance Indicators	21
Annual Inforce Premiums	22
Shareholder Investment Returns	23
Directors’ Report	24
Financial Statements	25
Consolidated Income Statement	26
Consolidated Balance Sheet	27
Consolidated Statement of Recognised Income and Expense	28
Consolidated Statement of Cash Flows	29
Notes to the Financial Statements	31
Directors’ Declaration	46
Independent Interim Review Report	47
Appendices	48

Highlights

Financial Performance and Business Review

Performance Highlights

	Half Year Ended
Net Profit after	31/12/06		30/06/06		31/12/05
Income Tax	$M		$M		$M
Statutory basis		2,191		1,929		1,999
Cash basis ex HK sale		2,271		1,992		1,916

The Group’s net profit after tax (“statutory basis”) for the half year ended 31 December 2006 was $2,191 million, representing an increase of 14% on the prior half, and 10% on the prior comparative period.

The net profit after tax (“cash basis”) increased 14% on the prior half to $2,271 million, and 19% on the prior comparative period (excluding the profit on the sale of the Hong Kong Insurance Business).

The Group’s Return on Equity (“cash basis”) has improved by 150 basis points on the prior half to 22.3%.

Cash earnings per share increased 13% on the prior half to 174.7 cents and 17% on the prior comparative period (excluding the profit on the sale of the Hong Kong Insurance Business).

This was a strong result for the Group with good earnings momentum and reflects the Group’s focus on profitable product segments. The result was underpinned by:

• Strong growth in banking income, following growth in average interest earning assets of 9% to $307 billion and net interest margin contraction of seven basis points;

• Growth in funds under administration of 11% to $168 billion supported by the continuing trends of both strong flows into the FirstChoice platform and strength in investment markets;

• Growth in insurance premiums, planned profit margins and shareholder investment returns;

• Strong credit quality across all lending portfolios; and

• Operating expense growth of 4% on the prior half and 6% on the prior comparative period. Importantly, underlying productivity improvements have enabled increased investment in the businesses including a significant investment in customer service staff.

The Group’s net profit after tax (“statutory basis”) for the half year was $2,191 million. The statutory result includes the impact of three non-cash items, which arose due to the requirements of Australian equivalents to International Financial Reporting Standards (“AIFRS”):

• Defined benefit superannuation plan income/(expense) which relates to the recognition of surplus superannuation fund assets ($4 million income);

• Treasury shares valuation adjustment which reflects the appreciation of the Bank’s own shares held in the life insurance statutory funds ($38 million expense); and

• One off AIFRS mismatch, a one off non-cash expense of $46 million which arose as a result of the expiry of a hedging transaction. The offsetting gain was recognised as an adjustment to opening retained earnings on the adoption of AIFRS on 1 July 2005. No economic loss has been incurred by the Group. Refer to Note 2 Income from Ordinary Activities, page 32 for more information.

Other performance highlights relating to the strategic priorities for the half year included:

• Improvement in retail customer satisfaction levels recorded by both AC Neilsen and Roy Morgan;

• Retail customer complaints down 47% on the prior comparative period;

• Recognition of transaction and deposit account product range with five star ratings given to seven products (Source: Cannex);

• Continued expansion in Business Banking operations, with the reintroduction of Business Bankers in branches and the opening of a new Business Banking centre in Western Australia during December 2006;

• ASB recognised as New Zealand’s “Bank of the Year” for the fifth year running by the UK based Banker magazine; and

• Group ranked 1^st in Retail funds management net flows for the year to September 2006 (Source: Plan for Life).

Dividends

The interim dividend for the year is $1.07 per share, an increase of 13 cents or 14% on the prior comparative period, representing a dividend payout ratio (“cash basis”) for the half year of 61.5%.

The dividend payment is fully franked and will be paid on 5 April 2007 to owners of ordinary shares at the close of business on 23 February 2007 (“record date”). Shares will be quoted ex–dividend on 19 February 2007.

The Group issued $300 million of shares to satisfy shareholder participation in the Dividend Reinvestment Plan (“DRP”) in respect of the final dividend for 2005/06.

Outlook

The domestic economy has maintained a good level of growth during the first half of the 2007 fiscal year. Looking forward, growth is likely to remain below the levels experienced in recent years due to capacity constraints and the impact of the drought on the economy. Business credit growth remains solid and consumer spending has been resilient in a rising interest environment.

The Australian financial services industry continues to be highly competitive.

The Group has maintained good earnings momentum and strong credit quality over the first six months of the 2007 financial year. Given the positive outlook for growth and the diversity of the income streams, the Group remains well on track to deliver cash EPS growth which meets or exceeds the average of its peers.

2      Commonwelth Bank of Australia

Highlights continued

	Half Year Ended
	31/12/06			30/06/06			31/12/05			Dec 06 vs			Dec 06 vs
Group Performance Summary	$M			$M			$M			Jun 06 %			Dec 05 %
Net interest income		3,485			3,259			3,255			7			7
Other banking income		1,678			1,591			1,445			5			16
Total Banking Income		5,163			4,850			4,700			6			10
Funds management income		893			828			715			8			25
Insurance income		382			356			386			7			(1	)
Total Operating Income		6,438			6,034			5,801			7			11
Shareholder investment returns		85			37			64			large			33
Profit on sale of the Hong Kong Insurance Business		—			—			145			—			—
Total Income		6,523			6,071			6,010			7			9
Operating expenses		3,144			3,027			2,967			(4	)		(6	)
Loan impairment expenses		195			210			188			7			(4	)
Net Profit Before Income Tax		3,184			2,834			2,855			12			12
Corporate tax expense(1)		900			829			776			(9	)		(16	)
Minority interests(2)		13			13			18			—			28
NPAT (“cash basis”)		2,271			1,992			2,061			14			10
Defined benefit superannuation plan income/(expense)		4			(6	)		(19	)		large			large
Treasury shares valuation adjustment		(38	)		(57	)		(43	)		33			12
One off AIFRS mismatch		(46	)		—			—			—			—
NPAT (“statutory basis”)		2,191			1,929			1,999			14			10
Represented by:
Banking		1,867			1,638			1,589			14			17
Funds management		232			217			183			7			27
Insurance		111			112			103			(1	)		8
NPAT (“underlying basis”)		2,210			1,967			1,875			12			18
Shareholder investment returns		61			25			41			large			49
Cash NPAT excluding the sale of the Hong Kong Insurance Business		2,271			1,992			1,916			14			19
Profit on sale of the Hong Kong Insurance Business		—			—			145			—			—
NPAT (“cash basis”)		2,271			1,992			2,061			14			10

(1)	For purposes of presentation, Policyholder tax benefit and Policyholder tax expense components of corporate tax expense are shown on a net basis (31 December 2006: $138 million, 30 June 2006: $130 million, and 31 December 2005: $201 million).
(2)	Minority interests includes preference dividends paid to holders of preference shares in ASB Capital.

	Half Year Ended
							Dec 06 vs			Dec 06 vs
Shareholder Summary	31/12/06		30/06/06		31/12/05		Jun 06 %			Dec 05 %
Dividends per share – fully franked (cents)		107		130		94		(18	)		14
Dividend cover – cash (times)		1.6		1.2		1.7		n/a			n/a
Earnings per share (cents)(1)
Statutory basis – basic		169.6		151.1		157.1		12			8
Cash basis – basic		174.7		154.9		160.9		13			9
Cash basis – basic excluding the sale of the Hong Kong Insurance Business		174.7		154.9		149.5		13			17
Dividend payout ratio (%)
Statutory basis		63.8		86.5		60.6	large			320bpts
Cash basis		61.5		83.7		58.8	large			270bpts
Weighted average no. of shares – statutory basic (M)(1)		1,276		1,277		1,273		—			—
Weighted average no. of shares – cash basic (M)(2)		1,284		1,285		1,281		—			—
Return on equity – cash (%)		22.3		20.8		21.7	150bpts			60bpts

(1) For definitions refer to appendix 17, page 72. (2) Fully diluted EPS and weighted average number of shares (fully diluted) are disclosed in appendix 14, page 68.

Highlights continued

	As at
	31/12/06		30/06/06		31/12/05		Dec 06 vs		Dec 06 vs
Balance Sheet Summary	$M		$M		$M		Jun 06 %		Dec 05 %
Lending assets(1)		286,814		266,096		254,947		8		12
Total assets		397,261		369,103		351,193		8		13
Total liabilities		374,774		347,760		331,343		8		13
Shareholders’ Equity		22,487		21,343		19,850		5		13
Assets held and FUA
On balance sheet:
Banking assets		367,250		340,254		321,477		8		14
Insurance funds under administration		21,040		20,792		21,217		1		(1	)
Other insurance and internal funds management assets		8,971		8,057		8,499		11		6
		397,261		369,103		351,193		8		13
Off balance sheet:
Funds under administration		146,622		130,721		115,757		12		27
Total assets held and FUA		543,883		499,824		466,950		9		16

(1) Lending assets comprise Loans, Advances, and Other Receivables (gross of provisions for impairment and excluding securitisation) and bank acceptances of customers.

	Half Year Ended
							Dec 06 vs			Dec 06 vs
Key Performance Indicators	31/12/06		30/06/06		31/12/05		Jun 06 %			Dec 05 %
Banking
Underlying NPAT ($M)		1,867		1,638		1,589		14			17
Net interest margin (%)		2.22		2.29		2.39	(7)bpts			(17)bpts
Average interest earning assets ($M)(1)		306,868		282,553		267,169		9			15
Average interest bearing liabilities ($M)(1)		286,548		263,203		247,129		9			16
Expense to income (%)		45.6		47.4		48.1		4			5
Funds Management
Underlying NPAT ($M)		232		217		183		7			27
Operating income to average funds under administration (%)		1.13		1.14		1.10	(1)bpt			3bpts
Funds under administration – spot ($M)		167,662		151,513		136,974		11			22
Expense to average FUA (%)		0.71		0.72		0.70		1			(1	)
Insurance
Underlying NPAT ($M)		111		112		103		(1	)		8
Inforce premiums ($M)		1,412		1,223		1,216		15			16
Expense to average inforce premiums (%)		34.3		33.6		40.5		(2	)		15
Capital Adequacy
Tier One (%)		7.06		7.56		7.54	(50)bpts			(48)bpts
Total (%)		9.78		9.66		9.81	12bpts			(3)bpts
Adjusted Common Equity (%)		4.70		4.50		5.00	20bpts			(30)bpts

(1) Average interest earning assets and average interest bearing liabilities have been adjusted to remove the impact of securitisation. Refer to Average Balances and Related Interest Page 50.

Credit Ratings	Long–term	Short–term		Affirmed
Fitch Ratings	AA		F1+	Dec 06
Moody’s Investor Services	Aa3		P-1	Dec 06
Standards & Poor’s	AA-		A-1+	Dec 06

The Group continues to maintain a strong capital position which is reflected in its credit ratings which remained unchanged for the half year. Additional information regarding the Bank’s capital is disclosed in appendix 8, pages 56 to 58.

4      Commonwelth Bank of Australia

Highlights continued

Cash EPS Performance (cents)(1)	Underlying NPAT By Segment ($M)
Banking Expense to Income	Lending Assets ($B)
Funds Under Administration ($B)	Annual Inforce Premiums – Australia & New Zealand ($M)

(1) Excluding the profit from sale of Hong Kong Insurance Business in the December 2005 half year.

Banking Analysis

Financial Performance and Business Review

Performance Highlights

The half year underlying net profit after tax of $1,867 million for the Banking business increased 14% on the prior half and 17% on the prior comparative period.

The performance during the half year was driven by:

• Continued strong volume growth in home loans, up 6%* since June 2006 to $166 billion;

• Improvement in business lending volumes, up 10%* since June 2006 to $84 billion;

• Domestic deposit volume growth of 7% since June 2006 to $161 billion;

• Net interest margin decreased seven basis points over the half year, largely due to changes in asset and funding mix together with the impact of competition on the home loan and credit card portfolios;

• Improving productivity, investment in front line staff and salary increases resulting in an operating expenses increase of 2% on the prior half; and

• Credit quality remaining strong.

More comprehensive disclosure of business highlights by key product category is contained on pages 10-15.

Net Interest Income

Net interest income increased by 7% on the prior half to $3,485 million. The growth was driven by a strong increase in average interest earning assets of 9% offsetting a seven basis point reduction in net interest margin.

Average Interest Earning Assets

Average interest earning assets increased by $24 billion on the prior half to $307 billion, reflecting an almost $20 billion increase in average lending interest earning assets and an over $4 billion increase in average non-lending interest earning assets.

Home lending growth continued to be the largest contributor to the increase in average interest earning assets. Average home loan balances have increased by 7% since 30 June 2006 and 11% since December 2005.

Personal Lending average balances have increased by 7% since June 2006 and 11% since December 2005. This result has been driven by strong growth in margin loans. Credit card growth has been subdued largely due to the decision not to match the zero rate balance transfers offered by certain competitors.

Average balances for Business, Corporate and Institutional lending have increased 12% since June 2006 and 25% since December 2005 reflecting growth in structured finance and general business lending.

Net Interest Margin

Net interest margin of 2.22% decreased seven basis points on the prior half, comprising a three basis point decline due to growth in liquid assets and a four basis point contraction in core lending and deposits. At a summary level, the margin contraction is attributable to the Group’s strategy of pursuing profitable growth in a competitive environment. The strategy has driven changes in business mix by focusing on quality lending growth while foregoing growth in products with low long-term value creation.

Liquid Assets: Average non lending assets have increased by over $4 billion resulting in margin reduction of three basis points.

Pricing: Changes within the home loan lending and credit cards portfolios have resulted in a four point margin decline. Home loan margins reduced in Australia and New Zealand due to increased proportion of fixed-rate lending in a rising rate environment (one basis point); increased package lending (one basis point); together with the impact of a slight increase in third party broker mix (half basis point). Credit card margins were affected due to strong growth in the “Yellow” low rate credit card (half basis point), and some attrition of “revolving” customers due to competitor zero rate balance transfer offers (one basis point).

Cash Rate: Deposit margin improvement for the half year has contributed a net increase of three basis points. This is partly offset by margin contraction due to the timing lag that arises on passing cash rate increases on to variable rate home loans (half basis point); the impact on credit card balances not bearing interest (half basis point); and the tightening of spreads due to the 90-day bill rate rising in anticipation of cash rate increases during the period (one basis point).

Funding mix: Average lending asset growth of 8% continued to outpace average retail deposit growth of 5%, resulting in a greater reliance on wholesale funding which has grown from 45% in June 2006 to 46% in December 2006. This ongoing structural change in funding mix has resulted in a two basis point margin contraction.

Lending Mix: Higher margin business lending has grown faster than lower margin home lending, resulting in a one basis point increase in margin.

NIM movement since June 2006

Additional information, including the average balance sheet, is set out on pages 50 to 51.

• Growth in lending and deposit spot rates have been adjusted to exclude the impact of NZD foreign exchange movements on translation of ASB Bank assets.

6      Commonwelth Bank of Australia

Banking Analysis continued

	Half Year Ended
	31/12/06			30/06/06			31/12/05			Dec 06 vs			Dec 06 vs
Key Performance Indicators	$M			$M			$M			Jun 06 %			Dec 05 %
Net interest income		3,485			3,259			3,255			7			7
Other banking income		1,678			1,591			1,445			5			16
Total Banking income		5,163			4,850			4,700			6			10
Operating expenses		2,354			2,298			2,260			(2	)		(4	)
Loan impairment expense		195			210			188			7			(4	)
Net profit before income tax		2,614			2,342			2,252			12			16
Income tax expense		734			691			648			(6	)		(13	)
Minority interests		13			13			15			—			13
NPAT (“cash basis”)		1,867			1,638			1,589			14			17
NPAT(“underlying basis”)		1,867			1,638			1,589			14			17
Productivity and other measures
Net interest margin (%)		2.22			2.29			2.39		(7)bpts			(17)bpts
Expense to income (%)		45.6			47.4			48.1			4			5
Effective corporate tax rate (%)		28.1			29.5			28.8		140bpts			70bpts
Total Banking NPAT (“Underlying Basis”) (1)
Australian Retail Products		912			847			842			8			8
Business, Corporate and Institutional Products		762			617			589			24			29
Asia Pacific		202			186			184			9			10
Other		(9	)		(12	)		(26	)		25			65
Total Banking NPAT (“Underlying Basis”)		1,867			1,638			1,589			14			17

(1) During the current period certain balance sheet risk management operations have been merged within the Financial Markets product of the Business, Corporate and Institutional segment; and the methodology for overhead cost allocation between banking segments has been refined. Prior periods have been restated to allow comparability.

Other Banking Income

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Commissions		859			820			815
Lending fees		417			411			389
Trading income		306			261			244
Other income		159			138			37
		1,741			1,630			1,485
Non-trading derivatives		(63	)		(39	)		(40	)
Other banking income		1,678			1,591			1,445

Other Banking Income

Factors impacting other banking income were:

• Commissions: increased by 5% on the prior half to $859 million, principally driven by volume-related increases in home lending package fee income and continued strong brokerage commissions within CommSec;

• Lending fees: increased by 1% on the prior half to $417 million. The result was driven by growth in institutional lending offset by seasonal factors in other fee categories. Increases in establishment fees received due to lending volume growth no longer flow through other banking income, the benefit is instead received within net interest income over the life of the product under AIFRS;

• Trading income: increased 17% on the prior half to $306 million due to favourable market conditions and an increase in trading assets; and

• Other income: increased $21 million on the prior half. The current half year includes $79 million due to the sale of the Bank’s share in Greater Energy Alliance Corporation Pty Limited (“Loy Yang”). The prior half included $32 million in relation to the Mastercard IPO.

Banking Analysiscontinued

Operating expenses

Underlying operating expenses within the Banking business increased by 2% on the prior half to $2,354 million. Operating expenses were impacted by:

• Average salary increases of 4% reflecting labour market movements and increases in other inflation-related expense;

• Continued investment in front line staff supporting the banking operations with 577 new domestic retail customer service staff recruited since October 2005 together with the reintroduction of business bankers in the branches;

• Continued investment in projects supporting the strategic priorities of the Bank (including customer service and business banking initiatives); partly offset by

• IT efficiency savings and favourable timing differences in advertising and other spend.

Banking Expense to Income Ratio

Banking expense to income ratio improved from 47.4% for the half year ended 30 June 2006 to 45.6% in the current half representing a productivity improvement of 4%. The improvement reflects strong income growth and good expense control, including IT efficiency savings.

Productivity

Loan Impairment Expense

The total charge for loan impairments for the half year was $195 million, which represents 17 basis points of Risk Weighted Assets on an annualised basis. This expense is $15 million lower than the prior half, reflecting continued improvement in the quality of the unsecured lending portfolio.

Gross impaired assets were $338 million as at 31 December 2006, compared with $326 million at 30 June 2006.

The Bank remains well provisioned, with total provisions for impairment as a percentage of gross impaired assets of 364%.

Taxation Expense

The corporate tax charge for the half year was $734 million, an effective tax rate of 28.1%.

Provisions for Impairment Losses

Total provisions for impairment losses at 31 December 2006 were $1,230 million. The current level reflects:

• The continued high quality of the home lending and business lending portfolios; and

• Improvement in the unsecured retail lending portfolio due to tightening of credit policies since 2004.

Risk Weighted Assets on Balance Sheet ($M)

Gross Impaired Assets ($M)

     8           Commonwealth Bank of Australia

Banking Analysiscontinued

	As at
	31/12/06			30/06/06			31/12/05			Dec 06 vs			Dec 06 vs
Total Banking Assets & Liabilities	$M			$M			$M			Jun 06 %			Dec 05 %
Interest earning assets
Home loans including securitisation		176,721			167,121			159,339			6			11
Less: securitisation		(10,754	)		(12,607	)		(9,124	)		(15	)		18
Home loans		165,967			154,514			150,215			7			10
Personal		18,237			17,228			15,967			6			14
Business and corporate		84,215			76,044			71,502			11			18
Loans, advances and other receivables(1)		268,419			247,786			237,684			8			13
Non lending interest earning assets		45,792			40,283			39,431			14			16
Total interest earning assets		314,211			288,069			277,115			9			13
Other assets(2)		53,039			52,185			44,362			2			20
Total assets		367,250			340,254			321,477			8			14
Interest bearing liabilities
Transaction deposits		36,070			35,771			33,641			1			7
Savings deposits		47,380			42,729			40,676			11			16
Investment deposits		72,188			67,364			67,462			7			7
Other demand deposits		24,892			20,325			19,573			22			27
Total interest bearing deposits		180,530			166,189			161,352			9			12
Deposits not bearing interest(3)		8,289			7,038			7,371			18			12
Deposits and other public borrowings		188,819			173,227			168,723			9			12
Other interest bearing liabilities		111,751			99,976			95,538			12			17
Total interest bearing liabilities		292,281			266,165			256,890			10			14
Securitisation debt issues		11,130			13,505			9,849			(18	)		13
Non interest bearing liabilities		46,788			44,515			40,316			5			16
Total liabilities		350,199			324,185			307,055			8			14
Provisions for Impairment losses
Collective provision		1,040			1,046			1,041			(1	)		—
Individually assessed provisions		171			171			179			—			(4	)
Total provisions for loan impairment		1,211			1,217			1,220			—			(1	)
Other credit provisions(4)		19			24			24			(21	)		(21	)
Total provisions for impairment losses		1,230			1,241			1,244			(1	)		(1	)

(1)	Gross of provisions for impairment which are included in Other assets.
(2)	Other assets include Bank acceptances of customers, provisions for impairment and securitisation assets.
(3)	Increase includes a short term funds flow of $380 million which reversed in January 2007, and a $450 million transfer following a product rationalisation program within ASB Bank.
(4)	Included in Other provisions.

	Half Year Ended
							Dec 06 vs		Dec 06 vs
Asset Quality	31/12/06		30/06/06		31/12/05		Jun 06 %		Dec 05 %
Risk weighted assets ($M)		234,569		216,438		202,667		8		16
Net impaired assets ($M)		167		155		217		8		(23	)
Prudential general reserve for credit losses as a % of risk weighted assets		0.68		0.71		0.71	(3)bpts		(3)bpts
Individually assessed provisions for impairment as a % of gross impaired assets		50.6		52.5		45.2	(190)bpts		540bpts
Loan impairment expense as a % of risk weighted assets (annualised)		0.17		0.19		0.19	(2)bpts		(2)bpts

Profit Announcement            9

Banking Analysiscontinued

Australian Retail

The Australian Retail product segment continued to perform strongly over the half year ended 31 December 2006 with underlying profit after tax increasing by 8% on the prior half. The result was underpinned by solid revenue growth in a competitive business environment, good expense management and continuing sound credit quality.

Business Review

Over the half year, good progress was made on a number of initiatives designed to improve the customer experience, to enable the Group to achieve its vision to be Australia’s finest financial services organisation through excelling in customer service. Highlights in the half year included:

• The recruitment of a further 127 customer service staff, taking the number of new front line customer service positions established since October 2005 to 577;

• A fresh approach to the recruitment, induction and training of new customer service staff, with greater emphasis placed on the sales and service skills of our people;

• The continued reinvigoration of front line sales and service effort through global best practice techniques and processes;

• The opening of new branches in selected growth areas, with new technology and design features delivering a better experience for customers;

• The opening of 65 of the busiest branches for Saturday trading;

• The ongoing revitalisation of the product range, highlighted by the awarding of five star ratings to seven of the Group’s deposit and transaction accounts, including NetBank Saver, Streamline, Cash Investment Account, AwardSaver and YouthSaver (Source: Cannex); and

• The continued utilisation of the Group’s state-of-the-art customer management system, CommSee, to improve sales productivity and customer service.

As a result of these and other actions, there have been some encouraging improvements in a range of customer service and people engagement measures, including;

• Customer satisfaction levels have improved from 75.1% to 80.0% since June 2006 (Source: AC Neilsen);

• Recorded our best result in six years in the December 2006 Roy Morgan customer satisfaction survey;

• Retail customer complaints reduced by 47% on the prior comparative period; and

• Improving trends in key measures of staff engagement, including absenteeism and time lost through injury.

Home Loans

Home loan revenue increased by 4% on the prior half. Net interest income grew by 3% on the prior half, with strong average balance growth of 6% partially offset by lower margins. Margin compression in the period was largely due to mix changes relating to a higher proportion of lower margin package and fixed rate lending. Fixed rate margins were compressed by yield curve changes in the periods leading up to the August and November cash rate rises. Fee revenue growth was solid, underpinned by good package fee income.

Some market share has been ceded over the period, largely to smaller players generating a greater proportion of their business through the broker distribution channel. There has been some dampening in consumer demand, particularly in the first home buyer and investor housing segments.

Consumer Finance (Personal Loans and Credit Cards)

Total income in the Consumer Finance portfolio was 3% lower on the prior half, with the prior half including $32 million related to the MasterCard IPO. Excluding this, underlying income growth was 2% on the prior half. Credit card income has been impacted by an increasingly price-driven market, characterised by zero/low rate balance transfer offers and strong growth in the low rate card segment. The Bank’s low-rate credit card (“Yellow”) continues to meet strong customer demand, with over 174,000 accounts opened since launch in March 2006.

Retail Deposits

Retail deposits include all domestic retail customer transaction and savings accounts and other demand deposits. Deposit revenue increased 6% on the prior half, driven by a combination of strong volume growth and improved margins in a rising interest rate environment.

Deposit balances grew by 6% on the prior half to $97 billion, with good inflows recorded in a range of products, including Transaction Accounts, NetBank Saver and Term Deposits. NetBank Saver balances now stand at over $6 billion, accounting for 7% of total portfolio balances.

Operating expenses

Expenses increased by 2% on the prior half and are flat compared to the prior comparative period. Expense growth in this period reflects staff related pay increases from 1 July 2006 and the introduction of additional front line customer service staff. Offsetting this has been the continuing realisation of productivity and other expense savings.

Loan Impairment

Total Loan Impairment Expense for retail products for the half year was $164 million, a reduction on the prior half of $34 million. Lower collective provisioning levels reflect an improvement in unsecured consumer portfolio arrears. Overall credit quality in the consumer portfolios remains sound. Home loan and credit card loss rates are stable and whilst home loan arrears rates have risen in line with the market, this is off a very low base. In personal loans, policy tightening and the introduction of new scorecards has resulted in an improvement in loan quality.

Market Share Percentage(1)	31/12/06		30/06/06		31/12/05
Home loans(3)		18.2		18.7		18.8
Credit cards(2)(3)		19.4		20.3		21.4
Personal lending (APRA and other households)(4)		16.4		16.1		16.0
Household deposits		28.8		29.3		29.6
Retail deposits		21.9		22.2		22.9

(1)	For market share definitions refer to appendix 18, page 73.
(2)	As at 30 November 2006.
(3)	30 June 2006 comparative revised.
(4)	Personal lending market share includes personal loans and margin loans.

10           Commonwealth Bank of Australia

Banking Analysiscontinued

Half Year to December 2006

Net

Other

Total

Loan

Underlying

Interest

Banking

Banking

Expenses

Impairment

Profit after

Australian Retail

Income $M(1)

Income $M

Income $M

$M(2)

$M

Tax $M

Home loans

644

87

731

Consumer finance

351

191

542

Retail deposits

1,061

337

1,398

Australian Retail products

2,056

615

2,671

1,206

164

912

	Half Year to June 2006
	Net		Other		Total				Loan		Underlying
	Interest		Banking		Banking		Expenses		Impairment		Profit after
	Income $M(1)		Income $M		Income $M		$M(2)		$M		Tax $M
Home loans		627		74		701
Consumer finance		366		195		561
Retail deposits		963		351		1,314
Australian Retail products		1,956		620		2,576		1,181		198		847

	Half Year to December 2005
	Net		Other		Total				Loan		Underlying
	Interest		Banking		Banking		Expenses		Impairment		Profit after
	Income $M(1)		Income $M		Income $M		$M(2)		$M		Tax $M
Home loans		633		77		710
Consumer finance		366		173		539
Retail deposits		965		349		1,314
Australian Retail products		1,964		599		2,563		1,207		156		842

(1)	During the current period the methodology for allocation of total Australian Retail income between products has been refined. Prior periods have been restated on a consistent basis.
(2)	During the current period the methodology for overhead cost allocation has been refined. Prior periods have been restated on a consistent basis.

	As at
	31/12/06		30/06/06		31/12/05		Dec 06 vs		Dec 06 vs
Major Balance Sheet Items (gross of impairment)	$M		$M		$M		Jun 06 %		Dec 05 %
Home loans (including securitisation)		150,834		144,834		135,990		4		11
Consumer finance(1)		10,602		10,640		10,507		—		1
Total Assets — Australian Retail products		161,436		155,474		146,497		4		10
Home loans (net of securitisation)		140,080		132,227		126,866		6		10
Transaction deposits		18,323		16,993		17,077		8		7
Savings deposits(2)		37,898		36,176		34,240		5		11
Other demand deposits(3)		37,710		35,893		35,702		5		6
Deposits not bearing interest		2,930		2,362		2,478		24		18
Total Liabilities — Australian Retail products		96,861		91,424		89,497		6		8

(1)	Consumer Finance includes personal loans and credit cards.
(2)	The December 2006 half excludes $2.1 billion in Commonwealth Direct Investment Account balances transferred to the Business, Corporate and Institutional segment. Prior periods have been restated on a consistent basis.
(3)	The December 2006 half includes $15.9 billion of term deposits transferred from the Business, Corporate and Institutional segment. Prior periods have been restated on a consistent basis.

Australian Home Loan Approvals by State(1) (2)	Australian Home Loan Approvals by State(2)

(1)	As at 30 November 2006.
(2)	Half year averages.

Profit Annoucement          11

Banking Analysiscontinued

Business, Corporate and Institutional

The Business, Corporate and Institutional product segment delivered underlying net profit after tax of $762 million, an increase of 24% on the prior half and an increase of 29% on the prior comparative period. Included in the current half is a $55 million after tax profit on the sale of the Bank’s share in Greater Energy Alliance Corporation Pty Limited (“Loy Yang”). Excluding this amount, profit increased 15% on the prior half and 20% on the prior comparative period.

Business Review

The Business, Corporate and Institutional product segment performed well with the performance highlights including:

• A five year expansion and change program has been launched as the “Business Banking Growth Strategy”. Execution of the program is progressing to plan including alignment of the internal business segments with our customer needs. The recruitment of business bankers into branches throughout the country has commenced. The first new Business Banking Centre was opened in Albany in December 2006 and plans are on track for continued expansion of the distribution footprint to establish a presence in key growth areas. A comprehensive training and development program is being rolled out to all of the front line staff and new recruits with approximately 50% of front line staff having completed the first stage of the program.

• Institutional Banking continued to build strong momentum with above market growth rates achieved in the period.

• CommSec is Australia’s largest stockbroker with more than one million clients as well as the most active broker by number of transactions on the ASX, recently averaging more than 35,000 transactions per day (October 2006). The CommSec website is the number one site for stocks and shares in Australia, receiving more than 400 million hits per month and transferring more than 11 terabytes of data. The Group was the only major bank to participate in the T3 offering and have been experiencing favourable growth in Equity Capital Markets and margin lending.

• The rollout of CommBiz, an internet-based banking channel for business customers, is gathering pace. Feedback from the early adopter customers has been very positive with strong endorsement of the service efficiency, functionality and intuitive user interface. The first external customer commenced using CommBiz in October and the solution was launched in December. Around 400 business customers are now using CommBiz and over $1 billion of value payments have been processed.

• The Financial Markets and Treasury functions have been brought together to obtain better leverage across the financial markets operations and provide a platform for future growth opportunities.

Outcomes by key product category are summarised below.

Corporate Banking

Corporate Banking includes commercial and corporate transaction services and merchant acquiring.

This line of business achieved income growth of 11% on the prior half and 6% on the prior comparative period reflecting deposit balance growth largely driven by the introduction of the Business Online Saver product; seasonal merchant income increases; and the benefit of the recent rate rises.

Financial Markets

Financial Markets includes financial markets and wholesale operations, treasury, equities broking (including CommSec) and structured products, capital markets services (including IPOs and placements) and margin lending.

Financial markets income has increased 8% on the prior half and 10% on the prior comparative period following continued favourability in trading conditions and increased customer flows. Growth in investment markets has resulted in increased CommSec trading volumes and margin lending balances have increased 14% on the prior half.

Lending and Finance

Lending and Finance includes asset finance, structured finance and general business lending.

Lending and Finance income has increased by 15% on the prior half and 29% on the prior comparative period. Income volatility has been impacted by the timing of asset sales including the $79 million pre-tax profit on sale of the Bank’s share in Greater Energy Alliance Corporation Pty Limited (“Loy Yang”) during the half.

Lending and Finance assets have increased $9 billion or 9% on the prior half and $16 billion or 17% on the prior comparative period. The increase has been driven by continued growth in the Australian and New Zealand syndicated loan market and in structured finance transactions.

Operating Expenses

Operating expenses of $833 million increased by 3% on the prior half and by 5% on the prior comparative period. This was due to general salary increases and higher employee numbers, mainly to support the expansion of the Business Banking activities.

Market Share

Business lending market share to non-financial corporations, as measured by APRA, has increased by 40 basis points since 30 June 2006. However, the broader RBA business lending market share measure has declined by 20 basis points to 12.9% over this period.

Asset Finance market share has decreased by 60 basis points to 13.9% since June 2006. The decline reflects the maturity of this business segment, which has been characterised by aggressive price competition coupled with competitor expansion.

Business deposit market share of non-financial corporations, as measured by APRA, has increased by 10 basis points since 30 June 2006.

Equities Trading market share has remained constant over the calendar year at 4.3%.

Market Share Percentage(1)	31/12/06		30/06/06		31/12/05
Business lending — APRA		12.5		12.1		12.5
Business lending — RBA		12.9		13.1		13.4
Asset finance		13.9		14.5		15.1
Business deposits — APRA		12.0		11.9		11.6
Equities trading (CommSec)		4.3		4.3		4.3

(1) For market share definitions refer to appendix 18, page 73.

12           Commonwealth Bank of Australia

Banking Analysiscontinued

Business, Corporate and Institutional

	Half Year to December 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Loan Impairment		Profit after
	Income $M		Income $M		Income $M		$M(2)		$M		Tax $M
Corporate Banking		303		212		515
Financial Markets(1)		240		418		658
Lending and Finance		435		290		725
Business, Corporate and Institutional products		978		920		1,898		833		20		762

	Half Year to June 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Loan Impairment		Profit after
	Income $M		Income $M		Income $M		$M(2)		$M		Tax $M
Corporate Banking		282		184		466
Financial Markets(1)		261		347		608
Lending and Finance		382		249		631
Business, Corporate and Institutional products		925		780		1,705		811		31		617

	Half Year to December 2005
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Loan Impairment		Profit after
	Income $M		Income $M		Income $M		$M(2)		$M		Tax $M
Corporate Banking		276		210		486
Financial Markets(1)		235		362		597
Lending and Finance		370		191		561
Business, Corporate and Institutional products		881		763		1,644		796		37		589

(1)	During the current period, certain balance sheet risk management operations have been merged within the Financial Markets product segment. Prior periods have been restated on a consistent basis.
(2)	During the current period the methodology for overhead cost allocation has been refined. Prior periods have been restated on a consistent basis..

	As at
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Major Balance Sheet Items (gross of impairment)	$M		$M		$M		Jun 06 %			Dec 05 %
Interest earning lending assets		74,029		66,343		60,949		12			21
Bank acceptances of customers		18,395		18,310		17,263		—			7
Non lending interest earning assets		41,723		35,471		35,320		18			18
Margin loans		6,542		5,758		4,664		14			40
Other assets(1)		19,486		19,947		15,711		(2	)		24
Total Assets(2)		160,175		145,829		133,907		10			20
Transaction deposits		16,648		16,426		14,155		1			18
Other demand deposits(3)		26,162		23,641		23,415		11			12
Deposits not bearing interest		3,686		3,520		3,675		5			—
Certificates of deposits and other		24,923		20,178		19,243		24			30
Due to other financial institutions		12,390		11,333		9,852		9			26
Liabilities at fair value through Income Statement		3,783		2,085		2,630		81			44
Debt issues		82,381		77,848		69,854		6			18
Loan Capital		9,724		9,744		9,129		—			7
Other non interest bearing liabilities		36,805		36,703		31,628		—			16
Total Liabilities(2)		216,502		201,478		183,581		7			18
Balance Sheet by Product Segment
Assets
Corporate Banking		4,792		3,546		2,982		35			61
Financial Markets		40,800		36,228		29,680		13			37
Lending and Finance		110,590		101,601		94,671		9			17
Other(2)		3,993		4,454		6,574		(10	)		(39	)
Total Assets		160,175		145,829		133,907		10			20
Liabilities
Corporate Banking		22,493		20,799		18,592		8			21
Financial Markets(3)		60,336		57,414		56,439		5			7
Lending and Finance		27,655		27,303		25,145		1			10
Other(2)		106,018		95,962		83,405		10			27
Total Liabilities		216,502		201,478		183,581		7			18

(1)	Other assets include intangible assets and derivative assets.
(2)	Includes Group Funding, Balance Sheet Management and other capital not directly attributed to the product based segments above.
(3)	The December 2006 half includes $2.1 billion in Commonwealth Direct Investment Account balances transferred form the Australian Retail segment and excludes $15.9 billion of term deposits transferred to the Australian Retail segment. Prior periods have been restated on a consistent basis.

Profit Announcement            13

Banking Analysiscontinued

Asia Pacific

Asia Pacific Banking incorporates the Group’s retail, business/commercial and rural banking operations in New Zealand, Indonesia, China and Fiji.

Underlying net profit after tax for the Asia Pacific businesses increased 9% to $202 million⁽¹⁾ compared to the prior half. ASB Bank in New Zealand represents the majority of the business.

ASB Bank

ASB Bank net profit after tax for the half year was $195 million,⁽¹⁾ an increase of 8% on the prior half year. The major drivers of growth were:

• 6.8% increase in average home loan balances. This enabled the business to maintain market share of home loans at 23.1%;

• Retail deposit balances of NZD$22.8 billion were 8% higher than at 30 June 2006. FastSaver and the new BusinessSaver accounts continue to grow strongly collectively representing 72% of total retail deposit growth for the half year;

• Reduction in net interest margin of seven basis points arising from increased mix of high interest rate deposits and competitive pressure on asset prices;

• Expansion of the ASB service capability across New Zealand with three new branches opened in the half year; and

• Improvement in loan arrears.

Other performance highlights were:

• For the fifth consecutive year, ASB Bank was recognised as New Zealand’s “Bank of the Year” by the UK based Banker Magazine;

• Winner of the TUANZ Business Internet eCommerce Financial Services Award in recognition of the ASB Fastnet Classic online banking service; and

• ASB endorsed to be a Default Provider for the Kiwisaver Retirement Savings Scheme, a New Zealand Government initiative to encourage employees to save consistently during their working years.

Other Asia Pacific Business

The highlights in this region during the half were:

• The Group made an offer to acquire 83% of a regional bank, Arta Niaga Kencana (ANK), in the Surabaya region of Indonesia. ANK has 20 branches to add to the existing 21 branches which PT Bank Commonwealth operates in Jakarta. The acquisition is subject to regulatory and shareholder approvals;

• The two investments in China City Commercial Banks, Hangzhou and Jinan, continue to perform well. Profit momentum has been maintained in Hangzhou and the dividend payout ratio for Jinan has now increased to 6% of paid up capital;

• Capability transfer programs for Jinan City Commercial Bank are well advanced and such programs have also commenced in Hangzhou City Commercial Bank;

• Purchase of an additional 14 million shares for $5.8 million in Hangzhou City Commercial Bank to maintain the Group’s shareholding at 19.9% following an issue of shares to the Asian Development Bank; and

• Fiji lending balances grew by 6.7% to $377 million during the half year ended 31 December 2006. A tightening of the liquidity situation in Fiji pushed up cost of funds and negatively impacted margins during the period.

Market Share

Housing market share in New Zealand remained stable at 23.1% despite intense competition in this market.

Retail deposit market share in New Zealand was 20.7%, up from 20.3% at 30 June 2006.

Market Share Percentage(2)	31/12/06		30/06/06		31/12/05
NZ lending for housing(3)		23.1		23.1		23.2
NZ retail deposits(3)		20.7		20.3		19.9

(1)	Represents Group Management view for the product segment rather than statutory view.
(2)	For market share definitions refer to appendix 18, page 73.
(3)	30 June 2006 comparative revised.

14  Commonwealth Bank of Australia

Asia Pacific

Banking Analysiscontinued

Half Year to December 2006

Net

Other

Total

Loan

Underlying

Interest

Banking

Banking

Expenses

Impairment

Profit after

Income $M

Income $M

Income $M

$M

$M

Tax $M

ASB Bank

346

167

513

Other

16

21

37

Asia Pacific

362

188

550

260

5

202

Half Year to June 2006

Net

Other

Total

Loan

Underlying

Interest

Banking

Banking

Expenses

Impairment

Profit after

Income $M

Income $M

Income $M

$M(1)

$M

Tax $M

ASB Bank

338

138

476

Other

23

38

61

Asia Pacific

361

176

537

256

8

186

Half Year to December 2005

Net

Other

Total

Loan

Underlying

Interest

Banking

Banking

Expenses

Impairment

Profit after

Income $M

Income $M

Income $M

$M(1)

$M

Tax $M

ASB Bank

342

153

495

Other

19

13

32

Asia Pacific

361

166

527

253

12

184

(1) During the current period the methodology for overhead cost allocation has been refined. Prior periods have been restated on consistent basis.

	As at
Major Balance Sheet Items	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
(gross of impairment)	$M		$M		$M		Jun 06 %			Dec 05 %
Home lending		25,887		22,287		23,349		16			11
Other lending assets		11,279		10,531		11,157		7			1
Non lending interest earning assets		6,938		4,812		5,523		44			26
Other assets		1,535		1,321		1,044		16			47
Total Assets — Asia Pacific		45,639		38,951		41,073		17			11
								��
Debt issues		180		744		182		(76	)		(1	)
Deposits(1)		21,038		18,040		19,256		17			9
Liabilities at fair value through Income Statement		14,204		11,727		13,691		21			4
Other liabilities		1,414		772		848		83			67
Total Liabilities — Asia Pacific		36,836		31,283		33,977		18			8
Balance Sheet by Segment
Assets
ASB Bank		43,379		36,724		38,981		18			11
Other		2,260		2,227		2,092		1			8
Total Assets — Asia Pacific		45,639		38,951		41,073		17			11
Liabilities
ASB Bank		34,885		29,306		31,933		19			9
Other		1,951		1,977		2,044		(1	)		(5	)
Total Liabilities — Asia Pacific		36,836		31,283		33,977		18			8

(1) Asia Pacific Deposits exclude deposits held in other overseas countries (31 December 2006: $6 billion, 30 June 2006: $5 billion, and 31 December 2005: $4 billion).

Profit Announcement   15

Funds Management Analysis

Financial Performance and Business Review

Performance Highlights

Underlying profit after tax for the Funds Management business increased by 7% on the prior half to $232 million reflecting continued strong revenue growth. This result was an increase of 27% on the prior comparative period.

Half year net profit after tax (“cash basis”) increased 6% on the prior half and 25% on the prior comparative period.

Business Review

Industry conditions have remained positive with strong investment markets and retail flows driving growth.

Funds under administration increased by 11% on the prior half to $168 billion and 22% on the prior comparative period. The growth in funds under administration over the prior half has primarily been driven by strong investment performance.

Net funds flows in the half year ended 31 December 2006 were $2.1 billion. The prior half net flows of $8.1 billion were boosted by $4.3 billion of inflows related to a one-off FUA acquisition.

The key drivers of net funds flows for the half were:

• Continued strong flows into the FirstChoice platform;

• Solid institutional and international flows generated by the Global Asset Management business;

• Some outflows from Income and Mortgage Funds to high yielding banking products following recent interest rate rises; and

• Reduction in property net flows following the transfer of management rights in the Commonwealth Property Fund ($0.9 billion) and the sale of the Colonial Agricultural Fund ($0.3 billion).

FirstChoice flows remained strong in the market with $3 billion in net flows for the half year ended 31 December 2006. With over $31 billion in funds under administration, FirstChoice has experienced a growth rate of 48% in the last 12 months. A recently published survey from ASSIRT showed that 57% of advisors in the market used FirstChoice as one of their platforms.

Market Share

In the latest Plan for Life market share statistics, the Group ranked 1^st in retail net flows for the year to September 2006. The Group remains 1^st in total Australian retail market share at 15.3%.

Market Share Percentage(1)	31/12/06		30/06/06		31/12/05
Australian retail(2) (3)		15.3		15.4		14.5
New Zealand retail(3)		16.1		15.8		15.0
Platforms (Masterfunds)(2) (3)		12.8		12.6		10.7
FirstChoice Platform(2) (3)		8.0		7.8		7.0

(1)	For market share definitions refer to appendix 18, page 74
(2)	As at 30 September 2006.
(3)	30 June 2006 comparative revised.

Other key developments within the business include:

• CFS Global Asset Management is the joint lead partner in a consortium acquiring AWG plc, an infrastructure company with enterprise value in excess of £5 billion. The principal business is Anglian Water, the UK’s largest water and wastewater company by service area. The company was delisted from the London Stock Exchange on 21 December 2006. The consortium has reached the 92% acceptance threshold and has moved to compulsory acquisition of the remaining shares;

• New products launched by CFS Global Asset Management during the period include the Long Short Energy Fund, Asian Property Securities Fund and the India Sub-continent Fund;

• Continued progress with initiatives designed to improve cross-selling of Wealth Management products to retail customers, and the focus now shifting to realisation of benefits;

• The first Adviser Gateway Program has so far successfully trained 24 internal candidates to be financial advisers with the second intake commencing during February 2007; and

• Successful implementation of the new Financial Wisdom Dealer Group Offering in October 2006 to enhance practice quality and adviser segment service levels.

Investment Performance

Investment performance has been solid with 72% of funds outperforming benchmark for the half year to 31 December 2006. On a one year basis, 66% of funds have outperformed benchmark; and 61% of funds have outperformed on a three year basis.

Operating Income

Operating income increased by 8% to $898 million on the prior half, up 25% on the prior comparative period. Underpinning this result was an increase in average funds under administration of 7% on the prior half and 21% on the prior comparative period.

Margins remained steady over the half, with performance fees and growth in higher margin asset classes offsetting the impact of outflows in higher margin legacy business.

Operating Expenses

Total operating expenses (excluding Volume Related Expenses) of $423 million were up by 4% on the prior half and 18% on the prior comparative period.

The key drivers of expense growth include:

• Increased spend on strategic projects including the Wealth Management cross-selling initiatives;

• Increase in performance-based remuneration to retain and attract high quality talent within the asset management business;

• Expenses relating to the full impact of businesses acquired during the previous financial year; and

• Offset by reduced compliance spend in this half on the unit pricing initiative which is tracking well.

Volume Related Expenses were up 15% on the prior half and 45% on the prior comparative period; due to:

• Commission expenses increasing in line with funds under administration; and

• Increased performance-based commissions to property trusts.

Taxation

The effective corporate tax rate for the half year was 29.9% compared with 28.2% for the prior half which included the benefit of recouped international tax losses.

16  Commonwealth Bank of Australia

Funds Management Analysiscontinued

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Key Performance Indicators	$M		$M		$M		Jun 06 %			Dec 05 %
Operating income — external		893		828		715		8			25
Operating income — internal		5		4		5		25			—
Total operating income		898		832		720		8			25
Shareholder investment returns		4		7		7		(43	)		(43	)
Funds management income		902		839		727		8			24
Volume expense		144		125		99		(15	)		(45	)
Operating expenses		423		405		360		(4	)		(18	)
Total expenses		567		530		459		(7	)		(24	)
Net profit before income tax (“cash basis”)		335		309		268		8			25
Net profit before income tax (“underlying basis”)(1)		331		302		261		10			27
Corporate tax expense(2)		100		87		77		(15	)		(30	)
Minority interests		—		—		3		—			—
Net profit after income tax (“cash basis”)		235		222		188		6			25
Net profit after income tax (“underlying basis”)(1)		232		217		183		7			27

(1)	Underlying basis excludes shareholder investment returns.
(2)	For presentation purposes, Policyholder tax benefit and Policyholder tax expense components of corporate tax expense are shown on a net basis (December 2006: $91 million, June 2006: $83 million, December 2005: $109 million).

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Funds Under Administration	$M		$M		$M		Jun 06 %			Dec 05 %
Funds under administration — average		158,010		147,684		130,179		7			21
Funds under administration — spot		167,662		151,513		136,974		11			22
Net funds flows		2,076		8,135		2,695		(74	)		(23	)
Total retail net flows		1,438		6,870		1,365		(79	)		5

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs		Dec 06 vs
Productivity and Other Measures	$M		$M		$M		Jun 06 %		Dec 05 %
Operating income to average funds under administration (%)		1.13		1.14		1.10	(1)bpts		3bpts
Total expenses to average funds under administration (%)		0.71		0.72		0.70		1		(1	)
Operating expenses to net income (total operating income less
volume expenses)		56.1		57.3		58.0		2		3
Effective corporate tax rate (%)		29.9		28.2		28.7	(170)bpts		(120)bpts

Underlying Net Profit After Tax growth of 27% on prior comparative period

Profit Announcement   17

Funds Management Analysiscontinued

	Half Year to December 2006
	Opening									FX(3)&			Closing
	Balance							Investment		Other(4)			Balance
	30/06/06		Inflows		Outflows			Income		Movements			31/12/06
Funds Under Administration	$M		$M		$M			$M		$M			$M
FirstChoice		26,177		6,278		(3,301	)		2,434		—			31,588
Avanteos		9,198		1,144		(451	)		1,298		—			11,189
Cash management		3,690		1,028		(1,309	)		85		(41	)		3,453
Other retail(1)		35,555		1,205		(3,156	)		2,544		70			36,218
Australian retail		74,620		9,655		(8,217	)		6,361		29			82,448
Wholesale		29,815		5,614		(4,530	)		1,993		—			32,892
Property		13,909		564		(1,860	)		933		(8	)		13,538
Other(2)		3,708		55		(272	)		227		(21	)		3,697
Domestically sourced		122,052		15,888		(14,879	)		9,514		—			132,575
Internationally sourced		29,461		7,322		(6,255	)		4,463		96			35,087
Total – Funds Under Administration		151,513		23,210		(21,134	)		13,977		96			167,662

	Half Year to June 2006
	Opening										FX(3) &			Closing
	Balance							Investment			Other(4)			Balance
	31/12/05		Inflows		Outflows			Income			Movements			30/06/06
Funds Under Administration	$M		$M		$M			$M			$M			$M
FirstChoice		21,284		6,951		(2,876	)		1,035			(217	)		26,177
Avanteos		3,486		5,704		(382	)		390			—			9,198
Cash management		3,966		1,159		(1,548	)		113			—			3,690
Other retail(1)		36,647		1,799		(3,937	)		1,459			(413	)		35,555
Australian retail		65,383		15,613		(8,743	)		2,997			(630	)		74,620
Wholesale		28,012		6,001		(5,901	)		1,753			(50	)		29,815
Property		13,750		304		(1,008	)		859			4			13,909
Other(2)		3,349		95		(308	)		(85	)		657			3,708
Domestically sourced		110,494		22,013		(15,960	)		5,524			(19	)		122,052
Internationally sourced		26,480		6,633		(4,551	)		805			94			29,461
Total – Funds Under Administration		136,974		28,646		(20,511	)		6,329			75			151,513

	Half Year to December 2005
	Opening									FX(3)&			Closing
	Balance							Investment		Other(4)			Balance
	30/06/05		Inflows		Outflows			Income		Movements			31/12/05
Funds Under Administration	$M		$M		$M			$M		$M			$M
FirstChoice		16,128		6,126		(2,412	)		1,442		—			21,284
Avanteos		2,941		438		(216	)		323		—			3,486
Cash management		4,182		1,258		(1,513	)		39		—			3,966
Other retail(1)		36,069		1,651		(3,967	)		2,894		—			36,647
Australian retail		59,320		9,473		(8,108	)		4,698		—			65,383
Wholesale		24,894		7,098		(5,909	)		1,929		—			28,012
Property		13,456		770		(1,136	)		661		(1	)		13,750
Other(2)		2,886		97		(173	)		539		—			3,349
Domestically sourced		100,556		17,438		(15,326	)		7,827		(1	)		110,494
Internationally sourced		22,508		5,464		(4,881	)		3,030		359			26,480
Total – Funds Under Administration		123,064		22,902		(20,207	)		10,857		358			136,974

(1)	Includes stand alone retail and legacy retail products.
(2)	Includes life company assets sourced from retail investors but not attributable to a funds management product (e.g. premiums from risk products). These amounts do not appear in retail market share data.
(3)	Includes foreign exchange gains and losses from translation of internationally sourced business.
(4)	Other movements represent the re-alignment of funds to correctly classify source of funds.

18     Commonwealth Bank of Australia

Funds Management Analysiscontinued

FirstChoice – Fund Manager Destination	FirstChoice — Sources of Funds

Total Funds Under Administration – Asset Class

FirstChoice Funds Under Administration Balance & Market Share

Profit Announcement     19

Insurance Analysis

Financial Performance and Business Review

Performance Highlights

Underlying profit after tax for the Insurance business was flat on the prior half and increased 8% on the prior comparative period. These growth rates were affected by the positive experience variations of $29 million which occurred in the prior half, and by the inclusion of the operating results of the Hong Kong Insurance Business for part of the prior comparative period. Another measure of Insurance business performance is planned profit margins, which increased by 22% on the prior half and 36% on the prior comparative period.

The result was driven by:

• Solid inforce premium growth in Australia and New Zealand;

• Growth in planned margins; and

• Significant increase in investment spend in the business.

Cash profit after tax increased by 28% on the prior half, a strong result driven by high shareholder investment returns.

The Bank remains the largest life insurer in Australia, New Zealand and Fiji.

Business Review

Australia

Half year ended 31 December 2006 underlying profit after tax for the Australian insurance business was flat on the prior half at $68 million and increased 24% on the prior comparative period.

Half year ended 31 December 2006 net profit after tax (“cash basis”) increased 26% to $115m reflecting growth in shareholder returns over the half year. The result for the half increased 28% on the prior comparative period.

Key performance drivers were:

• Life and General Insurance premium growth, with inforce premiums increasing by 15%, reflecting strong sales volumes;

• Increase in planned life margins of 9% on the prior half and 42% on the prior comparative period;

• Good claims experience, particularly in the Group Risk portfolio; and

• Very strong shareholder investment returns.

Other highlights for the Australian Insurance business include:

• Increased market share for Australian risk premiums to 13.7% of the total insurance risk market and maintaining its number 1 position as at September 2006;

• The introduction of 73 Branch Insurance Representatives as part of the cross-selling initiative positively impacting on General Insurance sales;

• Ongoing simplification and rationalisation of systems and processes;

• Launch of online quoting tool for planners aimed at reducing the time and complexity of insurance and annuity quotes to improve conversion rates; and

• Continued good claims management.

New Zealand

The life insurance operations in New Zealand operate predominantly under the Sovereign brand.

New Zealand’s net profit after tax (“cash basis”) was $50 million for the half year ended 31 December 2006, an increase of $4 million. The main drivers of this result were:

• Market leading growth in new business sales with Sovereign capturing 33.8% of New Business sales market share for the December 2006 quarter compared to 32.7% for the half year ended 30 June 2006; and

• A continuation of positive investment returns offset by higher claims incidence in disability and term life.

The market share of inforce premiums at 31 December 2006 was 31.5%, an increase of 1 basis point over 30 June 2006.

Operating Income

Total operating income increased 7% on the prior half to $382 million and is down 1% on the prior comparative period. The prior comparative period is impacted by the inclusion of the operating results of the Hong Kong Insurance Business until its sale in October 2005.

Life Insurance income increased 5% on the prior half in line with average inforce growth. The quality of the result improved with a higher component of planned margins.

General Insurance income increased 26% on the prior half. The result was supported by an increase in sales and no significant weather events. The prior half included weaker claims experience associated with Cyclone Larry.

Operating Expenses

Total operating expenses of $139 million (excluding volume related expenses) increased by 19% on the prior half with investment spend aimed at future revenue growth driving this increase.

Increases in operating expenses include:

• Increased spend on strategic projects including the Wealth Management cross-selling initiatives;

• Introduction of Branch Insurance Representatives into selected Bank branches;

• Product development across life and general insurance lines;

• Investment on system migration to further reduce the number of insurance systems used in order to reduce ongoing costs; and

• Development costs in preparation for the launch of compulsory savings in New Zealand under the KiwiSaver program.

Corporate Taxation

The effective corporate tax rate for the half year was 28.1% compared with 27.9% in the prior half.

20      Commonwealth Bank of Australia

Insurance Analysiscontinued

	Half Year Ended
	31/12/06		30/06/06		31/12/05(4)		Dec 06 vs			Dec 06 vs
Key Performance Indicators	$M		$M		$M		Jun 06 %			Dec 05 %
Insurance
Life insurance operating income		339		322		347		5			(2	)
General insurance operating income		43		34		39		26			10
Total operating income		382		356		386		7			(1	)
Shareholder investment returns		81		30		57	large				42
Profit on sale of the Hong Kong Insurance Business		—		—		145		—			—
Total insurance income		463		386		588		20			(21	)
Volume expense		89		86		95		(3	)		6
Operating expenses(1)		139		117		158		(19	)		12
Total expenses		228		203		253		(12	)		10
Net profit before income tax		235		183		335		28			(30	)
Corporate tax expense(2)		66		51		51		(29	)		(29	)
Net profit after income tax (“cash basis”)		169		132		284		28			(40	)
Net profit after income tax (“underlying basis”)(3)		111		112		103		(1	)		8

	Half Year Ended
	31/12/06		30/06/06		31/12/05(4)		Dec 06 vs			Dec 06 vs
Productivity and Other Measures	$M		$M		$M		Jun 06 %			Dec 05 %
Expenses to average inforce premiums (%)		34.3		33.6		40.5		(2	)		15
Effective corporate tax rate excluding impact of profit on sale of Hong Kong Insurance Business (%)		28.1		27.9		26.8	(20)bpts			(130)bpts

	Half Year Ended
	31/12/06		30/06/06			31/12/05(4)		Dec 06 vs				Dec 06 vs
Sources of Profit from Insurance Activities	$M		$M			$M		Jun 06 %				Dec 05 %
The Margin on Services profit from ordinary activities after income tax is represented by:
Planned profit margins		94		77			69		22				36
Experience variations		7		29			19		(76	)			(63	)
Other		—		(2	)		2	large			large
General insurance operating margins		10		8			13		25				(23	)
Operating margins		111		112			103		(1	)			8
After tax Shareholder investment returns		58		20			36	large					61
Profit on sale of the Hong Kong Insurance Business		—		—			145		—				—
Net profit after income tax (“cash basis”)		169		132			284		28				(40	)

(1)	Operating expenses include $5 million internal expenses relating to the asset management of shareholder funds (half year to June 2006: $4 million, half year to 31 December 2005: $5 million).
(2)	For purpose of presentation, Policyholder tax benefit and Policyholder tax expense components of corporate tax expense are shown on a net basis (31 December 2006: $47 million, 30 June 2006: $47 million, 31 December 2005: $92 million).
(3)	Underlying basis excludes Shareholder investment returns and the profit on the sale of the Hong Kong Insurance Business.
(4)	Includes impact of the operating performance of the Hong Kong Life Insurance Business until its sale in October 2005. Financial impact was set out on page 55 of the 30 June 2006 Profit Announcement.

Geographical Analysis of Business Performance

	Half Year Ended
	Australia				New Zealand				Asia					Total
	31/12/06		30/06/06		31/12/06		30/06/06		31/12/06		30/06/06			31/12/06		30/06/06
Net Profit after Income Tax (“cash basis”)	$M		$M		$M		$M		$M		$M			$M		$M
Operating margins		68		70		41		39		2		3			111		112
After tax Shareholder investment returns		47		21		9		7		2		(8	)		58		20
Net profit after income tax		115		91		50		46		4		(5	)		169		132

Profit Announcement     21

Insurance Analysiscontinued

	Half Year Ended 31 December 2006
	Opening										Closing
	Balance		Sales/New					Other			Balance
	30/06/06		Balances		Lapses			Movements(2)			31/12/06
Annual Inforce Premiums(1)	$M		$M		$M			$M			$M
General insurance(3)		236		43		(28	)		—			251
Personal life		732		74		(44	)		27			789
Group life		255		136		(20	)		1			372
Total		1,223		253		(92	)		28			1,412
Australia		921		225		(85	)		(1	)		1,060
New Zealand		302		28		(7	)		29			352
Total		1,223		253		(92	)		28			1,412

	Half year Ended 30 June 2006
	Opening										Closing
	Balance		Sales/New					Other			Balance
	31/12/05		Balances		Lapses			Movements(2)			30/06/06
Annual Inforce Premiums(1)	$M		$M		$M			$M			$M
General insurance(3)		225		35		(24	)		—			236
Personal life		740		65		(39	)		(34	)		732
Group life		251		31		(24	)		(3	)		255
Total		1,216		131		(87	)		(37	)		1,223
Australia		895		110		(83	)		(1	)		921
New Zealand		321		21		(4	)		(36	)		302
Total		1,216		131		(87	)		(37	)		1,223

	Half Year Ended 31 December 2005
	Opening										Closing
	Balance		Sales/New					Other			Balance
	30/06/05		Balances		Lapses			Movements(2)			31/12/05
Annual Inforce Premiums(1)	$M		$M		$M			$M			$M
General insurance		215		35		(25	)		—			225
Personal life		785		72		(42	)		(75	)		740
Group life		265		40		(24	)		(30	)		251
Total		1,265		147		(91	)		(105	)		1,216
Australia		856		121		(83	)		1			895
New Zealand		296		26		(8	)		7			321
Asia(4)		113		—		—			(113	)		—
Total		1,265		147		(91	)		(105	)		1,216

(1)	Inforce premium relates to risk business. Savings products are disclosed within Funds Management.
(2)	Includes foreign exchange movements.
(3)	General insurance inforce premiums includes approximately $51 million of badged premium (June 2006: $46 million, December 2005: $42 million).
(4)	Other movements represent the sale of the Hong Kong Insurance Business.

Market Share Percentage-Annual Inforce Premiums(1)	31/12/06		30/06/06		31/12/05
Australia (total risk)(2) (3)		13.7		13.2		13.5
Australia (individual risk)(2) (3)		12.0		12.2		12.6
New Zealand		31.5		31.4		30.9

(1)	For market share definitions refer to appendix 18, page 74.
(2)	As at 30 September 2006.
(3)	30 June 2006 comparative revised.

22      Commonwealth Bank of Australia

Shareholder Investment Returns

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Shareholder Investment Returns	$M		$M		$M		Jun 06 %			Dec 05 %
Funds management business		4		7		7		(43	)		(43	)
Insurance business(1)		81		30		57	large				42
Profit on sale of Hong Kong Insurance Business		—		—		145		—			—
Shareholder investment returns before tax		85		37		209	large				(59	)
Taxation		24		12		23	large				(4	)
Shareholder investment returns after tax		61		25		186	large				(67	)

(1)	Excluding profit on sale of the Hong Kong Insurance Business.
Shareholder investment returns of $85 million pre tax was driven by strong positive returns across all asset classes.

	As at 31 December 2006
	Australia		New Zealand		Asia		Total
Shareholder Investment Asset Mix	$M		$M		$M		$M
Local equities		21		4		—		25
International equities		—		19		7		26
Property		366		3		20		389
Sub-total		387		26		27		440
Fixed interest		404		53		52		509
Cash		756		362		1		1,119
Sub-total		1,160		415		53		1,628
Total		1,547		441		80		2,068

	As at 31 December 2006
	Australia		New Zealand		Asia		Total
Shareholder Investment Asset Mix	%		%		%		%
Local equities		1		1		—		1
International equities		—		4		9		1
Property		24		1		25		19
Sub-total		25		6		34		21
Fixed interest		26		12		65		25
Cash		49		82		1		54
Sub-total		75		94		66		79
Total		100		100		100		100

Profit Announcement       23

Directors’ Report

The Directors submit their report for the half year ended 31 December 2006.

Directors

     The names of the Directors holding office during the half year ended 31 December 2006 and until the date of this report were:

J M Schubert	Chairman
R J Norris	Managing Director and Chief Executive Officer
R J Clairs AO	Director
A B Daniels OAM	Director (Retired 3 November 2006)
C R Galbraith AM	Director
J Hemstritch	Director (Appointed 9 October 2006)
S C Kay	Director
W G Kent AO	Director
F D Ryan	Director
F J Swan	Director
D J Turner	Director (Appointed 1 August 2006)
B K Ward	Director (Retired 3 November 2006)
H H Young	Director (Appointed 13 February 2007)

Review and Results of Operations

Commonwealth Bank recorded a statutory net profit after tax of $2,191 million for the half year ended 31 December 2006, compared with $1,999 million for the prior comparative period, an increase of 10%. Excluding the $145 million profit on sale of the Hong Kong Insurance Business that was recognised in the prior comparative period, the profit growth was 18%. The increase was principally due to strong growth in banking income resulting from lending asset growth, as well as continued strong performance within the Funds Management and Insurance Businesses.

The net cash profit from Banking of $1,867 million (December 2005: $1,589 million), reflects continued growth in home loans and business lending together with strong credit quality.

The net cash profit from Funds Management of $235 million (December 2005: $188 million) reflects growth in revenues from a 21% increase in average funds under administration on the prior comparative period. Insurance reported a net cash profit of $169 million (December 2005: $284 million). Excluding the profit on sale of the Hong Kong Insurance Business from the prior comparative period, this represents profit growth of 22%.

In accordance with the ASX Principles of Good Corporate Governance and Best Practice Recommendations, the Chief Executive Officer and the Chief Financial Officer, have provided the Board with a written statement that the accompanying Financial Report represents a true and fair view, in all material respects, of the Bank’s financial position as at 31 December 2006 and performance for the half year ended 31 December 2006, in accordance with relevant accounting standards.

We have obtained the following independence declaration from the Group’s auditors, Ernst and Young.

Signed in accordance with a resolution of the Directors.

J M Schubert	R J Norris
Chairman	Managing Director and Chief Executive Officer
14 February 2007

24      Commonwealth Bank of Australia

Financial Statements

Consolidated Income Statement		26
Consolidated Balance Sheet		27
Consolidated Statement of Recognised Income and Expense		28
Consolidated Statement of Cash Flows		29
Notes to the Financial Statements		31
Note 1	Accounting Policies	31
Note 2	Income from Ordinary Activities	32
Note 3	Operating Expenses	33
Note 4	Income Tax Expense	34
Note 5	Loans, Advances and Other Receivables	35
Note 6	Asset Quality	35
Note 7	Deposits and Other Public Borrowings	37
Note 8	Financial Reporting by Segments	38
Note 9	Detailed Consolidated Statement of Changes in Equity	41
Note 10	Notes to the Statement of Cash Flows	43
Note 11	Assets Held for Sale	45
Note 12	Events after the end of the Financial Period	45
Note 13	Contingent Liabilities	45
Note 14	Acquisition of Business Interest	45

Profit Announcement       25

Financial Statementscontinued

Consolidated Income Statement
For the half year ended 31 December 2006

	Half Year Ended
			31/12/06			30/06/06			31/12/05
	Note		$M			$M			$M
Interest income		2		11,565			10,120			9,638
Interest expense				8,080			6,861			6,383
Net interest income				3,485			3,259			3,255
Other operating income				1,612			1,591			1,445
Net banking operating income				5,097			4,850			4,700
Funds management income		2		905			852			737
Investment revenue				1,192			719			1,379
Claims and policyholder liability expense				(1,162	)		(721	)		(1,343	)
Net funds management operating income				935			850			773
Premiums from insurance contracts		2		577			479			573
Investment revenue				473			338			693
Claims and policyholder liability expense from insurance contracts				(541	)		(384	)		(586	)
Insurance margin on services operating income				509			433			680
Total net operating income				6,541			6,133			6,153
Loan impairment expense				195			210			188
Operating expenses		3		3,144			3,027			2,967
Defined benefit superannuation plan income/(expense)				5			(8	)		(27	)
Profit before income tax				3,207			2,888			2,971
Corporate tax expense		4		865			816			753
Policyholder tax expense		4		138			130			201
Profit after income tax				2,204			1,942			2,017
Minority interests				(13	)		(13	)		(18	)
Net profit attributable to members of the Bank				2,191			1,929			1,999

	Cents per share
Earnings per share:
Statutory basic		169.6	151.1	157.1
Statutory diluted		166.0	148.3	154.4
Dividends per share attributable to shareholders of the Bank:
Ordinary shares		107	130	94
Trust preferred securities (TPS) — issued 8 March 2006		3,986	—	—

	$M			$M			$M
Net profit after income tax comprises:
Net profit after income tax (“underlying basis”)		2,210			1,967			1,875
Shareholder investment returns (after tax)		61			25			41
Profit on sale of the Hong Kong Insurance Business		—			—			145
Net profit after income tax (“cash basis”)		2,271			1,992			2,061
Defined benefit superannuation plan income/(expense)		4			(6	)		(19	)
Treasury shares valuation adjustment		(38	)		(57	)		(43	)
One off AIFRS mismatch		(46	)		—			—
Net profit after income tax (“statutory basis”)		2,191			1,929			1,999

26      Commonwealth Bank of Australia

Financial Statementscontinued

Consolidated Balance Sheet
As at 31 December 2006

	As at
			31/12/06		30/06/06		31/12/05
Assets	Note		$M		$M		$M
Cash and liquid assets				7,606		5,131		7,269
Receivables due from other financial institutions				5,686		7,107		5,279
Assets at fair value through Income Statement:
Trading				18,887		15,758		15,617
Insurance				24,520		24,437		25,141
Other				4,838		2,944		3,590
Derivative assets				10,519		9,675		8,238
Available-for-sale investments				11,434		11,203		9,605
Loans, advances and other receivables		5		277,962		259,176		245,606
Bank acceptances of customers				18,395		18,310		17,263
Investment property				273		258		252
Property, plant and equipment				1,325		1,314		1,143
Investment in associates				216		190		191
Intangible assets				7,846		7,809		7,740
Deferred tax assets				638		650		891
Other assets				5,846		5,141		3,368
				395,991		369,103		351,193
Assets held for sale		11		1,270		—		—
Total assets				397,261		369,103		351,193
Liabilities
Deposits and other public borrowings		7		188,819		173,227		168,723
Payables due to other financial institutions				12,432		11,184		9,902
Liabilities at fair value through Income Statement				17,986		13,811		16,322
Derivative liabilities				13,238		10,820		9,391
Bank acceptances				18,395		18,310		17,263
Current tax liabilities				685		378		575
Deferred tax liabilities				1,384		1,336		1,153
Other provisions				826		821		846
Insurance policy liabilities				22,729		22,225		23,055
Debt issues				82,561		78,591		70,036
Managed funds units on issue				438		1,109		1,031
Bills payable and other liabilities				5,379		6,053		3,917
				364,872		337,865		322,214
Loan capital				9,902		9,895		9,129
Total liabilities				374,774		347,760		331,343
Net assets				22,487		21,343		19,850
Shareholders’ Equity
Share capital:
Ordinary share capital		9		13,920		13,505		13,801
Other equity instruments		9		939		939		—
Reserves		9		1,979		1,904		1,936
Retained profits		9		5,141		4,487		3,590
Shareholders’ equity attributable to members of the Bank				21,979		20,835		19,327
Minority interests:
Controlled entities				508		508		523
Total shareholders’ equity				22,487		21,343		19,850

Profit Announcement      27

Financial Statementscontinued

Consolidated Statement of Recognised Income and Expense
For the half year ended 31 December 2006

		Half Year Ended
		31/12/06			30/06/06			31/12/05
	Note	$M			$M			$M
Actuarial gains and losses from defined benefit superannuation plans			149			319			68
Gains and losses on cash flow hedging instruments:
Recognised in equity			206			66			23
Transferred to the Income Statement			(26	)		(69	)		11
Gains and losses on available-for-sale investments:
Recognised in equity			(37	)		61			(10	)
Transferred to the Income Statement on disposal			(6	)		(34	)		1
Transferred to the Income Statement on impairment			—			—			(3	)
Revaluation of properties			—			19			—
Transfer from FCTR to the Income Statement on disposal			—			—			41
Exchange differences on translation of foreign operations			97			(312	)		80
Income tax on items transferred directly to/from equity:
FCTR			(10	)		30			(17	)
Available-for-sale investments revaluation reserve			16			(5	)		(1	)
Revaluation of properties			—			(4	)		—
Cash flow hedge reserve			(57	)		—			(11	)
Net income recognised directly in equity			332			71			182
Profit for the period			2,204			1,942			2,017
Total net income recognised for the period			2,536			2,013			2,199
Attributable to:
Members of the parent			2,523			2,000			2,181
Minority Interests			13			13			18
Total net income recognised for the period			2,536			2,013			2,199

28     Commonwealth Bank of Australia

Financial Statementscontinued

Consolidated Statement of Cash Flows⁽¹⁾
For the half year ended 31 December 2006

	��
					Half Year Ended
					31/12/06			30/06/06			31/12/05
		Note			$M			$M			$M
Cash Flows from Operating Activities
Interest received						11,163			10,191			9,521
Interest paid						(7,784	)		(6,167	)		(6,388	)
Other operating income received						2,145			1,515			2,804
Expenses paid						(2,917	)		(2,923	)		(2,886	)
Income taxes paid						(683	)		(690	)		(1,290	)
Net (increase)/decrease in assets at fair value through Income
Statement (excluding life insurance)						(1,501	)		483			(790	)
Life insurance business:
Investment income						965			773			1,626
Premiums received(2)						1,143			1,114			1,224
Policy payments(2)						(2,088	)		(2,268	)		(2,670	)
Net increase/(decrease) in liabilities at fair value through Income Statement (excluding life insurance)						4,110			(1,054	)		2,499
Cash flows from operating activities before changes in operating assets and liabilities						4,553			974			3,650
Changes in operating assets and liabilities arising from cash flow movements
Movement in available-for-sale investments:
Purchases						(12,553	)		(16,687	)		(11,502	)
Proceeds from sale						1,489			230			416
Proceeds at or close to maturity						10,552			13,837			10,994
Lodgement of deposits with regulatory authorities						(8	)		(29	)		—
Net (increase) in loans, advances and other receivables						(16,415	)		(14,112	)		(17,884	)
Net (increase)/decrease in receivables due from other financial institutions not at call						(1,710	)		132			(1,013	)
Net (increase)/decrease in securities purchased under agreements to resell						(1,245	)		729			(192	)
Life insurance business:
Purchase of insurance assets at fair value through Income Statement						(5,643	)		(2,364	)		(5,714	)
Proceeds from sale/maturity of insurance assets at fair value through Income Statement						5,780			2,912			6,486
Net increase in deposits and other public borrowings						13,000			4,002			8,797
Net proceeds from issuance of debt securities						2,847			9,437			5,168
Net increase in payables due to other financial institutions not at call						2,913			1,920			651
Net increase in securities sold under agreements to repurchase						1,081			222			106
Changes in operating assets and liabilities arising from cash flow movements						88			229			(3,687	)
Net cash provided by/(used in) operating activities			10	(a)		4,641			1,203			(37	)
Cash flows from Investing Activities
Payment for acquisition of entities and management rights			10	(e)		(3	)		(418	)		—
Proceeds from disposal of controlled entities (net of cash disposals)			10	(c)		—			—			553
Net proceeds from disposal of other entities						—			35			—
Dividends received						1			3			1
Proceeds from sale of property, plant and equipment						5			21			11
Purchases of property, plant and equipment						(118	)		(266	)		(119	)
Payment for acquisition of investments in associates/joint ventures						(6	)		(9	)		(143	)
Purchases of intangible assets						(68	)		(68	)		(22	)
Purchases of assets held for sale						(1,258	)		—			—
Net (increase)/decrease in other assets						(314	)		(477	)		508
Net cash (used in)/provided by investing activities						(1,761	)		(1,179	)		789

(1)	It should be noted that the Group does not use this accounting Statement of Cash Flows in the internal management of its liquidity positions.
(2)	Gross premiums and policy payments before splitting between policyholders and shareholders.

Profit Announcement     29

Financial Statementscontinued

Consolidated Statement of Cash Flows⁽¹⁾(continued)
For the half year ended 31 December 2006

				Half Year Ended
				31/12/06			30/06/06			31/12/05
	Note			$M			$M			$M
Cash Flows from Financing Activities
Buy back of shares					—			(499	)		(1	)
Proceeds from issue of shares (net of costs)					13			14			35
Proceeds from issue of other equity instruments (net of costs)					—			939			—
Dividends paid (excluding Dividend Reinvestment Plan)					(1,396	)		(990	)		(1,173	)
Net movement in other liabilities					(401	)		685			(546	)
Net sale/(purchase) of treasury shares					34			(29	)		19
Issue of loan capital					1,615			1,679			767
Redemption of loan capital					(1,069	)		(513	)		(402	)
Other					67			(4	)		5
Net cash (used in)/provided by financing activities					(1,137	)		1,282			(1,296	)
Net increase/(decrease) in cash and cash equivalents					1,743			1,306			(544	)
Cash and cash equivalents at beginning of period					2,038			732			1,276
Cash and cash equivalents at end of period		10	(b)		3,781			2,038			732

(1) It should be noted that the Group does not use this accounting Statement of Cash Flows in the internal management of its liquidity positions.

30     Commonwealth Bank of Australia

Notes to the Financial Statements

Note 1 Accounting Policies General Information

The Financial Statements of the Commonwealth Bank of Australia (the ‘Bank’) and the Bank and its subsidiaries (the ‘Group’) for the half year ended 31 December 2006, were approved and authorised for issue by the Board of Directors on 14 February 2007.

The Bank is incorporated and domiciled in Australia. It is a company limited by shares that are publicly traded on the Australian Stock Exchange. The address of its registered office is Level 7,48 Martin Place, Sydney NSW 1155, Australia.

The Group is one of Australia’s leading providers of integrated financial services including retail, business and institutional banking, superannuation, life insurance, general insurance, funds management, broking services and finance company activities. The principal activities of the Commonwealth Bank Group during the financial period were:

(i) Banking

The Group provides retail banking services including housing loans, credit cards, personal loans, savings and cheque accounts, and demand and term deposits. The Group also offers commercial products including business loans, equipment and trade finance, and rural and agribusiness products. The Group also has full service banking operations in New Zealand, Fiji and Indonesia. The Group has wholesale banking operations in London, New York, Hong Kong, Singapore, Indonesia, regions of China, Tokyo and Malta.

(ii) Funds Management

The Group’s funds management business comprises wholesale and retail investment, superannuation and retirement funds. Investments are across all major asset classes including Australian and international shares, property, fixed interest and cash. The Group also has funds management businesses in New Zealand, the United Kingdom and Asia.

(iii) Insurance

The Group provides term insurance, disability insurance, annuities, master trusts, investment products and household general insurance. Life insurance operations are also conducted in New Zealand, where the Group has the leading market share, and in Asia and the Pacific. There have been no significant changes in the nature of the principal activities of the Group during the half year.

(a) Bases of accounting

This general purpose financial report for the interim half year reporting period ended 31 December 2006 has been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting.

This half year financial report complies with current Australian Accounting Standards which consist of Australian equivalents to International Financial Reporting Standards (AIFRS).

This half year financial report does not include all notes of the type normally included within the Annual Financial Report and therefore, cannot be expected to provide as full an understanding of the financial position and financial performance of the Group as that given by the Annual Financial Report.

As a result, this report should be read in conjunction with the 30 June 2006 Annual Financial Report of the Group and any public announcements made in the period by the Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

For the purpose of this half year Financial Report, the half year has been treated as a discrete reporting period.

The accounting policies followed in this half year Financial Report are the same as those applied in the 30 June 2006 Annual Financial Report.

Profit Announcement     31

Notes to the Financial Statementscontinued

Note 2 Income from Ordinary Activities

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Banking
Interest income		11,565			10,120			9,638
Fees and commissions		1,276			1,231			1,204
Trading income		306			261			244
Gain on disposal of non-trading instruments		82			44			1
Loss on other financial instruments (including non-trading derivatives)(1)		(129	)		(39	)		(40	)
Dividends		1			3			1
Net (loss)/gain on sale of property, plant and equipment		(4	)		4			—
Other income		80			87			35
		13,177			11,711			11,083
Funds Management, Investment contract and Insurance contract revenue
Funds management and investment contract income including premiums		905			852			737
Insurance contract premiums and related income		577			479			573
Investment income(2)		1,665			1,057			2,072
		3,147			2,388			3,382
Total income from ordinary activities		16,324			14,099			14,465

(1)

December 2006 includes an accounting loss of $66 million ($46 million after tax) due to the unwind of a structured financing transaction at the request of the counterparty. The transaction had been fully economically hedged at inception in 2003, and on transition to AIFRS on 1 July 2005 the hedge profit was recognised in retained profits. Interest expense offsetting the hedge was being amortised over the life of the transaction. The unwind of the transaction brings forward the recognition of this expense to the current period. There is no overall economic loss incurred by the Group. The Group is not aware of any other contracts of a similar nature.

(2)

December 2005 includes profit on sale of the Hong Kong Insurance Business of $145 million.

32     Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 3 Operating Expenses

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	$M		$M		$M
Staff Expenses
Salaries and wages		1,340		1,237		1,182
Share based compensation(1)		56		17		22
Superannuation contributions		4		4		4
Provisions for employee entitlements		32		31		35
Payroll tax		74		62		61
Fringe benefits tax		16		17		17
Other staff expenses		65		69		65
Total staff expenses		1,587		1,437		1,386
Occupancy and Equipment Expenses
Operating lease rentals		179		169		169
Depreciation:
Buildings		11		11		11
Leasehold improvements		30		28		28
Equipment		34		31		33
Operating lease assets		13		5		4
Repairs and maintenance		32		39		34
Other		36		28		31
Total occupancy and equipment expenses		335		311		310
Information Technology Services
Application maintenance and development		130		179		185
Data processing		110		109		118
Desktop		59		61		76
Communications		97		99		102
Amortisation of software assets		30		27		16
IT equipment depreciation		13		8		5
Total information technology services		439		483		502
Other Expenses
Postage		56		60		58
Stationery		53		47		51
Fees and commissions		316		322		314
Advertising, marketing and loyalty		148		161		146
Amortisation of other intangible assets (excluding software)		4		4		2
Non-lending losses		57		64		52
Other		149		138		146
Total other expenses		783		796		769
Total Operating Expenses		3,144		3,027		2,967

(1) Changes to the market conditions of the Equity Reward Plan were approved by the Group’s Remuneration Committee in November 2006. This modification has changed the definition of the comparator group against which the Bank’s Total Shareholder Return is compared. In relation to the 2002 and 2003 plans, this modification has resulted in additional vesting of $36 million in the half year to 31 December 2006.

Profit Announcement     33

Notes to the Financial Statementscontinued

Note 4 Income Tax Expense

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Profit from Ordinary Activities before Income Tax
Banking		2,547			2,342			2,252
Funds management		373			324			319
Insurance		282			230			427
Defined benefit superannuation plan income/(expense)		5			(8	)		(27	)
		3,207			2,888			2,971
Prima Facie Income Tax at 30%
Banking		765			701			676
Funds management		112			97			96
Insurance		85			69			128
Defined benefit superannuation plan income/(expense)		1			(2	)		(8	)
		963			865			892
Tax effect of expenses that are non-deductible/income non-assessable in determining taxable profit:
Current period
Taxation offsets and other dividend adjustments		(4	)		(11	)		(18	)
Tax adjustment referable to policyholder income		96			91			141
Non–assessable capital gains		—			2			(45	)
Tax losses recognised		(4	)		(32	)		(3	)
Other		(16	)		(1	)		4
		72			49			79
Prior periods
Other		(32	)		32			(17	)
Total income tax expense		1,003			946			954
Income Tax Attributable to Profit from Ordinary Activities
Banking		714			688			640
Funds management		85			77			62
Insurance		66			51			51
Corporate tax expense		865			816			753
Policyholder tax expense		138			130			201
Total income tax expense		1,003			946			954
Effective Tax Rate			%			%			%
Total – corporate		28. 2			29. 6			27. 2
Banking – corporate		28. 0			29. 5			28. 8
Funds management – corporate		30. 1			32. 0			29. 5
Insurance – corporate		28. 1			27. 9			15. 2

New Zealand Subsidiaries

An assessment has been received from the IRD in respect of one structured finance investment in relation to the year ended 30 June 2001. Notices of Proposed Adjustment have been received for similar investments for other years.

The Group is confident that the tax treatment it has adopted for these investments is correct, and any assessments received will be disputed.

34      Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 5 Loans, Advances and Other Receivables

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Australia
Overdrafts		2,272			2,672			2,220
Housing loans (including securitisation)		150,834			144,834			135,990
Credit card outstandings		7,071			6,997			6,870
Lease financing		4,617			4,924			4,906
Bills discounted		3,303			2,779			3,898
Term loans		62,613			56,950			51,938
Redeemable preference share financing		—			1			6
Other lending		386			597			401
Other securities		4			—			—
Total Australia		231,100			219,754			206,229
Overseas
Overdrafts		2,064			2,435			2,694
Housing loans		25,887			22,287			23,349
Credit card outstandings		518			428			478
Lease financing		329			139			124
Bills discounted		24			7			—
Term loans		19,020			15,282			14,265
Redeemable preference share financing		1,194			1,194			894
Other lending		74			8			34
Other securities		480			438			300
Total Overseas		49,590			42,218			42,138
Gross loans, advances and other receivables		280,690			261,972			248,367
Less:
Provisions for impairment:
Collective provision		(1,040	)		(1,046	)		(1,041	)
Individually assessed provisions		(171	)		(171	)		(179	)
Unearned income:
Term loans		(931	)		(934	)		(921	)
Lease financing		(586	)		(645	)		(620	)
		(2,728	)		(2,796	)		(2,761	)
Net loans, advances and other receivables		277,962			259,176			245,606

Note 6 Asset Quality

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Total Impaired Assets
Gross non–accruals		338			326			396
Less individually assessed provisions for impairment		(171	)		(171	)		(179	)
Total net impaired assets		167			155			217
Net impaired assets by geographical segment
Australia		159			146			214
Overseas		8			9			3
Total		167			155			217

Profit Announcement       35

Notes to the Financial Statementscontinued

Note 6 Asset Quality(continued)

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Provisions for impairment losses
Collective provisions
Opening balance		1,046			1,041			1,021
Charge against profit and loss		195			210			188
Net transfer to individually assessed provisions		(239	)		(240	)		(200	)
Transfer from other credit provisions		5			—			—
Impairment losses recovered		55			70			57
Adjustments for foreign exchange movements and other items		5			(8	)		1
		1,067			1,073			1,067
Impairment losses written off		(27	)		(27	)		(26	)
Closing balance		1,040			1,046			1,041
Individually assessed provisions
Opening balance		171			179			191
Transfer from collective provision for:
New and increased provisioning		249			254			214
Less write–back of provisions no longer required		(10	)		(14	)		(14	)
Net transfer		239			240			200
Discount unwind to interest income		(3	)		(7	)		(6	)
Adjustments for foreign exchange movements and other items		(4	)		(6	)		3
Impairment losses		(232	)		(235	)		(209	)
Closing balance		171			171			179
Total provisions for loan impairment		1,211			1,217			1,220
Other credit provisions(1)		19			24			24
Total provisions for impairment losses		1,230			1,241			1,244

(1) Included in Other Provisions.

	%		%		%
Provision Ratios
Collective provisions as a % of risk weighted assets		0. 44		0. 48		0. 51
Prudential general reserve for credit losses as a % of risk weighted assets(1)		0. 68		0. 71		0. 71
Individually assessed provisions for impairment as a % of gross impaired assets		50. 6		52 .5		45. 2
Total provisions for impairment losses as a % of gross impaired assets		363. 9		380. 7		314. 1

(1) While the Group is required to maintain a Prudential General Reserve for Credit Losses (“GRCL”) to cover credit losses estimated over the life of portfolio facilities, from 1 July 2006 the Australian prudential regulator, APRA, no longer requires banks to maintain a minimum provisioning benchmark of 0.5% (after tax) of risk weighted assets. The Group’s GRCL within shareholders’ equity, which is over and above APRA requirements, has been retained as part of the Prudential General Reserve for Credit Losses for prudential reporting purposes (refer Capital Adequacy, appendix 8, pages 56-58).

	Half Year Ended
	31/12/06		30/06/06		31/12/05
Impaired Asset Ratios		%		%		%
Gross impaired assets % of risk weighted assets		0. 14		0. 15		0. 20
Net impaired assets as a % of:
Risk weighted assets		0. 07		0. 07		0. 11
Total shareholders’ equity		0. 74		0. 73		1. 09

Provisioning Policy

Provisions for impairment are maintained at an amount adequate to cover incurred credit losses.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant and individually or collectively for financial assets that are not individually significant. If there is objective evidence of impairment, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the expected future cash flows discounted at the financial asset’s original effective interest rate. Short term balances are not discounted.

For APRA prudential reporting purposes the collective provision ($1,040 million), other credit provisions ($19 million), fair value credit adjustments ($31 million) and General Reserve for Credit Losses (pre-tax equivalent $500 million), a total of $1,590 million, equates to 0.68% of risk weighted assets.

36      Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 6 Asset Quality(continued)

	Half Year Ended
	31/12/06			30/06/06			31/12/05		��
	$M			$M			$M
Impaired Assets
Total income received		4			7			4
Interest income forgone		3			5			6
Movement in Impaired Asset Balances
Gross impaired assets opening balance		326			396			395
New and increased impaired assets		401			380			365
Balances written off		(241	)		(241	)		(209	)
Returned to performing or repaid		(148	)		(209	)		(155	)
Gross impaired assets closing balance		338			326			396

The following amounts comprising loans less than $250,000 are reported in accordance with regulatory returns to APRA. They are not classified as impaired assets and therefore not included within the above impaired asset summary.

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	$M		$M		$M
Loans Accruing but Past Due 90 Days or More
Housing loans		161		155		154
Other loans		133		137		119
Total		294		292		273

Note 7 Deposits and Other Public Borrowings

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	$M		$M		$M
Australia
Certificates of deposit		20,590		18,185		17,351
Term deposits		46,004		43,210		42,959
On demand and short-term deposits		85,691		81,547		77,902
Deposits not bearing interest		6,617		5,872		6,149
Securities sold under agreements to repurchase		2,478		1,380		1,092
Total Australia		161,380		150,194		145,453
Overseas
Certificates of deposit		2,414		959		935
Term deposits		14,987		13,790		13,992
On demand and short-term deposits		8,351		7,088		7,024
Deposits not bearing interest		1,672		1,166		1,222
Securities sold under agreements to repurchase		15		30		97
Total Overseas		27,439		23,033		23,270
Total deposits and other public borrowings		188,819		173,227		168,723

Profit Announcement       37

Notes to the Financial Statementscontinued

Note 8 Financial Reporting by Segments

This note sets out segment reporting in accordance with statutory reporting requirements. Refer to the business analysis at the front of this report for detailed Income Statements by segment.

	Half Year Ended 31 December 2006
				Funds
	Banking			Management			Insurance			Total
	$M			$M			$M			$M
Primary Segment
Business Segments
Income Statement
Interest income		11,565			—			—			11,565
Insurance premium and related revenue		—			—			577			577
Other income		1,612			2,097			473			4,182
Total revenue		13,177			2,097			1,050			16,324
Interest expense		8,080			—			—			8,080
Segment result before income tax		2,552			373			282			3,207
Income tax expense		(714	)		(176	)		(113	)		(1,003	)
Segment result after income tax		1,838			197			169			2,204
Minority interests		(13	)		—			—			(13	)
Segment result after income tax and minority interests		1,825			197			169			2,191
Net profit attributable to shareholders of the Bank		1,825			197			169			2,191
Non–Cash Expenses
Intangible asset amortisation		34			—			—			34
Loan impairment expense		195			—			—			195
Depreciation		95			2			4			101
Defined benefit superannuation plan (income)		(5	)		—			—			(5	)
Other		31			1			—			32
Balance Sheet
Total assets		367,250			19,575			10,436			397,261
Acquisition of property, plant & equipment, intangibles and other non–current assets		169			5			12			186
Investments in associates		134			49			33			216
Total liabilities		350,199			17,117			7,458			374,774

38      Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 8 Financial Reporting by Segments(continued)

	Half Year Ended 31 December 2005
				Funds
	Banking			Management			Insurance			Total
	$M			$M			$M			$M
Primary Segment
Business Segments
Income Statement
Interest income		9,638			—			—			9,638
Insurance premium and related revenue		—			—			573			573
Other income		1,445			2,116			693			4,254
Total revenue		11,083			2,116			1,266			14,465
Interest expense		6,383			—			—			6,383
Segment result before income tax		2,225			319			427			2,971
Income tax expense		(640	)		(171	)		(143	)		(954	)
Segment result after income tax		1,585			148			284			2,017
Minority interests		(15	)		(3	)		—			(18	)
Segment result after income tax and minority interests		1,570			145			284			1,999
Net profit attributable to shareholders of the Bank		1,570			145			284			1,999
Non–Cash Expenses
Intangible asset amortisation		18			—			—			18
Loan impairment expense		188			—			—			188
Depreciation		76			2			3			81
Defined benefit superannuation plan (income)/expense		27			—			—			27
Other		34			1			—			35
Balance Sheet Total assets		321,477			19,650			10,066			351,193
Acquisition of property, plant & equipment, intangibles and other non–current assets		122			81			20			223
Investments in associates(1)		120			42			29			191
Total liabilities		307,055			16,500			7,788			331,343

(1) During the half year ended 30 June 2006, an associate investment acquired during the 2006 financial year was reclassified from the Insurance segment to the Funds Management segment. December 2005 half year has been restated on a consistent basis.

Profit Announcement       39

Notes to the Financial Statementscontinued

Note 8 Financial Reporting by Segments(continued)

	Half Year Ended
	31/12/06				31/12/05
	$M		%		$M		%
Secondary Segment
Geographical Segment
Financial Performance
Revenue
Australia		13,117		80. 3		11,603		80. 2
New Zealand		2,151		13. 2		1,982		13. 7
Other countries(1)		1,056		6. 5		880		6. 1
		16,324		100. 0		14,465		100. 0
Net Profit Attributable to Shareholders of the Bank
Australia		1,756		80. 2		1,547		77. 4
New Zealand		235		10. 7		192		9. 6
Other countries(1)		200		9. 1		260		13. 0
		2,191		100. 0		1,999		100. 0
Assets
Australia		321,448		80. 9		287,191		81. 8
New Zealand		50,902		12. 8		45,401		12. 9
Other countries(1)		24,911		6. 3		18,601		5. 3
		397,261		100. 0		351,193		100. 0
Acquisition of Property, Plant & Equipment and Intangibles and Other Non–current Assets Australia		146		78. 4		201		90. 1
New Zealand		36		19. 4		17		7. 6
Other countries(1)		4		2. 2		5		2. 3
		186		100. 0		223		100. 0

(1) Other countries were: United Kingdom, United States of America, Japan, Singapore, Malta, Hong Kong, Grand Cayman, Fiji, Indonesia, China and Vietnam.

The geographical segment represents the location in which the transaction was booked.

40      Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 9 Detailed Consolidated Statement of Changes in Equity

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Equity Reconciliations
Ordinary Share Capital
Opening balance		13,505			13,801			13,486
Buy back of shares		—			(499	)		(1	)
Dividend reinvestment plan		300			219			262
Exercise of executive options		13			15			35
(Purchase)/sale and vesting of treasury shares(1)		102			(29	)		19
Issue costs		—			(2	)		—
Closing balance		13,920			13,505			13,801
Other Equity Instruments
Opening balance		939			—			—
Issue of instruments		—			947			—
Issue costs		—			(8	)		—
Closing balance		939			939			—
Retained Profits
Opening balance		4,487			3,590			3,063
Actuarial gains and losses from defined benefit superannuation plan		149			319			68
Realised gains and dividend income on treasury shares held within the Group’s life insurance statutory funds(1)		9			59			26
Operating profit attributable to members of the Bank		2,191			1,929			1,999
Total available for appropriation		6,836			5,897			5,156
Transfers (to)/from general reserve		1			(133	)		(106	)
Transfers (to)/from general reserve for credit losses		—			(67	)		(25	)
Interim dividend — cash component		—			(992	)		—
Interim dividend — dividend reinvestment plan		—			(219	)		—
Final dividend — cash component		(1,368	)		1			(1,173	)
Final dividend — dividend reinvestment plan		(300	)		—			(262	)
Other dividends		(28	)		—			—
Closing balance		5,141			4,487			3,590
Reserves
General Reserve
Opening balance		1,221			1,088			982
Appropriation (to)/from retained profits		(1	)		133			106
Closing balance		1,220			1,221			1,088
Capital Reserve
Opening balance		285			284			282
Reversal of revaluation surplus on sale of property		1			1			2
Closing balance		286			285			284

(1) Relates to movements in treasury shares held within life insurance statutory funds and the employee share scheme trust.

Profit Announcement       41

Notes to the Financial Statementscontinued

Note 9 Detailed Consolidated Statement of Changes in Equity(continued)

		Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Asset Revaluation Reserve
Opening balance		131			117			119
Revaluation of properties		—			19			—
Transfers on sale of properties		(1	)		(1	)		(2	)
Tax on adjustments		—			(4	)		—
Closing balance		130			131			117
Foreign Currency Translation Reserve
Opening balance		(241	)		41			(63	)
Currency translation adjustments of foreign operations		97			(312	)		80
Transferred to the Income Statement on disposal		—			—			41
Tax on translation adjustments		(10	)		30			(17	)
Closing balance		(154	)		(241	)		41
Cash Flow Hedge Reserve
Opening balance		59			62			39
Gains and losses on cash flow hedging instruments:
Recognised in equity		206			66			23
Transferred to the Income Statement		(26	)		(69	)		11
Tax on cash flow hedging instruments		(57	)		—			(11	)
Closing balance		182			59			62
Employee Compensation Reserve
Opening balance		34			18			23
Current period movement		(107	)		16			(5	)
Closing balance		(73	)		34			18
General Reserve for Credit Losses(1)
Opening balance		350			283			258
Appropriation from retained profits		—			67			25
Closing balance		350			350			283
Available-for-Sale Investments Reserve
Opening balance		65			43			56
Net gains and losses on available-for-sale investments		(37	)		61			(10	)
Net gains and losses on available-for-sale investments transferred to the Income Statement on disposal		(6	)		(34	)		1
Impairment of available-for-sale investments transferred to the Income Statement		—			—			(3	)
Tax on available-for-sale investments		16			(5	)		(1	)
Closing balance		38			65			43
Total Reserves		1,979			1,904			1,936
Shareholders’ Equity Attributable to Members of the Bank		21,979			20,835			19,327
Shareholders’ Equity Attributable to Minority Interests		508			508			523
Total Shareholders’ Equity		22,487			21,343			19,850

(1) While the Group is required to maintain a Prudential General Reserve for Credit Losses (“GRCL”) to cover credit losses estimated over the life of portfolio facilities, from 1 July 2006 the Australian prudential regulator, APRA, no longer requires banks to maintain a minimum provisioning benchmark of 0.5% (after tax) of risk weighted assets. The Group’s GRCL within Shareholders’ Equity, which is over and above APRA requirements, has been retained as part of the Prudential General Reserve for Credit Losses for prudential reporting purposes (refer Capital Adequacy, appendix 8, pages 56-58).

42     Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 10 Notes to the Statement of Cash Flows

(a) Reconciliation of Operating Profit after Income Tax to Net Cash provided by/(used in) Operating Activities

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Operating profit after income tax		2,204			1,942			2,017
(Increase)/decrease in interest receivable		(388	)		21			(120	)
Increase/(decrease) in interest payable		290			818			(34	)
Net (increase)/decrease in assets at fair value through Income Statement (excluding life insurance)		(4,097	)		1,007			(1,060	)
Net (gain)/loss on sale of controlled entities and associates		—			(18	)		(145	)
(Increase)/decrease in derivative assets		(845	)		(1,438	)		1,566
Loss/(gain) on sale of property plant and equipment		4			1			(5	)
Loan impairment expense		195			210			188
Depreciation and amortisation		135			110			99
Increase/(decrease) in liabilities at fair value through Income Statement (excluding life insurance)		4,198			(2,330	)		3,704
Increase/(decrease) in derivative liabilities		2,418			1,429			(1,874	)
Increase/(decrease) in other provisions		6			(46	)		(46	)
Increase/(decrease) in income taxes payable		260			(197	)		(258	)
Increase/(decrease) in deferred income taxes payable		48			194			(12	)
Decrease/(increase) in deferred tax assets		11			250			(66	)
(Increase)/decrease in accrued fees/reimbursements receivable		(174	)		48			(136	)
Increase/(decrease) in accrued fees and other items payable		109			(84	)		217
Unrealised loss/(gain) on revaluation of assets at fair value through Income Statement (excluding life insurance)		43			(122	)		10
Change in life insurance policy liabilities		(326	)		(904	)		(307	)
Increase in cash flow hedge reserve		180			31			—
Changes in operating assets and liabilities arising from cash flow movements		88			229			(3,687	)
Other		282			52			(88	)
Net cash provided by/(used in) operating activities		4,641			1,203			(37	)

(b) Reconciliation of Cash

For the purposes of the Statement of Cash Flows, cash includes cash, money at short call, at call deposits with other financial institutions and settlement account balances with other banks.

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Notes, coins and cash at bank		2,559			1,703			3,023
Other short term liquid assets		864			491			581
Receivables due from other financial institutions — at call(1)		3,504			4,657			2,754
Payables due to other financial institutions — at call(1)		(3,146	)		(4,813	)		(5,626	)
Cash and cash equivalents at end of half year		3,781			2,038			732

(1) At call includes receivables and payables due from and to financial institutions within three months.

(c) Disposal of Controlled Entities

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	$M		$M		$M
Fair value of net tangible assets disposed:
Cash and liquid assets		—		—		55
Assets at fair value through Income Statement		—		—		2,297
Other assets		—		—		148
Life insurance policy liabilities		—		—		(1,996	)
Bills payable and other liabilities		—		—		(41	)
Profit on sale		—		—		145
Cash consideration received		—		—		608
Less: Cash and cash equivalents disposed		—		—		(55	)
Net cash inflows on disposal		—		—		553

Profit Announcement       43

Notes to the Financial Statementscontinued

Note 10 Notes to the Statement of Cash Flows(continued)

(d) Non-cash financing and investing activities

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	$M		$M		$M
Shares issued under the Dividend Reinvestment Plan		300		219		262

(e) Acquisition of Controlled Entities

	Half Year Ended
	31/12/06		30/06/06			31/12/05
	$M		$M			$M
Fair value of assets acquired:
Minority interests		—		126			—
Goodwill		3		7			—
Other intangibles		—		122			—
Other assets		—		167			—
Bills payable and other liabilities		—		(8	)		—
Cash consideration paid		3		414			—
Less: Cash and cash equivalents acquired		—		—			—
Net cash outflow on acquisition		3		414			—

(f) Financing Facilities

Standby funding lines are immaterial.

44     Commonwealth Bank of Australia

Notes to the Financial Statementscontinued

Note 11 Assets Held for Sale

During the half year ended 31 December 2006 the Group purchased through Colonial First State a 32% stake in AWG plc. The stake was acquired through the purchase of preference shares and eurobonds that have been classified as Assets Held for Sale ($1.3 billion), as the Group intends to dispose of its holding into Australian and European based infrastructure funds within the next 12 months.

Until sold, the holding will be measured at the lower of carrying amount and fair value less costs to sell. Interest revenue on the eurobonds will be accrued, while dividend revenue on the preference shares will be recognised when declared.

Note 12 Events after the end of the Financial Period

Dividends

The Directors have declared a fully franked dividend of 107 cents per share — amounting to $1,380 million for the half year ended 31 December 2006.

On 13 February 2007 the appointment of Mr Harrison Young was announced. Mr Young’s appointment is effective immediately.

The Directors are not aware of any other matter or circumstance that has occurred since the end of the half year that has significantly affected or may significantly affect the operations of the Bank, the results of those operations, or the state of affairs of the Bank in subsequent financial years.

Note 13 Contingent Liabilities

There have been no material changes in contingent liabilities since those disclosed in the Financial Statements for the year ended 30 June 2006. Refer to Note 42 in the 2006 Annual Report.

Note 14 Acquisitions of Business Interest

Hangzhou City Commercial Bank

On 27 December 2006, the Bank invested a further A$5.8 million in Hangzhou City Commercial Bank (HZB) to maintain its interest of 19.9% following HZB’s issuance of additional share capital.

Profit Announcement      45

Directors’ Declaration

In accordance with a resolution of the Directors of the Commonwealth Bank of Australia we state that in the opinion of the Directors:

(a) The half year consolidated financial statements and notes as set out on pages 26 to 45 are in accordance with the Corporations Act 2001 and:

(i)	give a true and fair view of the financial position as at 31 December 2006 and the performance for the half year ended on that date of the consolidated entity; and
(ii)	comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and

(b) There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors.

J M Schubert	R J Norris
Chairman	Managing Director and Chief Executive Officer
Dated: 14 February 2007

46     Commonwealth Bank of Australia

Independent Interim Review Report to members of Commonwealth Bank Australia

Scope

We have reviewed the accompanying half year financial report of the Commonwealth Bank of Australia (the company) and the entities it controlled during the half year period, which comprises the condensed balance sheet as at 31 December 2006, and the condensed income statement, condensed statement of recognised income and expense and condensed cash flow statement for the period ended on that date, a statement of accounting policies, explanatory notes 1 to 14 and the directors’ declaration.

Directors’ Responsibility for the half year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the half year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2006 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and other mandatory financial reporting requirements in Australia. As the auditor of the company and the entities it controlled during the half year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report. The Auditor’s Independence Declaration would have been expressed in the same terms if it had been given to the directors at the date this auditor’s report was signed.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of the company and the entities it controlled during the half year is not in accordance with:

(a)	the Corporations Act 2001, including:
(i)	giving a true and fair view of the consolidated entity’s financial position as at 31 December 2006 and of its performance for the six months ended on that date; and
(ii)	complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
(b)	other mandatory financial reporting requirements in Australia.

Ernst & Young

S. J. Ferguson

Partner

Sydney

14 February 2007

Profit Announcement      47

Appendices

1	Net Interest Income	49
2	Net Interest Margin	49
3	Average Balances and Related Interest	50
4	Interest Rate and Volume Analysis	52
5	Other Banking Operating Income	53
6	Operating Expenses	53
7	Integrated Risk Management	54
8	Capital Adequacy	56
9	Share Capital	59
10	Life Insurance Business	60
11	Intangible Assets	62
12	ASB Bank Group	63
13	ASX Appendix 4D	64
14	Analysis Template	66
15	Summary	70
16	Foreign Exchange Rates	71
17	Definitions	72
18	Market Share Definitions	73

48     Commonwealth Bank of Australia

Appendices

1. Net Interest Income

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
	$M		$M		$M		Jun 06 %			Dec 05 %
Interest Income
Loans		10,013		8,829		8,475		13			18
Other financial institutions		244		158		175		54			39
Cash and liquid assets		135		147		103		(8	)		31
Assets at fair value through Income Statement		790		645		541		22			46
Available-for-sale investments		383		341		344		12			11
Total interest income		11,565		10,120		9,638		14			20
Interest Expense
Deposits		4,427		3,765		3,623		(18	)		(22	)
Other financial institutions		333		262		213		(27	)		(56	)
Liabilities at fair value through Income Statement		430		490		481		12			11
Debt issues		2,513		2,011		1,784		(25	)		(41	)
Loan capital		377		333		282		(13	)		(34	)
Total interest expense		8,080		6,861		6,383		(18	)		(27	)
Net interest income		3,485		3,259		3,255		7			7

Included in net interest income is the impact of reclassifying the yield on certain non-trading derivatives which do not qualify for hedge accounting under AIFRS. For the half year ended 31 December 2006 this had the effect of increasing net interest income $29 million (30 June 2006 half year: $21 million; 31 December 2005 half year: $26 million).

2. Net Interest Margin

	Half Year Ended
	31/12/06		30/06/06		31/12/05
	%		%		%
Australia
Interest spread(1)		2.08		2.15		2.27
Benefit of interest free liabilities, provisions and equity(2)		0.26		0.23		0.26
Net interest margin(3)		2.34		2.38		2.53
Overseas
Interest spread(1)		0.91		0.97		0.97
Benefit of interest free liabilities, provisions and equity(2)		0.69		0.68		0.65
Net interest margin(3)		1.60		1.65		1.62
Total Bank
Interest spread(1)		1.86		1.95		2.02
Benefit of interest free liabilities, provisions and equity(2)		0.36		0.34		0.37
Net interest margin(3)		2.22		2.29		2.39

(1)	Difference between the average interest rate earned and the average interest rate paid on funds.
(2)	A portion of the Group’s interest earning assets is funded by interest free liabilities and Shareholders’ Equity. The benefit to the Group of these interest free funds is the amount it would cost to replace them at the average cost of funds.
(3)	Net interest income divided by average interest earning assets for the half year, annualised.

Profit Announcement      49

Appendices

3. Average Balances and Related Interest

The following table lists the major categories of interest earning assets and interest bearing liabilities of the Group together with the respective interest earned or paid and the average interest rate for each of the half years ending 31 December 2006, 30 June 2006 and 31 December 2005. Averages used were predominantly daily averages. Interest is accounted for based on product yield, while all trading gains and losses are disclosed as trading income within other banking income.

Where assets or liabilities are hedged, the interest amounts are shown net of the hedge.

The overseas component comprises overseas branches of the Bank and overseas domiciled controlled entities.

The official cash rate in Australia increased by 50 bpts during the half year while rates in New Zealand remained unchanged.

Average Balances

	Half Year Ended 31/12/06						Half Year Ended 30/06/06						Half Year Ended 31/12/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield		Avg Bal		Income		Yield
Interest Earning Assets	$M		$M		%		$M		$M		%		$M		$M		%
Home loans excluding securitisation		160,395		5,695		7.04		150,588		5,063		6.78		144,879		4,925		6.74
Personal(1)		17,574		947		10.69		16,475		885		10.83		15,878		868		10.84
Business and corporate		81,248		2,932		7.16		72,565		2,468		6.86		64,975		2,330		7.11
Loans, Advances and Other Receivables		259,217		9,574		7.33		239,628		8,416		7.08		225,732		8,123		7.14
Cash and other liquid assets		13,544		379		5.55		12,068		305		5.10		10,965		278		5.03
Assets at fair value through Income Statement (ex life insurance)		21,874		790		7.16		19,473		645		6.68		18,822		541		5.70
Available-for-sale investments		12,233		383		6.21		11,384		341		6.04		11,650		344		5.86
Non Lending Interest Earning Assets		47,651		1,552		6.46		42,925		1,291		6.06		41,437		1,163		5.57
Total interest earning assets (excluding securitisation)(3)		306,868		11,126		7.19		282,553		9,707		6.93		267,169		9,286		6.89
Securitisation home loan assets		11,647		439		7.48		11,775		413		7.07		10,013		352		6.97
Non interest earning assets		67,555						67,847						67,613
Total Average Assets		386,070						362,175						344,795
Interest Bearing Liabilities
Transaction deposits(4)		34,798		529		3.02		33,570		463		2.78		32,931		438		2.64
Savings deposits(4)		45,454		982		4.28		41,709		794		3.84		39,403		723		3.64
Investment deposits		71,155		2,153		6.00		68,226		1,862		5.50		64,948		1,804		5.51
Certificates of deposits and other(2)		22,825		763		6.63		19,901		646		6.55		19,500		658		6.69
Total Interest Bearing Deposits		174,232		4,427		5.04		163,406		3,765		4.65		156,782		3,623		4.58
Payables due to other financial Institutions		12,017		333		5.50		10,291		262		5.13		8,982		213		4.70
Liabilities at fair value through Income Statement		15,884		430		5.37		15,528		490		6.36		15,084		481		6.33
Debt issues		74,382		2,127		5.67		64,193		1,655		5.20		57,696		1,469		5.05
Loan Capital		10,033		377		7.45		9,785		333		6.86		8,585		282		6.52
Total Interest Bearing Liabilities		286,548		7,694		5.33		263,203		6,505		4.98		247,129		6,068		4.87
Securitisation debt issues		11,802		386		6.49		11,856		356		6.06		11,231		315		5.56
Non interest bearing liabilities		65,594						64,393						65,161
Total Average Liabilities		363,944						339,452						323,521

(1)	Personal includes personal loans, credit cards, and margin loans.
(2)	Comparisons between reporting periods are impacted by hedge accounting.
(3)	Used for calculating net interest margin.
(4)	During the current period, certain ASB Bank customer account balances and associated interest expense were re-classified from transaction deposits to savings deposits. Prior periods have been restated on a consistent basis.

50     Commonwealth Bank of Australia

Appendices

3. Average Balances and Related Interest(continued)

	Half Year Ended 31/12/06						Half Year Ended 30/06/06						Half Year Ended 31/12/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield		Avg Bal		Income		Yield
Net Interest Margin	$M		$M		%		$M		$M		%		$M		$M		%
Total interest earning assets excluding securitisation		306,868		11,126		7.19		282,553		9,707		6.93		267,169		9,286		6.89
Total interest bearing liabilities excluding securitisation		286,548		7,694		5.33		263,203		6,505		4.98		247,129		6,068		4.87
Net interest income & interest spread (excluding securitisation)				3,432		1.86				3,202		1.95				3,218		2.02
Benefit of free funds						0.36						0.34						0.37
Net interest margin						2.22						2.29						2.39

Geographical analysis of key categories

	Half Year Ended 31/12/06						Half Year Ended 30/06/06						Half Year Ended 31/12/05
Loans, Advances and Other	Avg Bal		Income		Yield		Avg Bal		Income		Yield		Avg Bal		Income		Yield
Receivables	$M		$M		%		$M		$M		%		$M		$M		%
Australia		212,600		7,813		7.29		197,262		6,810		6.96		186,994		6,717		7.13
Overseas		46,617		1,761		7.49		42,366		1,606		7.64		38,738		1,406		7.20
Total		259,217		9,574		7.33		239,628		8,416		7.08		225,732		8,123		7.14
Non Lending Interest Earning Assets
Australia		28,174		960		6.76		24,695		754		6.16		23,560		708		5.96
Overseas		19,477		592		6.03		18,230		537		5.94		17,877		455		5.05
Total		47,651		1,552		6.46		42,925		1,291		6.06		41,437		1,163		5.57
Total Interest Bearing Deposits
Australia		148,422		3,536		4.73		140,037		3,046		4.39		134,212		2,995		4.43
Overseas		25,810		891		6.85		23,369		719		6.20		22,570		628		5.52
Total		174,232		4,427		5.04		163,406		3,765		4.65		156,782		3,623		4.58
Other Interest Bearing Liabilities
Australia		72,598		2,186		5.97		60,216		1,693		5.67		56,358		1,615		5.68
Overseas		39,718		1,081		5.40		39,581		1,047		5.33		33,989		830		4.84
Total		112,316		3,267		5.77		99,797		2,740		5.54		90,347		2,445		5.37

The overseas component comprises overseas branches of the Bank and overseas domiciled controlled entities. Overseas intragroup borrowings have been adjusted into the interest spread and margin calculations to more appropriately reflect the overseas cost of funds. Non-accrual loans were included in interest earning assets under Loans, Advances and Other Receivables.

In calculating net interest margin, assets, liabilities, interest income and interest expense related to securitisation has been excluded, to more accurately reflect the Bank’s underlying net margin.

Profit Announcement 51

Appendices

4. Interest Rate and Volume Analysis

	Half Year Ended
	31/12/06			31/12/06
	vs 30/06/06			vs 31/12/05
	Increase/			Increase/
	(Decrease)			(Decrease)
Change in Net Interest Income (excluding securitisation)	$M			$M
Due to changes in average volume of interest earning assets		276			461
Due to changes in interest margin		(99	)		(247	)
Due to variation in time period		53			—
Change in net interest income		230			214

						��
	Half Year Ended Dec 06 vs Jun 06									Half Year Ended Dec 06 vs Dec 05
	Volume			Rate			Total			Volume		Rate			Total
Interest Earning Assets	$M			$M			$M			$M		$M			$M
Home loans		339			293			632			539		231			770
Personal		59			3			62			92		(13	)		79
Business and corporate		304			160			464			585		17			602
Loans, advances and other receivables		706			452			1,158			1,221		230			1,451
Cash and liquid assets		39			35			74			69		32			101
Assets at fair value through Income Statement (excluding life insurance)		83			62			145			99		150			249
Available-for-sale investments		26			16			42			18		21			39
Non lending interest earning assets		147			114			261			188		201			389
Total interest earning assets		858			561			1,419			1,410		430			1,840
Securitisation home loan assets		(5	)		31			26			60		27			87
Interest Bearing Liabilities
Transaction deposits		18			48			66			27		64			91
Savings deposits		77			111			188			121		138			259
Investment deposits		84			207			291			180		169			349
Certificates of deposits and other		96			21			117			112		(7	)		105
Total interest bearing deposits		262			400			662			423		381			804
Payables due to other financial institutions		46			25			71			78		42			120
Liabilities at fair value through Income Statement		10			(70	)		(60	)		24		(75	)		(51	)
Debt issues		277			195			472			451		207			658
Loan capital		9			35			44			51		44			95
Total interest bearing liabilities		602			587			1,189			1,013		613			1,626
Securitisation debt issues		(2	)		32			30			17		54			71

	Half Year Ended Dec 06 vs Jun 06							Half Year Ended Dec 06 vs Dec 05
	Volume		Rate			Total		Volume		Rate		Total
Geographical analysis of key categories	$M		$M			$M		SM		$M		$M
Loans, Advances and Other Receivables
Australia		547		456			1,003		930		166		1,096
Overseas		161		(6	)		155		292		63		355
Total		706		452			1,158		1,221		230		1,451
Non Lending Interest Earning Assets
Australia		112		94			206		148		104		252
Overseas		37		18			55		45		92		137
Total		147		114			261		188		201		389
Total Interest Bearing Deposits
Australia		191		299			490		328		213		541
Overseas		80		92			172		101		162		263
Total		262		400			662		423		381		804
Other Interest Bearing Liabilities
Australia		360		133			493		477		94		571
Overseas		4		30			34		148		103		251
Total		354		173			527		617		205		822

These volume and rate analyses are for half year periods. The calculations were based on balances over the half year. The volume and rate variances for total interest earning assets and liabilities have been calculated separately (rather than being the sum of the individual categories).

52 Commonwealth Bank of Australia

Appendices

5. Other Banking Operating Income

	Half Year Ended
	31/12/06			30/06/06			31/12/05			Dec 06 vs				Dec 06 vs
	$M			$M			$M			Jun 06 %				Dec 05 %
Lending fees		417			411			389			1				7
Commission and other fees		859			820			815			5				5
Trading income		306			261			244			17				25
Net gain/(loss) on disposal of non-trading instruments(1)		82			44			1			86			large
Dividends		1			3			1			(67	)			—
Net gain/(loss) on sale of property, plant and equipment		(4	)		4			—		large					—
Other income		80			87			35			(8	)		large
		1,741			1,630			1,485			7				17
Loss on other financial instruments (including non-trading derivatives)(2)		(129	)		(39	)		(40	)	large			large
Total other banking operating income		1,612			1,591			1,445			1				12

(1)	December 2006 half includes $79 million profit on sale of the Bank’s share in Greater Energy Alliance Corporation Pty Limited (“Loy Yang”). June 2006 half includes $32 million profit related to MasterCard IPO.
(2)	December 2006 half includes an accounting loss of $66 million ($46 million after tax) due to the unwind of a structured financing transaction at the request of the counterparty.

6. Operating Expenses

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Expenses by Segment	$M		$M		$M		Jun 06 %			Dec 05 %
Operating expenses
Banking		2,354		2,298		2,260		(2	)		(4	)
Funds management		567		530		459		(7	)		(24	)
Insurance		223		199		248		(12	)		10
Total		3,144		3,027		2,967		(4	)		(6	)

	Half Year Ended
	31/12/06		30/06/06		31/12/05		Dec 06 vs			Dec 06 vs
Expenses by Category	$M		$M		$M		Jun 06 %			Dec 05 %
Staff		1,587		1,437		1,386		(10	)		(15	)
Occupancy and equipment		335		311		310		(8	)		(8	)
Information technology services		439		483		502		9			13
Other expenses		783		796		769		2			(2	)
Total		3,144		3,027		2,967		(4	)		(6	)

Capitalisation of Computer Software Costs

Capitalised computer software costs (net of amortisation) totalled $267 million as at 31 December 2006 (June 2006: $229 million and December 2005: $188 million). Expenditure in the half year principally comprises development of customer focussed systems.

Profit Announcement 53

Appendices

7. Integrated Risk Management (Excludes Insurance and Funds Management)

The major categories of risk actively managed by the Group include credit risk, liquidity and funding risk, market risk and other operational and compliance risks. The 2006 Annual Report “Integrated Risk Management” section on pages 29 to 32, details the major risks managed by a diversified financial institution.

Credit Risk

The Group uses a portfolio approach for the management of its credit risk. A key element is a well diversified portfolio. The Group uses various portfolio management tools to assist in diversifying the credit portfolio.

The commercial portfolio remains well rated and low actual loan impairments were experienced during the half year.

	31/12/06		30/06/06		31/12/05
Industry On Balance Sheet Exposure	%		%		%
Accommodation, cafes and restaurants		1.0		1.0		1.0
Agriculture, forestry and fishing		2.8		2.8		3.0
Communication services		0.3		0.4		0.3
Construction		1.2		1.4		1.4
Cultural and recreational services		0.5		0.6		0.6
Electricity, gas and water supply		1.5		1.6		1.9
Finance and insurance		13.0		12.2		11.4
Government administration and defence		1.4		1.2		1.4
Health and community services		1.5		1.5		1.6
Manufacturing		3.3		3.1		2.9
Mining		1.2		0.8		0.8
Personal and other services		0.6		0.6		0.5
Property and business services		8.1		8.3		8.1
Retail trade		1.6		1.7		1.8
Transport and storage		2.8		2.5		2.0
Wholesale trade		1.3		1.4		1.4
Consumer		57.9		58.9		59.9
		100.0		100.0		100.0

The bulk of the Group’s committed exposures are concentrated in Australia and New Zealand.

	31/12/06		30/06/06		31/12/05
Regional Committed Credit Exposure	%		%		%
Australia		81.0		82.6		82.9
New Zealand		14.6		13.6		13.5
Europe		2.1		1.8		2.2
Americas		1.5		1.2		0.7
Asia		0.6		0.6		0.6
Other		0.2		0.2		0.1
		100.0		100.0		100.0

	31/12/06		30/06/06		31/12/05
Commercial Portfolio Quality	%		%		%
AAA/AA		30		31		29
A		17		20		22
BBB		20		17		16
Other		33		32		33
		100		100		100

As a measure of individually risk rated commercial portfolio exposure (including finance and insurance), the Group has 67% of commercial exposures at investment grade quality.

54 Commonwealth Bank of Australia

Appendices

7. Integrated Risk Management(continued)

Interest Rate Risk

Interest rate risk in the balance sheet is discussed within Note 43 of the 2006 Annual Report.

Next 12 months’ Earnings

The potential impact on net interest earnings of a 1% parallel rate shock and the expected change in price of assets and liabilities held for purposes other than trading is as follows:

					��
	31/12/06		30/06/06		31/12/05
Interest Rate Risk	%		%		%
(expressed as a % of expected next 12 months’ earnings)
Average monthly exposure		1.2		1.1		1.2
High month exposure		2.2		2.1		1.8
Low month exposure		0.3		0.2		0.2

Value at Risk (VaR)

VaR within Financial Markets Trading is discussed in the 2006 Annual Report “Integrated Risk Management” section on page 30. The following table provides a summary of VaR by type.

	Average VaR			Average VaR			Average VaR
	During			During			During
	December 2006			June 2006			December 2005
	Half Year			Half Year			Half Year
VaR expressed based on 97. 5% confidence	$M			$M			$M
Group
Interest rate risk		3.29			3.16			2.65
Exchange rate risk		0.54			0.65			0.53
Implied volatility risk		0.57			0.61			0.61
Equities risk		0.14			0.10			0.08
Commodities risk		0.71			1.20			0.36
Prepayment risk		0.40			0.33			0.28
ASB Bank		0.27			0.30			0.36
Diversification benefit		(1.73	)		(2.26	)		(1.40	)
Total general market risk		4.19			4.09			3.47
Credit spread risk		6.14			5.97			5.74
Total		10.33			10.06			9.21

	Average VaR			Average VaR			Average VaR
	During			During			During
	December 2006			June 2006			December 2005
	Half Year			Half Year			Half Year
VaR expressed based on 99. 0% confidence	$M			$M			$M
Group
Interest rate risk		4.31			4.01			3.36
Exchange rate risk		0.72			0.77			0.62
Implied volatility risk		0.74			0.80			0.95
Equities risk		0.18			0.13			0.09
Commodities risk		0.93			1.61			0.45
Prepayment risk		0.40			0.33			0.28
ASB Bank		0.34			0.40			0.48
Diversification benefit		(2.38	)		(3.04	)		(1.93	)
Total general market risk		5.24			5.01			4.30
Credit spread risk		7.29			7.09			6.81
Total		12.53			12.10			11.11

Profit Announcement 55

Appendices

8. Capital Adequacy

	31/12/06			30/06/06			31/12/05
Risk-Weighted Capital Ratios	%			%			%
Tier One		7.06			7.56			7.54
Tier Two		3.49			3.10			3.28
Less deductions		(0.77	)		(1.00	)		(1.01	)
Total		9.78			9.66			9.81
Adjusted Common Equity(1)		4.70			4.50			5.00

	31/12/06			30/06/06			31/12/05
Regulatory Capital	$M			$M			$M
Tier One Capital
Shareholders’ Equity		22,487			21,343			19,850
Reverse effect on Shareholders’ Equity of AIFRS transition(2)		—			7,183			7,183
Reverse effect of AIFRS during the period to 30 June 2006:(2)
Purchase/(sale) and vesting of treasury shares		—			10			(18	)
Actuarial gains and losses from defined benefits superannuation plan		—			(387	)		(68	)
Realised gains and dividend income on treasury shares held with in the Group’s life insurance statutory funds		—			(85	)		(25	)
Cash flow hedge reserve		—			(20	)		(23	)
Employee compensation reserve		—			(11	)		5
General reserve for credit losses		—			(92	)		(25	)
Available-for-sale investments		—			(9	)		13
Defined benefit superannuation plan expense		—			25			19
Treasury shares valuation adjustment		—			100			43
Preference share capital		—			(687	)		—
Issue of hybrid instruments		—			1,147			—
Other		—			(6	)		31
Adjusted Shareholders’ Equity		22,487			28,511			26,985
Treasury shares		294			—			—
Estimated reinvestment under Dividend Reinvestment Plan(3)		248			303			221
Irredeemable non-cumulative preference shares(4)		2,582			—			—
Eligible loan capital		263			281			317
Deferred fees		123			—			—
Retained earnings(5)		752			—			—
Employee compensation reserve		73			—			—
Cash flow hedge reserve		(182	)		—			—
General reserve for credit losses (after tax)		(350	)		—			—
Available-for-sale investments reserve		(38	)		—			—
Foreign currency translation reserve related to non-consolidated subsidiaries		(25	)		160			160
Asset revaluation reserve		(130	)		(131	)		(117	)
Expected dividend		(1,380	)		(1,668	)		(1,211	)
Goodwill(6)		(7,579	)		(4,416	)		(4,392	)
Intangible component of investment in non–consolidated subsidiaries(6)		—			(5,397	)		(5,397	)
Minority interest in life insurance statutory funds and other funds		—			(1,158	)		(1,158	)
Capitalised expenses		(100	)		(122	)		(107	)
Capitalised computer software costs		(267	)		—			—
Equity investments in other companies(7)		(820	)		—			—
Defined benefit superannuation plan surplus(8)		(1,018	)		—			—
Deferred tax		(39	)		—			—
Other		18			(9	)		(11	)
Transitional Tier One capital relief on adoption of AIFRS(9)		1,641			—			—
Total Tier One Capital		16,553			16,354			15,290

(1)	Adjusted Common Equity (“ACE”) is one measure considered by Standard & Poor’s in evaluating the Group’s credit rating. The ACE ratio has been calculated in accordance with Standard & Poor’s methodology at 31 December 2006.
(2)	APRA required regulatory capital to be calculated in accordance with AGAAP accounting principles until 1 July 2006. As such, all material changes to capital resulting from the Group adopting AIFRS accounting standards on 1 July 2005 have been reversed from regulatory capital.
(3)	Based on reinvestment experience related to the Bank’s Dividend Reinvestment Plan.
(4)	Represents capital instruments classified as debt under AIFRS but approved by APRA as capital instruments.
(5)	Represents the writedown in retained earnings upon adoption of AIFRS within the non-consolidated subsidiaries.
(6)	31 December 2006 balance represents total Goodwill and other intangibles (excluding capitalised computer software costs) under AIFRS which is required to be deducted from Tier One Capital. The increase from the prior period principally represents the intangible component of the carrying value of the life insurance and funds management business which was transferred to Goodwill on adoption of AIFRS.
(7)	Represents the Group’s non-controlling equity interest in a major infrastructure asset.
(8)	In accordance with APRA regulations, the surplus (net of tax) in the Bank’s defined benefit superannuation fund which is included in shareholders’ equity, must be deducted from Tier One capital.
(9)	APRA has granted transitional relief for Tier One and Two capital on adoption of AIFRS, which expires 1 January 2008.

56 Commonwealth Bank of Australia

Appendices

8. Capital Adequacy(continued)

	31/12/06			30/06/06			31/12/05
Regulatory Capital	$M			$M			$M
Tier Two Capital
Collective provision for impairment losses		1,040			1,046			1,041
Other credit provisions(1)		19			—			—
Fair value credit adjustments(1)		31			—			—
General reserve for credit losses (pre-tax equivalent)(1)		500			500			404
Prudential general reserve for credit losses(1)		1,590			1,546			1,445
Future income tax benefit related to prudential general reserve for credit losses		(477	)		(464	)		(434	)
Asset revaluation reserve(2)		59			131			117
Upper Tier Two note and bond issues		212			235			232
Lower Tier Two note and bond issues(3) (4)		6,780			5,335			5,349
Other		(62	)		(58	)		(65	)
Transitional Tier Two capital relief on adoption of AIFRS(5)		74			—			—
Total Tier Two Capital		8,176			6,725			6,644
Total Capital before deductions		24,729			23,079			21,934

(1)	Prior to 1 July 2006 APRA required a minimum ratio of 0.5% (after tax) of risk weighted assets which comprised the collective provision for impairment losses and the General Reserve for Credit Losses. From 1 July 2006 there is no longer a minimum regulatory requirement. The Prudential General Reserve for Credit Losses is now comprised of the collective provision for impairment losses, other credit provisions, fair value credit adjustments and a general reserve for credit losses within shareholders’ equity which is an additional amount reserved over and above APRA requirements.
(2)	From 1 July 2006 APRA allows only 45% of the asset revaluation reserve to be included in Tier Two capital.
(3)	APRA requires these Lower Tier Two note and bond issues to be included as if they were unhedged.
(4)	For regulatory capital purposes, Lower Tier Two note and bond issues are amortised by 20% of the original amount during each of the last five years to maturity.
(5)	APRA has granted transitional relief for Tier One and Two capital on adoption of AIFRS, which expires 1 January 2008.

	31/12/06			30/06/06			31/12/05
Regulatory Capital	$M			$M			$M
Total Capital before deductions		24,729			23,079			21,934
Deduct:
Investment in non–consolidated subsidiaries (net of intangible component deducted from Tier One capital):
Shareholders’ net tangible assets in life and funds management businesses		(2,068	)		(1,902	)		(1,517	)
Reverse effect of transition to AIFRS		(592	)		(592	)		(592	)
Capital in other non-consolidated subsidiaries		(456	)		(256	)		(321	)
Value of acquired inforce business(1)		—			(1,339	)		(1,339	)
Less: non-recourse debt		2,133			2,077			1,851
Funds Management Securities(2)		700			—			—
		(283	)		(2,012	)		(1,918	)
Value of acquired inforce business(1)		(1,339	)		—			—
		(1,622	)		(2,012	)		(1,918	)
Other deductions		(166	)		(151	)		(130	)
Capital base		22,941			20,916			19,886

(1)	Value of acquired inforce business (excess of market value over net assets), which was transferred to Goodwill upon adoption of AIFRS.
(2)	Funds Management Securities issued September 2006.

	31/12/06			30/06/06			31/12/05
Adjusted Common Equity(1)	$M			$M			$M
Tier One capital		16,553			16,354			15,290
Add:
Deferred Income Tax		39			—			—
Equity investments in other companies(2)		820			—			—
Deduct:
Eligible loan capital		(263	)		(281	)		(317	)
Preference share capital		—			—			(687	)
Other hybrid equity instruments		(3,522	)		(3,659	)		(1,573	)
Minority interest (net of minority interest component deducted from Tier One capital)		(508	)		(508	)		(523	)
Investment in non–consolidated subsidiaries (net of intangible component deducted from Tier One capital)(3)		(283	)		(2,012	)		(1,918	)
Other deductions		(166	)		(151	)		(130	)
Impact upon adoption of AIFRS(4)		(1,641	)		—			—
Total Adjusted Common Equity		11,029			9,743			10,142

(1)	Adjusted Common Equity (“ACE”) is one measure considered by Standard & Poor’s in evaluating the Bank’s credit rating. The ACE ratio has been calculated in accordance with Standard & Poor’s methodology at 31 December 2006.
(2)	Represents the Group’s non-controlling equity interest in a major infrastructure asset.
(3)	Balance at 31 December 2006 excludes $1,339 million associated with the excess over market value of net assets which was transferred to goodwill upon adoption of AIFRS.
(4)	Standards and Poor’s calculation of ACE Capital did not allow for any relief upon adoption of AIFRS.

Profit Announcement 57

8. Capital Adequacy(continued)

							Risk
	Face Value						Weights		Risk–Weighted Balance
	31/12/06		30/06/06		31/12/05				31/12/06		30/06/06		31/12/05
	$M		$M		$M		%		$M		$M		$M
Risk-Weighted Assets
On balance sheet assets
Cash, claims on Reserve Bank of Australia, short term claims on Australian Commonwealth and State Government and Territories, and other zero–weighted assets		29,442		23,301		25,677		—		—		—		—
Claims on OECD banks and local governments		14,227		16,742		18,771		20		2,845		3,348		3,754
Advances secured by residential property		170,377		157,962		154,274		50		85,189		78,981		77,137
All other assets		122,858		110,971		99,794		100		122,858		110,971		99,794
Total on balance sheet assets – credit risk		336,904		308,976		298,516				210,892		193,300		180,685
Total off balance sheet exposures – credit risk										20,032		19,691		18,626
Risk-weighted assets – market risk										3,645		3,447		3,356
Total risk-weighted assets (regulatory)(1)										234,569		216,438		202,667

(1) In calculating risk weighted assets in accordance with Standard and Poor’s agreed methodology, the equity investment in other companies ($0.8 billion) is required to be added to regulatory risk weighted assets as this amount is not deducted from ACE Capital. On an unrelated transaction, a similar amount was required to be deducted from regulatory risk weighted assets due to Standard and Poor’s different treatment of set-off arrangements where they are recognised from a legal and accounting perspective.

Active Capital Management

The Banking Group maintains a strong capital position. The Total Capital Ratio increased from 9.66% at 30 June 2006 to 9.78% at 31 December 2006. The Tier One Capital Ratio decreased from 7.56% to 7.06% during the half year to 31 December 2006 reflecting the acquisition of a major infrastructure asset in the United Kingdom and growth in Risk Weighted Assets. Risk Weighted Assets, increased to $235 billion at 31 December 2006 due to strong growth in lending assets particularly in the business/corporate sector. The Group’s credit ratings remained unchanged.

Adoption of AIFRS and Transitional Relief

The Group adopted the Australian equivalents to International Financial Reporting Standards (“AIFRS”) on 1 July 2005. However, APRA required reporting under AGAAP accounting principles to continue for regulatory capital purposes until the introduction of revised prudential standards, which took effect on 1 July 2006.

With the introduction of the revised prudential standards, APRA granted transitional relief in relation to changes to their prudential regulations from 1 July 2006 until 31 December 2007.

Total transitional relief of $1,715 million is comprised of $1,641 million relief for Tier One Capital and $74 million of relief for Upper Tier Two Capital.

Transitional relief principally relates to:

• Excess of Market Value Over Net Assets (“EMVONA”) $1,339 million;

• Software capitalised expenses $229 million; and

• Defined benefit superannuation plan deficit $45 million.

Adjusted Common Equity

The Adjusted Common Equity (“ACE”) ratio at 31 December 2006 is 4.70%, an increase from 4.39% at 1 July 2006 (on an AIFRS basis). Standard & Poor’s did not grant any transition relief for the impact of AIFRS adjustments in relation to the impact of software capitalised expenses and defined benefit superannuation plan deficit.

Significant Initiatives

The following significant initiatives were undertaken to actively manage the Group’s capital:

Tier One Capital

• Issue of $300 million shares in October 2006 to satisfy the Dividend Reinvestment Plan (“DRP”) in respect of the final dividend for 2005/06; and

• In accordance with APRA guidelines, the estimated issue of $248 million of shares to satisfy the DRP in respect of the interim dividend for 2006/07.

Tier Two Capital

• Issue of the equivalent of $1,831 million of Lower Tier Two capital; offset by

• The call and maturity of the equivalent of $206 million of Tier Two note and bond issues; and

• Decrease in the value of Tier Two note and bond issues of $180 million resulting from changes in foreign exchange movements (whilst these notes are hedged, the unhedged value is included in the calculation of regulatory capital in accordance with the APRA regulations).

Other Capital Initiatives

Issue of $700 million hybrid securities, called Funds Management Securities (“FMS”) in September 2006. The coupons on the FMS, and in some cases repayment of capital, will depend on the fees generated by the Australian Funds Management business of the Group. The issue of FMS forms part of the Group’s ongoing commitment to efficient innovative capital management.

Deductions from Total Capital

During the half year a decrease in deductions for investment in non-consolidated subsidiaries primarily reflects up-streaming of dividends from the Colonial group of companies.

Life & Fund Management Activities

As required by APRA, the Group’s investment in its life insurance and funds management companies is deducted from regulatory capital to arrive at the Banking Group’s Capital Ratios. The Group’s insurance and funds management companies held an estimated $911 million excess over regulatory capital requirements at 31 December 2006 in aggregate.

58 Commonwealth Bank of Australia

Appendices

9. Share Capital

	Half Year Ended
	31/12/06			30/06/06			31/12/05
Ordinary Share Capital	$M			$M			$M
Opening balance (excluding Treasury Shares deduction)		13,901			14,168			13,872
Dividend reinvestment plan: Final Dividend prior year		300			—			262
Dividend reinvestment plan: Interim Dividend		—			219			—
Buyback of shares		—			(499	)		(1	)
Exercise of executive options		13			15			35
Issue costs		—			(2	)		—
Closing balance (excluding Treasury Shares deduction)		14,214			13,901			14,168
Less Treasury Shares		(294	)		(396	)		(367	)
Closing Balance		13,920			13,505			13,801

	Half Year Ended
	31/12/06			30/06/06			31/12/05
Shares on Issue	M			M			M
Opening balance (excluding Treasury Shares deduction)		1,282,904,909			1,288,562,729			1,280,276,172
Dividend reinvestment plan issue:
2004/2005 Final dividend fully paid ordinary shares at $37.19		—			—			7,032,857
2005/2006 Interim dividend fully paid ordinary shares at $43.89		—			4,979,668			—
2005/2006 Final dividend fully paid ordinary shares at $45.24		6,638,553			—			—
Buyback of shares		—			(11,114,988	)		(25,000	)
Exercise under executive option plan		474,400			477,500			1,278,700
Closing balance (excluding Treasury Shares deduction)		1,290,017,862			1,282,904,909			1,288,562,729
Less Treasury Shares		(9,235,153	)		(11,085,258	)		(10,767,501	)
Closing balance		1,280,782,709			1,271,819,651			1,277,795,228

Terms and Conditions of Ordinary Share Capital

Ordinary shares have the right to receive dividends as declared and in the event of winding up the Bank, to participating in the proceeds from sale of surplus assets in proportion to the number of and amounts paid up on shares held.

A shareholder has one vote on a show of hands and one vote for each fully paid share on a poll. A shareholder may be present at a general meeting in person or by proxy or attorney, and if a body corporate, it may also authorise a representative.

Dividend Franking Account

After fully franking the interim dividend to be paid for the half year ended 31 December 2006, the amount of credits available as at 31 December 2006 to frank dividends for subsequent financial years is $88 million (June 2006: nil). This figure is based on the combined franking accounts of the Bank at 31 December 2006, which have been adjusted for franking credits that will arise from the payment of income tax payable on profits for the half year ended 31 December 2006, franking debits that will arise from the payment of dividends proposed for the year and franking credits that the Bank may be prevented from distributing in subsequent financial periods. The Bank expects that future tax payments will generate sufficient franking credits for it to be able to fully frank future dividend payments. These calculations have been based on the taxation law as at 31 December 2006.

Dividends

The Directors have declared a fully franked interim dividend of 107 cents per share amounting to $1,380 million. The dividend will be payable on 5 April 2007 to shareholders on the register at 5pm on 23 February 2007. Dividends per share are based on net profit after tax (“cash basis”) per share, having regard to a range of factors including:

• Current and expected rates of business growth and the mix of business;

• Capital needs to support economic, regulatory and credit ratings requirements;

• The rate of return on assets; and

• Investments and/or divestments to support business development.

As declared in the 30 June 2006 Annual Report, a fully franked final dividend of 130 cents per share amounting to $1,668 million was paid on 5 October 2006. The payment comprised cash disbursements of $1,368 million with $300 million being reinvested by participants through the Dividend Reinvestment Plan.

Dividend Reinvestment Plan

The Bank expects to issue around $248 million of shares in respect of the Dividend Reinvestment Plan for the interim dividend for 2006/07.

Record Date

The register closes for determination of dividend entitlement and for participation in the DRP at 5:00pm on 23 February 2007 at Link Market Services Limited, Locked Bag A14, Sydney South, NSW 1235.

Ex Dividend Date

The ex-dividend date is 19 February 2007.

Profit Announcement 59

Appendices

10. Life Insurance Business

Life Insurance contract liabilities

Appropriately qualified actuaries have been appointed in respect of each life insurance business and they have reviewed and satisfied themselves as to the accuracy of the policy liabilities included in this Financial Report, including compliance with the regulations of the Life Insurance Act (“Life Act”) 1995 where appropriate.

Life Investment contract liabilities

Investment contracts consist of a financial instrument and an investment management services element, both of which are measured at fair value. The financial instrument liabilities are measured in accordance with AASB 139 with changes in fair value taken to the Income Statement. Fair value represents the value of future benefit payments and fees subject to a minimum of the surrender value. The liability to policyholders is closely linked to the performance and value of the assets (net of income tax) that back those liabilities.

	31/12/06			30/06/06			31/12/05
Components of Policy Liabilities(1)	$M			$M			$M
Future policy benefits(2)		24,666			23,916			24,861
Future bonuses		1,197			1,128			1,106
Future expenses		1,997			1,844			1,851
Future profit margins		1,517			1,388			1,224
Future charges for acquisition expenses		(442	)		(434	)		(450	)
Balance of future premiums		(6,290	)		(5,706	)		(5,604	)
Provisions for bonuses not allocated to participating policyholders		84			89			67
Total policy liabilities		22,729			22,225			23,055

(1)	Includes both investment and insurance business.
(2)	Including bonuses credited to policyholders in prior years.

Taxation

Taxation has been allowed for in the determination of policy liabilities in accordance with the relevant legislation applicable in each market.

Actuarial Methods and Assumptions

Insurance contract policy liabilities have been calculated in accordance with AASB 1038 “Life Insurance Contracts” and the Margin on Services (“MoS”) methodology as set out in Actuarial Standard 1.04 – Valuation Standard (“AS1.04”) issued by the Life Insurance Actuarial Standards Board (“LIASB”). The principal methods and profit carriers used for particular product groups were as follows:

Product Type	Method	Profit Carrier
Individual
Conventional	Projection	Bonuses or expected claim payments
Investment account	Projection	Bonuses or funds under management
Lump sum risk	Projection	Premiums/Expected claim payment
Income stream risk	Projection	Expected claim payments
Immediate annuities	Projection	Annuity payments
��
Group
Investment account	Projection	Bonuses or funds under management
Lump sum risk	Accumulation/Projection	Expected claim payments
Income stream risk	Accumulation/Projection	Expected claim payments

The “Projection Method” measures the present values of estimated future policy cash flows to calculate policy liabilities. The policy cash flows incorporate investment income, premiums, expenses, redemptions and benefit payments.

Bonuses are amounts added, at the discretion of the life insurer, to the benefits currently payable under Participating Business. Bonuses may take a number of forms including reversionary bonuses, interest credits and terminal bonuses (payable on the termination of the policy).

Actuarial assumptions

Set out below is a summary of the material assumptions used in the calculation of policy liabilities.

Discount rates

Discount rates are used to discount future cash flows in the determination of policy liabilities. The discount rates assumed vary by product and are based on the risk-free rate, except for discretionary participating products where the rate is based on the expected earning rate of the assets supporting the policy liabilities, adjusted for taxation where relevant. The following table shows the applicable rates for the major classes of business in Australia and New Zealand.

60Commonwealth Bank of Australia

Appendices

10. Life Insurance Business(continued)

	December 2006		June 2006
Class of Business – Australia(1)	Rate Range %		Rate Range %
Traditional – ordinary business (after tax)		4.12–6.07		6.00 – 6.75
Traditional – superannuation business (after tax)		5.01–7.42		7.33 – 8.26
Annuity – term and lifetime (exempt from tax)		6.17–6.63		5.79 – 6.30
Term insurance – (before tax)		5.86–6.25		5.58–5.81
Income protection (before tax)		5.86–6.25		5.58–5.81
Investment account – ordinary (after tax)		4.29		4.21
Investment account – superannuation (after tax)		5.22		5.12
Investment account – annuities (exempt from tax)		6.09		5.98

(1) For New Zealand, investment earning rates assumed were 3.9% to 5.7% net of tax.

Bonuses

The valuation assumes that the long-term supportable bonuses will be paid, which is in line with company bonus philosophy. There are no significant changes to these assumptions.

Maintenance expenses

The maintenance expenses are based on an internal analysis of experience and are assumed to increase in line with inflation each year. The expenses are expected to be sufficient to cover the cost of servicing the business in the coming year, after adjusting for one-off expenses. For Australian Participating Business, current expenses are adjusted for actual experience and assumed to increase in line with inflation each year. There are no significant changes to these assumptions.

Investment management expenses

Investment management expense assumptions vary by asset classes and are based on agreed rates with investment managers, as set out in Fund Management Arrangements. There are no significant changes to overall investment fees.

Inflation

The inflation assumption is based on current inflation levels together with consideration of future inflation rates implied by inflation-linked securities.

Benefit indexation

Benefits and premiums under most of the regular premium policies are automatically indexed. The indexation rates are based on an analysis of past experience and estimated long term inflation and vary by business and product type. There are no significant changes to these assumptions.

Taxation

The taxation basis and rates assumed vary by market and product type.

Voluntary discontinuance

Discontinuance rates are based on recent company experience and vary by market, product, age and duration inforce. There are no significant changes to these assumptions.

Surrender values

Current surrender value bases are assumed to apply in the future. There are no significant changes to these assumptions.

Mortality and morbidity

Rates vary by sex, age, product type and smoker status. Rates are based on standard mortality tables applicable to each market (e.g. IA95-97 in Australia for retail risk, IM/IF80 for annuities), adjusted for recent company experience where appropriate. There are no significant changes to these assumptions.

Solvency

Australian life insurers:

Australian life insurers are required to hold prudential reserves in excess of policy liabilities. These reserves are required to support solvency requirements and provide protection against adverse experience. Actuarial Standard AS2.04 “Solvency Standard” (“AS2.04”) prescribes a minimum solvency requirement and the minimum level of assets required to be held in each insurance fund. All controlled Australian insurance entities complied with the solvency requirements of AS2.04.

Overseas life insurers:

Overseas insurance subsidiaries are required to hold reserves in excess of policy liabilities in accordance with local Acts and prudential rules. Each of the overseas subsidiaries complied with local requirements.

Managed assets & fiduciary activities

Arrangements are in place to ensure that asset management and other fiduciary activities of controlled entities are independent of the insurance funds and other activities of the Group.

Disaggregated information

Life Insurance business is conducted through a number of life insurance entities in Australia and overseas. Under the Australian Life Insurance Act 1995, life insurance business is conducted within one or more separate statutory funds, which are separated from the shareholders’ funds. The financial statements of Australian life insurers, which are lodged annually with the relevant Australian regulators, show all major components of the financial statements disaggregated between the various life insurance statutory funds and their shareholders’ funds, as well as between investment linked business and non-investment linked business.

Profit Announcement            61

Appendices

11. Intangible Assets

	As at
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Total Intangible Assets
Goodwill		7,203			7,200			7,214
Computer software costs		267			229			188
Other		376			380			338
Total		7,846			7,809			7,740
Goodwill
Purchased goodwill — Colonial		6,705			6,705			6,705
Purchased goodwill — other		498			495			509
Total goodwill		7,203			7,200			7,214
Computer Software Costs
Cost		353			290			228
Accumulated amortisation		(86	)		(61	)		(40	)
Total computer software costs		267			229			188
Other
Cost		393			393			347
Accumulated amortisation		(17	)		(13	)		(9	)
Total other		376			380			338

	Half Year Ended
	31/12/06			30/06/06			31/12/05
	$M			$M			$M
Goodwill (reconciliation)
Opening balance		7,200			7,214			7,214
Additions		3			7			—
Impairment		—			(21	)		—
Closing balance		7,203			7,200			7,214
Computer Software Costs (reconciliation)
Opening balance		229			188			182
Additions:
From internal development		68			68			22
Amortisation		(30	)		(27	)		(16	)
Closing balance		267			229			188
Other (reconciliation)
Opening balance		380			338			260
Additions:
From acquisitions		—			46			80
Amortisation		(4	)		(4	)		(2	)
Closing balance		376			380			338

62            Commonwealth Bank of Australia

Appendices

12. ASB Bank Group

		Half Year Ended
	31/12/06		30/06/06		31/12/05		31/12/06		30/06/06		31/12/05
Income Statement(1)	NZDM		NZDM		NZDM		$M		$M		$M
Interest income		1,835		1,676		1,534		1,577		1,442		1,419
Interest expense		1,398		1,264		1,142		1,201		1,088		1,056
Net interest earnings		437		412		392		376		354		363
Other income		190		169		175		163		145		162
Total operating income		627		581		567		539		499		525
Impairment losses on advances		4		9		10		3		8		9
Total operating income after debt provisions expense		623		572		557		536		491		516
Total operating expense		267		252		243		230		217		225
Salaries and other staff expense		152		142		134		131		122		124
Building occupancy and equipment expense		46		42		43		40		36		40
Information technology expense		25		24		26		21		21		24
Other expenses		44		44		40		38		38		37
Net surplus before taxation		356		320		314		306		274		291
Taxation		106		97		97		91		83		90
Net surplus after taxation		250		223		217		215		191		201

		As at
	31/12/06		30/06/06		31/12/05		31/12/06		30/06/06		31/12/05
Balance Sheet(2)	NZDM		NZDM		NZDM		$M		$M		$M
Assets
Cash and liquid assets		120		17		123		107		14		115
Due from other banks		2,387		1,728		1,500		2,130		1,424		1,401
Money market advances		1,688		966		1,540		1,506		796		1,438
Securities at fair value through Income Statement		3,389		3,021		2,323		3,024		2,489		2,169
Derivative assets		376		511		326		336		421		304
Advances to customers		40,274		37,989		35,611		35,939		31,304		33,250
Property, plant and equipment		149		152		146		133		125		136
Intangible assets		30		20		16		27		16		15
Other assets		198		164		164		177		135		153
Total assets		48,611		44,568		41,749		43,379		36,724		38,981
Total interest earning and discount bearing assets		47,719		43,682		40,943		42,582		35,994		38,229
Liabilities
Money and market deposits		16,245		14,390		14,532		14,496		11,857		13,568
Derivative liabilities		765		241		291		683		199		272
Deposits from customers		22,849		21,145		19,447		20,389		17,423		18,158
Due to other banks		5,112		5,531		4,482		4,562		4,558		4,185
Other liabilities		356		361		295		318		297		275
Deferred taxation liabilities		49		13		7		44		11		6
Current tax liability		44		15		41		39		12		38
Subordinated debt		199		183		—		178		151		—
Total liabilities		45,619		41,879		39,095		40,709		34,508		36,502
Shareholders’ Equity
Contributed capital — ordinary shareholder		1,013		1,013		323		904		835		302
Asset revaluation reserve		23		23		18		21		19		17
Cash flow hedge reserves		119		50		57		106		41		53
Accumulated surplus		1,287		1,053		1,706		1,148		868		1,593
Ordinary shareholders’ equity		2,442		2,139		2,104		2,179		1,763		1,965
Contributed capital — perpetual preference shareholders		550		550		550		491		453		514
Total shareholders’ equity		2,992		2,689		2,654		2,670		2,216		2,479
Total liabilities and shareholders’ equity		48,611		44,568		41,749		43,379		36,724		38,981
Total interest and discount bearing liabilities		42,543		39,852		37,164		37,964		32,838		34,700

(1)	The Income Statement has been translated at AUD 1.00= NZD 1.1637 for the half year ended 31 December 2006 (AUD 1.00= NZD 1.1623 for the half year ended 30 June 2006 and AUD 1.00= NZD 1.0810 for the half year ended 31 December 2005).
(2)	Refer to appendix 16 for rates at which the Balance Sheet has been translated.

Profit Announcement           63

Appendices

13. ASX Appendix 4D

Cross Reference Index	Page
Results for Announcement to the Market (4D Item 2)	Inside front cover
Dividends (4D Items 5)	Inside front cover
Dividend dates (4D Items 5)	Inside front cover
Dividend Reinvestment Plan (4D Item 6)		59
Net tangible assets per security (4D Item 3)		69
Commentary on Results (4D Item 2.6)		2

John Hatton
Company Secretary
14 February 2007

64            Commonwealth Bank of Australia

Appendices

13. ASX Appendix 4D(continued)

Details of entities over which control was lost during the year

		Ownership Interest
4D Item 4	Date control lost	Held (%)
IDI (No.1) Limited	25 November 2006		100	%
IDI (No.2) Limited	25 November 2006		100	%
Riley Investments Limited	25 November 2006		100	%
Riley International Limited	25 November 2006		100	%

Details of associates and joint ventures 4D Item 7

As at 31 December 2006	Ownership Interest Held (%)
Computer Fleet Management		50	%
Cyberlynx Procurement Services		50	%
PT Astra CMG Life		50	%
AMTD Group Limited (formerly Allday Enterprises Limited)		30	%
China Life CMG Life Assurance Company		49	%
Bao Minh CMG Life Insurance Company		50	%
CMG CH China Funds Management Limited		50	%
Hangzhou City Commercial Bank		19.9	%
452 Capital Pty Limited		30	%
Alster & Thames Partnership		25	%
First State Cinda Fund Management Company Limited		46	%
Healthcare Support (Newcastle) Ltd		40	%
Equion Health (Barts) Limited		50	%
Acadian Asset Management (Australia) Limited		50	%
Five D Holdings		50	%
First State Media (Ireland) Limited		50	%

Any other significant information

There is no other significant information other than as disclosed in note 12.

Post Balance Date Events

There have been no significant events occurring since the balance sheet date other than as disclosed in note 12.

Foreign Entities 4D Item 8

Not Applicable

Profit Announcement           65

Appendices

14. Analysis Template

	Half Year Ended
	31/12/06			30/06/06			31/12/05			Page
Profit Summary – Input Schedule	$M			$M			$M			References
Income – Cash Basis
Net interest income		3,485			3,259			3,255		Page 7
Other banking operating income		1,678			1,591			1,445		Page 7
Total banking Income		5,163			4,850			4,700		Page 7
Operating income		893			828			715		Page 17
Shareholder investment returns		4			7			7		Page 17
Funds management income		897			835			722		Page 17
Operating income – life insurance		339			322			347		Page 21
Operating income – general insurance		43			34			39		Page 21
Operating income insurance		382			356			386		Page 21
Shareholder investment returns		81			30			57		Page 21
Profit on sale of the Hong Kong Insurance Business		—			—			145		Page 21
Insurance income		463			386			588		Page 21
Total income		6,523			6,071			6,010		Page 3
Expenses – Cash Basis
Banking		2,354			2,298			2,260		Page 7
Funds management		567			530			459		Page 17
Insurance		223			199			248		Page 53
Total operating expenses		3,144			3,027			2,967		Page 3
Profit before loan impairment expense		3,379			3,044			3,043		Page 3
Loan impairment expense		195			210			188		Page 3
Profit before income tax		3,184			2,834			2,855		Page 3
Income tax – corporate		900			829			776		Page 3
Operating profit after tax		2,284			2,005			2,079		Page 3
Minority interest		13			13			18		Page 3
Net profit after tax – cash basis		2,271			1,992			2,061		Page 3
Defined benefit superannuation plan income/(expense)		4			(6	)		(19	)	Page 3
Treasury shares valuation adjustment		(38	)		(57	)		(43	)	Page 3
One off AIFRS mismatch		(46	)		—			—		Page 3
Net profit after tax – statutory basis		2,191			1,929			1,999		Page 3
Investment return on Shareholder funds		85			37			209		Page 23
Tax expense on shareholder investment returns		24			12			23		Page 23
Shareholder investment returns – after tax		61			25			186		Page 23
Net profit after tax – underlying basis		2,210			1,967			1,875		Page 3

66            Commonwealth Bank of Australia

Appendices

14. Analysis Template(continued)

				Half Year Ended
	31/12/06			30/06/06			31/12/05			Page
Profit Summary – Input Schedule	$M			$M			$M			References
Other Data
Net interest income (excluding securitisation)		3,432			3,202			3,218		Page 51
Average interest earning assets		306,868			282,553			267,169		Page 51
Average net assets(1)		21,915			20,597			21,247		Page 27
Average minority interest(1)		508			515			1,156		Page 27
Average preference shares & other equity instruments(1)		939			470			1,130		Page 27
Average treasury shares(1)		(345	)		(381	)		(376	)	Page 59
Average defined benefit superannuation plan net surplus(1)		896			656			471			—
Distributions – other equity instruments		28			—			—			—
Preference dividends – convertible		90			67			60			—
Preference dividends (after tax) – convertible		75			54			46			—
Weighted average number of shares – statutory basic		1,276			1,277			1,273		Page 3
Weighted average number of shares – fully diluted – statutory		1,348			1,336			1,324			—
Weighted average number of shares – cash and underlying		1,284			1,285			1,281		Page 3
Weighted average number of shares – fully diluted – cash and underlying		1,357			1,344			1,333			—
Dividends per share (cents)		107			130			94		Page 3
No. of shares at end of period (excluding treasury shares deduction – millions)		1,290			1,283			1,289		Page 59
Average funds under administration		158,010			147,684			130,179		Page 17
Operating income – internal		5			4			5		Page 17
Average inforce premiums(1)		1,318			1,220			1,241		Page 22
Net assets		22,487			21,343			19,850		Page 27
Total intangible assets		7,846			7,809			7,740		Page 27
Minority interests		508			508			523		Page 27
Other equity instruments		939			939			—		Page 27
Tier One capital		16,553			16,354			15,290		Page 56
Deferred income tax		39			—			—		Page 56
Equity investments in other companies		820			—			—		Page 56
Eligible loan capital		263			281			317		Page 56
Preference share capital		—			—			687
Other equity instruments		3,522			3,659			1,573		Page 57
Minority interests (net of minority interest component deducted from Tier One capital)		508			508			523		Page 57
Investment in non consolidated subsidiaries (net of Intangible component deducted from Tier One capital)		283			2,012			1,918		Page 57
Other deductions		166			151			130		Page 57
Transitional Tier One capital relief granted on adoption of AIFRS		1,641			—			—		Page 57
Risk-weighted assets		234,569			216,438			202,667		Page 58

(1) Average of opening & closing balance.

Profit Announcement           67

Appendices

14. Analysis Template(continued)

				Half Year Ended
	31/12/06			30/06/06			31/12/05
Ratios – Output Summary	$M			$M			$M
EPS
Earnings per share – cash basis adjusted for sale of Hong Kong Insurance Business (cents)		174.7			154.9			149.5
Earnings per share – cash basis (cents)		174.7			154.9			160.9
Net profit after tax – cash basis		2,271			1,992			2,061
Distributions – other equity instruments		28			—			—
Adjusted profit for EPS calculation		2,243			1,992			2,061
Average number of shares (M)		1,284			1,285			1,281
Add back preference dividends (after tax) (M)		75			54			46
Adjusted diluted profit for EPS calculation		2,318			2,046			2,107
Diluted average number of shares (M)		1,357			1,344			1,333
EPS diluted – cash basis (cents)		170.9			152.1			158.1
Earnings per share – underlying basis (cents)		169.9			153.0			146.4
Net profit after tax – underlying		2,210			1,967			1,875
Adjusted profit for EPS calculation		2,182			1,967			1,875
Average number of shares (M)		1,284			1,285			1,281
DPS
Dividends
Dividends per share (cents)		107			130			94
No of shares at end of period (M)		1,290			1,283			1,289
Total dividends		1,380			1,668			1,211
Dividend payout ratio – cash basis
Net profit after tax – cash basis		2,271			1,992			2,061
NPAT – available for distribution to ordinary shareholders		2,243			1,992			2,061
Total dividends		1,380			1,668			1,211
Payout ratio – cash basis (%)		61.5			83.7			58.8
Dividend cover
NPAT – available for distribution to ordinary shareholders		2,243			1,992			2,061
Total dividends		1,380			1,668			1,211
Dividend cover – cash basis		1.6			1.2			1.7
ROE
Return on equity – cash basis
Average net assets		21,915			20,597			21,247
Less:
Average minority interests		(508	)		(515	)		(1,156	)
Average preference shares		(939	)		(470	)		(1,130	)
Average equity		20,468			19,612			18,961
Add average treasury shares		345			381			376
Less average defined benefit superannuation plan net surplus		(896	)		(656	)		(471	)
Net average equity		19,917			19,337			18,866
NPAT (“cash basis”)		2,271			1,992			2,061
Less distributions – other equity instruments		28			—			—
Adjusted profit for ROE calculation		2,243			1,992			2,061
Return on equity – cash basis (%)		22.3			20.8			21.7
Return on equity – underlying basis
Average net assets		21,915			20,597			21,247
Average minority interests		(508	)		(515	)		(1,156	)
Average preference shares		(939	)		(470	)		(1,130	)
Average equity		20,468			19,612			18,961
Add average treasury shares		345			381			376
Less average defined benefit superannuation plan net surplus		(896	)		(656	)		(471	)
Net average equity		19,917			19,337			18,866
NPAT (“underlying basis”)		2,210			1,967			1,875
Less distribution other equity instruments		28			—			—
Adjusted profit for ROE calculation		2,182			1,967			1,875
Return on equity – underlying basis (%)		21.7			20.5			19.7
NIM
Net interest income (excluding securitisation)		3,432			3,202			3,218
Average interest earning assets (excluding securitisation)		306,868			282,553			267,169
NIM ( % pa)		2.22			2.29			2.39

68            Commonwealth Bank of Australia

Appendices

14. Analysis Template(continued)

				Half Year Ended
	31/12/06			30/06/06			31/12/05
Ratios - Output Summary	$M			$M			$M
Productivity
Banking expense to income ratio
Expenses		2,354			2,298			2,260
Banking Income		5,163			4,850			4,700
Expense to Income – cash basis (%)		45.6			47.4			48.1
Funds management expenses to average FUA ratio
Expenses		567			530			459
Average funds under administration		158,010			147,684			130,179
Expenses to average FUA – cash basis (%)		0.71			0.72			0.70
Insurance expenses to average inforce premiums ratio
Operating expenses		223			199			248
Operating expenses – internal		5			4			5
Total expenses		228			203			253
Average inforce premiums		1,318			1,220			1,241
Expenses to average inforce premiums – cash basis (%)		34.3			33.6			40.5
Operating expenses – external		223			199			248
Operating expenses – internal		5			4			5
Total expenses		228			203			253
Average inforce premiums		1,318			1,220			1,241
Expenses to average inforce premiums – underlying basis (%)		34.3			33.6			40.5
Net Tangible Assets (NTA) per share
Net assets		22,487			21,343			19,850
Less:
Intangible assets		(7,846	)		(7,809	)		(7,740	)
Minority interests		(508	)		(508	)		(523	)
Other equity instruments		(939	)		(939	)		—
Total net tangible assets		13,194			12,087			11,587
No of shares at end of period (M)		1,290			1,283			1,289
Net tangible assets (NTA) per share ($)		10.23			9.42			8.99
ACE ratio
Tier One capital		16,553			16,354			15,290
Add:
Deferred income tax		39			—			—
Equity investments in other companies		820			—			—
Deduct:
Eligible loan capital		(263	)		(281	)		(317	)
Preference share capital		—			—			(687	)
Other hybrid equity instruments		(3,522	)		(3,659	)		(1,573	)
Minority Interest (net of minority interest component deducted from Tier One capital)		(508	)		(508	)		(523	)
Investment in non-consolidated subsidiaries (net of intangible component deducted from Tier One capital)		(283	)		(2,012	)		(1,918	)
Other deductions		(166	)		(151	)		(130	)
Impact upon adoption of AIFRS		(1,641	)		—			—
Total Adjusted Common Equity		11,029			9,743			10,142
Risk weighted assets		234,569			216,438			202,667
ACE ratio (%)		4.70			4.50			5.00

Profit Announcement           69

Appendices

15. Summary

					Half Year Ended
					31/12/06			30/06/06			31/12/05			Dec 06 vs			Dec 06 vs
Total			Page		$M			$M			$M			Jun 06%			Dec 05 %
Net profit after tax — underlying	$	M		3		2,210			1,967			1,875			12			18
Net profit after tax — cash basis	$	M		3		2,271			1,992			2,061			14			10
Defined benefit superannuation plan income/(expense) — after tax	$	M		3		4			(6	)		(19	)	large			large
Treasury shares valuation adjustment — after tax	$	M		3		(38	)		(57	)		(43	)		33			12
One off AIFRS mismatch	$	M		3		(46	)		—			—			—			—
Net profit after tax — statutory	$	M		3		2,191			1,929			1,999			14			10
Earnings per share — cash basis — basic (cents)	cents			3		174.7			154.9			160.9			13			9
Dividends per share	cents			3		107			130			94			(18	)		14
Dividend pay-out ratio — cash basis (adjusted for sale of Hong Kong Insurance Business)		%		3		61.5			83.7			63.2		large			(170)bpts
Tier One capital		%		56		7.06			7.56			7.54		(50)bpts			(48)bpts
Total capital		%		56		9.78			9.66			9.81		12bpts			(3)bpts
Adjusted common equity		%		56		4.70			4.50			5.00		20bpts			(30)bpts
Number of full time equivalent staff	No.			—		37,216			36,664			34,918			2			7
Return on equity — cash		%		3		22.3			20.8			21.7		150bpts			60bpts
Return on equity — underlying		%		—		21.7			20.5			19.7		120bpts			200bpts
Weighted average number of shares — statutory		M		3		1,276			1,277			1,273			—			—
Net tangible assets per share		$		69		10.23			9.42			8.99			9			14
Banking
Net profit after tax — underlying	$	M		7		1,867			1,638			1,589			14			17
Net profit after tax — cash basis	$	M		7		1,867			1,638			1,589			14			17
Net Interest Income	$	M		7		3,485			3,259			3,255			7			7
Net Interest Margin		%		7		2.22			2.29			2.39		(7)bpts			(17)bpts
Other banking income	$	M		7		1,678			1,591			1,445			5			16
Other banking income/total banking income		%		—		32.5			32.8			30.7		(30)bpts			180bpts
Expense to income ratio		%		7		45.6			47.4			48.1			4			5
Average interest earning assets	$	M		4		306,868			282,553			267,169			9			15
Average interest earning liabilities	$	M		4		286,548			263,203			247,129			9			16
Loan impairment expense	$	M		7		195			210			188			7			(4	)
Loan impairment expense to risk-weighted assets (annualised)		%		9		0.17			0.19			0.19		(2)bpts			(2)bpts
Prudential general reserve for credit losses to risk weighted assets		%		9		0.68			0.71			0.71		(3)bpts			(3)bpts
Total provisions for impairment losses to gross impaired assets		%		36		363.9			380.7			314.1		large			large
Individually assessed provisions for impairment to Gross Impaired Assets		%		36		50.6			52.5			45.2		(190)bpts			540bpts
Risk weighted assets	$	M		58		234,569			216,438			202,667			8			16
Funds Management
Net profit after tax — underlying	$	M		17		232			217			183			7			27
Net profit after tax — cash basis	$	M		17		235			222			188			6			25
Shareholder investment returns	$	M		17		4			7			7			(43	)		(43	)
Average funds under administration	$	M		17		158,010			147,684			130,179			7			21
Net inflows	$	M		17		2,076			8,135			2,695			(74	)		(23	)
Income to average funds under administration		%		17		1.13			1.14			1.10		(1)bpt			3bpts
Expenses to average funds under administration		%		17		0.71			0.72			0.70			1			(1	)
Insurance
Net profit after tax — underlying	$	M		21		111			112			103			(1	)		8
Net profit after tax — cash basis	$	M		21		169			132			284			28			(40	)
Shareholder investment returns	$	M		21		81			30			202		large				(60	)
Inforce premiums	$	M		22		1,412			1,223			1,216			15			16
Expenses to Average Inforce premiums		%		21		34.3			33.6			40.5			(2	)		15

70     Commonwealth Bank of Australia

Appendices

16. Foreign Exchange Rates

Exchange Rates Utilised

As at		31/12/06		30/06/06		31/12/05
AUD 1. 00=	USD		0.7913		0.7428		0.7341
	GBP		0.4027		0.4053		0.4251
	JPY		94.024		85.276		86.214
	NZD		1.121		1.214		1.071
	HKD		6.151		5.770		5.692
	EUR		0.6007		0.5848		0.6187

Profit Announcement       71

Appendices

17. Definitions

Term	Description
Banking	Banking operations includes retail; business, corporate, institutional and treasury; Asia Pacific banking and centre support functions. Retail banking operations include banking services which were distributed through the Business and Retail distribution divisions. Business, Corporate and Institutional banking includes banking services which were distributed to all business customers through the Premium Business Services division and the small business customers which were serviced through the Premium and Retail divisions and funding operations. Asia Pacific banking includes offshore banking subsidiaries, primarily ASB Bank operations in New Zealand.
Dividend Payout Ratio	Dividends paid on ordinary shares divided by earnings (earnings are net of dividends on preference shares).
DRP	Dividend reinvestment plan.
DRP Participation	The percentage of total issued capital participating in the dividend reinvestment plan.
Earnings Per Share	Calculated in accordance with the revised AASB 133: Earnings per Share.
Funds Management	Funds management business includes funds management within the Wealth Management division and International Financial Services division.
Insurance	Insurance business includes the life risk business within the Wealth Management division and the International Financial Services division and general insurance financial results. The insurance segment as reported on page 21 includes the operating performance of the Hong Kong Insurance Business up to the effective date of sale (18 October 2005).
Net Profit after Tax (“Cash Basis”)	Represents profit after tax and minority interests, before defined benefit superannuation plan income/expense, treasury shares valuation adjustment and one off AIFRS mismatch.
Net Profit after Tax (“Statutory Basis”)	Represents profit after tax, minority interests, defined benefit superannuation plan income/expense, treasury shares valuation adjustment and one off AIFRS mismatch. This is equivalent to the statutory item “Net Profit attributable to Members of the Group”.
Net profit after tax (“Underlying Basis”)	Represents net profit after tax (“cash basis”) excluding shareholder investment returns.
Net Tangible Assets per Share	Net assets excluding intangible assets, minority interests, preference shares and other equity instruments divided by ordinary shares on issue at the end of the period.
Overseas	‘Overseas’ represents amounts booked in branches and controlled entities outside Australia .
Return on Average Shareholders’ Equity	Based on net profit after tax and minority interests less other equity instrument distribution applied to average shareholders’ equity, excluding minority interests and other equity instruments.
Return on Average Shareholders’ Equity - Cash Basis	As per the return on average shareholders’ equity, excluding the effect of defined benefit superannuation plan income/expense, treasury shares valuation adjustment and one off AIFRS mismatch.
Staff Numbers	Staff numbers include all permanent full time staff, part time staff equivalents and external contractors employed by 3rd party agencies.
Expense to Income Ratio	Represents operating expenses as a percentage of total operating revenue.
Weighted Average Number of Shares (“Statutory Basis”)	Includes an adjustment to exclude “Treasury Shares” related to investments in the Bank’s shares held by both the life insurance statutory funds and by the employee share scheme trust.
Weighted Average Number of Shares (“Cash Basis”)	Includes an adjustment to deduct from ordinary shares only those “Treasury Shares” related to the investment in the Bank’s shares held by the employee share scheme trust.

72     Commonwealth Bank of Australia

Appendices

18. Market Share Definitions

Banking

Australian Retail
Home Loans	Total Household Loans (APRA)- MISA (Pre Sep 04) + Securitised Assets (APRA) + Homepath. Total Housing Loans (incl securitisations) (from RBA which includes NBFI’s unlike APRA).(1)
Credit Cards	CBA Total Credit Card Lending (APRA). Total Credit Cards with Interest Free + Total Credit Cards without Interest Free (from RBA which includes NBFI’s unlike APRA).(1)
Retail Deposits	CBA Current Deposits + Term (excl CD’s) + Other (All as reported to RBA) Total RBA: Current Deposits with banks + Term (excl CD’s) + Other with banks.(from RBA monthly bulletin statistics)(1)
Household Deposits	CBA Household Deposits (as reported to APRA) MISA (Pre Sep 04) Total Bank Household Deposits (from APRA monthly banking statistics)
APRA Other Household Lending	CBA Term Personal Lending + Margin Lending net balances + Personal Leasing + Revolving credit Total Market Term Personal Lending + Margin Lending + Personal Leasing + Revolving credit from APRA
Business
Business Lending (RBA)	CBA business lending and credit (specific ‘business lending’ categories in lodged APRA returns -320.0, 320.1 and 320.4) Total of business lending and credit to the private non-financial sector by all financial intermediaries (sourced from RBA table Lending & Credit Aggregates which is in turn sourced from specific ‘business lending’ categories in lodged APRA returns -320.0, 320.1 and 320.4) (includes bills on issue and securitised business loans).(1)
Business Lending (APRA)	Loans and advances to residents that are recorded on the domestic books of CBA within the non-financial corporations sector, where this sector comprises private trading corporations, private unincorporated businesses and commonwealth, state, territory and local government non-financial corporations (as per lending balances submitted to APRA in ARF 320.0) Total loans and advances to the non-financial corporations sector for all licensed banks that submit to APRA
Business Deposits (APRA)	Total transaction and non-transaction account deposit balances recorded on the domestic books of CBA from residents within the non-financial corporations sector, where this sector comprises private trading corporations, private unincorporated businesses and commonwealth, state, territory and local government non-financial corporations (as per deposit balances submitted to APRA in ARF 320.0) Total transaction and non-transaction deposit balances from the non-financial corporations sector for all licensed banks that submit to APRA
Asset Finance	Total end of month asset finance net receivables excluding repossessed assets, non-accrual receivables, progressive fundings and the consumer loan balance Total market as determined by Australian Equipment Lessors Association (AELA)
Equities Trading (CommSec)	12 months rolling average of total value of CommSee equities trades 12 months rolling average of total value of equities market trades as measured by ASX SEATS
Asia Pacific
NZ Lending	All retail, business, commercial, corporate, and rural deposits on ASB Balance Sheet Total retail, business, commercial, corporate, and rural deposits in New Zealand (from NZ Reserve Bank)
NZ Deposits	All retail, business, commercial, corporate, and rural loans on ASB Balance Sheet Total retail, business, commercial, corporate, and rural deposits in New Zealand (from NZ Reserve Bank)

(1) The RBA restates the total of all financial intermediaries retrospectively when required. This may be due to a change in definition, the inclusion of a new participant or correction of errors in prior returns. CBA restates its market share where the RBA total has changed based on current balances less implied percentage growth rates now reported by the RBA for previous months.

Profit Announcement       73

Appendices

18. Market Share Definitions

Funds Management

Australian Retail	Total funds in CBA Wealth Management retail investment products (including WM products badged by other parties) Total funds in retail investment products market (from Plan for Life)
Platforms/ masterfunds	Total funds in CBA Wealth Management platforms and masterfunds (including WM platforms badged by other parties) Total funds in platform/masterfund market (from Plan for Life)
FirstChoice Platform	Total funds in FirstChoice platform Total funds in platform/masterfund market (from Plan for life)
New Zealand retail	Total ASB + Sovereign + JMNZ Retail net Funds under Management Total Market net Retail Funds under Management (from Fund Source Research Limited)
Insurance
Australia (Total Risk)	Total risk inforce premium of all CBA Group Australian life insurance companies Total risk inforce premium for all Australian life insurance companies (from Plan for Life)
Australia (Individual Risk)	(Individual lump sum + individual risk income) inforce premium of all CBA Group Australian life insurance companies Individual risk inforce premium for all Australian life insurance companies (from Plan for Life)
New Zealand	Total Sovereign (inforce annual premium income + new business exits other)
	Total inforce premium for New Zealand (from ISI statistics)

74     Commonwealth Bank of Australia