ABN 48 123 123 124
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) | ASX Rule 4.2.C.3 |
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 and Final Dividend 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 | |||
Special Note Regarding Forward-Looking Statements | 3 | |||
Financial Information Definitions | 4 | |||
Critical Accounting Policies and Estimates | 5 | |||
Highlights | 8 | |||
Banking Analysis | 11 | |||
Funds Management Analysis | 21 | |||
Insurance Analysis | 24 | |||
Shareholder Investment Returns | 27 | |||
Liquidity and Capital Resources | 27 | |||
Off-Balance Sheet Arrangements | 27 | |||
Directors’ Report | 28 | |||
Financial Statements | 29 | |||
Notes to the Financial Statements | 35 | |||
Directors’ Declaration | 70 | |||
Appendices | 71 |
• | Business assumptions including: |
• | Amount, timing and duration of claims/policy payments; | ||
• | Policy lapse rates; and | ||
• | Acquisition and long term maintenance expense levels; |
• | Long term economic assumptions for discount and interest rates, inflation rates and market earnings rates; and | |
• | Selection of methodology, either projection or accumulation method. The selection of the method is generally governed by the product type. |
• | Recent results may be a statistical aberration; or |
• | There may be a commencement of a new paradigm requiring a change in long term assumptions. |
• | Decrease the 30 June 2006 fund liabilities by $400 million (pre tax); |
• | Increase the 2006/2007 pension expense by $8 million (pre tax); |
• | Correspondingly, a one percent decrease in the discount rate assumption for the OSF would affect the Group’s AIFRS staff superannuation disclosures as follows; |
• | Increase the 30 June 2006 fund liabilities by $501 million (pre tax); and |
• | Decrease the 2006/2007 pension expense by $6 million (pre tax). |
• | Derivatives – The Group does not seek to apply the hedge accounting rules applicable under US GAAP to all of the transactions for which hedge accounting has been applied under AIFRS. Therefore, many of the derivative hedges under AIFRS do not comply with the specific hedge criteria of US GAAP. In any given period this may result in a significant difference between reported profit under AIFRS and Net Income under US GAAP. The difference for the half year 31 December 2006 was an increase in Net Income of $1,053 million, and the difference for the half year ended 31 December 2005 was a decrease in Net Income of $983 million; |
• | Deconsolidation of Qualifying Special Purpose Entities (“QSPE”) - under AIFRS, entities are consolidated or deconsolidated based on whether majority voting rights are held, or exposure to rates and benefits. Under US GAAP the consolidation or deconsolidation of entities is subject to assessment under a different framework, which for securitisation of assets depends on an entity’s status as a “QSPE”. Certain entities consolidated under AIFRS have been deconsolidated under US GAAP, due to their status as QSPEs. The difference for the half year ended 31 December 2006 was a decrease in assets of $10,742 million (2005:$9,547 million). |
• | Life insurance – The methodology used for calculating life insurance and deferred acquisition costs is different under US GAAP compared to AIFRS (results in a $6 million increase in Net Income for the half year ended 31 December 2006, $2 million increase in Net Income for the half year ended 31 December 2005); |
• | Pensions – Under AIFRS the Group recognises movements in actuarial gains and losses directly in retained earnings, whereas under US GAAP the Group selected the “corridor” approach for their recognition in profit (results in a nil impact to Net Income for the half year ended 31 December 2006 and $1 million decrease in Net Income for the half year ended 31 December 2005). |
Half Year Ended | ||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | ||||||||||
$M | $M | $M | ||||||||||
Net Profit after Income Tax | 2,191 | 1,929 | 1,999 |
• | Strong growth in banking income, following growth in average interest earning assets of 9% to $307 billion since June 2006 and of 15% since December 2005, offset by net interest margin contraction of seven basis points since June 2006 and 17 basis points since December 2005; |
• | Growth in Funds under Administration of 11% to $168 billion on the prior half and 22% on the prior comparative period, supported by the continuing trends of both strong flows into the FirstChoice platform and strength in investment markets; |
• | Growth in planned profit margins and shareholder investment returns in the Insurance Business compared to both the prior half and prior comparative periods, as discussed on pages 24-27; |
• | 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, productivity improvements have enabled increased investment in the businesses including a significant investment in customer service staff. |
• | 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 36 for more information. |
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”)(3) | 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 | 235 | 222 | 188 | 6 | 25 | |||||||||||||||
Insurance | 169 | 132 | 139 | 28 | 22 | |||||||||||||||
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”)(3) | 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. | |
(3) | Refer to Appendix 17: Definitions, page 95. |
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 – statutory (times) | 1.6 | 1.2 | 1.7 | n/a | n/a | |||||||||||||||
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 – statutory (%) | 21.0 | 19.8 | 20.9 | 120bpts | 10bpts | |||||||||||||||
Return on equity – cash (%) | 22.3 | 20.8 | 21.7 | 150bpts | 60bpts | |||||||||||||||
(1) | For definitions refer to Appendix 17: Definitions, page 95. | |
(2) | Fully diluted EPS and weighted average number of shares (fully diluted) are disclosed in Appendix 14: Analysis template, page 90. |
As at | |||||||||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | Dec 06 vs | Dec 06 vs | |||||||||||||||||||
Balance Sheet Summary | $M | $M | $M | Jun 06 % | Dec 05 % | ||||||||||||||||||
Lending assets(1) | 286,814 | 266,096 | 254,947 | 8 | 12 | ||||||||||||||||||
Total assets | 397,261 | 369,103 | 351,193 | 8 | 13 | ||||||||||||||||||
Total liabilities | 374,774 | 347,760 | 331,343 | 8 | 13 | ||||||||||||||||||
Shareholders’ Equity | 22,487 | 21,343 | 19,850 | 5 | 13 | ||||||||||||||||||
�� | |||||||||||||||||||||||
Assets held and FUA | |||||||||||||||||||||||
On balance sheet: | |||||||||||||||||||||||
Banking assets | 367,250 | 340,254 | 321,477 | 8 | 14 | ||||||||||||||||||
Insurance funds under administration | 21,040 | 20,792 | 21,217 | 1 | (1 | ) | |||||||||||||||||
Other insurance and internal funds management assets | 8,971 | 8,057 | 8,499 | 11 | 6 | ||||||||||||||||||
397,261 | 369,103 | 351,193 | 8 | 13 | |||||||||||||||||||
Off balance sheet: | |||||||||||||||||||||||
Funds under administration (FUA) | 146,622 | 130,721 | 115,757 | 12 | 27 | ||||||||||||||||||
Total assets held and FUA | 543,883 | 499,824 | 466,950 | 9 | 16 | ||||||||||||||||||
(1) | Lending assets comprise Loans, Advances, and Other Receivables (gross of provisions for impairment and excluding securitisation) and bank acceptances of customers. |
Half Year Ended | ||||||||||||||||||||
Dec 06 vs | Dec 06 vs | |||||||||||||||||||
Key Performance Indicators | 31/12/06 | 30/06/06 | 31/12/05 | Jun 06 % | Dec 05 % | |||||||||||||||
Banking | ||||||||||||||||||||
Net profit after tax (“statutory basis”) ($M) | 1,825 | 1,632 | 1,570 | 12 | 16 | |||||||||||||||
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 | ||||||||||||||||||||
Net profit after tax (“statutory basis”) ($M) | 197 | 165 | 145 | 36 | 19 | |||||||||||||||
Operating income to average funds under administration (%) | 1.13 | 1.14 | 1.10 | (1)bpt | 3bpts | |||||||||||||||
Funds under administration – spot ($M) | 167,662 | 151,513 | 136,974 | 11 | 22 | |||||||||||||||
Expense to average FUA (%) | 0.71 | 0.72 | 0.70 | 1 | (1 | ) | ||||||||||||||
Insurance | ||||||||||||||||||||
Net profit after tax (“statutory basis”) ($M) | 169 | 132 | 284 | 28 | (40 | ) | ||||||||||||||
Inforce premiums ($M) | 1,412 | 1,223 | 1,216 | 15 | 16 | |||||||||||||||
Expense to average inforce premiums (%) | 34.3 | 33.6 | 40.5 | (2 | ) | 15 | ||||||||||||||
Capital Adequacy(2) | ||||||||||||||||||||
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 (%)(2) | 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 73. | |
(2) | For additional information refer to Appendix 8, Capital Adequacy, pages 79 - 81. |
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 | ||||||||
Ratings are not a recommendation to purchase, hold or sell securities, and may be changed, suspended or withdrawn at any time. | ||
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, Capital Adequacy, pages 79 to 81. |
• | Continued strong volume growth in home loans, driven by the continued high demand for housing finance, up 7% since June 2006 to $166 billion, and up 10% since December 2005; |
• | Improvement in business lending volumes, up 11% since June 2006 to $84 billion, and up 18% since December 2005 driven by the general business credit growth in the Australian market; |
• | Australian deposit volume growth of 7%, since June 2006 to $161 billion, and 11% since December 2005 driven by the current interest rate environment; |
• | Net interest margin decreased seven basis points over the half year and 17 basis points over the full year largely due to changes in asset and funding mix together with the impact of competition on the home loan and credit card portfolios; |
• | Investment in front line staff and salary increases, offset by productivity increases, resulting in an operating expenses increase of 2% on the prior half and 4% on the prior comparative period; |
• | Credit quality remaining strong. |
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 | |||||||||||||||
Defined benefit superannuation plan income/(expense) | 4 | (6 | ) | (19 | ) | large | large | |||||||||||||
One off AIFRS hedging mismatch | (46 | ) | — | — | — | — | ||||||||||||||
NPAT (“statutory basis”) | 1,825 | 1,632 | 1,570 | 12 | 16 | |||||||||||||||
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 (“Statutory 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 | (51 | ) | (18 | ) | (45 | ) | large | (13 | ) | |||||||||||
Total Banking NPAT (“Statutory Basis”) | 1,825 | 1,632 | 1,570 | 12 | 16 | |||||||||||||||
(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. |
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 | |||||||||
• | Commissions: increased by 5% on both the prior half and the prior comparative period to $859 million, principally driven by increased home lending package fee income and continued strong brokerage commissions within CommSec; |
• | Lending fees: increased by 1% on the prior half to $417 million and by 7% on the prior comparative period. 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 was up 17% on the prior half and 25% on the prior comparative period to $306 million due to favourable market conditions and an increase in trading assets; and |
• | Other income increased $21 million on the prior half and $122 million on the prior comparative period. 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 year included $32 million received from the sale of equity in the Mastercard IPO. |
• | Average salary increases of 4% during the past twelve months reflecting labour market tightness and increases in other inflation-related expense; |
• | Investment in front line staff, in both periods, supporting the banking operations with 577 new Australian 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, in both periods, (including customer service and business banking initiatives); partly offset by |
• | IT efficiency savings and favourable timing differences in advertising and other spend, which occurred during the prior period. |
• | The credit quality of the home lending and business lending portfolios; and |
• | Improvement in the credit quality of the unsecured retail lending portfolio due to tightening of credit policies since 2004. |
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 provisions | 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 | 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 $450 million transfer following a product rationalisation program within ASB Bank. |
Half Year Ended | ||||||||||||||||||||
Dec 06 vs | Dec 06 vs | |||||||||||||||||||
Asset Quality | 31/12/06 | 30/06/06 | 31/12/05 | Jun 06 % | Dec 05 % | |||||||||||||||
Risk weighted assets ($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 | |||||||||||||||
• | 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 service and sales skills of our people; |
• | The continued reinvigoration of front line service and sales 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; and |
• | The continued utilisation of the Group’s state-of-the-art customer management system, CommSee, to improve sales productivity and customer service. |
• | Customer satisfaction levels have improved from 75.1% to 80.0% since June 2006 (Source: AC Nielsen, Financial Institution Customer Monitor (Q3) September 2006 survey); and |
• | Improving trends in key measures of staff engagement, including absenteeism and time lost through injury. |
Market Share Percentage(1) | 31/12/06 | 30/06/06 | 31/12/05 | |||||||||
Home loans – APRA(3) | 18.2 | 18.7 | 18.8 | |||||||||
Credit cards – APRA(2)(3) | 19.4 | 20.3 | 21.4 | |||||||||
Personal lending (APRA and other households) – APRA(4) | 16.4 | 16.1 | 16.0 | |||||||||
Household deposits – APRA | 28.8 | 29.3 | 29.6 | |||||||||
Retail deposits – APRA | 21.9 | 22.2 | 22.9 | |||||||||
(4) | For market share definitions refer to Appendix 18, pages 96-97. | |
(2) | As at 30 November 2006. | |
(3) | 30 June 2006 comparative revised by APRA. | |
(4) | Personal lending market share includes personal loans and margin loans. |
Half Year to December 2006 | ||||||||||||||||||||||||
Net | Other | Total | Loan | |||||||||||||||||||||
Interest | Banking | Banking | Expenses | Impairment | Profit after | |||||||||||||||||||
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 | |||||||||||||||||||||
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 | |||||||||||||||||||||
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. |
• | 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 Western Australia in December 2006 and plans are on track for continuing 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 achieved above market growth rates in both periods. |
• | 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, as a member of the syndicate, 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 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. |
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, pages 96-97. |
Half Year to December 2006 | ||||||||||||||||||||||||
Net | Other | Total | Loan | |||||||||||||||||||||
Interest | Banking | Banking | Expenses | 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 | Loan | |||||||||||||||||||||
Interest | Banking | Banking | Expenses | 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 | Loan | |||||||||||||||||||||
Interest | Banking | Banking | Expenses | 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 | ||||||||||||||||||||
Major Balance Sheet Items (gross of | 31/12/06 | 30/06/06 | 31/12/05 | Dec 06 vs | Dec 06 vs | |||||||||||||||
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 from 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. |
• | Continued high demand for housing finance leading to a 6.8% increase in average home loan balances since June 2006 (14% on the prior comparative period), driven by the high demand for housing finance. This enabled the business to maintain market share of home loans at 23.1% for the half year (23.2% for the prior comparative period); |
• | Retail deposit balances of $20.4 billion were 8% higher than at 30 June 2006 (17% higher than the prior comparative period). FastSaver and the new BusinessSaver accounts continue to grow strongly collectively representing 72% of total retail deposit growth for the half year (62% on the prior comparative period) driven by the current interest rate environment; |
• | Reduction in net interest margin of seven basis points, against both periods, 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 versus both periods, primarily within the Home and Personal Lending sectors. |
• | 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. This is not expected to have a material financial impact on this region’s results; |
• | 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, due to current political developments there, pushed up cost of funds and negatively impacted margins during the period. |
Market Share Percentage(1) | 31/12/06 | 30/06/06 | 31/12/05 | |||||||||
NZ lending for housing — RBNZ(2) | 23.1 | 23.1 | 23.2 | |||||||||
NZ retail deposits — RBNZ(2) | 20.7 | 20.3 | 19.9 | |||||||||
(1) | For market share definitions refer to Appendix 18, pages 96-97. | |
(2) | 30 June 2006 comparative revised by RBNZ (Reserve Bank of New Zealand). |
Half Year to December 2006 | ||||||||||||||||||||||||
Net | Other | Total | Loan | |||||||||||||||||||||
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 | |||||||||||||||||||||
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 | |||||||||||||||||||||
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 (gross of | 31/12/06 | 30/06/06 | 31/12/05 | Dec 06 vs | Dec 06 vs | |||||||||||||||
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). |
• | Continued flows into the FirstChoice platform in both periods; |
• | Institutional and international flows generated by the Global Asset Management business in both periods; |
• | Some outflows from Income and Mortgage Funds to high yielding banking products following recent interest rate rises in both periods; and |
• | Reduction in Property net out 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) in the prior period. |
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, pages 96-97. | |
(2) | As at 30 September 2006. | |
(3) | 30 June 2006 comparative revised by external provider. |
• | 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. Refer to Note 11 for additional information; |
• | 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; |
• | Successful implementation of the new Financial Wisdom Dealer Group Offering, which comprised third party financial advisers, in October to enhance practice quality and adviser segment service levels. |
• | Commission expenses increasing in line with funds under administration; and |
• | Increased performance-based commissions to property trusts. |
• | 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 (being the Gandel joint venture property management interests) during the previous financial year; and |
• | Offset by reduced compliance spend in this half on the unit pricing initiative which is tracking well. |
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(1) | 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 | |||||||||||||||
Corporate tax expense(2) | 100 | 87 | 77 | (15 | ) | (30 | ) | |||||||||||||
Minority interests | — | — | 3 | — | large | |||||||||||||||
Net profit after income tax (“cash basis”) | 235 | 222 | 188 | 6 | 25 | |||||||||||||||
Treasury shares valuation adjustment | (38 | ) | (57 | ) | (43 | ) | 33 | 12 | ||||||||||||
Net profit after income tax (“statutory basis”) | 197 | 165 | 145 | 36 | 19 | |||||||||||||||
(1) | Represents income earned from the Group’s Insurance segment. | |
(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 | |||||||||||||||
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 | ||||||||||||||||
Australian 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 | ||||||||||||||||
Australian 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 | |||||||||||||||||
Australian 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. |
• | Inforce premium growth in Australia and New Zealand; |
• | Growth in planned margins; and |
• | Increase in investment spend in the business. |
• | Life and General Insurance premium growth, with inforce premiums increasing by 15% (16% on the prior comparative period), 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 for both periods; and |
• | Very strong shareholder investment returns in both periods. |
• | 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. |
• | 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 32.6% for the half year ended 31 December 2005; and |
• | A continuation of positive investment returns offset by higher claims incidence in disability and term life. |
• | 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. |
Half Year Ended | ||||||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05(3) | 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 | — | large | |||||||||||||||
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 (“statutory and cash basis”) | 169 | 132 | 284 | 28 | (40 | ) | ||||||||||||||
Half Year Ended | ||||||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05(3) | 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(3) | 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 | — | large | |||||||||||||||
Net profit after income tax (“statutory and 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) | 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 275 of the Bank’s Annual Report on Form 20-F for the fiscal year ended 30 June 2006. |
Half Year Ended | ||||||||||||||||||||||||
Australia | New Zealand | |||||||||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | 31/12/06 | 30/06/06 | 31/12/05 | |||||||||||||||||||
Profit after Income Tax | $M | $M | $M | $M | $M | $M | ||||||||||||||||||
Operating margins | 68 | 70 | 56 | 41 | 39 | 38 | ||||||||||||||||||
After tax Shareholder investment returns | 47 | 21 | 35 | 9 | 7 | 10 | ||||||||||||||||||
Net profit after income tax (“statutory and cash basis”) | 115 | 91 | 91 | 50 | 46 | 48 | ||||||||||||||||||
Asia | Total | |||||||||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | 31/12/06 | 30/06/06 | 31/12/05 | |||||||||||||||||||
Net Profit after Income Tax | $M | $M | $M | $M | $M | $M | ||||||||||||||||||
Operating margins | 2 | 3 | 9 | 111 | 112 | 103 | ||||||||||||||||||
After tax Shareholder investment returns | 2 | (8 | ) | (9 | ) | 58 | 20 | 36 | ||||||||||||||||
Profit on sale of Hong Kong business | — | — | 145 | — | — | 145 | ||||||||||||||||||
Net profit after income tax (“statutory and cash basis”) | 4 | (5 | ) | 145 | 169 | 132 | 284 | |||||||||||||||||
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 for the half year to December 2006 of a $28 million gain (June 2006: ($16 million) loss, December 2005: $8 million gain). | |
(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, pages 96-97. | |
(2) | As at 30 September 2006. | |
(3) | 30 June 2006 comparative revised by external provider. |
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. |
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 | ||||||||||||
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) |
J M Schubert | R J Norris | |
Chairman | Managing Director and Chief Executive Officer | |
14 February 2007 |
Consolidated Income Statement | 30 | |||||
Consolidated Balance Sheet | 31 | |||||
Consolidated Statement of Recognised Income and Expense | 32 | |||||
Consolidated Statement of Cash Flows | 33 | |||||
Notes to the Financial Statements | 35 | |||||
Note 1 | Accounting Policies | 35 | ||||
Note 2 | Income from Ordinary Activities | 36 | ||||
Note 3 | Operating Expenses | 37 | ||||
Note 4 | Income Tax Expense | 38 | ||||
Note 5 | Loans, Advances and Other Receivables | 39 | ||||
Note 6 | Asset Quality | 39 | ||||
Note 7 | Deposits and Other Public Borrowings | 41 | ||||
Note 8 | Financial Reporting by Segments | 42 | ||||
Note 9 | Detailed Consolidated Statement of Changes in Equity | 45 | ||||
Note 10 | Notes to the Statement of Cash Flows | 47 | ||||
Note 11 | Assets Held for Sale | 49 | ||||
Note 12 | Events after the end of the Financial Period | 49 | ||||
Note 13 | Contingent Liabilities | 49 | ||||
Note 14 | Acquisition of Business Interest | 49 | ||||
Note 15 | Pensions | 50 | ||||
Note 16 | Ratio of Earnings to Fixed Charges | 50 | ||||
Note 17 | Earnings Per Share | 50 | ||||
Note 18 | Differences Between Australian and United States Accounting Principles | 51 |
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 15 March 2006 | 3,986 | — | — |
As at | ||||||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | ||||||||||||||
Note | $M | $M | $M | |||||||||||||
Assets | ||||||||||||||||
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 | |||||||||||||
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 | |||||||||||||
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. |
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. |
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) | The 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. 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) | The December 2005 half includes profit on sale of the Hong Kong Insurance Business of $145 million. |
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. |
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 37
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 | |||||||||
38 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 | |||||||||||||
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 | |||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 39
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 Income Statement | 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 to Capital Adequacy, Appendix 8, pages 79-81). |
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 | |||||||||
40 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 | |||||||||
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 | |||||||||
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 | |||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 41
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 | ||||||||||||
42 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 debts 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. |
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 43
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. |
44 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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. |
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 45
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 to Capital Adequacy, Appendix 8, pages 79-81). |
46 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 | ) | ||||||||
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. |
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 | |||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 47
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 | |||||||||
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 | — | |||||||||
48 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 49
OSF | CBA(UK)SBS | Total | ||||||||||||||||||||||
Half year to | Half year to | Half year to | Half year to | Half year to | Half year to | |||||||||||||||||||
31 December | 31 December | 31 December | 31 December | 31 December | 31 December | |||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
Service cost | (15 | ) | (20 | ) | (2 | ) | (2 | ) | (17 | ) | (22 | ) | ||||||||||||
Interest cost | (94 | ) | (86 | ) | (11 | ) | (10 | ) | (105 | ) | (96 | ) | ||||||||||||
Expected return on plan assets | 184 | 156 | 11 | 9 | 195 | 165 | ||||||||||||||||||
Amortisation of transitional obligation assets | — | — | — | — | — | — | ||||||||||||||||||
Recognised net gain (loss) | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||
Amortisation of prior service costs | — | — | — | — | — | — | ||||||||||||||||||
Employer financed benefits within Accumulation Division | (67 | ) | (74 | ) | — | — | (67 | ) | (74 | ) | ||||||||||||||
Settlements & Curtailment Effects | — | — | — | — | — | — | ||||||||||||||||||
Cost of Special Termination Benefits | — | — | — | — | — | — | ||||||||||||||||||
Defined benefit superannuation (Pension) plan (expense) income under US GAAP | 8 | (24 | ) | (2 | ) | (4 | ) | 6 | (28 | ) | ||||||||||||||
Half Year Ended | ||||||||||||||||
31/12/06 | 31/12/06 | 31/12/05 | 31/12/05 | |||||||||||||
AIFRS | US GAAP | AIFRS | US GAAP | |||||||||||||
Ratio of Earnings to Fixed Changes | $M | $M | $M | $M | ||||||||||||
Net profit before tax and fixed charges (interest expense and rental costs) | 11,369 | 12,163 | 9,327 | 7,953 | ||||||||||||
Fixed charges | 8,168 | 7,868 | 6,439 | 6,211 | ||||||||||||
Ratio of earnings to fixed charges | 1.4 | 1.5 | 1.4 | 1.3 | ||||||||||||
Half Year Ended | ||||||||||||||||
31/12/06 | 31/12/06 | 31/12/05 | 31/12/05 | |||||||||||||
Earnings Per Share Computation | AIFRS | US GAAP | AIFRS | US GAAP | ||||||||||||
Net profit under AIFRS/Net Income under US GAAP — available for ordinary shares ($M) | 2,163 | 2,937 | 1,999 | 1,187 | ||||||||||||
Add back preference dividends (after tax) ($M) | 75 | 75 | 47 | 26 | ||||||||||||
Net profit under AIFRS/net income under US GAAP — for diluted EPS ($M) | 2,238 | 3,012 | 2,046 | 1,213 | ||||||||||||
Weighted average number of shares (M) | 1,276 | 1,276 | 1,273 | 1,273 | ||||||||||||
Diluted weighted average number of shares (M) | 1,348 | 1,348 | 1,324 | 1,308 | ||||||||||||
Earnings per share (cents) basic | 169.6 | 230.1 | 157.1 | 93.3 | ||||||||||||
Earnings per share (cents) diluted | 166.0 | 223.4 | 154.5 | 92.7 | ||||||||||||
50 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
31/12/06 | 31/12/05 | |||||||||||
For the half year ended 31 December 2006 | Footnote | $M | $M | |||||||||
Net profit reported under AIFRS | 2,191 | 1,999 | ||||||||||
Pension expense adjustment | (f | ) | — | (1 | ) | |||||||
Amortisation of identifiable intangible assets | (g),(t | ) | (9 | ) | (9 | ) | ||||||
Movement in life insurance value of business acquired | (h | ) | (35 | ) | (43 | ) | ||||||
Movement in life insurance policyholder liabilities | (l | ) | (1 | ) | 14 | |||||||
Reversal of unrealised gains and depreciation on life insurance and other property investments | (j | ) | 27 | (36 | ) | |||||||
Reversal of unrealised gains on assets and liabilities at fair value through profit and loss | (e | ) | (76 | ) | (31 | ) | ||||||
Movement in life insurance deferred acquisition costs | (m | ) | 6 | 2 | ||||||||
Adjustment to derivative and hedge accounting | (o | ) | 1,053 | (983 | ) | |||||||
Reversal of redundancy provision | (c | ) | — | 11 | ||||||||
Deconsolidation of Variable Interest Entities | (r | ) | (1 | ) | — | |||||||
Reversal of software write-off and software amortisation | (s | ) | 122 | (14 | ) | |||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (14 | ) | (127 | ) | ||||||
Gain on sale of Hong Kong Insurance Business | (u | ) | — | 49 | ||||||||
Adjustment for costs of loan origination | (v | ) | 14 | 4 | ||||||||
Adjustment in relation to securitised loans | (n | ) | 95 | — | ||||||||
Movement in deferred tax relating to life insurance policyholder liabilities | (a | ) | 5 | (7 | ) | |||||||
Tax effects of US GAAP adjustments | (413 | ) | 359 | |||||||||
Net Income according to US GAAP | 2,964 | 1,187 | ||||||||||
Other Comprehensive Income | ||||||||||||
Foreign currency translation reserve. Tax included within balance — 2006: $26 million, 2005: $26 million | (k | ) | 87 | 33 | ||||||||
Pension plan — movement in minimum liability | (k | ) | (7 | ) | (5 | ) | ||||||
Unrealised gains/(losses) on available-for-sale investments. Tax included within balance — 2006: $(17) million, 2005: $(17) million | (e | ) | 64 | (47 | ) | |||||||
Adjustment to derivative and hedge accounting. Tax included within balance — 2006: $56 million, 2005: $26 million | (o | ) | (60 | ) | (50 | ) | ||||||
Total Other Comprehensive Income/(loss) | 84 | (69 | ) | |||||||||
Total Comprehensive Income according to US GAAP | 3,048 | 1,118 | ||||||||||
Basic earnings per share on Net Income according to US GAAP (cents) | 230 | 93 | ||||||||||
Fully diluted earnings per share on Net Income according to US GAAP (cents) | 223 | 93 | ||||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 51
31/12/06 | 31/12/05 | |||||||||||
Consolidated Statement of Shareholders’ Equity | Footnote | $M | $M | |||||||||
Shareholders’ Equity | ||||||||||||
Shareholders’ Equity reported under AIFRS, excluding outside equity interests | 21,979 | 19,327 | ||||||||||
Reversal of unrealised gains on assets and liabilities at fair value through profit and loss | (e | ) | (55 | ) | (51 | ) | ||||||
Prepaid pension cost | (f | ) | (561 | ) | 111 | |||||||
Life insurance business recognition of additional goodwill | (g | ) | 332 | 332 | ||||||||
Amortisation of identifiable intangible assets | (g | ) | (121 | ) | (102 | ) | ||||||
Goodwill amortisation to 30 June 2002 | (g | ) | (78 | ) | (78 | ) | ||||||
Reversal of goodwill amortisation | (g | ) | 646 | 646 | ||||||||
Movement in value of business acquired | (h | ) | (1,312 | ) | (1,181 | ) | ||||||
Movement in deferred acquisition costs | (m | ) | (327 | ) | (321 | ) | ||||||
Equity issued for Colonial acquisition | (t | ) | (1,026 | ) | (1,026 | ) | ||||||
Reversal of unrealised gain and accumulated depreciation on life insurance and other property investments | (j | ) | (139 | ) | (160 | ) | ||||||
Movement in policyholder liabilities | (l | ) | 357 | 366 | ||||||||
Movement in deferred tax relating to policyholder liabilities | (l | ) | (107 | ) | (108 | ) | ||||||
Adjustment to derivative and hedge accounting | (o | ) | (1,253 | ) | (1,092 | ) | ||||||
Reversal of redundancy provision | (c | ) | 37 | 85 | ||||||||
Deconsolidation of variable interest entities | (r | ) | (1 | ) | — | |||||||
Reversal of software write-off and software amortisation | (s | ) | 243 | 110 | ||||||||
Reversal of asset revaluation reserve | (i | ) | (138 | ) | (118 | ) | ||||||
Deconsolidation of Employee Share ownership Plans (“ESOP”) | (b | ) | 47 | 134 | ||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (11 | ) | (61 | ) | ||||||
Gain on sale of Hong Kong Insurance Business | (u | ) | (71 | ) | (71 | ) | ||||||
Adjustment for costs of loan origination | (v | ) | 250 | 233 | ||||||||
Adjustment in relation to securitised loans | (n | ) | 158 | — | ||||||||
Tax effect of foreign currency translation reserve | (a | ) | 26 | 26 | ||||||||
Tax effects of US GAAP adjustments | 885 | 663 | ||||||||||
Shareholders’ Equity according to US GAAP | 19,761 | 17,664 | ||||||||||
31/12/06 | 31/12/05 | |||||||||||
Consolidated Balance Sheet | Footnote | $M | $M | |||||||||
Total Assets reported under AIFRS | 397,261 | 351,193 | ||||||||||
Deferred tax assets related to differences in life insurance policyholder liabilities | (a | ) | 51 | 49 | ||||||||
Unrealised net gain/(loss) on available-for-sale securities | (e | ) | (66 | ) | (39 | ) | ||||||
Prepaid pension cost | (f | ) | (367 | ) | 293 | |||||||
Goodwill, net of amortisation | (g | ) | (1,254 | ) | (1,254 | ) | ||||||
Value of business acquired, net of amortisation | (h | ) | 1,396 | 1,527 | ||||||||
Life insurance policy deferred acquisition costs, net of amortisation | (m | ) | 787 | 749 | ||||||||
Other identifiable intangible assets recognised, net of amortisation | (g | ) | (240 | ) | (221 | ) | ||||||
Unrealised gain and accumulated depreciation on life insurance property investments | (j | ) | (110 | ) | (120 | ) | ||||||
Adjustment to derivative and hedge accounting | (o | ) | 58 | (6 | ) | |||||||
Reclassification between reinsurance receivable and life insurance policyholder liabilities | 2 | 3 | ||||||||||
Consolidation of variable interest entities | (r | ) | (1 | ) | — | |||||||
Reversal of asset revaluation reserve | (i | ) | (138 | ) | (118 | ) | ||||||
Reversal of software write-off and software amortisation | (s | ) | 243 | 110 | ||||||||
Deconsolidation of Employee Share Ownership Plans (“ESOPs”) | (b | ) | 47 | 134 | ||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (10,742 | ) | (9,547 | ) | ||||||
Adjustment for costs of loan origination | (v | ) | 175 | 163 | ||||||||
Adjustment in relation to securitised loans | (n | ) | 158 | — | ||||||||
Total Assets according to US GAAP | 387,260 | 342,916 | ||||||||||
52 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
31/12/06 | 31/12/05 | |||||||||||
Assets | Footnote | $M | $M | |||||||||
Cash and liquid assets under AIFRS | 7,606 | 7,269 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (1 | ) | 2 | |||||||
Cash and liquid assets under US GAAP | 7,605 | 7,271 | ||||||||||
Receivables due from other financial institutions under AIFRS | 5,686 | 5,279 | ||||||||||
Deconsolidation of variable interest entities | (r | ) | — | — | ||||||||
Receivables due from other financial institutions under US GAAP | 5,686 | 5,279 | ||||||||||
Assets at fair value through Income Statement — Trading under AIFRS | 18,887 | 15,617 | ||||||||||
Reclassification from life insurance investment assets and other assets | (d | ) | 23,818 | 24,397 | ||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | — | — | ||||||||
Assets at fair value through Income Statement — Trading under US GAAP | 42,705 | 40,014 | ||||||||||
Assets at fair value through Income Statement — Insurance under AIFRS | 24,520 | 25,141 | ||||||||||
Reclassification to Trading securities and other assets | (d | ) | (23,818 | ) | (24,397 | ) | ||||||
Reclassification to real estate investment assets and deferred tax assets | (j | ) | (215 | ) | (286 | ) | ||||||
Unrealised gains and depreciation adjustment (after tax) | (j | ) | (89 | ) | (120 | ) | ||||||
Reclassification of Mortgage Loans to other assets | (l | ) | (398 | ) | (338 | ) | ||||||
Assets at fair value through Income Statement — Insurance under US GAAP | — | — | ||||||||||
Assets at fair value through Income Statement — Other under AIFRS | 4,838 | 3,590 | ||||||||||
Reclassification to available-for-sale securities | (e | ) | (1,344 | ) | (980 | ) | ||||||
Reclassification to Loans, advances and other receivables | (e | ) | (3,494 | ) | (2,610 | ) | ||||||
Assets at fair value through Income Statement — Other under US GAAP | — | — | ||||||||||
Derivative assets under AIFRS | 10,519 | 8,238 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (36 | ) | (451 | ) | ||||||
Adjustment to derivative and hedge accounting | (o | ) | 26 | 10 | ||||||||
Derivative assets under US GAAP | 10,509 | 7,797 | ||||||||||
Available-for-sale securities under AIFRS | 11,434 | 9,605 | ||||||||||
Reclassification from assets at fair value through Income Statement — Other | (e | ) | 1,344 | 980 | ||||||||
Reclassification to other assets | (e | ) | (22 | ) | (126 | ) | ||||||
Unrealised net gain on available-for-sale securities | (e | ) | (59 | ) | (40 | ) | ||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | 7 | 7 | ||||||||
Adjustment in relation to securitised loans | (n | ) | 158 | — | ||||||||
Available-for-sale securities under US GAAP | 12,862 | 10,426 | ||||||||||
Loans, advances and other receivables under AIFRS | 277,962 | 245,606 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (10,754 | ) | (9,124 | ) | ||||||
Adjustment to derivative and hedge accounting | (o | ) | 32 | (16 | ) | |||||||
Reclassification from assets at fair value through Income Statement — Other | (e | ) | 3,494 | 2,610 | ||||||||
Remeasurement to amortised cost | (e | ) | (7 | ) | 1 | |||||||
Adjustment for costs of loan origination | (v | ) | 250 | 233 | ||||||||
Consolidation of variable interest entities | (r | ) | (23 | ) | — | |||||||
Loans, advances and other receivables under US GAAP | 270,954 | 239,310 | ||||||||||
Real estate investments at market value under AIFRS | — | — | ||||||||||
Reclassification from life insurance investment assets | (j | ) | 186 | 246 | ||||||||
Real estate investments under US GAAP | 186 | 246 | ||||||||||
31/12/06 | 31/12/05 | |||||||||||
Assets (continued) | Footnote | $M | $M | |||||||||
Investment property under AIFRS | 273 | 252 | ||||||||||
Reversal of fair value adjustments | (21 | ) | — | |||||||||
Investment property under US GAAP | 252 | 252 | ||||||||||
Property, plant and equipment under AIFRS | 1,325 | 1,143 | ||||||||||
Reversal of asset revaluation reserve | (i | ) | (138 | ) | (118 | ) | ||||||
Consolidation of variable interest entities | (r | ) | 22 | — | ||||||||
Property, plant and equipment under US GAAP | 1,209 | 1,025 | ||||||||||
Intangible Assets under AIFRS | 7,846 | 7,740 | ||||||||||
Identifiable intangible asset amortisation | (g | ) | (76 | ) | (57 | ) | ||||||
Goodwill amortisation to 30 June 2002 | (g | ) | (78 | ) | (78 | ) | ||||||
Reversal of goodwill amortisation | (g | ) | 646 | 646 | ||||||||
Adjustment to equity issued on Colonial acquisition | (t | ) | (1,026 | ) | (1,026 | ) | ||||||
Adjustment to policyholder liabilities | (t | ) | 559 | 559 | ||||||||
Deferred tax assets on differences in life insurance policyholder liabilities | (a | ) | (158 | ) | (158 | ) | ||||||
Reclassification to Value of Business Acquired | (g | ) | (2,786 | ) | (2,786 | ) | ||||||
Deferred tax liability on value of business acquired | (g | ) | 1,256 | 1,256 | ||||||||
Pension fund surplus acquired | (f | ) | (244 | ) | (244 | ) | ||||||
Deferred tax liability on pension fund surplus acquired | (f | ) | 80 | 80 | ||||||||
Goodwill measurement differences | (g | ) | 332 | 332 | ||||||||
Amortisation of software | (s | ) | 243 | 110 | ||||||||
Intangible Assets under US GAAP | 6,594 | 6,374 | ||||||||||
Value of Business Acquired under AIFRS | — | — | ||||||||||
Reclassification from Goodwill | (g | ) | 2,708 | 2,708 | ||||||||
Value of Business Acquired amortisation (net of imputed interest) | (h | ) | (1,312 | ) | (1,181 | ) | ||||||
Value of Business Acquired under US GAAP | 1,396 | 1,527 | ||||||||||
Deferred tax assets under AIFRS | 638 | 891 | ||||||||||
Deferred tax assets on differences in life insurance policyholder liabilities | (a | ) | 51 | 49 | ||||||||
Adjustment for costs of loan origination | (v | ) | (75 | ) | (70 | ) | ||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | — | (19 | ) | |||||||
Deferred tax assets on investment property | 29 | 40 | ||||||||||
Deferred tax assets under US GAAP | 643 | 891 | ||||||||||
Other Assets under AIFRS | 5,846 | 3,368 | ||||||||||
Prepaid pension cost | (f | ) | (367 | ) | 293 | |||||||
Reclassification of Mortgage Loans from insurance investment assets | (l | ) | 398 | 338 | ||||||||
Life insurance policy deferred acquisition costs, net of amortisation | (m | ) | 787 | 749 | ||||||||
Deconsolidation of Employee Share Ownership Plans (“ESOPs”) | (b | ) | 47 | 134 | ||||||||
Reclassification from available-for-sale securities | (e | ) | 22 | 126 | ||||||||
Reclassification between reinsurance receivable and policyholder liabilities | 2 | 3 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | 42 | 37 | ||||||||
Other Assets under US GAAP | 6,777 | 5,048 | ||||||||||
31/12/06 | 31/12/05 | |||||||||||
Liabilities | Footnote | $M | $M | |||||||||
Deposits and other public borrowings under AIFRS | 188,819 | 168,723 | ||||||||||
Reclassification from liabilities at fair value through Income Statement and remeasurement to amortised cost | (e | ) | 6,331 | 6,541 | ||||||||
Adjustment to derivative and hedge accounting | (o | ) | (1 | ) | — | |||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | — | — | ||||||||
Deposits and other public borrowings under US GAAP | 195,149 | 175,264 | ||||||||||
Payables due to other financial institutions under AIFRS | 12,432 | 9,902 | ||||||||||
Reclassification from liabilities at fair value through Income Statement | (e | ) | 1 | 180 | ||||||||
Payables due to other financial institutions under US GAAP | 12,433 | 10,082 | ||||||||||
Liabilities at fair value through Income Statement under AIFRS | 17,986 | 16,322 | ||||||||||
Reclassification to Deposits and other public borrowings | (e | ) | (6,326 | ) | (6,537 | ) | ||||||
Reclassification to Payables due to other financial institutions | (e | ) | (1 | ) | (180 | ) | ||||||
Reclassification to Debt Issues | (e | ) | (7,877 | ) | (6,974 | ) | ||||||
Reclassification to Bills payable and other liabilities | (e | ) | (3,782 | ) | (2,631 | ) | ||||||
Liabilities at fair value through Income Statement under US GAAP | — | — | ||||||||||
Derivative liabilities under AIFRS | 13,238 | 9,391 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (803 | ) | (667 | ) | ||||||
Adjustment to derivative and hedge accounting | (o | ) | 63 | 74 | ||||||||
Derivative liabilities under US GAAP | 12,498 | 8,798 | ||||||||||
Current tax liabilities under AIFRS | 685 | 575 | ||||||||||
Tax effect of reversal of software write-off and software amortisation | (s | ) | 73 | 33 | ||||||||
Current tax liabilities under US GAAP | 758 | 608 | ||||||||||
Deferred tax liabilities under AIFRS | 1,384 | 1,153 | ||||||||||
Deferred tax liability on unrealised gain on available-for-sale securities | (e | ) | (16 | ) | (15 | ) | ||||||
Deferred tax liability on pension income | (f | ) | (95 | ) | 107 | |||||||
Deferred tax liability on derivative and hedge accounting | (o | ) | (343 | ) | (328 | ) | ||||||
Reclassification from life insurance policyholder liabilities | (l | ) | 248 | 236 | ||||||||
Deferred tax liability on value of business acquired | (h | ) | 803 | 863 | ||||||||
Deferred tax element of other intangibles | 9 | 14 | ||||||||||
Deferred tax element of foreign currency translation reserve | (a | ) | (26 | ) | (26 | ) | ||||||
Deferred tax relating to deconsolidation of QSPEs established for securitisation | ||||||||||||
Deferred tax element of redundancy provisions | (c | ) | 11 | 26 | ||||||||
Deferred tax element of revaluations | (10 | ) | — | |||||||||
Adjustment in relation to securitised loans | (n | ) | 47 | — | ||||||||
Deferred tax relating to deconsolidation of QSPEs established for securitisation | (n | ) | — | (49 | ) | |||||||
Deferred tax liabilities under US GAAP | 2,012 | 1,981 | ||||||||||
31/12/06 | 31/12/05 | |||||||||||
Liabilities (continued) | Footnote | $M | $M | |||||||||
Other provisions under AIFRS | 826 | 846 | ||||||||||
Reversal of redundancy provision | (c | ) | (37 | ) | (85 | ) | ||||||
Other provisions under US GAAP | 789 | 761 | ||||||||||
Life insurance policy liabilities under AIFRS | 22,729 | 23,055 | ||||||||||
Adjustment to policyholder liability differences on acquisition | (l | ) | 559 | 559 | ||||||||
Reclassification to Other Assets of life insurance policy deferred acquisition costs | (m | ) | 839 | 810 | ||||||||
Movement in policyholder liabilities | (357 | ) | (366 | ) | ||||||||
Gain re sale of Hong Kong Insurance Business | (u | ) | (7 | ) | (7 | ) | ||||||
Reclassification between reinsurance receivable and policyholder liabilities | 2 | 3 | ||||||||||
Life insurance policy liabilities under US GAAP | 23,765 | 24,054 | ||||||||||
Debt issues under AIFRS | 82,561 | 70,036 | ||||||||||
Adjustment to derivative and hedge accounting | (o | ) | 1,244 | 1,002 | ||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | (10,429 | ) | (9,136 | ) | ||||||
Reclassification from liabilities at fair value through Income Statement and re-measurement to amortised cost | (e | ) | 7,861 | 6,982 | ||||||||
Debt issues under US GAAP | 81,237 | 68,884 | ||||||||||
Bills payable and other liabilities under AIFRS | 5,379 | 3,917 | ||||||||||
Deconsolidation of QSPEs established for securitisation | (n | ) | 500 | 379 | ||||||||
Reclassification from liabilities at fair value through Income Statement | (e | ) | 3,782 | 2,631 | ||||||||
Defined benefit plan deficit | (f | ) | (50 | ) | (62 | ) | ||||||
Bills payable and other liabilities under US GAAP | 9,611 | 6,865 | ||||||||||
Loan capital under AIFRS | 9,902 | 9,129 | ||||||||||
Adjustment to derivative and hedge accounting | (o | ) | 5 | 11 | ||||||||
Loan capital under US GAAP | 9,907 | 9,140 | ||||||||||
31/12/06 | 31/12/05 | |||||||
$M | $M | |||||||
Service cost | (17 | ) | (22 | ) | ||||
Interest cost | (105 | ) | (96 | ) | ||||
Expected return on assets | 195 | 165 | ||||||
Recognised net gain (loss) | — | (1 | ) | |||||
Employer financed benefits within Accumulation Division | (67 | ) | (74 | ) | ||||
Expensed employer contributions | — | — | ||||||
Defined benefit superannuation (pension) plan (expense) income under US GAAP | 6 | (28 | ) | |||||
Defined benefit superannuation (pension) plan (expense) income under AIFRS | 6 | (27 | ) | |||||
Difference | — | (1 | ) | |||||
Less tax effect | — | — | ||||||
Defined Benefit Superannuation (pension) Expense Adjustment | — | (1 | ) | |||||
Funded status as per AIFRS Balance Sheet | 1,391 | 710 | ||||||
Assets not recognised: | ||||||||
Unrecognised net gains (loss) | (317 | ) | 356 | |||||
Net Amount Recognised under US GAAP | 1,074 | 1,066 | ||||||
Comprising of: | ||||||||
Prepaid Pension Cost | 1,074 | 1,066 | ||||||
Additional minimum liability | (37 | ) | (54 | ) | ||||
Accumulated other comprehensive income (loss) | 37 | 54 | ||||||
Net Amount Recognised under US GAAP | 1,074 | 1,066 | ||||||
Asset (liability) in AIFRS Balance Sheet | 1,391 | 710 | ||||||
Difference | (317 | ) | 356 | |||||
Less tax effect | 95 | (107 | ) | |||||
Pension Asset (Liability) Adjustment | (222 | ) | 249 | |||||
2006 | 2005 | |||||||
$M | $M | |||||||
Projected benefit obligation | 430 | 408 | ||||||
Accumulated benefit obligation | 426 | 404 | ||||||
Fair value of plan assets | 366 | 326 | ||||||
Financial Year Ending | $M | |||
30 June 2007 232 | ||||
30 June 2008 | 232 | |||
30 June 2009 | 233 | |||
30 June 2010 | 240 | |||
30 June 2011 | 239 | |||
30 June 2012 to 30 June 2016 | 1,201 | |||
31/12/06 | 31/12/05 | |||||||
Segment | $M | $M | ||||||
Banking | 4,182 | 4,190 | ||||||
Funds Management | 977 | 998 | ||||||
Insurance | 550 | 550 | ||||||
Total | 5,709 | 5,738 | ||||||
31/12/06 | 31/12/05 | |||||||
$M | $M | |||||||
Opening balance, 1 July | 614 | 777 | ||||||
Imputed interest | 84 | 124 | ||||||
Amortisation | (119 | ) | (166 | ) | ||||
Disposal of Hong Kong Insurance Business | — | (81 | ) | |||||
Movement in deferred tax liability on value of business acquired | 5 | 1 | ||||||
Closing Net Balance, 31 December | 584 | 655 | ||||||
31/12/06 | 31/12/05 | |||||||
Accumulated Other Comprehensive Income Balances | $M | $M | ||||||
Foreign currency translation reserve | ||||||||
Balance at beginning of Financial Period | (421 | ) | (172 | ) | ||||
Foreign currency translation adjustment net of tax expense | 87 | 33 | ||||||
Balance at end of Financial Period | (334 | ) | (139 | ) | ||||
Available-for-Sale securities | ||||||||
Balance at beginning of Financial Period | 49 | 77 | ||||||
Change in fair value of available-for-sale securities | 70 | (11 | ) | |||||
Transferred from Income Statement | (6 | ) | (36 | ) | ||||
Balance at end of Financial Period | 113 | 30 | ||||||
SFAS 133 | ||||||||
Balance at beginning of Financial Period | (44 | ) | (1 | ) | ||||
Change in value of cash flow hedges | — | — | ||||||
Transferred from Income Statement | (60 | ) | (50 | ) | ||||
Balance at end of Financial Period | (104 | ) | (51 | ) | ||||
Pension Plans | ||||||||
Balance at beginning of Financial Period | 44 | 59 | ||||||
Adjustment to net assets in UK Pension Plan — net of tax expense | (7 | ) | (5 | ) | ||||
Balance at end of Financial Period | 37 | 54 | ||||||
Total Other Comprehensive Income | (288 | ) | (106 | ) | ||||
• | the account balance that accrues to the benefit of the policyholder at the date of the Financial Statements; and | |
• | any unearned revenue liability; |
31/12/06 | 31/12/05 | |||||||
$M | $M | |||||||
Difference in deferral of new business acquisition expenses | (34 | ) | (27 | ) | ||||
Difference in amortisation of acquisition expenses | 40 | 30 | ||||||
Tax effect of differences in acquisition expense treatment | 2 | (12 | ) | |||||
Total | 8 | (9 | ) | |||||
31/12/06 | 31/12/05 | |||||||
$M | $M | |||||||
Opening Balance, 1 July | 750 | 863 | ||||||
Acquisition costs for the period | 62 | 64 | ||||||
Amortisation of DAC/Imputed interest | (25 | ) | (27 | ) | ||||
Disposal of Hong Kong Insurance Business | — | (150 | ) | |||||
Net movement | 37 | (113 | ) | |||||
Closing Balance, 31 December | 787 | 750 | ||||||
�� | ||||
31/12/06 | ||||
Discount rate | 6.25 | % | ||
Payment rate(1) | 28 | % | ||
Expected weighted average life | 6 yrs | |||
(1) | Cumulative Prepayment Rate (‘CPR’) which represents an estimate of the principal repaid on an annual basis. |
31/12/06 | 31/12/05 | |||||||
$M | $M | |||||||
Servicing fee | 14 | 9 | ||||||
Management fee | 2 | 2 | ||||||
Excess servicing fee | 24 | 19 | ||||||
Proceeds from sale of mortgage loans | — | — | ||||||
Interest rate swaps | 7 | 18 | ||||||
Total cash receipts | 47 | 48 | ||||||
2001 | ||||
$M | ||||
Cost of acquisition | 9,120 | |||
Less 351,409,450 new Commonwealth Bank shares @ $26.39(1) | (9,274 | ) | ||
Add 351,409,450 shares @ $23.47(2) | 8,248 | |||
Revised cost of acquisition under US GAAP | 8,094 | |||
Fair Value of net tangible assets acquired: | ||||
Net tangible assets under AIFRS | 910 | |||
Pension fund surplus | 243 | |||
Differences in life insurance policyholder liabilities | (559 | ) | ||
Differences in deferred taxes | 76 | |||
Net tangible assets under US GAAP | 670 | |||
Intangible Assets on acquisition under US GAAP | 7,424 | |||
Intangible assets acquired on Colonial Acquisition: | ||||
Identifiable intangible assets(3) | 1,917 | |||
Goodwill (unidentifiable intangible assets)(4) | 5,507 | |||
7,424 | ||||
(1) | Price calculated under AIFRS based on the weighted average share price on the acquisition date, 13 June 2000. | |
(2) | Under US GAAP price calculated as weighted average closing price for the two days either side of the announcement date (10 March 2000). Non trading days were excluded from the calculation. Value of equity issued for Colonial acquisition under US GAAP accounting is reduced by $1,026 million. | |
(3) | Includes Colonial State Bank Core Deposits ($149 million) which is to be amortised on a straightline basis over 8 years and Value of Business Acquired (VOBA) net of associated deferred tax liability $1,530 million (refer to Note 18 (h) for amortisation details). The carrying value of the core deposits at 31 December 2006 is $28 million, net of amortisation. | |
(4) | Goodwill on acquisition under US GAAP includes the excess of net market value over net assets of life insurance controlled entities. |
GAAP reporting purposes were significantly different compared with AIFRS, due to the AIFRS transitional adjustment which reset the FCTR at 1 July 2004 to zero. On disposal of the Hong Kong Insurance Business, all FCTR assets are recycled to Net Income as part of the calculation of the gain on disposal. This resulted in a net increase in the profit on disposal of the Hong Kong Insurance Business of $49 million on a US GAAP basis.
(a) | The half year consolidated financial statements and notes as set out on pages 30 to 69 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 |
1 | Net Interest Income | 72 | ||||
2 | Net Interest Margin | 72 | ||||
3 | Average Balances and Related Interest | 73 | ||||
4 | Interest Rate and Volume Analysis | 75 | ||||
5 | Other Banking Operating Income | 76 | ||||
6 | Operating Expenses | 76 | ||||
7 | Integrated Risk Management | 77 | ||||
8 | Capital Adequacy | 79 | ||||
9 | Share Capital | 82 | ||||
10 | Life Insurance Business | 83 | ||||
11 | Intangible Assets | 85 | ||||
12 | ASB Bank Group | 86 | ||||
13 | ASX Appendix 4D | 87 | ||||
14 | Analysis Template | 89 | ||||
15 | Summary | 93 | ||||
16 | Foreign Exchange Rates | 94 | ||||
17 | Definitions | 95 | ||||
18 | Market Share Definitions | 97 | ||||
19 | Auditor Independence |
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 | |||||||||||||||
Half Year Ended | ||||||||||||
31/12/06 | 30/06/06 | 31/12/05(4) | ||||||||||
% | % | % | ||||||||||
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. | |
(4) | Due to a change in accounting policy regarding classification of interest expense on certain non traded derivatives (i.e. all interest expense on unhedged variable to variable cross currency swaps was reclassified from Other Banking Income to Net Interest Income), a reclassification of $29 million between Net Interest Income and Other Banking Income occurred in Financial Year 2006. There was no impact on total banking income or on profit. |
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)(2) | 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(3) | 34,798 | 529 | 3.02 | 33,570 | 463 | 2.78 | 32,931 | 438 | 2.64 | |||||||||||||||||||||||||||
Savings deposits(3) | 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 | 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) | Used for calculating net interest margin. | |
(3) | 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. |
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 | |||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Loans, Advances and OtherReceivables | $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 | |||||||||||||||||||||||||||
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 | $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 other 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 | ||||||||||||||||||
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 | 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. |
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 | ) | |||||||||||||
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 | ||||||||||
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 | ||||||||||
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 | |||||||||
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 | |||||||||
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 Bank’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 Bank 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 Bank’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. |
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 Bank’s non-controlling equity interest in a major infrastructure asset. | |
(3) | Balance at 31 December 2006 excludes $1,339 million associated with excess of 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. |
�� | ||||||||||||||||||||||||||||
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. |
• | Excess of Market Value Over Net Assets (“EMVONA”) $1,339 million; |
• | Software capitalised expenses $229 million; and |
• | Defined benefit superannuation plan deficit $45 million. |
• | 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. |
• | 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). |
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 | ||||||||||||
Shares on Issue | 31/12/06 | 30/06/06 | 31/12/05 | |||||||||
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 | |||||||||
• | 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. |
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. |
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 | ||||||||||
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. |
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 | |||||||||
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. |
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) | 82 | |
Net tangible assets per security (4D Item 3) | 92 | |
Commentary on Results (4D Item 2.6) | 8 | |
Company Secretary
14 February 2007
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 | % | |||||
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 | % | ||
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 12 | ||||||||||||
Other banking operating income | 1,678 | 1,591 | 1,445 | Page 12 | ||||||||||||
Total banking Income | 5,163 | 4,850 | 4,700 | Page 12 | ||||||||||||
Operating income | 893 | 828 | 715 | Page 22 | ||||||||||||
Shareholder investment returns | 4 | 7 | 7 | Page 22 | ||||||||||||
Funds management income | 897 | 835 | 722 | Page 22 | ||||||||||||
Operating income – life insurance | 339 | 322 | 347 | Page 25 | ||||||||||||
Operating income – general insurance | 43 | 34 | 39 | Page 25 | ||||||||||||
Operating income insurance | 382 | 356 | 386 | Page 25 | ||||||||||||
Shareholder investment returns | 81 | 30 | 57 | Page 25 | ||||||||||||
Profit on sale of the Hong Kong Insurance Business | — | — | 145 | Page 25 | ||||||||||||
Insurance income | 463 | 386 | 588 | Page 25 | ||||||||||||
Total income | 6,523 | 6,071 | 6,010 | Page 9 | ||||||||||||
Expenses – Cash Basis | ||||||||||||||||
Banking | 2,354 | 2,298 | 2,260 | Page 12 | ||||||||||||
Funds management | 567 | 530 | 459 | Page 22 | ||||||||||||
Insurance | 223 | 199 | 248 | Page 76 | ||||||||||||
Total operating expenses | 3,144 | 3,027 | 2,967 | Page 9 | ||||||||||||
Profit before loan impairment expense | 3,379 | 3,044 | 3,043 | Page 9 | ||||||||||||
Loan impairment expense | 195 | 210 | 188 | Page 9 | ||||||||||||
Profit before income tax | 3,184 | 2,834 | 2,855 | Page 9 | ||||||||||||
Income tax – corporate | 900 | 829 | 776 | Page 9 | ||||||||||||
Operating profit after tax | 2,284 | 2,005 | 2,079 | Page 9 | ||||||||||||
Minority interests | 13 | 13 | 18 | Page 9 | ||||||||||||
Net profit after tax – cash basis | 2,271 | 1,992 | 2,061 | Page 9 | ||||||||||||
Defined benefit superannuation plan income/(expense) | 4 | (6 | ) | (19 | ) | Page 9 | ||||||||||
Treasury shares valuation adjustment | (38 | ) | (57 | ) | (43 | ) | Page 9 | |||||||||
One off AIFRS mismatch | (46 | ) | — | — | Page 9 | |||||||||||
Net profit after tax – statutory basis | 2,191 | 1,929 | 1,999 | Page 9 | ||||||||||||
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 74 | ||||||||||||||||||||
Average interest earning assets | 306,868 | 282,553 | 267,169 | Page 74 | ||||||||||||||||||||
Average net assets(1) | 21,915 | 20,597 | 21,247 | Page 31 | ||||||||||||||||||||
Average minority interest(1) | 508 | 515 | 1,156 | Page 31 | ||||||||||||||||||||
Average preference shares & other equity instruments(1) | 939 | 470 | 1,130 | Page 31 | ||||||||||||||||||||
Average treasury shares(1) | (345 | ) | (381 | ) | (376 | ) | Page 82 | |||||||||||||||||
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 9 | ||||||||||||||||||||
Weighted average number of shares – fully diluted – statutory | 1,348 | 1,336 | 1,324 | — | ||||||||||||||||||||
Weighted average number of shares – cash | 1,284 | 1,285 | 1,281 | Page 9 | ||||||||||||||||||||
Weighted average number of shares – fully diluted – cash | 1,357 | 1,344 | 1,333 | — | ||||||||||||||||||||
Dividends per share (cents) | 107 | 130 | 94 | Page 9 | ||||||||||||||||||||
No. of shares at end of period (excluding treasury shares deduction – millions) | 1,290 | 1,283 | 1,289 | Page 82 | ||||||||||||||||||||
Average funds under administration | 158,010 | 147,684 | 130,179 | Page 22 | ||||||||||||||||||||
Operating income – internal | 5 | 4 | 5 | Page 22 | ||||||||||||||||||||
Average inforce premiums(1) | 1,318 | 1,220 | 1,241 | Page 26 | ||||||||||||||||||||
Net assets | 22,487 | 21,343 | 19,850 | Page 31 | ||||||||||||||||||||
Total intangible assets | 7,846 | 7,809 | 7,740 | Page 31 | ||||||||||||||||||||
Minority interests | 508 | 508 | 523 | Page 31 | ||||||||||||||||||||
Other equity instruments | 939 | 939 | — | Page 31 | ||||||||||||||||||||
Tier One capital | 16,553 | 16,354 | 15,290 | Page 79 | ||||||||||||||||||||
Deferred income tax | 39 | — | — | Page 79 | ||||||||||||||||||||
Equity investments in other companies | 820 | — | — | Page 79 | ||||||||||||||||||||
Eligible loan capital | 263 | 281 | 317 | Page 79 | ||||||||||||||||||||
Preference share capital | — | — | 687 | |||||||||||||||||||||
Other equity instruments | 3,522 | 3,659 | 1,573 | Page 80 | ||||||||||||||||||||
Minority interests (net of minority interest component deducted from Tier One capital) | 508 | 508 | 523 | Page 80 | ||||||||||||||||||||
Investment in non consolidated subsidiaries (net of Intangible component deducted from Tier One capital) | 283 | 2,012 | 1,918 | Page 80 | ||||||||||||||||||||
Other deductions | 166 | 151 | 130 | Page 80 | ||||||||||||||||||||
Transitional Tier One capital relief granted on adoption of AIFRS | 1,641 | — | — | Page 80 | ||||||||||||||||||||
Risk-weighted assets | 234,569 | 216,438 | 202,667 | Page 81 | ||||||||||||||||||||
(1) | Average of opening & closing balance. |
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 — statutory basis (cents) | 169.9 | 153.0 | 146.4 | |||||||||
Net profit after tax — statutory | 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 — statutory 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 | |||||||||
NPAT (“statutory 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 — statutory 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 | |||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 91
Half Year Ended | ||||||||||||
31/12/06 | 30/06/06 | 31/12/05 | ||||||||||
Ratios Output Summary | $M | $M | $M | |||||||||
Productivity | ||||||||||||
Banking expense to income ratio | ||||||||||||
Expenses | 2,354 | 2,298 | 2,260 | |||||||||
Banking Income | 5,163 | 4,850 | 4,700 | |||||||||
Expense to Income — cash basis (%) | 45.6 | 47.4 | 48.1 | |||||||||
Funds management expenses to average FUA ratio | ||||||||||||
Expenses | 567 | 530 | 459 | |||||||||
Average funds under administration | 158,010 | 147,684 | 130,179 | |||||||||
Expenses to average FUA — cash basis (%) | 0.71 | 0.72 | 0.70 | |||||||||
Insurance expenses to average inforce premiums ratio | ||||||||||||
Operating expenses | 223 | 199 | 248 | |||||||||
Operating expenses — internal | 5 | 4 | 5 | |||||||||
Total expenses | 228 | 203 | 253 | |||||||||
Average inforce premiums | 1,318 | 1,220 | 1,241 | |||||||||
Expenses to average inforce premiums — cash basis (%) | 34.3 | 33.6 | 40.5 | |||||||||
Operating expenses — external | 223 | 199 | 248 | |||||||||
Operating expenses — internal | 5 | 4 | 5 | |||||||||
Total expenses | 228 | 203 | 253 | |||||||||
Average inforce premiums | 1,318 | 1,220 | 1,241 | |||||||||
Expenses to average inforce premiums — statutory basis (%) | 34.3 | 33.6 | 40.5 | |||||||||
Net Tangible Assets (NTA) per share | ||||||||||||
Net assets | 22,487 | 21,343 | 19,850 | |||||||||
Less: | ||||||||||||
Intangible assets | (7,846 | ) | (7,809 | ) | (7,740 | ) | ||||||
Minority interests | (508 | ) | (508 | ) | (523 | ) | ||||||
Other equity instruments | (939 | ) | (939 | ) | — | |||||||
Total net tangible assets | 13,194 | 12,087 | 11,587 | |||||||||
No of shares at end of period (M) | 1,290 | 1,283 | 1,289 | |||||||||
Net tangible assets (NTA) per share ($) | 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 | |||||||||
92 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 — statutory | $M | 9 | 2,210 | 1,967 | 1,875 | 12 | 18 | |||||||||||||||||||||
Net profit after tax — cash basis | $M | 9 | 2,271 | 1,992 | 2,061 | 14 | 10 | |||||||||||||||||||||
Defined benefit superannuation plan income/(expense) — after tax | $M | 9 | 4 | (6 | ) | (19 | ) | large | large | |||||||||||||||||||
Treasury shares valuation adjustment — after tax | $M | 9 | (38 | ) | (57 | ) | (43 | ) | 33 | 12 | ||||||||||||||||||
One off AIFRS mismatch | $M | 9 | (46 | ) | — | — | — | — | ||||||||||||||||||||
Net profit after tax — statutory | $M | 9 | 2,191 | 1,929 | 1,999 | 14 | 10 | |||||||||||||||||||||
Earnings per share — cash basis — basic (cents) | cents | 9 | 174.7 | 154.9 | 160.9 | 13 | 9 | |||||||||||||||||||||
Dividends per share | cents | 9 | 107 | 130 | 94 | (18 | ) | 14 | ||||||||||||||||||||
Dividend pay-out ratio — cash basis (adjusted for sale of Hong Kong Insurance Business) | % | 9 | 61.5 | 83.7 | 63.2 | large | (170)bpts | |||||||||||||||||||||
Tier One capital | % | 79 | 7.06 | 7.56 | 7.54 | (50)bpts | (48)bpts | |||||||||||||||||||||
Total capital | % | 79 | 9.78 | 9.66 | 9.81 | 12bpts | (3)bpts | |||||||||||||||||||||
Adjusted common equity | % | 79 | 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 | % | 9 | 22.3 | 20.8 | 21.7 | 150bpts | 60bpts | |||||||||||||||||||||
Return on equity — statutory | % | — | 21.7 | 20.5 | 19.7 | 120bpts | 200bpts | |||||||||||||||||||||
Weighted average number of shares — statutory | M | 9 | 1,276 | 1,277 | 1,273 | — | — | |||||||||||||||||||||
Net tangible assets per share | $ | 92 | 10.23 | 9.42 | 8.99 | 9 | 14 | |||||||||||||||||||||
Banking | ||||||||||||||||||||||||||||
Net profit after tax — statutory | $M | 12 | 1,867 | 1,638 | 1,589 | 14 | 17 | |||||||||||||||||||||
Net profit after tax — cash basis | $M | 12 | 1,867 | 1,638 | 1,589 | 14 | 17 | |||||||||||||||||||||
Net Interest Income | $M | 12 | 3,485 | 3,259 | 3,255 | 7 | 7 | |||||||||||||||||||||
Net Interest Margin | % | 12 | 2.22 | 2.29 | 2.39 | (7)bpts | (17)bpts | |||||||||||||||||||||
Other banking income | $M | 12 | 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 — statutory | % | 12 | 45.6 | 47.4 | 48.1 | 4 | 5 | |||||||||||||||||||||
Average interest earning assets | $M | 10 | 306,868 | 282,553 | 267,169 | 9 | 15 | |||||||||||||||||||||
Average interest earning liabilities | $M | 10 | 286,548 | 263,203 | 247,129 | 9 | 16 | |||||||||||||||||||||
Loan impairment expense | $M | 12 | 195 | 210 | 188 | 7 | (4 | ) | ||||||||||||||||||||
Loan impairment expense to risk-weighted assets (annual) | % | 14 | 0.17 | 0.19 | 0.19 | (2)bpts | (2)bpts | |||||||||||||||||||||
Prudential general reserve for credit losses to risk weighted assets | % | 14 | 0.68 | 0.71 | 0.71 | (3)bpts | (3)bpts | |||||||||||||||||||||
Total provisions for impairment losses to gross impaired assets | % | 40 | 363.9 | 380.7 | 314.1 | large | large | |||||||||||||||||||||
Individually assessed provisions for impairment to Gross Impaired Assets | % | 40 | 50.6 | 52.5 | 45.2 | (190)bpts | 540bpts | |||||||||||||||||||||
Risk weighted assets | $M | 81 | 234,569 | 216,438 | 202,667 | 8 | 16 | |||||||||||||||||||||
Funds Management | ||||||||||||||||||||||||||||
Net profit after tax — statutory | $M | 22 | 232 | 217 | 183 | 7 | 27 | |||||||||||||||||||||
Net profit after tax — cash basis | $M | 22 | 235 | 222 | 188 | 6 | 25 | |||||||||||||||||||||
Shareholder investment returns | $M | 22 | 4 | 7 | 7 | (43 | ) | (43 | ) | |||||||||||||||||||
Average funds under administration | $M | 22 | 158,010 | 147,684 | 130,179 | 7 | 21 | |||||||||||||||||||||
Net inflows | $M | 22 | 2,076 | 8,135 | 2,695 | (74 | ) | (23 | ) | |||||||||||||||||||
Income to average funds under administration | % | 22 | 1.13 | 1.14 | 1.10 | (1)bpt | 3bpts | |||||||||||||||||||||
Expenses to average funds under administration | % | 22 | 0.71 | 0.72 | 0.70 | 1 | (1 | ) | ||||||||||||||||||||
Insurance | ||||||||||||||||||||||||||||
Net profit after tax — statutory | $M | 25 | 111 | 112 | 103 | (1 | ) | 8 | ||||||||||||||||||||
Net profit after tax — cash basis | $M | 25 | 169 | 132 | 284 | 28 | (40 | ) | ||||||||||||||||||||
Shareholder investment returns | $M | 25 | 81 | 30 | 202 | large | (60 | ) | ||||||||||||||||||||
Inforce premiums | $M | 26 | 1,412 | 1,223 | 1,216 | 15 | 16 | |||||||||||||||||||||
Expenses to Average Inforce premiums — statutory | % | 25 | 34.3 | 33.6 | 40.5 | (2 | ) | 15 | ||||||||||||||||||||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 93
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 | |||||||||||||
94 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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. | |
Cash Basis | Before defined benefit superannuation plan expense and treasury share valuation adjustment and one-off AIFRS hedging mismatch (refer to Note 2, to the Financial Statements, page 36). | |
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 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 distributions 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. | |
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 95
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 | CBA Term Personal Lending + Margin Lending net balances + Personal Leasing + Revolving credit | |
HouseholdLending | Total Market Term Personal Lending + Margin Lending + Personal Leasing + Revolving credit from APRA | |
Business | ||
CBA business lending and credit (specific ‘business lending’ categories in lodged APRA returns — 320.0, 320.1 and 320.4) | ||
Business Lending (RBA) | 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 Australian 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 Australian 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 | 12 months rolling average of total value of CommSee equities trades | |
(CommSec) | 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. |
96 Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation)
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 | Total funds in FirstChoice platform | |
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 inforce premium of all CBA Group Australian life insurance companies | |
(Total Risk) | 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) | ||
Commonwealth Bank of Australia Profit Announcement (U.S. version — with U.S. GAAP reconciliation) 97