Commonwealth Bank of Australia Half Year 2026 Commonwealth Bank of Australia Earnings Call | AllMind AI Earnings | AllMind AI
Half Year 2026 Commonwealth Bank of Australia Earnings Call
Speaker #1: Hello, and welcome to the results briefing for the Commonwealth Bank as of 31 December 2025. I'm Melanie Kirk, and I'm Head of Investor Relations. Thank you for joining us.
Melanie Kirk: Hello, and welcome to the Results Briefing for the Commonwealth Bank of Australia for the half-year ended 31 December 2025. I'm Melanie Kirk, and I'm Head of Investor Relations. Thank you for joining us. For this briefing, we will have presentations from our CEO, Matt Comyn, with an overview of the results and an update on the business. Our CFO, Alan Docherty, will provide details of the results, and Matt will then provide an outlook and summary. The presentations will be followed by the opportunity for analysts and investors to ask questions. I'll now hand over to Matt. Thank you, Matt.
Melanie Kirk: Hello, and welcome to the Results Briefing for the Commonwealth Bank of Australia for the half-year ended 31 December 2025. I'm Melanie Kirk, and I'm Head of Investor Relations. Thank you for joining us. For this briefing, we will have presentations from our CEO, Matt Comyn, with an overview of the results and an update on the business. Our CFO, Alan Docherty, will provide details of the results, and Matt will then provide an outlook and summary. The presentations will be followed by the opportunity for analysts and investors to ask questions. I'll now hand over to Matt. Thank you, Matt.
Speaker #1: Presentations from our CEO, Matt Comyn, with an overview of the results and an update on the business. Our CFO, Alan Docherty, will provide details of the results, and Matt Levan will provide an outlook and summary.
Speaker #1: The presentations will be followed by the opportunity for analysts and investors to ask questions. I'll now hand over to Matt. Thank you, Matt.
Speaker #2: Thanks very much, Mel, and good morning, everyone. It's great to be with you today to present the bank's half-year results. We recognize the cost of living pressures, global uncertainty, and rapid change are weighing on many Australians.
Alan Docherty: Thanks very much, Mel, and good morning, everyone. It's great to be with you today to present the bank's half-year results. We recognize the cost-of-living pressures, global uncertainty, and rapid change are weighing on many Australians. In this environment, we've remained focused on supporting and serving our customers. That focus has delivered disciplined growth across our core customer segments. Cash net profit increased by 6% on the prior comparative period, and earnings per share increased by AUD 0.19. We maintained strong liquidity, funding, and capital positions, and our operating performance and capital position has allowed the board to declare a fully franked dividend of AUD 2.35, up AUD 0.10 on the prior corresponding period. This marks the 11th consecutive period of DRP neutralization. There are two features of this result that stand out. The first is the market context.
Half Year 2026 Commonwealth Bank of Australia Earnings Call
Matt Comyn: Thanks very much, Mel, and good morning, everyone. It's great to be with you today to present the bank's half-year results. We recognize the cost-of-living pressures, global uncertainty, and rapid change are weighing on many Australians. In this environment, we've remained focused on supporting and serving our customers. That focus has delivered disciplined growth across our core customer segments. Cash net profit increased by 6% on the prior comparative period, and earnings per share increased by AUD 0.19. We maintained strong liquidity, funding, and capital positions, and our operating performance and capital position has allowed the board to declare a fully franked dividend of AUD 2.35, up AUD 0.10 on the prior corresponding period. This marks the 11th consecutive period of DRP neutralization. There are two features of this result that stand out. The first is the market context.
Speaker #2: In this environment, we've remained focused on supporting and serving our customers. That focus has delivered disciplined growth across our core customer segments. Cash net profit increased by 6% on the prior comparative period, and earnings per share increased by $0.19.
Speaker #2: We maintained strong liquidity, funding, and capital positions. And our operating performance and capital position have allowed the Board to declare a fully franked dividend of $2.35, up 10 cents on the prior corresponding period.
Speaker #2: This marks the 11th consecutive period of DRP neutralization. There are two features of this result that stand out. The first is the market context.
Speaker #2: We've seen high credit growth, low loan losses, supportive funding markets, and intense competition. The second, which is a key strength, has been maintaining stable margins while growing volume at or above system across all major segments.
Alan Docherty: We've seen high credit growth, low loan losses, supportive funding markets, and intense competition. The second, which is a key strength, has been maintaining stable margins while growing volume at or above system across all major segments. Over the past 12 months, mortgage balances grew by AUD 45 billion, or 7%, and business lending grew by 12%, 0.3 times system. Deposit balances increased by AUD 44 billion in the half-year, growth domestic deposit and lending balance growth in a half-year of 2008. Australia is currently experiencing relatively strong nominal growth and private sector demand. In this environment, banks play a critical role in supporting credit growth for productive investment while maintaining unquestionably strong capital positions. Doing this sustainably requires profitable banks that can generate capital organically to support the economy. The last time credit growth was at this level, apart from a brief period during COVID, returns across the industry were materially higher.
Matt Comyn: We've seen high credit growth, low loan losses, supportive funding markets, and intense competition. The second, which is a key strength, has been maintaining stable margins while growing volume at or above system across all major segments. Over the past 12 months, mortgage balances grew by AUD 45 billion, or 7%, and business lending grew by 12%, 0.3 times system. Deposit balances increased by AUD 44 billion in the half-year, growth domestic deposit and lending balance growth in a half-year of 2008. Australia is currently experiencing relatively strong nominal growth and private sector demand. In this environment, banks play a critical role in supporting credit growth for productive investment while maintaining unquestionably strong capital positions. Doing this sustainably requires profitable banks that can generate capital organically to support the economy.
Speaker #2: Over the past 12 months, mortgage balances grew by $45 billion, or 7%, and business lending grew by 12.3 times system. Deposit balances increased by $44 billion in the half-year.
Speaker #2: Domestic deposit and lending balance growth in the half-year of 2008. Australia is currently experiencing relatively strong nominal growth and private sector demand. In this environment, banks play a critical role in supporting credit growth for productive investment while maintaining unquestionably strong capital positions.
Speaker #2: Doing this sustainably requires profitable banks that can generate capital organically to support the economy. The last time credit growth was at this level, apart from a brief period during COVID, returns across the industry were materially higher.
Matt Comyn: The last time credit growth was at this level, apart from a brief period during COVID, returns across the industry were materially higher. In normal conditions, such an environment would favor disciplined competition so that scarce capital is deployed where it earns an appropriate return. However, the competitive landscape is materially shifting due to differing business models, regulatory settings and architecture, customer offerings, and return hurdles. Against this backdrop, we believe CBA is uniquely positioned to adapt and perform strongly. Our deep customer relationships and franchise strength allows us to compete effectively and profitably. That profitability allows us to support higher growth across the economy, invest to improve the customer experience, and deliver consistent returns for our shareholders. Disciplined growth and margin management drove operating income growth of 6.6%; operating expenses increased by 5.5%, excluding restructuring and notable items.
Speaker #2: In normal conditions, such an environment would favor disciplined competition so that scarce capital is deployed where it earns return. However, the competitive and appropriate landscape is materially shifting, due to differing business models, regulatory settings and architecture, customer offerings, and return hurdles.
Alan Docherty: In normal conditions, such an environment would favor disciplined competition so that scarce capital is deployed where it earns an appropriate return. However, the competitive landscape is materially shifting due to differing business models, regulatory settings and architecture, customer offerings, and return hurdles. Against this backdrop, we believe CBA is uniquely positioned to adapt and perform strongly. Our deep customer relationships and franchise strength allows us to compete effectively and profitably. That profitability allows us to support higher growth across the economy, invest to improve the customer experience, and deliver consistent returns for our shareholders. Disciplined growth and margin management drove operating income growth of 6.6%; operating expenses increased by 5.5%, excluding restructuring and notable items. This reflected inflationary pressures and higher investment in technology, resilience, and our frontline teams to improve customer experience. Credit conditions remained very benign, contributing 6.1% cash profit growth.
Speaker #2: Against this backdrop, we believe CBA is uniquely positioned to adapt and perform strongly. Our deep customer relationships and franchise strength allow us to compete effectively and profitably.
Speaker #2: That profitability allows us to support higher growth across the economy, invest to improve the customer experience, and deliver consistent returns for our shareholders. Disciplined growth and margin management drove operating income growth of 6.6%. Operating expenses increased by 5.5%, excluding restructuring and notable items.
Matt Comyn: This reflected inflationary pressures and higher investment in technology, resilience, and our frontline teams to improve customer experience. Credit conditions remained very benign, contributing 6.1% cash profit growth. The performance and long-term health of our franchise is underpinned by a simple relationship-led model. Deep, trusted customer relationships drive more frequent and meaningful engagement. That engagement provides deeper insights into customer needs, enabling us to deliver superior customer experiences. Over time, this creates enduring value for customers and sustainable returns for our shareholders. This model has long underpinned our leadership in retail banking and, over the past year, over the past several years, has accelerated growth in our business bank. Technology continues to amplify this advantage, enabling more personalized, timely, and scalable customer engagement. Our financial performance reflects customer focus, disciplined execution, and investment in our franchise.
Speaker #2: This reflected inflationary pressures and higher investment in technology, resilience, and our frontline teams to improve customer experience. Credit conditions remained very benign, contributing 6.1% cash profit growth.
Speaker #2: The performance and long-term health of our franchise is underpinned by a simple relationship-led model. Deep, trusted customer relationships drive more frequent and meaningful engagement.
Alan Docherty: The performance and long-term health of our franchise is underpinned by a simple relationship-led model. Deep, trusted customer relationships drive more frequent and meaningful engagement. That engagement provides deeper insights into customer needs, enabling us to deliver superior customer experiences. Over time, this creates enduring value for customers and sustainable returns for our shareholders. This model has long underpinned our leadership in retail banking and, over the past year, over the past several years, has accelerated growth in our business bank. Technology continues to amplify this advantage, enabling more personalized, timely, and scalable customer engagement. Our financial performance reflects customer focus, disciplined execution, and investment in our franchise. We track the strength of our customer relationships through Net Promoter Score, and this remains an important indicator of trust and advocacy. We currently hold leading NPS positions among major banks in consumer and institutional banking.
Speaker #2: That engagement provides deeper insights into customer needs and enables us to deliver superior customer experiences. Over time, this creates enduring value for customers and sustainable returns for our shareholders.
Speaker #2: This model has long underpinned our leadership in retail banking, and over the past year—over the past several years—has accelerated growth in our business bank.
Speaker #2: Technology continues to amplify this advantage, enabling more personalized, timely, and scalable customer engagement. Our financial performance reflects customer focus, disciplined execution, and investment in our franchise.
Matt Comyn: We track the strength of our customer relationships through Net Promoter Score, and this remains an important indicator of trust and advocacy. We currently hold leading NPS positions among major banks in consumer and institutional banking. Following 15 months at number one, we dropped to the second position in business banking in the half. Operationally, this is translating into scale and momentum across the group. On average, each week, we settle more than 3,000 home loan purchases, lend around AUD 900 million to businesses, and process almost 150 million payments, and alert customers around 280,000 times to suspicious card activity. We continue to build scale and depth of primary customer relationships, which underpins long-term franchise health. We've consciously increased investment in data, technology, and AI to improve customer experience, safety, security, and operational resilience.
Speaker #2: We track the strength of our customer relationships through Net Promoter Score, and this remains an important indicator of trust and advocacy. We currently hold leading NPS positions among major banks and in consumer and institutional banking.
Speaker #2: Following 15 months at number one, we dropped to the second position in business banking in the half. Operationally, this is translating into scale and momentum across the group.
Alan Docherty: Following 15 months at number one, we dropped to the second position in business banking in the half. Operationally, this is translating into scale and momentum across the group. On average, each week, we settle more than 3,000 home loan purchases, lend around AUD 900 million to businesses, and process almost 150 million payments, and alert customers around 280,000 times to suspicious card activity. We continue to build scale and depth of primary customer relationships, which underpins long-term franchise health. We've consciously increased investment in data, technology, and AI to improve customer experience, safety, security, and operational resilience. The retail bank has performed well with pre-provision profit growth of 5%. We've maintained the leading Net Promoter Score for 38 consecutive months. Retail MFI share has increased slightly to 33.5% but remains below its 35% peak.
Speaker #2: On average, each week, we settle more than 3,000 home loan purchases, lend around $900 million to businesses, and process almost 150 million payments.
Speaker #2: And alert customers around 280,000 times to suspicious card activity. We continue to build scale and depth of primary customer relationships, which underpins long-term franchise health.
Speaker #2: We've consciously increased investment in data, technology, and AI to improve customer experience, safety, security, and operational resilience. The retail bankers perform well, with pre-provisioned profit growth of 5%.
Matt Comyn: The retail bank has performed well with pre-provision profit growth of 5%. We've maintained the leading Net Promoter Score for 38 consecutive months. Retail MFI share has increased slightly to 33.5% but remains below its 35% peak. Customer engagement remains a core strength, with 9.4 million CommBank app users and 14 million daily logins. We now hold 12 million retail transaction accounts, a 35% increase since the start of COVID, and an increase of 585,000 in the past year. As a result, our deposit growth has been strong. Home loan balances increased by 7% in the past year to AUD 622 billion. 97% of these customers hold a transaction account with us. Digitization and technology continue to drive performance in home lending. 70% of proprietary home loan applications are auto-decisioned on the same day.
Speaker #2: We've maintained the leading Net Promoter Score for 38 consecutive months. Retail MFI share has increased slightly to 33.5%, but remains below its 35% peak.
Speaker #2: Customer engagement remains a core strength, with 9.4 million ComBank app users and 14 million daily logins. We now hold 12 million retail transaction accounts, a 35% increase since the start of COVID, and an increase of 585,000 in the past year.
Alan Docherty: Customer engagement remains a core strength, with 9.4 million CommBank app users and 14 million daily logins. We now hold 12 million retail transaction accounts, a 35% increase since the start of COVID, and an increase of 585,000 in the past year. As a result, our deposit growth has been strong. Home loan balances increased by 7% in the past year to AUD 622 billion. 97% of these customers hold a transaction account with us. Digitization and technology continue to drive performance in home lending. 70% of proprietary home loan applications are auto-decisioned on the same day. We're focused on continuing to strengthen our MFI share and investing in AI-enabled digital experiences. The business bank has had another period of strong performance. Pre-provision profit growth was 8%, and cash profit growth was 14%. MFI share increased to 26.9%, which is a 310 basis point increase since the start of COVID.
Speaker #2: As a result, our deposit growth has been strong. Home loan balances increased by 7% in the past year, to $622 billion. 97% of these customers hold a transaction account with us.
Speaker #2: Digitization and technology continue to drive performance in home lending. Seventy percent of proprietary home loan applications are auto-decisioned on the same day. We're focused on continuing to strengthen our MFI share and investing in AI-enabled digital experiences.
Matt Comyn: We're focused on continuing to strengthen our MFI share and investing in AI-enabled digital experiences. The business bank has had another period of strong performance. Pre-provision profit growth was 8%, and cash profit growth was 14%. MFI share increased to 26.9%, which is a 310 basis point increase since the start of COVID. We added 85,000 transaction accounts in the past year, which is a 7% increase. The business bank is now the Commonwealth Bank's largest source of transactional deposits. We grew lending at 1.3-time system, increasing balances by AUD 18 billion in the year. Business banking lending balances have increased by 87%, or AUD 78 billion, in the past six years, supporting growth and jobs in our economy. Approximately 90% of business loans are linked to a CBA transaction account, reflecting the depth of our primary relationships.
Speaker #2: The business bank has had another period of strong performance. Pre-provision profit growth was 8%, and cash profit growth was 14%. MFI share increased to 26.9%, which is a 310 basis point increase since the start of COVID.
Speaker #2: We added 85,000 transaction accounts in the past year, which is a 7% increase. And the Business Bank is now the Commonwealth Bank's largest source of transactional deposits.
Alan Docherty: We added 85,000 transaction accounts in the past year, which is a 7% increase. The business bank is now the Commonwealth Bank's largest source of transactional deposits. We grew lending at 1.3-time system, increasing balances by AUD 18 billion in the year. Business banking lending balances have increased by 87%, or AUD 78 billion, in the past six years, supporting growth and jobs in our economy. Approximately 90% of business loans are linked to a CBA transaction account, reflecting the depth of our primary relationships. This supports credit quality with loan losses of six basis points in the half. It also allows us to use data and automation to substantially improve lending and servicing processes. For small businesses, we've doubled the volume of loans auto-approved through BizExpress over the past two years and have reduced annual loan maintenance activity by 85%.
Speaker #2: We grew lending at 1.3 times system, increasing balances by $18 billion in the year. Business banking lending balances have increased by 87%, or $78 billion, in the past six years.
Speaker #2: Supporting growth and jobs in our economy. Approximately 90% of business loans are linked to a CBA transaction account, reflecting the depth of our primary relationships.
Matt Comyn: This supports credit quality with loan losses of six basis points in the half. It also allows us to use data and automation to substantially improve lending and servicing processes. For small businesses, we've doubled the volume of loans auto-approved through BizExpress over the past two years and have reduced annual loan maintenance activity by 85%. We also launched a national AI, cybersecurity, and digital capability initiative, supporting up to 1 million small businesses to lift productivity and competitiveness. The combination of deep customer relationships and prudent lending growth is delivering sustained earnings performance. Our institutional business is also performing well, with pre-provision profit increasing by 13%. We've regained the number one position in NPS, supported by improvements in client experience and execution.
Speaker #2: This supports credit quality, with loan losses of 6 basis points in the half. It also allows us to use data and automation to substantially improve lending and servicing processes.
Speaker #2: For small businesses, we've doubled the volume of loans auto-approved through BizExpress over the past two years, and have reduced annual loan maintenance activity by 85%.
Speaker #2: We also launched a national AI cybersecurity and digital capability initiative, supporting up to 1 million small businesses to lift productivity and competitiveness. The combination of deep customer relationships and prudent lending growth is delivering sustained earnings performance.
Alan Docherty: We also launched a national AI, cybersecurity, and digital capability initiative, supporting up to 1 million small businesses to lift productivity and competitiveness. The combination of deep customer relationships and prudent lending growth is delivering sustained earnings performance. Our institutional business is also performing well, with pre-provision profit increasing by 13%. We've regained the number one position in NPS, supported by improvements in client experience and execution. Our institutional bank plays an important role in providing AUD 64 billion in net deposit balances and supporting markets activity. We've seen growth in new transaction banking mandates, enabling the institutional bank to further support the group in deposit funding. The markets business has had a particularly strong half. We led the market in debt capital market performance and last year topped the Bloomberg Combined Lead table. In New Zealand, ASB performed well with operating income growth of 8%.
Speaker #2: Our institutional business is also performing well, with pre-provisioned profit increasing by 13%. We've regained the number one position in NPS, supported by improvements in client experience and execution.
Matt Comyn: Our institutional bank plays an important role in providing AUD 64 billion in net deposit balances and supporting markets activity. We've seen growth in new transaction banking mandates, enabling the institutional bank to further support the group in deposit funding. The markets business has had a particularly strong half. We led the market in debt capital market performance and last year topped the Bloomberg Combined Lead table. In New Zealand, ASB performed well with operating income growth of 8%. ASB is the highest reputation score of the major banks in New Zealand and has been a digital bank of the year for the past four years. ASB saw 1.3 times system growth in home lending, business, and rural lending.
Speaker #2: Our institutional bank plays an important role in providing $64 billion in net deposit balances and supporting market activity. We've seen growth in new transaction banking mandates, enabling the institutional bank to further support the group in deposit funding.
Speaker #2: The market’s business has had a particularly strong half. We led the market in debt capital market performance and last year topped the Bloomberg combined lead table.
Speaker #2: In New Zealand, ASB performed well with operating income growth of 8%. ASB has the highest reputation score of the major banks in New Zealand and has been Digital Bank of the Year for the past four years.
Alan Docherty: ASB is the highest reputation score of the major banks in New Zealand and has been a digital bank of the year for the past four years. ASB saw 1.3 times system growth in home lending, business, and rural lending. Deposits grew at 1.2 times system. Customer deposits and home lending balances have both increased by 41% in the last six years, by AUD 26 billion and AUD 24 billion, respectively. The credit environment remains benign. Troublesome and non-performing exposures decreased following upgrades or external refinancing activity. The number of home loan customers in hardship declined by 28% since June 2024, and we remain well-provisioned for a range of economic scenarios. We hold total provisions of AUD 6.3 billion, which is AUD 2.8 billion above our central economic scenario. Our balance sheet remains strong, with 79% deposit funding. Our weighted average maturity of long-term funding is 5.2 years, and liquid assets are AUD 199 billion.
Speaker #2: ASB saw 1.3 times system growth in home lending, and business and rural lending. Deposits grew at 1.2 times system. Customer deposits and home lending balances have both increased by 41% in the last six years, by $26 billion and $24 billion, respectively.
Matt Comyn: Deposits grew at 1.2 times system. Customer deposits and home lending balances have both increased by 41% in the last six years, by AUD 26 billion and AUD 24 billion, respectively. The credit environment remains benign. Troublesome and non-performing exposures decreased following upgrades or external refinancing activity. The number of home loan customers in hardship declined by 28% since June 2024, and we remain well-provisioned for a range of economic scenarios. We hold total provisions of AUD 6.3 billion, which is AUD 2.8 billion above our central economic scenario. Our balance sheet remains strong, with 79% deposit funding. Our weighted average maturity of long-term funding is 5.2 years, and liquid assets are AUD 199 billion.
Speaker #2: The credit environment remains benign. Troublesome and non-performing exposures decreased, following upgrades or external refinancing activity. The number of home loan customers in hardship declined by 28% since June 2024.
Speaker #2: And we remain well provisioned for a range of economic scenarios. We hold total provisions of $2.8 billion, $6.3 billion, which is above our central economic scenario.
Speaker #2: Our balance sheet remains strong, with 79% deposit funding. Our weighted average maturity of long-term funding is 5.2 years, and liquid assets are $199 billion.
Speaker #2: Our capital ratio of 12.3% is $10 billion above minimum regulatory requirements. A strong balance sheet allows us to invest for the long term and respond to any deterioration in market conditions.
Alan Docherty: Our capital ratio of 12.3% is AUD 10 billion above minimum regulatory requirements. A strong balance sheet allows us to invest for the long term and respond to any deterioration in market conditions. We've seen record inflows of deposits in the half. We've also seen a AUD 15 billion increase in redraw balances and offset accounts. Customers having surplus funds available is a significant predictor of AREA's performance, and so this behavior has a positive capital impact. 87% of home loan customers are now in advance of their scheduled repayments, on average 35 payments in advance. When adjusted for redraw and offset savings, household debt has now returned to levels not seen since 2015. The transmission of monetary policy in Australia means that our banks pay very competitive interest rates on at-call household deposits compared with other markets.
Matt Comyn: Our capital ratio of 12.3% is AUD 10 billion above minimum regulatory requirements. A strong balance sheet allows us to invest for the long term and respond to any deterioration in market conditions. We've seen record inflows of deposits in the half. We've also seen a AUD 15 billion increase in redraw balances and offset accounts. Customers having surplus funds available is a significant predictor of AREA's performance, and so this behavior has a positive capital impact. 87% of home loan customers are now in advance of their scheduled repayments, on average 35 payments in advance. When adjusted for redraw and offset savings, household debt has now returned to levels not seen since 2015. The transmission of monetary policy in Australia means that our banks pay very competitive interest rates on at-call household deposits compared with other markets.
Speaker #2: We've seen record inflows of deposits in the half. We've also seen a $15 billion increase in redraw balances and offset accounts. Customers having surplus funds available is a significant predictor of arrears performance, and so this behavior has a positive capital impact.
Speaker #2: Eighty-seven percent of home loan customers are now in advance of their scheduled repayments, on average by 35 payments. When adjusted for redraw and offset savings, household debt has now returned to levels not seen since 2015.
Speaker #2: The transmission of monetary policy in Australia means that our banks pay very competitive interest rates on at-call household deposits compared with other markets. On average, at-call deposits in Australia attract an interest rate that is five times higher than in the US, and ten times higher than in Europe.
Alan Docherty: On average, at-call deposits in Australia attract an interest rate which is 5 times higher than in the US and 10 times higher than in Europe. We've seen a strengthening in the economy in the past 6 months, driven by consumer demand. Spend has been increasing across all customer age cohorts. Most age groups are broadly maintaining discretionary spending and increasing savings levels. GDP growth in mid-2026 was 2%, more than double the same period a year ago. Most noticeably, economic growth has shifted from being primarily driven by public demand to being driven by household consumption. Last week, we saw the Reserve Bank raise interest rates to 3.85% in response to inflation, which is running higher than the target band. Almost 1/3 of the increase in the CPI basket is driven by housing, with utilities a substantial contributor to that category.
Matt Comyn: On average, at-call deposits in Australia attract an interest rate which is 5 times higher than in the US and 10 times higher than in Europe. We've seen a strengthening in the economy in the past 6 months, driven by consumer demand. Spend has been increasing across all customer age cohorts. Most age groups are broadly maintaining discretionary spending and increasing savings levels. GDP growth in mid-2026 was 2%, more than double the same period a year ago. Most noticeably, economic growth has shifted from being primarily driven by public demand to being driven by household consumption. Last week, we saw the Reserve Bank raise interest rates to 3.85% in response to inflation, which is running higher than the target band.
Speaker #2: We've seen a strengthening in the economy in the past six months, driven by consumer demand. Spending has been increasing across all customer age cohorts.
Speaker #2: Most age groups are broadly maintaining discretionary spending and increasing savings levels. GDP growth in mid-2026 was 2%, more than double the same period a year ago.
Speaker #2: Most noticeably, economic growth has shifted from being primarily driven by public demand to being driven by household consumption. Last week, we saw the Reserve Bank raise interest rates to 3.85%.
Speaker #2: In response to inflation, which is running higher than the target band, almost one-third of the increase in the CPI basket is driven by housing, with utilities a substantial contributor to that category.
Matt Comyn: Almost 1/3 of the increase in the CPI basket is driven by housing, with utilities a substantial contributor to that category. Our purpose, building a brighter future for all, guides how we allocate capital, manage risk, and invest for the long term. It reflects our long-term commitment to Australia, our customers, and our communities. Some of the ways we're delivering on our purpose include significantly increasing funding for new residential housing development, delivering AUD 190 million in benefits to consumers through CommBank Yello, migrating our core banking system to the cloud to improve resilience, delivering 30% more technology changes, reducing critical incidents, and improving recovery times by 65%. We are rolling out new AI tools and training programs to our teams to build capability and deliver better customer experiences.
Speaker #2: Our purpose—building a brighter future for all—guides how we allocate capital, manage risk, and invest for the long term. It reflects our long-term commitment to Australia, our customers, and our communities.
Alan Docherty: Our purpose, building a brighter future for all, guides how we allocate capital, manage risk, and invest for the long term. It reflects our long-term commitment to Australia, our customers, and our communities. Some of the ways we're delivering on our purpose include significantly increasing funding for new residential housing development, delivering AUD 190 million in benefits to consumers through CommBank Yello, migrating our core banking system to the cloud to improve resilience, delivering 30% more technology changes, reducing critical incidents, and improving recovery times by 65%. We are rolling out new AI tools and training programs to our teams to build capability and deliver better customer experiences. We are maintaining our strong balance sheet settings, sending around 40,000 alerts a day to customers about suspicious activities, and deploying more than 2,900 AI bots to engage and disrupt scammers.
Speaker #2: Some of the ways we're delivering on our purpose include significantly increasing funding for new residential housing development, delivering $190 million in benefits to consumers through COMBANK YELLOW, migrating our core banking system to the cloud to improve resilience, delivering 30% more technology changes, reducing critical incidents 65%.
Speaker #2: And improving recovery times by rolling out new AI tools and training programs to our teams to build capability and deliver better customer experiences. And maintaining our strong balance sheet settings.
Matt Comyn: We are maintaining our strong balance sheet settings, sending around 40,000 alerts a day to customers about suspicious activities, and deploying more than 2,900 AI bots to engage and disrupt scammers. Importantly, our strong performance enables us to continue supporting our 18 million customers, protect communities, support Australia's economy, and invest for the long term. As cost of living pressures persist, we are providing targeted support to households under strain, including 63,000 tailored payment arrangements for customers most in need. We've supported more than 79,000 households to buy a home, including through dedicated support for first home buyers, and we lent AUD 25 billion to businesses, supporting growth, jobs, and economic activity. We're investing AUD 1 billion a year to help more people protect themselves from scams and fraud.
Speaker #2: We are sending around 40,000 alerts a day to customers about suspicious activities and deploying more than 2,900 AI bots to engage and disrupt scammers. Importantly, our strong performance enables us to continue supporting our 18 million customers, protect communities, support Australia's economy, and invest for the long term.
Alan Docherty: Importantly, our strong performance enables us to continue supporting our 18 million customers, protect communities, support Australia's economy, and invest for the long term. As cost of living pressures persist, we are providing targeted support to households under strain, including 63,000 tailored payment arrangements for customers most in need. We've supported more than 79,000 households to buy a home, including through dedicated support for first home buyers, and we lent AUD 25 billion to businesses, supporting growth, jobs, and economic activity. We're investing AUD 1 billion a year to help more people protect themselves from scams and fraud. Our strong balance sheet allows us to support customers and communities while delivering sustainable long-term returns for shareholders, including AUD 4.4 billion in dividends this half, benefiting more than 14 million Australians.
Speaker #2: As cost of living pressures persist, we are providing targeted support to households under strain, including 63,000 tailored payment arrangements for customers most in need.
Speaker #2: We supported more than 79,000 households to buy a home, including through dedicated support for first home buyers. And we lent $25 billion to businesses, supporting growth, jobs, and economic activity.
Speaker #2: We're investing $1 billion a year to help more people protect themselves from scams and fraud. Our strong balance sheet allows us to support customers and communities while delivering sustainable, long-term returns for shareholders, including $4.4 billion in dividends this half, benefiting more than 14 million Australians.
Matt Comyn: Our strong balance sheet allows us to support customers and communities while delivering sustainable long-term returns for shareholders, including AUD 4.4 billion in dividends this half, benefiting more than 14 million Australians. We will continue to support our customers, protect communities, and invest for the long term to provide strength and stability to the Australian economy. I'll now hand to Alan to take you through the result in more detail.
Speaker #2: We will continue to support our customers, protect communities, and invest for the long term to provide strength and stability to the Australian economy. I'll now hand to Alan to take you through the result in more detail.
Alan Docherty: We will continue to support our customers, protect communities, and invest for the long term to provide strength and stability to the Australian economy. I'll now hand to Alan to take you through the result in more detail. Thank you, Matt, and good morning, everyone. Starting with the results overview, we've set out the key aspects of our current operating context, how we are responding, and how those actions are contributing to the long-term strengthening of our franchise. At a macro level, we are seeing strong system growth in both credit and money supply. Competitive intensity within the banking sector remains elevated. Technological innovations continue at pace, and geopolitics remains a source of potential tail risks. Against that backdrop, our response has been deliberate and disciplined.
Alan Docherty: Thank you, Matt, and good morning, everyone. Starting with the results overview, we've set out the key aspects of our current operating context, how we are responding, and how those actions are contributing to the long-term strengthening of our franchise. At a macro level, we are seeing strong system growth in both credit and money supply. Competitive intensity within the banking sector remains elevated. Technological innovations continue at pace, and geopolitics remains a source of potential tail risks. Against that backdrop, our response has been deliberate and disciplined.
Speaker #2: Thank you, Matt. And good morning, everyone. Starting with the results overview, we've set out the key aspects of our current operating context, how we are responding, and how those actions are contributing to the long-term strengthening of our franchise.
Speaker #2: At a macro level, we are seeing strong system growth in both credit and money supply. Competitive intensity within the banking sector remains elevated. Technological innovations continue at pace.
Speaker #2: And geopolitics remains a source of potential tail risks. Against that backdrop, our response has been deliberate and disciplined. We have carefully managed volume and margin trade-offs.
Alan Docherty: We have carefully managed volume and margin trade-offs, continued to invest and extend our leadership in both technology and proprietary distribution, and maintained conservative balance sheet settings. This approach is yielding strong financial outcomes. Pre-provision profit growth is healthy. Our dividend per share continues to reflect the strong compositional quality of our earnings, and our balance sheet settings give us confidence in our ability to continue supporting customers, growing the franchise, and delivering sustainable returns to shareholders over the long term. This slide sets out the usual reconciliation between statutory and cash profits for the half. There were only modest movements in the usual non-cash items during the period. As such, both statutory and cash profits on a continuing operations basis totaled around AUD 5.4 billion.
Alan Docherty: We have carefully managed volume and margin trade-offs, continued to invest and extend our leadership in both technology and proprietary distribution, and maintained conservative balance sheet settings. This approach is yielding strong financial outcomes. Pre-provision profit growth is healthy. Our dividend per share continues to reflect the strong compositional quality of our earnings, and our balance sheet settings give us confidence in our ability to continue supporting customers, growing the franchise, and delivering sustainable returns to shareholders over the long term. This slide sets out the usual reconciliation between statutory and cash profits for the half. There were only modest movements in the usual non-cash items during the period. As such, both statutory and cash profits on a continuing operations basis totaled around AUD 5.4 billion.
Speaker #2: Continued to invest and extend our leadership in both technology and proprietary distribution, and maintained conservative balance sheet settings. This approach has yielded strong financial outcomes.
Speaker #2: Pre-provisioned profit growth is healthy. Our dividend per share continues to reflect the strong compositional quality of our earnings. And our balance sheet settings give us confidence in our ability to continue supporting customers, growing the franchise, and delivering sustainable returns to shareholders over the long term.
Speaker #2: This slide sets out the usual reconciliation between statutory and cash profits for the half. There were only modest movements in the usual non-cash items during the period.
Speaker #2: As such, both statutory and cash profits on a continuing operations basis totaled around $5.4 billion. Breaking down the components of that cash profit, operating income grew 6.6% year on year, as our investments in technology and proprietary distribution continue to yield strong operational outcomes.
Alan Docherty: Breaking down the components of that cash profit, operating income grew 6.6% year-over-year as our investments in technology and proprietary distribution continue to yield strong operational outcomes. That top-line performance allows us to continue to invest in the franchise, with underlying operating expenses increasing 5.5% on the prior comparative period. Notable expense items totaled AUD 170 million over the last six months, largely due to the settlement of a longstanding legal proceeding in New Zealand during the September quarter. Loan impairment expense was flat year-over-year and lower versus the second half, reflecting the benefits of our conservative settings and the resilience we continue to see in customer and portfolio credit quality. This resulted in growth in cash profits of a little over 6% on both the prior corresponding period and the second half of last year.
Alan Docherty: Breaking down the components of that cash profit, operating income grew 6.6% year-over-year as our investments in technology and proprietary distribution continue to yield strong operational outcomes. That top-line performance allows us to continue to invest in the franchise, with underlying operating expenses increasing 5.5% on the prior comparative period. Notable expense items totaled AUD 170 million over the last six months, largely due to the settlement of a longstanding legal proceeding in New Zealand during the September quarter. Loan impairment expense was flat year-over-year and lower versus the second half, reflecting the benefits of our conservative settings and the resilience we continue to see in customer and portfolio credit quality. This resulted in growth in cash profits of a little over 6% on both the prior corresponding period and the second half of last year.
Speaker #2: That top-line performance allows us to continue to invest in the franchise, with underlying operating expenses increasing 5.5% on the prior comparative. Expense items totaled $170 million over the last six months, largely due to the settlement of a long-standing legal proceeding in New Zealand during the September quarter.
Speaker #2: Loan and permanent expense was flat year on year and lower versus the second half, reflecting the benefits of our conservative settings and the resilience we continue to see in customer and portfolio credit quality.
Speaker #2: This resulted in growth in cash profits of a little over 6% on both the prior corresponding period and the second half of last year.
Speaker #2: It's worth noting that the effective tax rate for the half was 30.3%. Looking ahead, you can assume that will settle closer to 30% for the 2026 financial year.
Alan Docherty: It's worth noting that the effective tax rate for the half was 30.3%. Looking ahead, you can assume that will settle closer to 30% for the 2026 financial year. On operating income, we delivered growth of 6.6% over the prior comparative period. Net interest income increased strongly, up AUD 761 million, supported by profitable above-system growth in lending and deposits. Other operating income also contributed, growing AUD 163 million over that period, assisted by one-off gains. This slide sets out some of the drivers of long-term franchise strength that we have been targeting: deeper customer relationships, deposit-led growth in our core segments that underpins and precedes lending growth, and productivity improvements within our front-line teams. Our retail bank continues to build foundational banking relationships, adding 3 million net new transaction account customers over the past five years.
Alan Docherty: It's worth noting that the effective tax rate for the half was 30.3%. Looking ahead, you can assume that will settle closer to 30% for the 2026 financial year. On operating income, we delivered growth of 6.6% over the prior comparative period. Net interest income increased strongly, up AUD 761 million, supported by profitable above-system growth in lending and deposits. Other operating income also contributed, growing AUD 163 million over that period, assisted by one-off gains. This slide sets out some of the drivers of long-term franchise strength that we have been targeting: deeper customer relationships, deposit-led growth in our core segments that underpins and precedes lending growth, and productivity improvements within our front-line teams. Our retail bank continues to build foundational banking relationships, adding 3 million net new transaction account customers over the past five years.
Speaker #2: On operating income, we delivered growth of 6.6% over the prior comparative period. Net interest income increased strongly, up $761 million, supported by profitable above-system growth in lending and deposits.
Speaker #2: Other operating income also contributed, growing $163 million over that period, assisted by one-off gains. This slide sets out some of the drivers of long-term franchise strength that we have been targeting.
Speaker #2: Deeper customer relationships, deposit-led growth in our core segments that underpins and precedes lending growth, and productivity improvements within our frontline teams. Our retail bank continues to build foundational banking relationships, adding 3 million net new transaction account customers over the past five years.
Speaker #2: In home lending, we continue to prioritize and grow proprietary distribution, with $55 billion of new fundings originated over the last six months through our own channels.
Alan Docherty: In home lending, we continue to prioritize and grow proprietary distribution, with AUD 55 billion of new fundings originated over the last six months through our own channels. Our strategic focus on business banking continues to deliver strong outcomes, with double-digit compound annual growth in both deposits and lending over recent years. Our investments in building a more digital, customer-focused, and streamlined business bank for our people and our customers can be seen in the productivity improvements delivered over the last five years, with fundings per banker up 65% over that period. Turning to the net interest margin and looking at the movement over the most recent six-month period, the main driver of the four basis point reduction over the half was the increased mix of low-margin liquid assets and institutional repos.
Alan Docherty: In home lending, we continue to prioritize and grow proprietary distribution, with AUD 55 billion of new fundings originated over the last six months through our own channels. Our strategic focus on business banking continues to deliver strong outcomes, with double-digit compound annual growth in both deposits and lending over recent years. Our investments in building a more digital, customer-focused, and streamlined business bank for our people and our customers can be seen in the productivity improvements delivered over the last five years, with fundings per banker up 65% over that period. Turning to the net interest margin and looking at the movement over the most recent six-month period, the main driver of the four basis point reduction over the half was the increased mix of low-margin liquid assets and institutional repos.
Speaker #2: And our strategic focus on business banking continues to deliver strong outcomes, with double-digit compound annual growth in both deposits and lending over recent years.
Speaker #2: Our investments in building a more digital, customer-focused, and streamlined business bank for our people and our customers can be seen in the productivity improvements delivered over the last five years, with fundings per banker up 65% over that period.
Speaker #2: Turning to the net interest margin, and looking at the movement over the most recent six-month period, the main driver of the four basis point reduction over the half was the increased mix of low-margin liquid assets and institutional repos.
Speaker #2: Excluding those items, margins were one basis point lower, with competitive pressures and the impact of a lower cash rate largely offset by the replicating portfolio and the favorable portfolio mix effect of strong deposit growth.
Alan Docherty: Excluding those items, margins were one basis point lower, with competitive pressures and the impact of a lower cash rate, largely offset by the replicating portfolio and the favorable portfolio mix effect of strong deposit growth. Margins were a little stronger in the December quarter, largely due to the benefit of higher swap rates on our replicating portfolio. You can see here that we're managing margin outcomes carefully, balancing competitiveness with returns and staying focused on building lasting primary relationships with our customers rather than chasing unprofitable volume growth. On operating expenses, they increased 5.5% on the prior corresponding period. The drivers are largely unchanged over recent years. We are seeing inflation re-impacts on wages, and IT vendor cost inflation continues to run higher than CPI.
Alan Docherty: Excluding those items, margins were one basis point lower, with competitive pressures and the impact of a lower cash rate, largely offset by the replicating portfolio and the favorable portfolio mix effect of strong deposit growth. Margins were a little stronger in the December quarter, largely due to the benefit of higher swap rates on our replicating portfolio. You can see here that we're managing margin outcomes carefully, balancing competitiveness with returns and staying focused on building lasting primary relationships with our customers rather than chasing unprofitable volume growth. On operating expenses, they increased 5.5% on the prior corresponding period. The drivers are largely unchanged over recent years. We are seeing inflation re-impacts on wages, and IT vendor cost inflation continues to run higher than CPI.
Speaker #2: Margins were a little stronger in the December quarter, largely due to the benefit of higher swap rates on our replicating portfolio. You can see here that we're managing margin outcomes carefully.
Speaker #2: Balancing competitiveness with returns and staying focused on building lasting, primary relationships with our customers, rather than chasing unprofitable volume growth. On operating expenses, the increase was 5.5% on the prior corresponding period.
Speaker #2: The drivers are largely unchanged over recent years. We are seeing inflation re-impacts on wages, and IT vendor cost inflation continues to run higher than CPI.
Speaker #2: At the same time, we continue to invest behind the franchise, with higher cloud costs and our ongoing consumption and software licensing investment in technology infrastructure and AI capabilities, alongside enhanced frontline capacity and operational resilience.
Alan Docherty: At the same time, we continue to invest behind the franchise with higher cloud consumption and software licensing costs and our ongoing investment in technology infrastructure and AI capabilities, alongside enhanced front-line capacity and operational resilience. We are self-funding much of that investment through productivity initiatives, realizing approximately AUD 222 million in incremental cost savings over the past six months. Turning to credit risk, loan impairment expense for the half was AUD 319 million, broadly consistent with the prior comparative period and improving versus the second half. Across the portfolio, we continue to see broadly stable to improving conditions. Households have been supported by the strength of the labor market and rising disposable incomes. We have seen this reflected in higher prepayments and lower consumer arrears. In the corporate portfolio, troublesome assets and non-performing exposures continue to trend lower as a proportion of the portfolio.
Alan Docherty: At the same time, we continue to invest behind the franchise with higher cloud consumption and software licensing costs and our ongoing investment in technology infrastructure and AI capabilities, alongside enhanced front-line capacity and operational resilience. We are self-funding much of that investment through productivity initiatives, realizing approximately AUD 222 million in incremental cost savings over the past six months. Turning to credit risk, loan impairment expense for the half was AUD 319 million, broadly consistent with the prior comparative period and improving versus the second half. Across the portfolio, we continue to see broadly stable to improving conditions. Households have been supported by the strength of the labor market and rising disposable incomes. We have seen this reflected in higher prepayments and lower consumer arrears.
Speaker #2: We are self-funding much of that investment through productivity initiatives, realizing approximately $222 million in incremental cost savings over the past six months. Turning to credit risk, loan and permanent expense for the half was $319 million, broadly consistent with the prior comparative period and improving versus the second half.
Speaker #2: Across the portfolio, we continue to see broadly stable-to-improving conditions. Households have been supported by the strength of the labor market and rising disposable incomes.
Speaker #2: We have seen this reflected in higher prepayments and lower consumer arrears. In the corporate portfolio, troublesome assets and non-performing exposures continue to trend lower as a proportion of the portfolio.
Alan Docherty: In the corporate portfolio, troublesome assets and non-performing exposures continue to trend lower as a proportion of the portfolio. Given the uncertainty in global macro and geopolitics, we've maintained strong provisioning coverage. Total recognized provisions are approximately AUD 6.3 billion. And importantly, we continue to hold a material buffer above the central scenario. This slide provides the usual additional detail on sectoral considerations. We marginally reduced base provisioning and forward-looking adjustments in areas where conditions have improved, including consumer, construction, and retail trade. This was partly offset by an increased level of provisioning relating to our downside economic scenarios, where we take into account the risk of exogenous shocks to the domestic economy. Overall, our approach to provisioning remains grounded, forward-looking, and appropriately conservative.
Speaker #2: Given the uncertainty in global macro and geopolitics, we've maintained strong provisioning coverage. Total recognized provisions are approximately $6.3 billion and, importantly, we continue to hold a material buffer above the central scenario.
Alan Docherty: Given the uncertainty in global macro and geopolitics, we've maintained strong provisioning coverage. Total recognized provisions are approximately AUD 6.3 billion. And importantly, we continue to hold a material buffer above the central scenario. This slide provides the usual additional detail on sectoral considerations. We marginally reduced base provisioning and forward-looking adjustments in areas where conditions have improved, including consumer, construction, and retail trade. This was partly offset by an increased level of provisioning relating to our downside economic scenarios, where we take into account the risk of exogenous shocks to the domestic economy. Overall, our approach to provisioning remains grounded, forward-looking, and appropriately conservative. Our funding and liquidity profile has continued to strengthen. We continue to be predominantly deposit-funded, supported by a strong deposit-gathering franchise. Total customer deposits grew at an annualized rate of 10% over the last six months, taking our customer deposit ratio to 79%.
Speaker #2: This slide provides the usual additional detail on sectoral considerations. We marginally reduced base provisioning and forward-looking adjustments in areas where conditions have improved, including consumer, construction, and retail trade.
Speaker #2: This was partly offset by an increased level of provisioning relating to our downside economic scenarios, where we take into account the risk of exogenous shocks to the domestic economy.
Speaker #2: Overall, our approach to provisioning remains grounded, forward-looking, and appropriately conservative. Our funding and liquidity profile has continued to strengthen. We continue to be predominantly deposit-funded, supported by a strong deposit-gathering franchise.
Alan Docherty: Our funding and liquidity profile has continued to strengthen. We continue to be predominantly deposit-funded, supported by a strong deposit-gathering franchise. Total customer deposits grew at an annualized rate of 10% over the last six months, taking our customer deposit ratio to 79%. We also maintained a historically low proportion of short-term wholesale funding. This combination of deposit growth, consistent term issuance across diverse funding markets, and strong liquidity buffers means we remain well-positioned to support the current strong level of customer demand for lending growth. On capital, our common equity tier one ratio remained at 12.3%, with organic capital generation continuing to support franchise growth and dividends. Growth in risk-weighted assets was largely a function of lending volume growth, with credit risk weightings remaining broadly stable over the past six months.
Speaker #2: Total customer deposits grew at an annualized rate of 10%, with the customer deposit ratio rising to 79%. We also maintain a historically low proportion of short-term wholesale funding.
Alan Docherty: We also maintained a historically low proportion of short-term wholesale funding. This combination of deposit growth, consistent term issuance across diverse funding markets, and strong liquidity buffers means we remain well-positioned to support the current strong level of customer demand for lending growth. On capital, our common equity tier one ratio remained at 12.3%, with organic capital generation continuing to support franchise growth and dividends. Growth in risk-weighted assets was largely a function of lending volume growth, with credit risk weightings remaining broadly stable over the past six months. The interim dividend increased AUD 0.10 to AUD 2.35, representing a headline payout ratio of 72% and a normalised payout of 74% after adjusting for the benign first-half loan loss rate. The dividend will be fully franked, and the dividend reinvestment plan will be offered with no discount and fully neutralised.
Speaker #2: This combination of deposit growth, consistent term issuance across diverse funding markets, and strong liquidity buffers means we remain well-positioned to support the current strong level of customer demand for lending capital. Our Common Equity Tier One ratio remained at 12.3%, with organic capital generation continuing to support franchise growth and dividends.
Speaker #2: Growth in risk-weighted assets was largely a function of lending volume growth, with credit risk weightings remaining broadly stable over the past six months. The interim dividend increased 10 cents to $2.35, representing a headline payout ratio of 72%, and a normalized payout of 74% after adjusting for the benign first-half loan loss rate.
Alan Docherty: The interim dividend increased AUD 0.10 to AUD 2.35, representing a headline payout ratio of 72% and a normalised payout of 74% after adjusting for the benign first-half loan loss rate. The dividend will be fully franked, and the dividend reinvestment plan will be offered with no discount and fully neutralised. Delivering franchise growth while maintaining returns above our shareholders' cost of capital allows sustainable and consistent accretion in dividend per share over the long term. This slide sets out our long-term approach to capital management. We prioritize profitable franchise growth as the first and best use of organic capital generation. We invest in line with our strategic priorities, aim to pay sustainable dividends, and we carefully manage our share count and surplus capital in a disciplined way.
Speaker #2: The dividend will be fully franked, and the dividend reinvestment plan will be offered with no discount and fully neutralized. Delivering franchise growth while maintaining returns above our shareholders' cost of capital allows sustainable and consistent accretion in dividend per share over the long term.
Alan Docherty: Delivering franchise growth while maintaining returns above our shareholders' cost of capital allows sustainable and consistent accretion in dividend per share over the long term. This slide sets out our long-term approach to capital management. We prioritize profitable franchise growth as the first and best use of organic capital generation. We invest in line with our strategic priorities, aim to pay sustainable dividends, and we carefully manage our share count and surplus capital in a disciplined way. Over time, you can see we've balanced capital generation with capital distribution, supporting franchise growth when lending demand is elevated, while also returning excess capital to shareholders, primarily through dividends as well as through the selective utilization of buybacks. Ultimately, we remain focused on optimizing long-term shareholder outcomes while maintaining the balance sheet resilience that underpins our ability to support our customers and the broader economy through the cycle.
Speaker #2: This slide sets out our long-term approach to capital management. We prioritize profitable franchise growth as the first and best use of organic capital generation.
Speaker #2: We invest in line with our strategic priorities, aim to pay sustainable dividends, and we carefully manage our share count and surplus capital in a disciplined way.
Alan Docherty: Over time, you can see we've balanced capital generation with capital distribution, supporting franchise growth when lending demand is elevated, while also returning excess capital to shareholders, primarily through dividends as well as through the selective utilization of buybacks. Ultimately, we remain focused on optimizing long-term shareholder outcomes while maintaining the balance sheet resilience that underpins our ability to support our customers and the broader economy through the cycle. In closing, this long-term approach has, again, assisted in delivering consistent and superior shareholder returns. Our combination of a high return on equity and strong payout ratio continues to compare favorably with domestic and global banking peers. Our strategic investments are yielding measurable improvements in franchise growth and productivity, underpinning our continued outperformance in net tangible assets and dividends per share.
Speaker #2: Over time, you can see we've balanced capital generation with capital distribution, supporting franchise growth when lending demand is elevated, while also returning excess capital to shareholders—primarily through dividends, as well as through the selective utilization of buybacks.
Speaker #2: Ultimately, we remain focused on optimizing long-term shareholder outcomes while maintaining the balance sheet resilience that underpins our ability to support our customers and the broader economy through the cycle.
Speaker #2: In closing, this long-term approach has again assisted in delivering consistent and superior shareholder returns. Our combination of a high return on equity and strong payout ratio continues to compare favorably with domestic and global banking peers.
Alan Docherty: In closing, this long-term approach has, again, assisted in delivering consistent and superior shareholder returns. Our combination of a high return on equity and strong payout ratio continues to compare favorably with domestic and global banking peers. Our strategic investments are yielding measurable improvements in franchise growth and productivity, underpinning our continued outperformance in net tangible assets and dividends per share. I'll now hand back to Matt for the economic outlook and closing remarks. Thank you.
Speaker #2: Our strategic investments are yielding measurable improvements in franchise growth and productivity, underpinning our continued outperformance in net tangible assets and dividends per share. I'll now hand back to Matt for the economic outlook and closing remarks.
Alan Docherty: I'll now hand back to Matt for the economic outlook and closing remarks. Thank you.
Speaker #2: Thank you. Thanks very much, Alan. Australian economic growth has strengthened more quickly, improving and proving more resilient than expected. This was driven by increases in consumer demand and rising investment in AI and energy infrastructure.
Matt Comyn: Thanks very much, Alan. Australian economic growth has strengthened more quickly and proven more resilient than expected. This was driven by increases in consumer demand and rising investment in AI and energy infrastructure. Household consumption has risen, including across discretionary categories. Supply-side constraints mean that the economy is struggling to meet this increased demand. As a result, inflation is now expected to remain above the Reserve Bank's target band for some time, placing further upwards pressure on interest rates. Australia has remained highly resilient despite a volatile global environment. To date, there has been limited economic impact from trade and tariff disruptions. A global AI investment cycle is supporting growth. Elevated geopolitical risks are likely to generate ongoing shocks, reinforcing the importance of economic and operational resilience. We will continue supporting our customers with their financial resilience during this period.
Matt Comyn: Thanks very much, Alan. Australian economic growth has strengthened more quickly and proven more resilient than expected. This was driven by increases in consumer demand and rising investment in AI and energy infrastructure. Household consumption has risen, including across discretionary categories. Supply-side constraints mean that the economy is struggling to meet this increased demand. As a result, inflation is now expected to remain above the Reserve Bank's target band for some time, placing further upwards pressure on interest rates. Australia has remained highly resilient despite a volatile global environment. To date, there has been limited economic impact from trade and tariff disruptions. A global AI investment cycle is supporting growth. Elevated geopolitical risks are likely to generate ongoing shocks, reinforcing the importance of economic and operational resilience. We will continue supporting our customers with their financial resilience during this period.
Speaker #2: Household consumption has risen, including across discretionary categories. Supply-side constraints mean that the economy is struggling to meet this increased demand, and as a result, inflation is now expected to remain above the Reserve Bank's target band for some time, placing further upwards pressure on interest rates.
Speaker #2: Australia has remained highly resilient despite a volatile global environment. To date, there has been limited economic impact from trade and tariff disruptions. A global AI investment cycle is supporting growth.
Speaker #2: Elevated geopolitical risks are likely to generate ongoing shocks, reinforcing the importance of economic and operational resilience. We will continue supporting our customers with their financial resilience during this period.
Speaker #2: We're optimistic about the prospects of the economy, and we'll play our part in building a brighter future for all. So, in summary, the market has seen a period of high growth, low loan losses, and intense competition.
Matt Comyn: We're optimistic about the prospects of the economy and will play our part in building a brighter future for all. So, in summary, the market has seen a period of high growth, low loan losses, and intense competition. The Commonwealth Bank is well-placed to adapt and perform against this backdrop. We remain committed to supporting and protecting our customers, reimagining customer experiences by investing in technology and AI, and providing strength and stability for the Australian economy and delivering sustainable returns. We will stay focused on consistent, disciplined execution and investment for the long term to deliver for our customers and build a brighter future for all. I'll now hand to Mel to go through your questions.
Matt Comyn: We're optimistic about the prospects of the economy and will play our part in building a brighter future for all. So, in summary, the market has seen a period of high growth, low loan losses, and intense competition. The Commonwealth Bank is well-placed to adapt and perform against this backdrop. We remain committed to supporting and protecting our customers, reimagining customer experiences by investing in technology and AI, and providing strength and stability for the Australian economy and delivering sustainable returns. We will stay focused on consistent, disciplined execution and investment for the long term to deliver for our customers and build a brighter future for all. I'll now hand to Mel to go through your questions.
Speaker #2: The Commonwealth Bank is well placed to adapt and perform against this backdrop. We remain committed to supporting and protecting our customers, reimagining customer experiences by investing in technology and AI, and providing strength and stability for the Australian economy.
Speaker #2: And delivering sustainable returns. We will stay focused on consistent, disciplined execution and investment for the long term to deliver for our customers and build a brighter future for all.
Speaker #2: On that hand to Mel, to go through your
Speaker #2: questions. Thank you, Matt.
Melanie Kirk: Thank you, Matt. For this briefing, we will take questions from analysts and investors. When the line opens for you, please introduce the organisation that you represent and limit your questions to one to two maximum questions. We'll then take the first question from Andrew Triggs. Thank you.
Melanie Kirk: Thank you, Matt. For this briefing, we will take questions from analysts and investors. When the line opens for you, please introduce the organisation that you represent and limit your questions to one to two maximum questions. We'll then take the first question from Andrew Triggs. Thank you.
Speaker #3: For this briefing, we will take questions from analysts and investors. When the line opens for you, please introduce the organization that you represent, and limit your questions to one to two maximum questions.
Speaker #3: The briefing will then have the—excuse me, sorry. We'll then take the first question from Andrew Triggs. Thank you.
Speaker #3: you. Thank you, Mel.
Alan Docherty: Thank you, Mel. Good morning. Matt, in your prepared remarks for the Q1 trading update, you talked about the competitive concerns—sorry, the competition concerns—you had and potential responses and offsetting. Could you sort of elaborate on those? You've seemed to have sort of reiterated some of those comments this morning. Specifically, what sides of the balance sheet are you referring to there? It does seem at odds with a stable underlying margin in the half and the slight improvement in NIM that you've seen in the December quarter.
Andrew Triggs: Thank you, Mel. Good morning. Matt, in your prepared remarks for the Q1 trading update, you talked about the competitive concerns—sorry, the competition concerns—you had and potential responses and offsetting. Could you sort of elaborate on those? You've seemed to have sort of reiterated some of those comments this morning. Specifically, what sides of the balance sheet are you referring to there? It does seem at odds with a stable underlying margin in the half and the slight improvement in NIM that you've seen in the December quarter.
Speaker #4: Good morning. Matt, in your prepared remarks for the first quarter trading update, you talked about the competitive concerns—sorry, the competition concerns—you had and potential responses and onsettings.
Speaker #4: Could you sort of elaborate on those? You’ve seemed to have sort of reiterated some of those comments this morning—specifically, what sides of the balance sheet are you referring to there?
Speaker #4: It does seem at odds with a stable underlying margin in the half and the slight improvement in NIM that you’ve seen in the December.
Speaker #4: quarter. Yeah, no, thanks.
[Analyst] (various): Yeah. No, thanks. And good morning. Look, I guess I'd contrast between, as I said in the opening remarks, I think the strength of this result has been our ability to maintain a very good and disciplined volume growth. And a part of that is underlying stability and the margin performance across all of our customer-facing segments. I think when we look at, let's say, last calendar year, I think the market is and the competitive context is shifting. Now, I think clearly this demonstrates our ability to be able to perform well in that. But, I mean, if you look at the period of the last five years, we've seen the most rapid growth by one competitor in household deposit share growth. In fact, I think it'll be close to double the previous growth rate. I think we've seen a pretty sharp reduction in household balances.
Matt Comyn: Yeah. No, thanks. And good morning. Look, I guess I'd contrast between, as I said in the opening remarks, I think the strength of this result has been our ability to maintain a very good and disciplined volume growth. And a part of that is underlying stability and the margin performance across all of our customer-facing segments. I think when we look at, let's say, last calendar year, I think the market is and the competitive context is shifting. Now, I think clearly this demonstrates our ability to be able to perform well in that. But, I mean, if you look at the period of the last five years, we've seen the most rapid growth by one competitor in household deposit share growth.
Speaker #2: And good morning. Look, I guess I'd contrast between, as I said in the opening remarks, I think the strength of this result has been our ability to maintain a very good and disciplined volume growth, and a part of that is underlying stability in the margin performance.
Speaker #2: Across all of our customer-facing segments, I think when we look at, let's say, last calendar year, I think the market is, and the competitive context is, shifting.
Speaker #2: Now, I think clearly this demonstrates our ability to be able to perform well in that. But over the last five years, we've seen the most rapid growth. I mean, if you look at the period by one competitor in household deposit share growth.
Speaker #2: In fact, I think it'll be close to double the previous growth rate. I think we've seen a pretty sharp reduction in household balances. I think the greatest over that five-year period, outside the major banks.
Matt Comyn: In fact, I think it'll be close to double the previous growth rate. I think we've seen a pretty sharp reduction in household balances. I think the greatest over that five-year period outside the major banks. I think even if you went back to 2008. I think that's interesting in the context of the backdrop. We've got, as we talked about, higher system credit growth. We've seen that clearly in retail and also in non-retail. We expect that there's going to be a maintenance of higher credit growth on the back of higher nominal growth and, of course, I hope, a pickup in investment. If you look at the organic capital generation across peers and really the sort of volume and NII returns that are being generated, I think that sort of marks quite a shift.
[Analyst] (various): I think the greatest over that five-year period outside the major banks. I think even if you went back to 2008. I think that's interesting in the context of the backdrop. We've got, as we talked about, higher system credit growth. We've seen that clearly in retail and also in non-retail. We expect that there's going to be a maintenance of higher credit growth on the back of higher nominal growth and, of course, I hope, a pickup in investment. If you look at the organic capital generation across peers and really the sort of volume and NII returns that are being generated, I think that sort of marks quite a shift. Against that sort of credit environment, you'd actually expect there to be much greater pricing discipline. Look, clearly, there are different choices that are being made around business model and customer proposition.
Speaker #2: I think even if you went back to 2008, and I think that's interesting in the context of the backdrop. We've got, as we talked about, higher system credit growth.
Speaker #2: We've seen that clearly in retail and also in non-retail. We expect that there's going to be a maintenance of higher credit growth on the back of higher nominal growth and, of course, I hope, a pickup in investment.
Speaker #2: If you look at the organic capital generation across peers, and really the sort of volume in NII returns that are being generated, I think that marks quite a shift. Against that sort of credit environment, you'd actually expect there to be much greater pricing discipline.
Matt Comyn: Against that sort of credit environment, you'd actually expect there to be much greater pricing discipline. Look, clearly, there are different choices that are being made around business model and customer proposition. Some part of that's being informed by the regulatory architecture and choices. I mean, it's for us to understand and adapt to the environment to be able to execute as well as we can, both in the 6 or the 12-month period, but also, most importantly, to position the organization for the future. We think a lot about how do we build on the scale, durability, resilience, investment in the franchise while continuing to perform well in any given period and deliver sustainable, reliable returns to our shareholders.
Speaker #2: And look, clearly there are different choices that are being made around business model and customer proposition. Some part of that’s being informed by the regulatory architecture and choices.
[Analyst] (various): Some part of that's being informed by the regulatory architecture and choices. I mean, it's for us to understand and adapt to the environment to be able to execute as well as we can, both in the 6 or the 12-month period, but also, most importantly, to position the organization for the future. We think a lot about how do we build on the scale, durability, resilience, investment in the franchise while continuing to perform well in any given period and deliver sustainable, reliable returns to our shareholders.
Speaker #2: I mean, it's for us to understand and adapt to the environment to be able to execute as well as we can, both in the six- or 12-month period, but also, most importantly, to position the organization for the future.
Speaker #2: And we think a lot about how we build on the scale, durability, and resilience of investment in the franchise, while continuing to perform well in any given period and deliver sustainable, reliable returns to our ...
Speaker #2: shareholders. Thanks,
Speaker #4: Matt, and maybe perhaps for Alan, could you just pick apart a little bit more the slight improvement you referred to in NIM in the second quarter?
Alan Docherty: Thanks, Matt. Maybe perhaps for Alan, just pick apart maybe a little bit more the slight improvement you referred to in NIM in Q2. You put that down to the replicating portfolio, but that tends to come through more slowly. What were the other drivers? Given we've had a rate hike in February, potentially another one in May, what does it mean for the outlook for the NIM into the second half?
Andrew Triggs: Thanks, Matt. Maybe perhaps for Alan, just pick apart maybe a little bit more the slight improvement you referred to in NIM in Q2. You put that down to the replicating portfolio, but that tends to come through more slowly. What were the other drivers? Given we've had a rate hike in February, potentially another one in May, what does it mean for the outlook for the NIM into the second half?
Speaker #4: You put that down to the replicating portfolio, but that tends to come through more slowly. What were the other drivers? And given we've had a rate hike in February, potentially another one in May, what does it mean for the outlook for the NIM into the—
Speaker #4: second half? Yep.
Speaker #2: Thank you, Andrew. Yeah, between Q1 and Q2, I guess there was a couple of things that changed. I mean, importantly, the replicatings—the, there's a major factor—the five-year swap rate, I think, increased 30 basis points between Q1 and Q2.
[Analyst] (various): Yep. Thank you, Andrew. Yeah, between Q1 and Q2, I guess there was a couple of things that changed. I mean, importantly, the replicating is a major factor. The five-year swap rate, I think, increased 30 basis points between Q1 and Q2. And as the factors ground through over that period, we've seen the pickup there. Also, there was a bit more of a cash rate headwind in Q1. So if you look at the weighted average overnight cash rate, that was down, I think, 40 basis points Q1 to the second half of last year, only down 12 basis points over the second quarter relative to the first. So you had that cash rate headwind in Q1. So it would be much more neutral, I guess, in Q2. And the other aspect was very strong growth, as we've reported, in particularly business transaction accounts in that December quarter.
Alan Docherty: Yep. Thank you, Andrew. Yeah, between Q1 and Q2, I guess there was a couple of things that changed. I mean, importantly, the replicating is a major factor. The five-year swap rate, I think, increased 30 basis points between Q1 and Q2. And as the factors ground through over that period, we've seen the pickup there. Also, there was a bit more of a cash rate headwind in Q1. So if you look at the weighted average overnight cash rate, that was down, I think, 40 basis points Q1 to the second half of last year, only down 12 basis points over the second quarter relative to the first. So you had that cash rate headwind in Q1. So it would be much more neutral, I guess, in Q2.
Speaker #2: And as the tractors ground through over that period, we've seen the pickup there. Also, there was a bit more of a cash rate headwind in Q1.
Speaker #2: So, if you look at the weighted average overnight cash rate, that was down, I think, 40 basis points Q1 to the second half of last year.
Speaker #2: Only down a dozen basis points over the second quarter relative to the first. So you had that cash rate headwind in Q1. So it'll be much more neutral, I guess, in Q2.
Alan Docherty: And the other aspect was very strong growth, as we've reported, in particularly business transaction accounts in that December quarter. So that was pleasing. So we picked up a bit of a mixed benefit on BTA growth through Q2. Now, an element of that seasonal, we get seasonally stronger growth in the December quarter. But you can see what the changes we've seen in swap rates. So that will continue to feed through in our metrics in the period ahead.
Speaker #2: And the other aspect was very strong growth, as we've reported, in particular in business transaction accounts in that December quarter. So that was pleasing, and so we picked up a bit of a mixed benefit.
[Analyst] (various): So that was pleasing. So we picked up a bit of a mixed benefit on BTA growth through Q2. Now, an element of that seasonal, we get seasonally stronger growth in the December quarter. But you can see what the changes we've seen in swap rates. So that will continue to feed through in our metrics in the period ahead.
Speaker #2: On BTA growth through Q2. Now, an element of that is seasonal; we get seasonally stronger growth in the December quarter. But you can see, with the changes we've seen in swap rates —
Speaker #2: So, that'll continue to feed through in our tractors in the period ahead.
Speaker #2: So that'll continue to feed through in our tractors in the period ahead.
Speaker #3: Great. Thank you. Thank you. The next question comes from John Mott.
Melanie Kirk: Great. Thank you.
Melanie Kirk: Great. Thank you.
Alan Docherty: Thank you.
Andrew Triggs: Thank you.
Melanie Kirk: Thank you. The next question comes from John Mott.
Melanie Kirk: Thank you. The next question comes from John Mott.
Speaker #5: Thank you, John Mott here from Dan Jolly. I've got a question on slide 96, and it's a long way in, but if we can just flick over there.
Jon Mott: Thank you. John Mott here from Barrenjoey. I've got a question on slide 96. I know it's a long way in, but if we can just flick over there. Just looking at the deposit side, and well done, just really shows the strength of the franchise with the great growth of the deposits coming through. But I wanted to drill down into it. So if you look at the growth in retail transaction accounts, pretty steady, good numbers, growing 3% in the half, 5% year-on-year. It's been growing pretty steadily. But then when we look over at the retail deposit mix, a big jump, and I think this is the biggest jump you've ever had in transaction deposits in the retail bank. And if you go on the average balance sheet, you can also see they're coming in non-interest-bearing deposits, so excluding offset accounts.
Jon Mott: Thank you. John Mott here from Barrenjoey. I've got a question on slide 96. I know it's a long way in, but if we can just flick over there. Just looking at the deposit side, and well done, just really shows the strength of the franchise with the great growth of the deposits coming through. But I wanted to drill down into it. So if you look at the growth in retail transaction accounts, pretty steady, good numbers, growing 3% in the half, 5% year-on-year. It's been growing pretty steadily. But then when we look over at the retail deposit mix, a big jump, and I think this is the biggest jump you've ever had in transaction deposits in the retail bank.
Speaker #5: Just bringing in the deposit side, and well done. It just really shows the strength of the franchise, with the great growth of the deposits coming through.
Speaker #5: But I wanted to drill down into it. So, if you look at the growth in retail transaction accounts, it's pretty steady—good numbers, growing 3% in the half, 5% year on year.
Speaker #5: It's been growing pretty steadily. But then, when we look over at the retail deposit mix, there's a big jump—and I think this is the biggest jump you've ever had in transaction deposits in the retail bank.
Speaker #5: And if you go in the average balance sheet, you can also see they're coming in non-interest-bearing deposits. So, excluding offset accounts, you've seen a huge growth.
Jon Mott: And if you go on the average balance sheet, you can also see they're coming in non-interest-bearing deposits, so excluding offset accounts. You've seen huge growth. Given the comments from Q1, it didn't appear to be there. So it really looks like it's come through in Q4. To put it into perspective, I just backsolved that the average transaction account in Australia jumped by AUD 700 from just over AUD 10,000 to AUD 10,700. So what happened in that December quarter to see such massive growth, not in the number of transaction accounts, but in the balance? And when you think about how it's going to go going forward, is this just seasonal and then get drained into savings or higher interest-rate accounts over this next half?
Jon Mott: You've seen huge growth. Given the comments from Q1, it didn't appear to be there. So it really looks like it's come through in Q4. To put it into perspective, I just backsolved that the average transaction account in Australia jumped by AUD 700 from just over AUD 10,000 to AUD 10,700. So what happened in that December quarter to see such massive growth, not in the number of transaction accounts, but in the balance? And when you think about how it's going to go going forward, is this just seasonal and then get drained into savings or higher interest-rate accounts over this next half? Or are you going to see really strong growth in non-interest-bearing deposits really support the NIM through the second half of 2026 and into 2027? So can you just explain what happened?
Speaker #5: And given the comments from the first quarter, it didn't appear to be there. So it really looks like it's come through in the December quarter.
Speaker #5: To put it into perspective, I'll just backfill that the average transaction account in Australia jumped by $700, from just over $10,000 to $10,700.
Speaker #5: So, what happened in that December quarter to see such massive growth, not in the number of transaction accounts, but in the balance? And when you think about how it's going to go going forward, is this drained into savings or higher interest rate accounts—just in a seasonal way—and that then gets over this next half?
Speaker #5: Or are you going to see really strong growth in non-interest-bearing deposits, really support the NIM through the second half of '26 and into '27?
Jon Mott: Or are you going to see really strong growth in non-interest-bearing deposits really support the NIM through the second half of 2026 and into 2027? So can you just explain what happened?
Speaker #5: So if you could just explain what
Speaker #5: happened. Yeah, I mean,
[Analyst] (various): Yeah. I mean, one element of that transaction account growth is growth in the offset accounts. We've seen very strong, consistent growth in offset through both Q1 and Q2. I mean, that's, I think, a healthy sign of continued growth in excess savings across the economy. And we called out in one of the macro slides the improvement that you can see in the savings rate that we've continued to see through the course of that half. Yeah. And in terms of the performance of the underlying ex-offset growth in the retail bank, that's continued to improve. I mean, we've seen relatively consistent growth in average balances per retail customer account. So that's continued to grow in the period. And, of course, we've continued to attract more customers. And so very strong growth and other, I think, year-on-year, 600,000 growth in customer transaction accounts in the retail bank.
Alan Docherty: Yeah. I mean, one element of that transaction account growth is growth in the offset accounts. We've seen very strong, consistent growth in offset through both Q1 and Q2. I mean, that's, I think, a healthy sign of continued growth in excess savings across the economy. And we called out in one of the macro slides the improvement that you can see in the savings rate that we've continued to see through the course of that half. Yeah. And in terms of the performance of the underlying ex-offset growth in the retail bank, that's continued to improve. I mean, we've seen relatively consistent growth in average balances per retail customer account. So that's continued to grow in the period.
Speaker #2: One element of that transaction account growth is in the offset accounts. We've seen very strong, consistent growth in offset through both Q1 and Q2. I mean, that's, I think, a healthy sign of continued growth in excess savings across the economy.
Speaker #2: And we called out, in one of the macro slides, the improvement that you can see in the savings rate that we've continued to see through the course of that half.
Speaker #2: Yeah, and in terms of the performance of the underlying ex-offset growth in the retail bank, that's continued to improve. I mean, we've seen relatively consistent growth in average balances per retail customer account.
Speaker #2: So that's continued to grow in the period. And of course, we've continued to attract more customers, and so very strong growth in Other. I think, year-on-year, 600,000 growth in customer transaction accounts in the retail bank.
Alan Docherty: And, of course, we've continued to attract more customers. And so very strong growth and other, I think, year-on-year, 600,000 growth in customer transaction accounts in the retail bank. Retail customer numbers are up 3 million over the five-year period. So, again, that's been relatively steady. But I think it's a function of just that continued growth in savings across the broader economy. And we've seen a large share of that come through the retail bank.
Speaker #2: Retail customer numbers are up 3 million over the five-year period. So again, that's been relatively steady, but I think it's a function of just that continued growth in savings across the broader economy.
[Analyst] (various): Retail customer numbers are up 3 million over the five-year period. So, again, that's been relatively steady. But I think it's a function of just that continued growth in savings across the broader economy. And we've seen a large share of that come through the retail bank.
Speaker #2: And we've seen a large share of that come through the retail bank.
Speaker #5: Okay, just digging into that a bit more, I'm just going over to the retail bank in the actual result. And if you look at the non-interest-bearing transaction accounts, you can see there, this obviously excludes offset accounts.
Jon Mott: Okay. Just digging into that a bit more and just going over to the retail bank in the actual result. And if you look at the non-interest-bearing transaction accounts, you can see there; this obviously excludes offset accounts. Big jump again there by AUD 4 billion. So is there anything in particular that happened in that Q4 that just drove this so much higher? Because you've seen steady customer account growth.
Jon Mott: Okay. Just digging into that a bit more and just going over to the retail bank in the actual result. And if you look at the non-interest-bearing transaction accounts, you can see there; this obviously excludes offset accounts. Big jump again there by AUD 4 billion. So is there anything in particular that happened in that Q4 that just drove this so much higher? Because you've seen steady customer account growth.
Speaker #5: Big jump again there by $4 billion. So is there anything in particular that happened in that fourth quarter that just drove this so much higher?
Speaker #5: Because this isn't—you've seen steady customer account growth.
Speaker #5: Just unusual. And then, obviously, yeah, I mean, this implies what happens in the next half.
[Analyst] (various): Yeah. I mean.
Matt Comyn: Yeah. I mean.
Jon Mott: It's unusual. Then, obviously, this implies what happens into the next half.
Jon Mott: It's unusual. Then, obviously, this implies what happens into the next half.
Speaker #2: Yep. No, I mean, it's very pleasing. I think a more like-for-like comparison is going to be December-to-December growth in non-interest-bearing in the retail bank.
[Analyst] (various): Yep. No, I mean, it's very pleasing. I think a more like-for-like comparison is going to be December-to-December growth in non-interest-bearing transaction in the retail bank. We do get a fair amount of seasonality into that June period. So going into June, as you come out of the March quarter into June, you tend to have a higher level of spot non-retail transaction account deposits, which then dip quite significantly into the 30 June period. We see a lot of switching, particularly small business owners injecting cash into other businesses as they get to the 30 June financial year-end. So we've been pleased with the growth. Probably the better underlying measure of that growth, I think, is the year-on-year 6% growth between the AUD 47.5 billion we had this time last year and the AUD 50 billion that we landed at 31 December. So, yeah, strong growth, but I wouldn't annualize the six-month growth.
Alan Docherty: Yep. No, I mean, it's very pleasing. I think a more like-for-like comparison is going to be December-to-December growth in non-interest-bearing transaction in the retail bank. We do get a fair amount of seasonality into that June period. So going into June, as you come out of the March quarter into June, you tend to have a higher level of spot non-retail transaction account deposits, which then dip quite significantly into the 30 June period. We see a lot of switching, particularly small business owners injecting cash into other businesses as they get to the 30 June financial year-end. So we've been pleased with the growth.
Speaker #2: We do get a fair amount of seasonality into that June period. So, going into June, as you come out of the March quarter into June, you tend to have a higher level of spot non-retail transaction account deposits, which then dip quite significantly into the 30 June period.
Speaker #2: We see a lot of switching, particularly small business owners injecting cash into other businesses as they get to the 30 June financial year end.
Speaker #2: So, we've been pleased with the growth. Probably the better underlying measure of that growth, I think, is the year-on-year 6% growth between the $47.5 billion we had this time last year and the $50 billion that we landed at 31 December.
Alan Docherty: Probably the better underlying measure of that growth, I think, is the year-on-year 6% growth between the AUD 47.5 billion we had this time last year and the AUD 50 billion that we landed at 31 December. So, yeah, strong growth, but I wouldn't annualize the six-month growth.
Speaker #2: So, yeah, strong growth, but I wouldn't annualize the six-month growth.
Speaker #4: Yeah, I think there's a bit of seasonality for sure in it, John. I think Alan's touched on it all. I mean, obviously, we'd like to think with all the work that we're doing around the engagement and main bank proposition, that's attracting higher balances.
Matt Comyn: Yeah. I think there's a bit of seasonality for sure. And John, I think Alan's touched on it all. I mean, obviously, we'd like to think with all the work that we're doing around the engagement and main bank proposition that's attracting higher balances. We did see, obviously, a run-up in incomes across the economy. But I think it's hard to then just extrapolate. I mean, the fourth quarter was strong for us in a number of areas, including both in business, and retail deposit growth at an account-end average balance number.
Alan Docherty: Yeah. I think there's a bit of seasonality for sure. And John, I think Alan's touched on it all. I mean, obviously, we'd like to think with all the work that we're doing around the engagement and main bank proposition that's attracting higher balances. We did see, obviously, a run-up in incomes across the economy. But I think it's hard to then just extrapolate. I mean, the fourth quarter was strong for us in a number of areas, including both in business, and retail deposit growth at an account-end average balance number.
Speaker #4: We did see, obviously, a run-up in incomes across the economy. But I think it's hard to then just extrapolate. I mean, the fourth quarter was strong for us in a number of areas, including both in business and retail deposit growth at an account and average balance.
Speaker #4: number. Thank
Jon Mott: Thank you.
Jon Mott: Thank you.
Speaker #3: Thank you. The next question comes from Richard.
Melanie Kirk: Thank you. The next question comes from Richard.
Melanie Kirk: Thank you. The next question comes from Richard.
Speaker #5: Good morning, Matt. I've got a couple of questions. The first relates to the mortgage market, and the second relates to the benefits of scale.
Richard Wiles: Good morning, Matt. I've got a couple of questions. The first relates to the mortgage market, and the second relates to the benefits of scale. So on the mortgage market, your major bank competitors have been pretty clear in communicating their desire to invest in and grow their proprietary distribution. So that leads me to ask whether your expectation that you can grow at or above system in the mortgage market is premised on a belief that you won't lose any share of proprietary distribution or that third-party broker share of the industry's mortgage origination will fall from its current levels.
Richard Wiles: Good morning, Matt. I've got a couple of questions. The first relates to the mortgage market, and the second relates to the benefits of scale. So on the mortgage market, your major bank competitors have been pretty clear in communicating their desire to invest in and grow their proprietary distribution. So that leads me to ask whether your expectation that you can grow at or above system in the mortgage market is premised on a belief that you won't lose any share of proprietary distribution or that third-party broker share of the industry's mortgage origination will fall from its current levels.
Speaker #5: So, on the mortgage market, your major bank competitors have been pretty clear in communicating their desire to invest in and grow their proprietary distribution.
Speaker #5: So that leads me to ask whether your expectation that you can grow at or above the system in the mortgage, that you won't lose any share of proprietary distribution, or that third-party broker share of the industry's mortgage origination will fall from its current levels.
Speaker #2: Yeah, look, Richard, I mean, we don't, as you know, sort of at any period seek to grow sort of at or around the system.
[Analyst] (various): Yeah. Look, Richard, I mean, we don't, as you know, sort of at any period seek to grow sort of at or around system. We're going to make lots of different choices. I think there's a couple of different sides. So clearly, the proprietary distribution has been a strength for some time, and the team have executed really well. I think we're now, we think, 54% of proprietary mortgage origination. On one side, the other banks joining and having a greater focus on that, maybe that helps a little bit to change the perception or customer preference more broadly in the market. I mean, secondly, the broker channel is a really important distribution for us, and it will be going into the future. So, I mean, it's predicated really on the continuation of what we have been doing.
Matt Comyn: Yeah. Look, Richard, I mean, we don't, as you know, sort of at any period seek to grow sort of at or around system. We're going to make lots of different choices. I think there's a couple of different sides. So clearly, the proprietary distribution has been a strength for some time, and the team have executed really well. I think we're now, we think, 54% of proprietary mortgage origination. On one side, the other banks joining and having a greater focus on that, maybe that helps a little bit to change the perception or customer preference more broadly in the market. I mean, secondly, the broker channel is a really important distribution for us, and it will be going into the future. So, I mean, it's predicated really on the continuation of what we have been doing.
Speaker #2: We're going to make lots of different choices. I think there's a couple of different sides to it. Clearly, the proprietary distribution has been a strength for some time, and the team have executed really well.
Speaker #2: I think we're now— we think 54% of proprietary mortgage origination. On one side, the other banks joining and having a greater focus on that, maybe that helps a little bit to change the perception or customer preference more broadly.
Speaker #2: In the market, I mean, secondly, the broker channel is a really important distribution for us. And it will be going into the future.
Speaker #2: So, I mean, it's predicated really on the continuation of what we have been doing. And
Speaker #1: And I think we'll be able to maintain between both our CBA Yellow brand, which is obviously heavily concentrated in broker and our digital proposition.
[Analyst] (various): I think we'll be able to maintain between both our CommBank Yello brand, Bankwest, which is obviously heavily concentrated in broker, and our digital proposition, a balanced portfolio in terms of distribution. And then, of course, while serving our customers, we've sought to optimize for cohorts and individual segments where there's structurally higher margins like there are in Investor.
Matt Comyn: I think we'll be able to maintain between both our CommBank Yello brand, Bankwest, which is obviously heavily concentrated in broker, and our digital proposition, a balanced portfolio in terms of distribution. And then, of course, while serving our customers, we've sought to optimize for cohorts and individual segments where there's structurally higher margins like there are in Investor.
Speaker #1: You know, a balanced portfolio in terms of being heavily concentrated in broker and our digital proposition—you know, a balanced portfolio in terms of distribution.
Speaker #1: And then , of course , while serving our customers , we've sought to , you know , optimize for cohorts individual and segments where there's , you know , structurally higher margins , like there are in investor .
Richard Wiles: Okay. Thank you. And my second question really relates to some of the slides and your comments pointing to very strong growth in the franchise since 2019, whether it be deposit balances or number of customers or number of accounts. You called that out in your opening remarks. That should suggest that you'll get increasing benefits from scale. But if we look at the cost-to-income ratio, in rough terms, it's somewhere in the mid-40s. That's where it is today. That's where it was back in 2019. Do you think it's fair to view the cost-to-income ratio as a measure of whether you're delivering benefits from scale? And can investors expect cost-to-income ratio CommBank over the coming years?
Richard Wiles: Okay. Thank you. And my second question really relates to some of the slides and your comments pointing to very strong growth in the franchise since 2019, whether it be deposit balances or number of customers or number of accounts. You called that out in your opening remarks. That should suggest that you'll get increasing benefits from scale. But if we look at the cost-to-income ratio, in rough terms, it's somewhere in the mid-40s. That's where it is today. That's where it was back in 2019. Do you think it's fair to view the cost-to-income ratio as a measure of whether you're delivering benefits from scale? And can investors expect cost-to-income ratio CommBank over the coming years?
Speaker #2: Okay . Thank you . And my second question really to some of the slides and your comments pointing to , you know , very strong growth in the franchise since 2019 , whether it be , you know , deposit balances or number of customers or number of accounts , you called that out in your opening remarks .
Speaker #2: That should suggest that you'll increasing benefits get from scale . But if we look at the cost to income ratio in rough terms , it's somewhere in the mid 40s .
Speaker #2: it is today . where it That's back in 2019 . Do it's you think fair to view the cost to income ratio as a measure of you're whether delivering benefits from scale and , you know , can investors expect .
Alan Docherty: Yeah. Look, I mean, it's a and look, I'm certainly a believer in increasing returns to scale and how they might compound over a long period of time. I think the drivers, particularly on the cost side for us, I guess, as we reflect over the last, whatever, 5 or 8 years, have been deliberately targeted in a couple of areas. First and foremost, we've significantly increased the investment, and we think that's really important to both underpin. I think that's one of the major sources of scale. And we've substantially increased sort of regulatory risk management. Of course, without giving any sort of clear guidance, you might recall early on in our collective tenure, we gave some cost-to-income ratio guidance, and then the cash rate promptly fell several times after that. So we're not likely to repeat with.
Matt Comyn: Yeah. Look, I mean, it's a and look, I'm certainly a believer in increasing returns to scale and how they might compound over a long period of time. I think the drivers, particularly on the cost side for us, I guess, as we reflect over the last, whatever, 5 or 8 years, have been deliberately targeted in a couple of areas. First and foremost, we've significantly increased the investment, and we think that's really important to both underpin. I think that's one of the major sources of scale. And we've substantially increased sort of regulatory risk management. Of course, without giving any sort of clear guidance, you might recall early on in our collective tenure, we gave some cost-to-income ratio guidance, and then the cash rate promptly fell several times after that. So we're not likely to repeat with.
Speaker #2: Or cost-to-income ratio, Combank, over the coming years?
Speaker #1: Yeah . Look , I mean it's it's a it's and look , I'm certainly a believer in increasing returns to scale and how they might compound over a long period of I think time .
Speaker #1: the cost drivers , side for us , I guess on the as we reflect over the whatever , last been have 5 or 8 years deliberately in a targeted couple of areas , you know , first and foremost , we've significantly increased the investment .
Speaker #1: And we think that's really important to both underpin—I think that's one of the major sources of scale—and we've substantially increased sort of operational, regulatory risk management.
Speaker #1: Of course , without giving any sort of clear guidance . You might recall early on in our collective tenure , we gave some cost to income ratio guidance .
Speaker #1: And then the cash rate promptly fell several times after that. So we're not likely to repeat.
Richard Wiles: I think that was early 2019, wasn't it, Matt?
Richard Wiles: I think that was early 2019, wasn't it, Matt?
[Analyst] (various): It was. It was, Richard. We remember it well. I'm sure you do. So look, I think we definitely have aspirations to perhaps over the medium term, definitely shift the trajectory of that cost. But we also, I guess, in any period, we're prepared to sacrifice near-term returns if we believe that we can deliver the best long-term outcome. And I do think the next five years will be quite different in terms of where the investments will come from. I do think there's a lot of consistency around technology. Probably the other area that I think occurs to Alan and I in this result is in terms of where the increased investment over and above the areas that we're used to calling out is; there's just a lot more going into resilience more broadly. And I mean, cyber's been a theme.
Matt Comyn: It was. It was, Richard. We remember it well. I'm sure you do. So look, I think we definitely have aspirations to perhaps over the medium term, definitely shift the trajectory of that cost. But we also, I guess, in any period, we're prepared to sacrifice near-term returns if we believe that we can deliver the best long-term outcome. And I do think the next five years will be quite different in terms of where the investments will come from. I do think there's a lot of consistency around technology. Probably the other area that I think occurs to Alan and I in this result is in terms of where the increased investment over and above the areas that we're used to calling out is; there's just a lot more going into resilience more broadly.
Speaker #2: With it. That was early 2019.
Speaker #1: . It It it was it was Richard . We remember it . Well I'm sure you do . So think look I we definitely have aspirations to .
Speaker #1: perhaps over the medium term . Perhaps Yeah . Definitely shift the trajectory of that that of But we cost . also , I guess in any period where prepared to sacrifice near-term returns if we believe that we can deliver the best long term outcome .
Speaker #1: And , you know , I do think the next , you know , five years will be quite different in terms of where the investments will come from .
Speaker #1: I do think there's a lot of consistency around technology. Probably the other area that I think occurs to Alan and I in this is, in terms of where the increased investment, over and above the areas that we're used to calling out, is there's just a lot more going into resilience, more broadly.
Matt Comyn: And I mean, cyber's been a theme. So we do think the importance of being able to continue to invest in differentiated experiences, but also just core resilience and protection of our customers. You need to be able to generate a strong organic return profile, to be able to fund that investment, to be able to simultaneously provide lending to the economy and distribute dividends. So it's probably a long-winded way of saying no change to guidance, believe in returns to scale strongly. I think there will be opportunities for us to improve our cost trajectory and ratios over time.
[Analyst] (various): So we do think the importance of being able to continue to invest in differentiated experiences, but also just core resilience and protection of our customers. You need to be able to generate a strong organic return profile, to be able to fund that investment, to be able to simultaneously provide lending to the economy and distribute dividends. So it's probably a long-winded way of saying no change to guidance, believe in returns to scale strongly. I think there will be opportunities for us to improve our cost trajectory and ratios over time.
Speaker #1: And I mean , cyber has been a been a theme . So we do think the importance of being able to continue to invest in differentiated experiences , but also just core resilience and protection of our customers , you need to be able to a generate strong organic return profile to be able to fund that investment , to be able to simultaneously provide lending to the economy and distribute dividends .
Speaker #1: So, it's long—probably a saying, 'way of winded change to guidance.' Believe in returns to scale strongly. I think there will be opportunities for us to improve our cost trajectory and ratios over time.
Richard Wiles: Thank you.
Richard Wiles: Thank you.
Melanie Kirk: Thank you. The next question comes from Andrew Lyons.
Melanie Kirk: Thank you. The next question comes from Andrew Lyons.
Andrew Lyons: Thank you. Good morning, Andrew Lyons from Jefferies. Alan, just a question on costs firstly. In Q1, you spoke to seasonally low IT vendor costs, but the first-half cost performance was a particularly good one, and it wasn't particularly apparent that that came through in Q2. How should we sort of think about that seasonality comment from Q1? Should we be seeing a bit of a step up in those costs being expensed through the P&L in the second half just as you continue to invest in the business?
Andrew Lyons: Thank you. Good morning, Andrew Lyons from Jefferies. Alan, just a question on costs firstly. In Q1, you spoke to seasonally low IT vendor costs, but the first-half cost performance was a particularly good one, and it wasn't particularly apparent that that came through in Q2. How should we sort of think about that seasonality comment from Q1? Should we be seeing a bit of a step up in those costs being expensed through the P&L in the second half just as you continue to invest in the business?
Speaker #2: you Thank .
Speaker #3: Thank you. The question comes from Andrew Lyons.
Speaker #4: Thanks . Good morning . Andrew Lyons from Jefferies . Alan , just a question on cost . Firstly the first quarter you spoke to seasonally lower .
Speaker #4: IT vendor costs , but the first half cost performance was was was a particularly good one . And it wasn't particularly apparent that that came through in the in the second quarter .
Speaker #4: How should we sort of think about that seasonality comment from the first quarter? Should we be seeing a bit of a step up in those costs being expensed through the P&L in the second half, just as you continue to invest in the business?
[Analyst] (various): Yeah. You'll notice in the detail of the investment spend disclosures, we have dropped the capitalization rate in the current period. We're capitalizing less. More of that's flowing through into the P&L. That goes with the slight change in mix that we've seen from a strategic investment perspective. So more weighting towards productivity and growth initiatives, a little bit less proportionately on some of the infrastructure spending. The infrastructure spending by nature is more capitalization-heavy than other forms of spend. There is a little bit of seasonality in Q1. We've seen some of that reverse in Q2. It's fair to say that we've called out IT vendor cost inflation pretty consistently over the past 12, 18 months. It's an area that we continue to be very cognizant of, very focused on.
Alan Docherty: Yeah. You'll notice in the detail of the investment spend disclosures, we have dropped the capitalization rate in the current period. We're capitalizing less. More of that's flowing through into the P&L. That goes with the slight change in mix that we've seen from a strategic investment perspective. So more weighting towards productivity and growth initiatives, a little bit less proportionately on some of the infrastructure spending. The infrastructure spending by nature is more capitalization-heavy than other forms of spend. There is a little bit of seasonality in Q1. We've seen some of that reverse in Q2. It's fair to say that we've called out IT vendor cost inflation pretty consistently over the past 12, 18 months. It's an area that we continue to be very cognizant of, very focused on.
Speaker #1: You'll Yeah . notice .
Speaker #5: In the detail of the investment spend disclosures . have We dropped the we have capitalization rate in the current We're period . capitalizing less , more of that's flowing through into the PNL .
Speaker #5: You know, that goes with the change, slight change in mix that we've seen from a strategic investment perspective. So, more weighting towards productivity and growth initiatives, a little bit less proportionately on some of the infrastructure spending.
Speaker #5: The infrastructure spending, by nature, is more capitalisation-heavy than other forms of spend. There is a little bit of seasonality in Q1.
Speaker #5: We've seen some of that reverse in Q2. It's fair to say that, you know, we've called out IT vendor cost inflation pretty consistently over the past.
Speaker #5: You know , 12 , 18 months . It's an area that we we're that continue to be very cognizant of , very focused on , you know , we we see that as a over the medium to long term potential source of above CPI , above domestic inflation , source of cost growth .
[Analyst] (various): We see that as a, over the medium to long-term, potential source of above CPI, above domestic inflation, source of cost growth. So it's something that we're managing carefully, but something we keep an eye on. And that's why we made the comment in Q1, because you didn't really see it as a source of cost inflation there. But again, that was a quarterly timing issue.
Alan Docherty: We see that as a, over the medium to long-term, potential source of above CPI, above domestic inflation, source of cost growth. So it's something that we're managing carefully, but something we keep an eye on. And that's why we made the comment in Q1, because you didn't really see it as a source of cost inflation there. But again, that was a quarterly timing issue.
Speaker #5: So it's something that we're managing. We keep an eye on that, that's why I commented in the first quarter, because we really see it as a source of cost inflation.
Andrew Lyons: Yeah. Okay. Thank you. And perhaps a question for Matt. It was a particularly strong result in business banking. Your loans are up 9% on PCP. NIM's up 3 bps over the same period and 5 bps in the half. That does somewhat fly in the face of the view that the market's facing elevated competition driven by both the Big Four and also other players in the space. So can you perhaps just talk about the competitive environment in business banking? How do you see it playing out, and what is CBA basically doing to sort of try and insulate the margin as much as possible as you do grow?
Andrew Lyons: Yeah. Okay. Thank you. And perhaps a question for Matt. It was a particularly strong result in business banking. Your loans are up 9% on PCP. NIM's up 3 bps over the same period and 5 bps in the half. That does somewhat fly in the face of the view that the market's facing elevated competition driven by both the Big Four and also other players in the space. So can you perhaps just talk about the competitive environment in business banking? How do you see it playing out, and what is CBA basically doing to sort of try and insulate the margin as much as possible as you do grow?
Speaker #5: There . But again , that was that was a quarterly timing issue .
Speaker #4: Yeah . Okay . Thank you . And perhaps a question for Matt . It was a particularly strong result in business banking . Your loans are up 9% on PCP Nims up three bips over the same period .
Speaker #4: And five bps in the half—that does somewhat fly in the face of, you know, the view that the market's facing elevated competition driven by both the big four and also other players in the space.
Speaker #4: So, can you perhaps just talk about the competitive environment in business banking? How do you see it playing out, and what is CBA basically doing to sort of try and insulate the margin as much as possible as you do grow?
Alan Docherty: Yeah. Look, I mean, I think the competitive context is intense. And against that, I think the team have executed extremely well. I mean, some of the things I think that stand out to us is a continuation of what we've now seen for many years in terms of transaction liability-led strategy, strong growth in account numbers, strong growth in balances, as Alan touched on, particularly in Q4. I think a very good track record over the last 5 or 6 years of high-quality risk identification in terms of lending, really leveraging the main bank relationship, and having a much broader relationship with our customers. We've seen also capabilities that the team have developed is probably one of the things that stood out to us as well as very good performance in small business.
Matt Comyn: Yeah. Look, I mean, I think the competitive context is intense. And against that, I think the team have executed extremely well. I mean, some of the things I think that stand out to us is a continuation of what we've now seen for many years in terms of transaction liability-led strategy, strong growth in account numbers, strong growth in balances, as Alan touched on, particularly in Q4. I think a very good track record over the last 5 or 6 years of high-quality risk identification in terms of lending, really leveraging the main bank relationship, and having a much broader relationship with our customers. We've seen also capabilities that the team have developed is probably one of the things that stood out to us as well as very good performance in small business.
Speaker #1: Yeah . Look , I mean , I think the competitive context is intense and against that , I think the team have executed extremely well .
Speaker #1: I mean , some of the things I think that stand out to us is , you know , a now seen many years transaction in continuation of terms of led liability strategy , strong growth in account numbers .
Speaker #1: Strong growth in balances . As Alan touched on , particularly in the fourth quarter , I think a very good track record over the last 5 or 6 years of high quality risk identification in terms of lending , really leveraging the main bank relationship and having a much broader relationship with our customers .
Speaker #1: We've seen also capabilities that the team have developed is probably one of the things that stood out to us as well, is like very good performance in Small Business.
Alan Docherty: I touched on some of the growth in products like BizExpress, which is largely unsecured, and we've gone from sort of AUD 30 million to AUD 130 million. Now, at some level, they're still relatively small numbers, but it's been the diversification of the lending growth that's been good. Small businesses probably be roughly twice the margin of some of the other segments. They've been very disciplined up and down throughout all of the segments. We monitor closely in terms of the value of deals that won't originate due to pricing, the value of deals we won't originate due to credit conditions. And I think leveraging some of the technology, both in the speed of decision as well through to funding, but also in terms of giving us the confidence to be able to originate across broader cohorts of customers where we've got that main bank relationship.
Matt Comyn: I touched on some of the growth in products like BizExpress, which is largely unsecured, and we've gone from sort of AUD 30 million to AUD 130 million. Now, at some level, they're still relatively small numbers, but it's been the diversification of the lending growth that's been good. Small businesses probably be roughly twice the margin of some of the other segments. They've been very disciplined up and down throughout all of the segments. We monitor closely in terms of the value of deals that won't originate due to pricing, the value of deals we won't originate due to credit conditions.
Speaker #1: I touched on some of the growth in in products like express , which is largely unsecured , and we've gone from , you know , sort of 30 million to $130 million .
Speaker #1: Now , you know , at some level , they're still small numbers , but it's relatively been the diversification lending growth of the that's been good .
Speaker #1: Small business has probably been roughly twice the margin of some of the other segments. They've been very disciplined up and down throughout all of the segments.
Speaker #1: We monitor closely. In terms of the value of deals that we won't originate due to pricing, and the value of deals we won't originate due to credit conditions.
Matt Comyn: And I think leveraging some of the technology, both in the speed of decision as well through to funding, but also in terms of giving us the confidence to be able to originate across broader cohorts of customers where we've got that main bank relationship. We've also been able to, again, leveraging some of the technology to automate some of the account management processes, substantially free up banker time. And so we're seeing much improved productivity in terms of facilities per banker. So I think, in aggregate, the team have executed extremely well, and I think the result is another very strong one.
Speaker #1: I think leveraging some of the technology, both in the decisioning speed of decision as well, to funding. But also in terms of giving us the confidence to be able to originate across broader cohorts of customers where we've got that main bank relationship.
Alan Docherty: We've also been able to, again, leveraging some of the technology to automate some of the account management processes, substantially free up banker time. And so we're seeing much improved productivity in terms of facilities per banker. So I think, in aggregate, the team have executed extremely well, and I think the result is another very strong one.
Speaker #1: We've also been able to, again, leverage some of the technology to automate some of the account management processes, and substantially free up banker time.
Speaker #1: And so we're seeing , you know , much improved productivity in terms of facilities per banker . So I in think aggregate , team the executed have extremely well .
Andrew Lyons: Thank you.
Andrew Lyons: Thank you.
Melanie Kirk: Thank you. The next question comes from Carlos.
Melanie Kirk: Thank you. The next question comes from Carlos.
Speaker #1: I think the result is another very strong one.
Carlos Cacho: Thanks, Alan. I'm Carlos Cacho from Macquarie. Now, you spoke to, in the retail section, lower deposit margins due to competition and shifting into high-yielding savings deposits. Can you give us any color on, I guess, the mix shift you're seeing there from lower-rate products like NetBank Saver into the higher Gold Saver or potentially higher rates on some of the NetBank Saver accounts that's driving that?
Carlos Cacho: Thanks, Alan. I'm Carlos Cacho from Macquarie. Now, you spoke to, in the retail section, lower deposit margins due to competition and shifting into high-yielding savings deposits. Can you give us any color on, I guess, the mix shift you're seeing there from lower-rate products like NetBank Saver into the higher Gold Saver or potentially higher rates on some of the NetBank Saver accounts that's driving that?
Speaker #4: Thank you .
Speaker #3: Thank you. The next question comes from Carlos.
Speaker #6: Thanks . I'm Carlos Coco from Macquarie . You spoke to in the in the retail section lower deposit margins due to competition and shifting into higher yielding savings deposits .
Speaker #6: Can you give us any color on the makeshift you're seeing there from lower rate products like Netbank saver into the higher goal saver or potentially higher rates on some net net bank saver accounts ?
[Analyst] (various): Yes. I mean, I guess that's been a consistent trend. I mean, I talked earlier about the things that had changed between Q1 and Q2. But one thing that didn't change was the very strong level of growth that we continue to see into the Gold Saver product. So that's running multiples of the growth rate. And we're still growing in NetBank Saver, but the key driver of savings account growth in the retail bank has continued to be Gold Saver. And so the sort of mix effect, and where we've called out previously the very strong level of balances that are attracting that high, the bonus rate on Gold Saver, so that's now up to 87% of balances attracting that high rate. We can see then on the quarterly trends on margin, it's a consistent headwind.
Matt Comyn: Yes. I mean, I guess that's been a consistent trend. I mean, I talked earlier about the things that had changed between Q1 and Q2. But one thing that didn't change was the very strong level of growth that we continue to see into the Gold Saver product. So that's running multiples of the growth rate. And we're still growing in NetBank Saver, but the key driver of savings account growth in the retail bank has continued to be Gold Saver. And so the sort of mix effect, and where we've called out previously the very strong level of balances that are attracting that high, the bonus rate on Gold Saver, so that's now up to 87% of balances attracting that high rate. We can see then on the quarterly trends on margin, it's a consistent headwind.
Speaker #6: That's driving that .
Speaker #5: Yes . I mean , I guess that's been a consistent trend . I mean , I talked earlier about the things that changed had between the first quarter and the second quarter .
Speaker #5: But one thing that didn't change was the very strong level of growth that we continue to see into the goal saver product . So that's running , you know , multiples of the growth rate .
Speaker #5: And we're still growing in NetSaver. But the key driver of savings account growth in the retail bank has continued to be GoalSaver.
Speaker #5: And so the sort of mix effect, and we've called out previously the very strong level of balances that are attracting that high, the bonus rate on GoalSaver.
Speaker #5: So that's now up to 87% of balances attracting that high rate. We can see them on the quarterly margin trends. It's a consistent headwind.
[Analyst] (various): So very consistent over Q1 and Q2, it was about a basis point headwind in each of those periods due to the mix effect of the growth in that higher-rate product.
Matt Comyn: So very consistent over Q1 and Q2, it was about a basis point headwind in each of those periods due to the mix effect of the growth in that higher-rate product.
Speaker #5: Very consistent over Q1. And Q2 is about a basis point headwind in each of those periods due to the mix effect of that, the growth in that higher rate product.
Alan Docherty: Yeah. I think specifically, we're using.
Alan Docherty: Yeah. I think specifically, we're using.
Richard Wiles: Thank you. I guess.
Richard Wiles: Thank you. I guess.
Alan Docherty: Sorry. I was just saying we're using the Gold Saver product particularly. We've got some targeted offers in market. I think we see a little bit more switching into the saving, but there's probably less churn than we would have seen in other periods from savings into TD. And I think, again, the team have done a good job of optimizing across the various customer segments and trying to make sure we're getting the right overall margin outcomes whilst growing a bit above system as well.
Alan Docherty: Sorry. I was just saying we're using the Gold Saver product particularly. We've got some targeted offers in market. I think we see a little bit more switching into the saving, but there's probably less churn than we would have seen in other periods from savings into TD. And I think, again, the team have done a good job of optimizing across the various customer segments and trying to make sure we're getting the right overall margin outcomes whilst growing a bit above system as well.
Speaker #1: Yeah, I think specifically we're—
Speaker #6: Using I .
Speaker #1: Sorry , I was going to say we're using , you know , the goal saver product , particularly . We've got some targeted offers in market .
Speaker #1: I think we see a little bit more switching into the saving. But there's probably less churn than we would have seen from savings in other periods into, I think, TD.
Speaker #1: And I, you know, again, the team have the job of optimizing across the various customer segments and trying to make sure we're getting the right overall margin outcomes, whilst growing a bit above system as well.
Carlos Cacho: Great. The other question I'd ask is more around the thinking longer-term at these investments you're making. You're clearly investing a lot of money into technology and AI. And you kind of spoke to those vendor inflation headwinds, which appear to be, I guess, the tech companies wanting a return on their investment. How do you think about the return on those investments you're making? And I guess, particularly, how do you think about that flowing through higher revenues versus potentially more productivity or lower costs in time?
Carlos Cacho: Great. The other question I'd ask is more around the thinking longer-term at these investments you're making. You're clearly investing a lot of money into technology and AI. And you kind of spoke to those vendor inflation headwinds, which appear to be, I guess, the tech companies wanting a return on their investment. How do you think about the return on those investments you're making? And I guess, particularly, how do you think about that flowing through higher revenues versus potentially more productivity or lower costs in time?
Speaker #6: Right . The the other question I want to ask is more around the thinking longer term about these investments . You're making with clearly investing a lot of money into technology and AI and kind of spoke to those vendor inflation headwinds , which appear to be , as the tech companies wanting a return on their investment .
Speaker #6: How do you think about the return on those investments you're making? And I guess, particularly, how you think that flows through—higher versus potentially more productivity or lower costs in time?
[Analyst] (various): Yeah. I mean, we've been very pleased with the yield from the investment. And I think, particularly, there's a number of proof points in this result that we've called out that I think show that we are getting a measurable return on those investments. We called out the productivity that we've seen as we've continued to digitize, importantly, the work of a business banker. We've got much better mobile and digital platforms for our business banking customers, getting them to the sort of levels that we'd achieved in previous years for retail customers. And you see that coming through. I mean, that's a big driver of the MFI growth that we've continued to see within the business bank, continue to underpin the transaction account growth.
Alan Docherty: Yeah. I mean, we've been very pleased with the yield from the investment. And I think, particularly, there's a number of proof points in this result that we've called out that I think show that we are getting a measurable return on those investments. We called out the productivity that we've seen as we've continued to digitize, importantly, the work of a business banker. We've got much better mobile and digital platforms for our business banking customers, getting them to the sort of levels that we'd achieved in previous years for retail customers. And you see that coming through. I mean, that's a big driver of the MFI growth that we've continued to see within the business bank, continue to underpin the transaction account growth.
Speaker #5: Yeah , I mean , we've been very pleased with the yield from the investment . And I think it's particularly there's a number of proof points in this result we've think that I called out that we are show measurable , getting a measurable on those return on investments .
Speaker #5: Now, we called out to you the productivity that we've seen as we've continued to digitize. Importantly, the work of a business banker.
Speaker #5: We've got much better mobile and digital platforms for our business banking customers. Getting the sort of them to levels that we'd achieved in previous years for retail customers.
Speaker #5: And you see that coming through. I think that's a big driver of the MFI growth that we've continued to see within the business bank, and it continues to underpin the transaction account growth.
[Analyst] (various): And then we've got a sort of 97% conversion of those TRAN accounts into lending relationships, which are seen as continuing to grow well above system in the business bank over the last 12 months. So yeah, the yield from the technology investments, we're seeing measurable returns both in the revenue side and in the cost side. So we've been pleased with that. To your point, and again, it's why we call out the IT vendor cost inflation. Over the next few years, we're going to continue to see where the returns emerge from newer technologies between the technology companies themselves and the corporates who deploy those tools. Certainly, over the past period of time, we've been pleased with the return that we are generating through our franchise. But that's something that we'll continue to manage, ensure we've got compatibility with lots of different vendors.
Alan Docherty: And then we've got a sort of 97% conversion of those TRAN accounts into lending relationships, which are seen as continuing to grow well above system in the business bank over the last 12 months. So yeah, the yield from the technology investments, we're seeing measurable returns both in the revenue side and in the cost side. So we've been pleased with that. To your point, and again, it's why we call out the IT vendor cost inflation. Over the next few years, we're going to continue to see where the returns emerge from newer technologies between the technology companies themselves and the corporates who deploy those tools. Certainly, over the past period of time, we've been pleased with the return that we are generating through our franchise.
Speaker #5: And then we've got sort of 97% conversion of those Tran accounts into lending relationships, which are seen as continuing to grow well above system in the business bank over the last 12 months.
Speaker #5: So yeah, the yield from the technology investments, you know, we're seeing measurable returns both on the revenue side and in the cost.
Speaker #5: The cost side. So we've been pleased with that, to your point. And again, it's why we—vendor—you’re going to continue for the next few, there is inflation.
Speaker #5: The cost side . So we've been pleased with that . To your point . And again , it's why we vendor you going to continue few next know over the to years there's is the IT you know , we're going to continue to see where the returns emerge from .
Speaker #5: Newer technologies between the technology companies themselves and and the corporates who deploy those tools . Certainly in the over the past period of time , we've been pleased with our the return that we are generating through our franchise .
Alan Docherty: But that's something that we'll continue to manage, ensure we've got compatibility with lots of different vendors. We're able to switch providers in various areas, maintain that flexibility to ensure we maintain competitive, have a competitive tension with some of our key technology providers, which I think is going to be important for every corporate over the next 5, 10 years.
[Analyst] (various): We're able to switch providers in various areas, maintain that flexibility to ensure we maintain competitive, have a competitive tension with some of our key technology providers, which I think is going to be important for every corporate over the next 5, 10 years.
Speaker #5: But that's something that we'll continue to to manage and ensure we've got compatibility with lots of different vendors . We're able to switch providers in various areas and maintain that flexibility to ensure we maintain competitive , you know , have a competitive tension with some of our key technology providers , which I think is going to be important for every corporate over the next five , ten years .
Carlos Cacho: Thank you.
Carlos Cacho: Thank you.
Melanie Kirk: Thank you. The next question comes from Matt Wilson.
Melanie Kirk: Thank you. The next question comes from Matt Wilson.
Matt Wilson: Yeah. Good morning, team. Matt Wilson, Jarden. Two questions, if I may. If you look through the long term, CBA's key point of differentiation has been your largest stickier low, no-cost deposit base, and you're very effective at growing it, as we can see today. And your major bank peers have failed to close that gap through the decades for various reasons. But today, we have sort of two new challenges out there. Macquarie, who's the fourth peer and perhaps should appear in every slide where there's a peer comparison now going forward, have put a line in the sand. And then you've got AI. If we embrace your enthusiasm for AI, then does it follow that we'll all have a personal AI bot that will automatically direct our savings and transaction accounts into the highest-yielding accounts? And a machine will do that for us.
Matt Wilson: Yeah. Good morning, team. Matt Wilson, Jarden. Two questions, if I may. If you look through the long term, CBA's key point of differentiation has been your largest stickier low, no-cost deposit base, and you're very effective at growing it, as we can see today. And your major bank peers have failed to close that gap through the decades for various reasons. But today, we have sort of two new challenges out there. Macquarie, who's the fourth peer and perhaps should appear in every slide where there's a peer comparison now going forward, have put a line in the sand.
Speaker #7: Thank you .
Speaker #3: Thank you. The next question comes from Matt Wilson.
Speaker #8: Yeah . Good morning , team Matt Wilson Two . Jarden . questions , if I may . If you look through the long term key point of , CBA's differentiation has you know , been , your largest year low .
Speaker #8: No-cost deposit base, and you're very effective at growing it, as we see today. And your major bank peers have failed to close that gap through the decades for various reasons.
Speaker #8: But today we have sort of two new challenges out there . Macquarie , who's the fourth peer and perhaps should appear in every slide where there's a peer comparison now going forward , have put a line in the then you've sand and got AI .
Matt Wilson: And then you've got AI. If we embrace your enthusiasm for AI, then does it follow that we'll all have a personal AI bot that will automatically direct our savings and transaction accounts into the highest-yielding accounts? And a machine will do that for us. On that basis today, they moved to Macquarie. I've got a second question.
Speaker #8: If we embrace your enthusiasm for AI, then does it follow that we'll all have a personal AI bot that will automatically direct our savings and transaction accounts into the highest-yielding accounts, and a machine will do that for us?
Matt Wilson: On that basis today, they moved to Macquarie. I've got a second question.
Alan Docherty: Yeah. I mean, look, Matt, I think on your first question, I mean, look, I think what the result demonstrates is our ability to perform in the current context we think we've got. So good strategic assets and sources. And the team have executed really well. We're, of course, alert to lots of different shifts in the competitive context. I mean, specifically, maybe it's a little bit of a flow onto Carlos's question. In terms of AI and technology, we've got a balance between sort of flexibility and scale. I think in the near term, for heavily regulated institutions, I think it adds both complexity and governance. I do think one of the important things that we're certainly spending time on is where do we think AI has the potential to change the economics of the industry?
Matt Comyn: Yeah. I mean, look, Matt, I think on your first question, I mean, look, I think what the result demonstrates is our ability to perform in the current context we think we've got. So good strategic assets and sources. And the team have executed really well. We're, of course, alert to lots of different shifts in the competitive context. I mean, specifically, maybe it's a little bit of a flow onto Carlos's question. In terms of AI and technology, we've got a balance between sort of flexibility and scale. I think in the near term, for heavily regulated institutions, I think it adds both complexity and governance. I do think one of the important things that we're certainly spending time on is where do we think AI has the potential to change the economics of the industry?
Speaker #8: And if, on that basis, today they move to Macquarie, I've got a second question.
Speaker #1: Yeah , but look , Matt , I think on your first question , I mean , look , I think what the result demonstrates is our ability to perform in the current think we've a good context .
Speaker #1: Strategically, we have assets and sources that have been executed really well. Our team has a lot of alertness to lots of different competitive contexts. I mean, specifically, maybe there's a little bit of a flow-on to the question in terms of AI and technology.
Speaker #1: We have we've got a balance between sort of flexibility and scale . I think the in the near term for , for heavily regulated institutions .
Speaker #1: I think, you know, it adds both complexity and governance. I do think one of the important things that we're certainly spending time on is where do we think AI has the potential to change the economics of the industry?
Alan Docherty: What might the impact be around sort of competitive moats or enduring sources of advantage? How might that show up? I think there's lots of different ways that we envisage that we can compete extremely effectively in that environment. So I think we're both planning for the long term, lots of different sort of scenarios. We think we've got the scale to invest. We think we're uniquely placed. And I think the team are highly motivated and very focused on execution. And at least in this period, I think it's a good example of it. And we certainly intend to maintain that focus, discipline, and execution ability.
Matt Comyn: What might the impact be around sort of competitive moats or enduring sources of advantage? How might that show up? I think there's lots of different ways that we envisage that we can compete extremely effectively in that environment. So I think we're both planning for the long term, lots of different sort of scenarios. We think we've got the scale to invest. We think we're uniquely placed. And I think the team are highly motivated and very focused on execution. And at least in this period, I think it's a good example of it. And we certainly intend to maintain that focus, discipline, and execution ability.
Speaker #1: What might the impact be around sort of competitive moats or enduring sources of advantage? How might that show up? I think there's lots of different ways that we envisage that we can compete extremely effectively in that environment.
Speaker #1: So , you know , I think we're planning both for the for the long term . Lots of different sort of scenarios . We think we've got scale to invest .
Speaker #1: I think we were uniquely placed. And our team are highly motivated and very focused on execution. And at least in this period, I think it's a good example of it.
Speaker #1: And we certainly intend to maintain that focus: discipline and execution ability.
Matt Wilson: Thank you. And then a second question, probably linked to Richard's second question as well. If we look back over the last five years or so, headcount at the enterprise is up nearly 20% despite investments in AI and technology that should be driving efficiencies. At some stage in the future, there's obviously a big dividend to be reaped by taking people out of the organization. Could you comment on that opportunity?
Matt Wilson: Thank you. And then a second question, probably linked to Richard's second question as well. If we look back over the last five years or so, headcount at the enterprise is up nearly 20% despite investments in AI and technology that should be driving efficiencies. At some stage in the future, there's obviously a big dividend to be reaped by taking people out of the organization. Could you comment on that opportunity?
Speaker #8: Thank you . And then a second question , probably linked to Richard's second question as well . If we look back over the last five years or so , headcount at the enterprise is up nearly 20% .
Speaker #8: You know, despite investments in AI and technology that should be driving efficiencies, you know, at some stage in the future.
Speaker #8: There's obviously a big dividend to be reaped by taking people out of the organisation. Could you comment on that opportunity?
Alan Docherty: Yeah. Look, I mean, I think that's right. In banking in Australia, there's been a significant increase in headcounts, at least in some of our areas, though as well. I mean, our approach to the management of important risk types like financial crime has strengthened considerably. There's large operational and FTE requirements with that today. When we think about that more broadly, economic crime, cross scams, fraud, cyber, clearly the vector of threats that we need to be able to deal with is increasing on a daily basis. And absolutely, some of the technology that we're deploying at the moment, in time, I think we'll be able to make a meaningful improvement to the level of automation and efficiency with which we're allowed to deliver those services. A lot of the other increases have been in and around technology.
Matt Comyn: Yeah. Look, I mean, I think that's right. In banking in Australia, there's been a significant increase in headcounts, at least in some of our areas, though as well. I mean, our approach to the management of important risk types like financial crime has strengthened considerably. There's large operational and FTE requirements with that today. When we think about that more broadly, economic crime, cross scams, fraud, cyber, clearly the vector of threats that we need to be able to deal with is increasing on a daily basis. And absolutely, some of the technology that we're deploying at the moment, in time, I think we'll be able to make a meaningful improvement to the level of automation and efficiency with which we're allowed to deliver those services. A lot of the other increases have been in and around technology.
Speaker #1: Look , I mean , Yeah . I I , think that's right . In , in , in banking in Australia , there's been a significant increase in , in , in headcount , at least in areas though , as well .
Speaker #1: it's , you know , approach to mean , our some of our I management of risk important types like financial crime has strengthened considerably .
Speaker #1: There's large operational and FTE with requirements that today . When we think about that more broadly , economic crime across scams , fraud , cyber , clearly the vector of threats that we need to be able to deal with is , is increasing daily on a basis .
Speaker #1: And absolutely , some technology that we're deploying at the moment in time , I think we'll be able to make , you know , a meaningful improvement to the level of automation and with which we're able efficiency to to deliver those services .
Alan Docherty: Obviously, that's supported much higher levels of investment, also into key frontline roles, notwithstanding the fact that we've been able to improve productivity on a per-role basis. But I think that's enabled us to grow at a faster revenue rate than peers, which we think is important. So I guess to Alan's answer earlier, I think there's both revenue and cost benefits that have been delivered in this period. And Alan is tracking those benefits very carefully and clearly. We think it's really important to continue to sort of push for further sources of competitive advantage. I think that takes time. But clearly, we think there's some opportunities to manage the cost base over the medium term.
Matt Comyn: Obviously, that's supported much higher levels of investment, also into key frontline roles, notwithstanding the fact that we've been able to improve productivity on a per-role basis. But I think that's enabled us to grow at a faster revenue rate than peers, which we think is important. So I guess to Alan's answer earlier, I think there's both revenue and cost benefits that have been delivered in this period. And Alan is tracking those benefits very carefully and clearly. We think it's really important to continue to sort of push for further sources of competitive advantage. I think that takes time. But clearly, we think there's some opportunities to manage the cost base over the medium term.
Speaker #1: A lot of the other increases have been in and around technology . Obviously , that's supported much higher levels of investment . Also key into roles frontline , notwithstanding , with the fact that we've been able to improve productivity on a per roll think that's basis .
Speaker #1: enabled But I us grow at a to faster revenue rate than which peers , we which we think is is important . So I Alan's guess to answer earlier , I think there's both revenue and cost benefits that are being delivered in this period .
Speaker #1: obviously We're and you know , Alan is tracking those benefits very carefully and think it's We really clearly . important to continue to sort of push for further sources of competitive advantage .
Speaker #1: I think that takes us time. But, clearly, we think there's, you know, some opportunities to manage the cost base over the medium term.
[Analyst] (various): I'd just add one point, Matt, around the 5-year growth in the FTE. Of course, about half of that growth just related to the insourcing that we had within our technology team. So we've moved away from third-party suppliers in many respects, brought our own engineers in-house. We're seeing a much greater velocity, much greater quality, much greater productivity over that four-, five-year period as we've conducted that insourcing. So that's been a big part of the overall FTE growth. But actually, we've seen, again, we've called out some of the benefits we're seeing in terms of the engineering capability. Changes deployed is up 30% on the past 12 months. We're seeing that deployments at greater pace, greater speed, and greater quality. And so the work that we've done to insource into our FTE base, the engineering capability, we think's paying dividends.
Alan Docherty: I'd just add one point, Matt, around the 5-year growth in the FTE. Of course, about half of that growth just related to the insourcing that we had within our technology team. So we've moved away from third-party suppliers in many respects, brought our own engineers in-house. We're seeing a much greater velocity, much greater quality, much greater productivity over that four-, five-year period as we've conducted that insourcing. So that's been a big part of the overall FTE growth. But actually, we've seen, again, we've called out some of the benefits we're seeing in terms of the engineering capability. Changes deployed is up 30% on the past 12 months. We're seeing that deployments at greater pace, greater speed, and greater quality.
Speaker #5: I'd just add one point. One, Matt, on the five year, around FTE. Of course, about half of that growth is just related to the insourcing that we had within our technology team.
Speaker #5: So we've moved away from third party suppliers in many respects , brought our own engineers We're more , much greater seeing a much in-house .
Speaker #5: greater greater quality , much velocity , much productivity we over that 4 or 5 year period . As conducted that insourcing . So that's been a big part of the overall FTE growth .
Speaker #5: But actually, we're seeing again—we've called out some benefits we're seeing in engineering. In terms of capability changes, deploys are up 30% in the past 12 months.
Alan Docherty: And so the work that we've done to insource into our FTE base, the engineering capability, we think's paying dividends.
Speaker #5: deployments at pace , greater We're seeing that speed and greater quality . And so the work that we've done to Insource into our FTE base , the engineering capability , we think is paying dividends .
Matt Wilson: Excellent. Thanks, guys.
Matt Wilson: Excellent. Thanks, guys.
Alan Docherty: Cheers.
Alan Docherty: Cheers.
Melanie Kirk: Thank you. Our next question comes from Brian.
Melanie Kirk: Thank you. Our next question comes from Brian.
Brian Johnson: Hi. Thank you. And first of all, congratulations on the stonking result. But more to the point, since you've been speaking, you've put on the lazy AUD 3 or 4 bucks a share. So I had two questions. The first one is that if we have a look at CommBank, we can see that you've got excess liquidity, long-term funding. You look at your software. You're increasing the expensing profile. You've got incredibly strong provisioning. When I have a look at the profit after capital charge, it's up. You're saying that you normalize the dividend payout ratio for the current low loan losses. I just would be interested to hear, what is the scenario where we'd start to see you harvesting the latency? And does that basically mean that we see a continued dividend growth even when system becomes more adverse? And then I have another question as well, please.
Brian Johnson: Hi. Thank you. And first of all, congratulations on the stonking result. But more to the point, since you've been speaking, you've put on the lazy AUD 3 or 4 bucks a share. So I had two questions. The first one is that if we have a look at CommBank, we can see that you've got excess liquidity, long-term funding. You look at your software. You're increasing the expensing profile. You've got incredibly strong provisioning. When I have a look at the profit after capital charge, it's up. You're saying that you normalize the dividend payout ratio for the current low loan losses. I just would be interested to hear, what is the scenario where we'd start to see you harvesting the latency?
Speaker #8: Excellent. Thanks, guys.
Speaker #3: Thank you. Our next question comes from Brian.
Speaker #8: Hi .
Speaker #6: Thank you . And first of all , congratulations on a stonking result . But more to the point , since you've been speaking , on a you've put lazy 3 or 4 bucks a share .
Speaker #6: So I had two questions. The first one is that if we have a look at CommBank, we see that, in terms of liquidity, you've got...
Speaker #6: Excess long term funding . You look at your software , your increasing the expensing profile . You've got an incredibly strong provisioning . When I have a look at the profit after capital charge , it's up .
Speaker #6: You're saying that you normalize the dividend payout ratio for the current low loan losses. I just would be interested to hear what is the scenario where we'd start to see you harvesting the latency.
Brian Johnson: And does that basically mean that we see a continued dividend growth even when system becomes more adverse? And then I have another question as well, please.
Speaker #6: And does that basically mean that we see a continued dividend growth even when the system becomes more adverse? And then I have another question as well.
Alan Docherty: Yeah. Maybe I'll start, and then Alan can add to it specifically. I mean, BJ, as I know, we've had this conversation before. I mean, a lot of the way we think about things is sort of maximizing value over the long term. We're consistently trying to find ways to invest in the earnings potential. We're prepared to not seek to sort of maximize our performance in a particular period because we want to have the flexibility over a long period of time to both deliver very strong earnings growth and momentum, but also to have substantial flexibility to be able to deal with a range of different scenarios. And so look, I think this is clearly above the central scenario. I think the largest excess we've had at AUD 2.8 billion, there's clearly still tail risks, particularly on a global basis.
Matt Comyn: Yeah. Maybe I'll start, and then Alan can add to it specifically. I mean, BJ, as I know, we've had this conversation before. I mean, a lot of the way we think about things is sort of maximizing value over the long term. We're consistently trying to find ways to invest in the earnings potential. We're prepared to not seek to sort of maximize our performance in a particular period because we want to have the flexibility over a long period of time to both deliver very strong earnings growth and momentum, but also to have substantial flexibility to be able to deal with a range of different scenarios. And so look, I think this is clearly above the central scenario.
Speaker #6: Please .
Speaker #1: Yeah , maybe I'll start . And then Alan can add to it specifically . I mean , as I know we've had this conversation before .
Speaker #1: I mean, a lot of the way we think about things is sort of maximizing value over the long term. We're consistently trying to find ways to invest in the earnings potential where prepared to.
Speaker #1: Not sort of seek to maximize our performance in a particular period, because we want to have the flexibility, you know, over a long period of time, to both deliver very strong earnings growth and momentum.
Speaker #1: But also to have , you substantial flexibility to be able to deal with a range of different scenarios . And so , look , I think this is clearly above the the central scenario .
Matt Comyn: I think the largest excess we've had at AUD 2.8 billion, there's clearly still tail risks, particularly on a global basis. Some of those are hard to accurately predict and price. I mean, I think there's a number of different areas where we've got a lot of flexibility in the organization. Most importantly, we want to translate a lot of the investments into long-term earnings potential going well beyond 2030.
Speaker #1: I think the largest excess we've we've had at , at 2.8 billion , you know , there's clearly still tail risks , particularly on a global basis .
Alan Docherty: Some of those are hard to accurately predict and price. I mean, I think there's a number of different areas where we've got a lot of flexibility in the organization. Most importantly, we want to translate a lot of the investments into long-term earnings potential going well beyond 2030.
Speaker #1: And some of those are hard to , you know . Accurately predict . And price . But I mean , I think there's a number of different areas where we've got a lot of flexibility in the organization .
Speaker #1: But most importantly , we want to translate a lot of the investments into long term earnings potential . You know , going well beyond 2030 .
[Analyst] (various): Yeah. I mean, the balance sheet's there. Things will continue to take us sort of through the cycle view, as Matt says. I mean, we're pleased to hold the provisioning broadly around stable levels, albeit we're growing the lending side of the balance sheet very quickly. We've seen record levels of lending growth. So the coverage ratio of the provisions as a proportion of the risk-weighted assets has drifted a little lower. And so you've seen some unwind of the provisioning that we'd held maybe 12, 18 months ago. But yep, we take it through the cycle view. We like having that latency. And I think that gives us a more stable through-the-cycle performance, which our shareholders really value.
Alan Docherty: Yeah. I mean, the balance sheet's there. Things will continue to take us sort of through the cycle view, as Matt says. I mean, we're pleased to hold the provisioning broadly around stable levels, albeit we're growing the lending side of the balance sheet very quickly. We've seen record levels of lending growth. So the coverage ratio of the provisions as a proportion of the risk-weighted assets has drifted a little lower. And so you've seen some unwind of the provisioning that we'd held maybe 12, 18 months ago. But yep, we take it through the cycle view. We like having that latency. And I think that gives us a more stable through-the-cycle performance, which our shareholders really value.
Speaker #5: Yeah , I mean , the balance sheet settings , we continue to take a sort of through the cycle views . As Matt says .
Speaker #5: I mean , the provisioning , we're pleased to hold the provisioning at the you know , broadly around stable levels , albeit , you know , we're the growing lending side of the balance sheet very quickly .
Speaker #5: We've seen record levels of lending growth . So the coverage ratio , the provisions is a is a proportion of the risk weighted assets has drifted a little lower .
Speaker #5: And so, you've seen some unwind of the provisioning that we've held, maybe 12 to 18 months ago. But we take it through the cycle view.
Speaker #5: We like having that latency . And I think that gives us a more stable through the cycle performance , which our shareholders really value .
Brian Johnson: Just a second question, if I may. Once again, I really want to congratulate the entire management team on the result. If we have a look at some of the global in financial services in particular, as they seem to hit a kind of more adverse environment, they basically seem to be pulling the pin quite aggressively to shed labor. I'm just wondering, when we have a look at CommBank, is there a point at which how close are we at the point to which technology replaces people? And I'm not saying that you necessarily have to go out and retrench people, but natural attrition probably gets you. But do we actually get to the point where we actually see basically the headcount element of the total operating cost fall?
Brian Johnson: Just a second question, if I may. Once again, I really want to congratulate the entire management team on the result. If we have a look at some of the global in financial services in particular, as they seem to hit a kind of more adverse environment, they basically seem to be pulling the pin quite aggressively to shed labor. I'm just wondering, when we have a look at CommBank, is there a point at which how close are we at the point to which technology replaces people? And I'm not saying that you necessarily have to go out and retrench people, but natural attrition probably gets you. But do we actually get to the point where we actually see basically the headcount element of the total operating cost fall?
Speaker #6: Just a second question, if I may. Once again, I really want to congratulate the entire management team on the result.
Speaker #6: If we have a look at some of the global in financial services, in particular, as they seem to hit an adverse environment kind of more, they basically seem to be pulling the pin quite aggressively to shed labour.
Speaker #6: I'm just wondering, when we have a look at Commbank, is there a point at which you—how close are we to the point at which technology replaces people?
Speaker #6: And I'm not saying that you necessarily have to go out and retrench people, but natural attrition probably gets you. But do we actually get to the point where we actually see basically the headcount element of the total operating cost fall?
Brian Johnson: In that context, can you see a point, Matt, and I never thought I'd ask this question, where it's difficult to find more incremental to spend on technology?
Brian Johnson: In that context, can you see a point, Matt, and I never thought I'd ask this question, where it's difficult to find more incremental to spend on technology?
Speaker #6: In that context, can you see a point, Matt? And I have to say, I never thought I'd ask this question, where it's difficult to find more incremental to spend on technology.
Alan Docherty: I think in terms of tech spend and investment and software, I think demand across the economy still sort of outstrips supply. But I mean, clearly, the potential to be able to deliver a lot more change, I mean, significantly more than we're currently doing in year, is clearly there. And I think some of the leading firms globally outside of banking are already seeing some of that automation. Look, I think there's going to be multiple sort of speeds for how AI is adopted across the organization, how it's able to improve and automate some of the processes. I do think also it's important, and certainly, the approach that we're taking is thinking through that very carefully and thinking about the individual tasks and skills. I think it's really important to build the capability across the organization.
Matt Comyn: I think in terms of tech spend and investment and software, I think demand across the economy still sort of outstrips supply. But I mean, clearly, the potential to be able to deliver a lot more change, I mean, significantly more than we're currently doing in year, is clearly there. And I think some of the leading firms globally outside of banking are already seeing some of that automation. Look, I think there's going to be multiple sort of speeds for how AI is adopted across the organization, how it's able to improve and automate some of the processes. I do think also it's important, and certainly, the approach that we're taking is thinking through that very carefully and thinking about the individual tasks and skills. I think it's really important to build the capability across the organization.
Speaker #1: I think, in terms of tech spend and investment, and software, I think demand, you know, across the economy is still, sort of, outstripping supply.
Speaker #1: But I mean , clearly , the potential to be able to deliver a lot more change . I mean than we're currently doing in year is clearly there .
Speaker #1: I think some of the leading firms globally , outside of banking , are already seeing some of that automation . Look , I think there's going to be multiple sort of speeds for how AI is adopted across the organization and how it's able to improve and automate some of the processes .
Speaker #1: You know , I do think also it's it's important , certainly the approach that we're taking is thinking through that very carefully . And , and thinking about the individual tasks and skills .
Alan Docherty: I think anything that is disruptive, like this technology is. It's really important to engage inside the organization, maintain the very high levels of engagement and motivation. I don't think some of the more pessimistic scenarios around labor force disruption will materialize. I think it does take quite a bit of time. I think sort of the performance of the models is quite jagged. There's also a number of different things that you can do really well. There's others that candidly, you can't. But I think the potential over time to improve, certainly, the performance of every individual, provide greater output, and then in time through more automation. And there's also just a number of customer processes we think we can manage on an automated basis.
Matt Comyn: I think anything that is disruptive, like this technology is. It's really important to engage inside the organization, maintain the very high levels of engagement and motivation. I don't think some of the more pessimistic scenarios around labor force disruption will materialize. I think it does take quite a bit of time. I think sort of the performance of the models is quite jagged. There's also a number of different things that you can do really well. There's others that candidly, you can't. But I think the potential over time to improve, certainly, the performance of every individual, provide greater output, and then in time through more automation. And there's also just a number of customer processes we think we can manage on an automated basis.
Speaker #1: I think it's really important to build the capability across the organisation . I think anything that is disruptive like this technology is it's really important to engage inside the organization , maintain the very high levels of engagement and motivation .
Speaker #1: I don't think some know, the more you hear of pessimistic scenarios around labor force disruption, they will materialize. I think it does take quite a bit of time.
Speaker #1: I think the sort of the performance of the models is quite jagged. There's also a number of different things that you can do really well.
Speaker #1: There's others that you you candidly , you can't . But I think the potential over time to , you know , improve . Certainly the performance .
Speaker #1: Of every individual, provide greater output, and then in time, through more automation. And there’s also just a number of customer processes.
Alan Docherty: I mean, we believe in having to be able to service our customers in real time, dealing with scams, and disputes and fraud, and to be able to perform and close those tasks out through an agentic framework, to be able to serve many of our customers more directly and comprehensively. We've already got the capability to be able to monitor the environment and to, on an automated basis, deploy new rules in to pick up and detect fraud. I think we're just scratching the surface of the potential here. And I don't think we're going to be talking about it in very significantly different ways at our full-year results in August. But I think in a sort of three- and five-year timeframe, I think there certainly is some significant potential. And there's a lot of things that need to be managed as a highly regulated industry.
Matt Comyn: I mean, we believe in having to be able to service our customers in real time, dealing with scams, and disputes and fraud, and to be able to perform and close those tasks out through an agentic framework, to be able to serve many of our customers more directly and comprehensively. We've already got the capability to be able to monitor the environment and to, on an automated basis, deploy new rules in to pick up and detect fraud. I think we're just scratching the surface of the potential here. And I don't think we're going to be talking about it in very significantly different ways at our full-year results in August. But I think in a sort of three- and five-year timeframe, I think there certainly is some significant potential.
Speaker #1: We think we can manage on an basis . I mean , we believe in , you know , having to be able to service our customers in real time , dealing with scams and disputes and fraud , and to be able to , you know , perform and close those tasks out through an agentic framework to be able to serve many of our customers directly more and comprehensively .
Speaker #1: We've already got the capability to be able to monitor the environment and to , in an automated basis , deploy new rules in to up and detect fraud .
Speaker #1: I think we're just scratching the surface of the potential here. And I don't think we're going to be talking about it in very significantly different ways at our full-year results in August.
Speaker #1: But I think in a sort of three- and a five-year timeframe, I think there certainly is some significant potential. And there's a lot of things that need to be managed as a highly regulated industry.
Matt Comyn: And there's a lot of things that need to be managed as a highly regulated industry. I mean, I do think sort of governance and transparency and explainability and, most importantly, trust with customers and with employees, I think that'll be a very important part of what we need to do well. We've obviously started communicating externally with some of the work that we're doing. I think we're trying to think about this comprehensively and over a long period of time. We believe it's going to be a source of competitive advantage for CBA.
Alan Docherty: I mean, I do think sort of governance and transparency and explainability and, most importantly, trust with customers and with employees, I think that'll be a very important part of what we need to do well. We've obviously started communicating externally with some of the work that we're doing. I think we're trying to think about this comprehensively and over a long period of time. We believe it's going to be a source of competitive advantage for CBA.
Speaker #1: I mean , I do think , you know , governance and transparency and explainability and most importantly , trust with customers and with employees .
Speaker #1: I think that will be a very important part of what we need to do. Well, we've obviously started communicating externally with some of the work that we're doing.
Speaker #1: And , you know , I think we're trying to think about this of time . And we believe period long it's comprehensively and over a going to source of be a competitive advantage for CBA .
Brian Johnson: Thank you.
Brian Johnson: Thank you.
Melanie Kirk: Thank you. Our next question comes from Brendan.
Melanie Kirk: Thank you. Our next question comes from Brendan.
Brendan Sproules: Good morning. Brendan Sprouse from Goldman Sachs. I just have a couple of questions. Just in terms of the impact of higher interest rates as we look forward into the second half, obviously, looking backwards, this half's had record lending growth, particularly strong deposit growth in business banking, as was touched on earlier on the call. But when you look back to when the cash rate was last 4.35, you showed us a number of slides similar to slide 18, which showed negative spending and cost of living pressures in the household sector. And you also saw quite a slowdown in business credit. Just want to get your view on how sensitive you think the current system growth rate in both lending and deposits will be to these higher rates over the next 6 to 12 months.
Brendan Sproules: Good morning. Brendan Sprouse from Goldman Sachs. I just have a couple of questions. Just in terms of the impact of higher interest rates as we look forward into the second half, obviously, looking backwards, this half's had record lending growth, particularly strong deposit growth in business banking, as was touched on earlier on the call. But when you look back to when the cash rate was last 4.35, you showed us a number of slides similar to slide 18, which showed negative spending and cost of living pressures in the household sector. And you also saw quite a slowdown in business credit. Just want to get your view on how sensitive you think the current system growth rate in both lending and deposits will be to these higher rates over the next 6 to 12 months.
Speaker #6: Thank you .
Speaker #3: Thank you. Our next question comes from Brendan.
Speaker #2: Hi. Good morning, Brendan Sprouse from Goldman Sachs.
Speaker #9: I just have a couple of questions. Just in terms of the impact of higher interest rates as we look forward into the second half.
Speaker #9: Obviously , in this looking backwards , this half had record lending growth , particularly strong deposit growth in business banking , as was touched on earlier on the call .
Speaker #9: But when you look back to when the cash rate was last 4.35 , you showed us a number of slides similar to slide 18 , which showed , you know , negative spending and cost of living pressures in the household sector .
Speaker #9: And you also saw quite a slowdown in business credit. I just want to get your view on how sensitive you think the current system growth rate in both lending and higher net rates will be to deposits, six to twelve months.
[Analyst] (various): Yeah. I mean, it's going to be, to your point, I mean, one of the things I called out in my opening was very strong level of credit growth leads to very strong growth in broad money and money supply. And that's a factor that we look closely at in terms of, I mean, we see a lot of that money supply growth come through our deposit accounts. And that puts more money in people's hands, ultimately, across the economy. And there's an inflationary element, obviously, to that mechanism. So, of course, the reason that rates are being hiked is in order to maybe slow down some of that demand more broadly across the economy, slow down that spending. And so we'd expect to see some impact to that. We've had a very strong period for system growth across both home lending and non-retail lending across the system.
Alan Docherty: Yeah. I mean, it's going to be, to your point, I mean, one of the things I called out in my opening was very strong level of credit growth leads to very strong growth in broad money and money supply. And that's a factor that we look closely at in terms of, I mean, we see a lot of that money supply growth come through our deposit accounts. And that puts more money in people's hands, ultimately, across the economy. And there's an inflationary element, obviously, to that mechanism. So, of course, the reason that rates are being hiked is in order to maybe slow down some of that demand more broadly across the economy, slow down that spending. And so we'd expect to see some impact to that.
Speaker #5: it's going your ? point , I mean , one of the one of the things I called out in the in my opening was very strong level of credit growth leads to very strong growth in broad money and money supply .
Speaker #5: , to to be
Speaker #5: And that's a factor that we look closely at in terms of. We see a lot of that money supply growth come through our deposit accounts.
Speaker #5: That puts more money in people's hands . Ultimately , across the economy . And there's a there's an inflationary element , obviously to that mechanism .
Speaker #5: So of course , the reason that rates are being hiked is in order to , you know , maybe slow down some of that , demand more broadly across the economy , slow down that spending .
Alan Docherty: We've had a very strong period for system growth across both home lending and non-retail lending across the system. Our economics team's got a range of between 6% and 8% across the total system credit over the next couple of years. Obviously, we're running at the top end of that as we sit here today. So look, I think there's maybe some you would expect some impact on system levels of credit growth in a higher-rate environment. I guess the big question will be how many rate rises do we see from here because that'll determine the sort of size of the slowdown you see from a credit perspective.
Speaker #5: And so we would expect to see some impact to that. We've had a very strong period for system growth across both home lending and non-retail lending across the system.
[Analyst] (various): Our economics team's got a range of between 6% and 8% across the total system credit over the next couple of years. Obviously, we're running at the top end of that as we sit here today. So look, I think there's maybe some you would expect some impact on system levels of credit growth in a higher-rate environment. I guess the big question will be how many rate rises do we see from here because that'll determine the sort of size of the slowdown you see from a credit perspective.
Speaker #5: We've got our economics teams with a range of between 6 and 8% across the credit over the next couple of years. Obviously, we're running at the top end of that as we sit here today.
Speaker #5: So look , I think there's , you know , maybe some , you know , you would expect some impact on system levels of credit growth in a higher rate environment .
Speaker #5: I guess the big question will be, how many, you know, how many rate rises do we see from here? Because that will determine the sort of size of the slowdown you see from a credit perspective.
Alan Docherty: Yeah. I mean, if you assume there's a couple of rate hikes, I think it's going to have a modest impact. And even if it took a percentage point off housing credit growth, I think the non-retail credit growth has been very strong. Certainly, everything that we see is there. We think sort of higher nominal growth's going to support that. I think boosting investment is going to be an important driver of productivity. I think there's certainly investments in technology across the economy that are going to support that. And I think that's the importance of having the right sort of capital settings and deploying that lending growth into the right risk-adjusted returns. And we've kind of extended out the sort of credit growth that we've seen over the last couple of years.
Matt Comyn: Yeah. I mean, if you assume there's a couple of rate hikes, I think it's going to have a modest impact. And even if it took a percentage point off housing credit growth, I think the non-retail credit growth has been very strong. Certainly, everything that we see is there. We think sort of higher nominal growth's going to support that. I think boosting investment is going to be an important driver of productivity. I think there's certainly investments in technology across the economy that are going to support that. And I think that's the importance of having the right sort of capital settings and deploying that lending growth into the right risk-adjusted returns. And we've kind of extended out the sort of credit growth that we've seen over the last couple of years.
Speaker #1: Yeah, I think, I mean, if you assume there's a couple of rate hikes, I think it would have a modest impact.
Speaker #1: I mean, even if it took a percentage point off housing credit growth, I think the non-retail credit growth has been very strong.
Speaker #1: Certainly, everything that we see is there. We think sort of higher nominal growth is going to support that. I think boosting investment is going to be an important driver of productivity.
Speaker #1: I think there's certainly other investments in technology . You know , across the going to support that . And I think that's the importance of having , you know , the right sort of capital settings .
Speaker #1: And deploying that lending growth into the right risk-adjusted returns. And we've certainly— we've kind of extended out the sort of credit growth that we've seen over the last couple of years.
Alan Docherty: I guess that's sort of our base case to make sure we're going to perform optimally in that environment.
Matt Comyn: I guess that's sort of our base case to make sure we're going to perform optimally in that environment.
Speaker #1: And I guess that's sort of our base case, to make sure we're going to perform optimally in that environment.
Brendan Sproules: That's great. Thank you. And the second question just on NIMS on slide 27, obviously, one of the better parts of today's result is the lack of compression on your funding costs. To what extent is this a timing issue in terms of the switch in the rate cycle that sort of happened towards the end of the fourth quarter? Obviously, with the RBA pushing rates higher earlier this month, we have seen some deposit product pricing move higher with that. To what extent is that going to play out in the second half, a bit of catch-up in terms of deposit pricing for these higher rates?
Brendan Sproules: That's great. Thank you. And the second question just on NIMS on slide 27, obviously, one of the better parts of today's result is the lack of compression on your funding costs. To what extent is this a timing issue in terms of the switch in the rate cycle that sort of happened towards the end of the fourth quarter? Obviously, with the RBA pushing rates higher earlier this month, we have seen some deposit product pricing move higher with that. To what extent is that going to play out in the second half, a bit of catch-up in terms of deposit pricing for these higher rates?
Speaker #9: That's great . Thank you . And the second question , just on Nims on slide 27 , obviously , one of the better parts of today's result is the lack of compression on your funding costs .
Speaker #9: To what extent is this a timing issue in terms of the switch in the rate cycle, that sort of happened towards the end of the fourth quarter? Obviously, with the RBA pushing rates higher earlier this month, we have seen some deposit product pricing move higher. To what extent is that?
[Analyst] (various): Yeah. I mean, I think that, as we've long said, I mean, deposits are very competitive. And we're going to continue to see the unfavorable mix impact of that growth in our high-rate products. I think that's likely to continue. The other element that we watch closely is wholesale funding spreads. I mean, I guess you've seen a very benign period. I mean, in the last six months, the five-year funding costs in the wholesale funding market's fallen another 10 basis points. You tend to find there's a real correlation between what happens in wholesale funding markets and the level of competitive intensity and deposit pricing. And so one of the forward indicators or lead indicators that we'll be looking carefully at around the likely outlook for deposit pricing and competition is that level of wholesale funding spread. We've had a benign period.
Alan Docherty: Yeah. I mean, I think that, as we've long said, I mean, deposits are very competitive. And we're going to continue to see the unfavorable mix impact of that growth in our high-rate products. I think that's likely to continue. The other element that we watch closely is wholesale funding spreads. I mean, I guess you've seen a very benign period. I mean, in the last six months, the five-year funding costs in the wholesale funding market's fallen another 10 basis points. You tend to find there's a real correlation between what happens in wholesale funding markets and the level of competitive intensity and deposit pricing. And so one of the forward indicators or lead indicators that we'll be looking carefully at around the likely outlook for deposit pricing and competition is that level of wholesale funding spread.
Speaker #9: Is there a bit of a catch in terms of how that's going to play out in the second half? With the higher rates, is that going to factor into the deposit pricing?
Speaker #5: mean , I Yeah , I think that as we've long said , I think the deposits are very competitive and we're going to see the mix unfavorable mix impact of that growth in our high rate product .
Speaker #5: So, I think that's likely to continue. The other element that we watch closely is wholesale funding spreads. I mean, I guess you've seen a very benign period.
Speaker #5: I mean, in the last six months, the five-year funding costs and the wholesale funding markets have fallen another ten basis points.
Speaker #5: You tend to find there's a real correlation between what happens in wholesale funding markets and the deposit, competitive intensity, and deposit pricing.
Speaker #5: And so one of the forward indicators, or lead indicators, that we'll be looking carefully at around the likely outlook for deposit pricing and competition is that level of wholesale funding spread. We've had a benign period where, below historic averages, a number of those long-term funding products—so we'll keep a close watch on those.
Alan Docherty: We've had a benign period. We're below historic averages in a number of those long-term funding products. So we'll keep a close eye on that in terms of how that, I mean, there's a potential for that to revert and that to lead to more deposit competition in the second half. But we don't know that today. We'll keep a close watch on that.
[Analyst] (various): We're below historic averages in a number of those long-term funding products. So we'll keep a close eye on that in terms of how that, I mean, there's a potential for that to revert and that to lead to more deposit competition in the second half. But we don't know that today. We'll keep a close watch on that.
Speaker #5: Close eye on that in terms of how that has a potential for that to revert, and that to lead to more deposit competition in the second half.
Brendan Sproules: Terrific. Thanks for that.
Brendan Sproules: Terrific. Thanks for that.
Speaker #5: But we don't know that today. We'll keep a close watch on that.
Melanie Kirk: Thank you. Our next question comes from John Storey.
Melanie Kirk: Thank you. Our next question comes from John Storey.
Speaker #9: Terrific. Thanks for that.
Speaker #3: Thank you. Our next question comes from John Story.
John Storey: Thanks very much. Good set of results, as Brian was saying. Matt, I just wanted to touch quickly just on business model and potential disruption to business models. You've seen it in the last few days. Insurance, broking firms have obviously been impacted by the threat of AI, right, in terms of distribution. Just thinking about it in terms of the mortgage market here in Australia, how prevalent brokers have become, I mean, what are your views on the likelihood of AI disrupting mortgage brokers so the disintermediators ultimately becoming disintermediated? And around that, how well or how prepared is CBA in terms of its own business model for something like that that could potentially eventuate?
John Storey: Thanks very much. Good set of results, as Brian was saying. Matt, I just wanted to touch quickly just on business model and potential disruption to business models. You've seen it in the last few days. Insurance, broking firms have obviously been impacted by the threat of AI, right, in terms of distribution. Just thinking about it in terms of the mortgage market here in Australia, how prevalent brokers have become, I mean, what are your views on the likelihood of AI disrupting mortgage brokers so the disintermediators ultimately becoming disintermediated? And around that, how well or how prepared is CBA in terms of its own business model for something like that that could potentially eventuate?
Speaker #10: Thanks very much . And good set of results . As Brian was saying . But I just wanted to touch quickly , just on business model and disruption potential disruption .
Speaker #10: You've seen it in the last few days. Insurance broking firms have obviously been impacted by the threat of AI, right?
Speaker #10: In terms of distribution . Just thinking about it in terms of the mortgage market share in , how brokers have become . I mean , what are your views on likelihood prevalent Australia AI of disrupting , you know , mortgage brokers ?
Speaker #10: So the disintermediation of becoming disintermediated and around that , how well or how prepared is CBA insensitive ? Its own business model something like for that .
Alan Docherty: Yeah. No. I mean, look, we've tried to think through all the various sort of potential sources of disruption, not limited to mortgages, and how to most effectively prepare for that. I think we feel we've got the right combination of distribution assets to perform well in that particular environment. I mean, I know from speaking to a number of mortgage brokers and some of the leaders of those mortgage broker firms, that's definitely on their mind. I think, like a lot of businesses, perhaps the sort of speed and rate of disruption is also a question of debate. I think one of the things that has been important in terms of why customers will still preference a face-to-face experience with either a mortgage broker or a proprietary lender is it's a significant decision. I think people still value that.
Matt Comyn: Yeah. No. I mean, look, we've tried to think through all the various sort of potential sources of disruption, not limited to mortgages, and how to most effectively prepare for that. I think we feel we've got the right combination of distribution assets to perform well in that particular environment. I mean, I know from speaking to a number of mortgage brokers and some of the leaders of those mortgage broker firms, that's definitely on their mind. I think, like a lot of businesses, perhaps the sort of speed and rate of disruption is also a question of debate. I think one of the things that has been important in terms of why customers will still preference a face-to-face experience with either a mortgage broker or a proprietary lender is it's a significant decision. I think people still value that.
Speaker #10: That could potentially eventuate ?
Speaker #1: Yeah . No , I mean , look , we've tried to think through all the various sort of potential sources of disruption , not limited to mortgages and how to most effectively prepare for that .
Speaker #1: I think we feel we've got the right combination of distribution assets to perform well in that particular environment. I mean, I know from speaking to a number of mortgage brokers and some of the leaders of those mortgage broker firms, that's definitely on their mind.
Speaker #1: You know , I think like a lot of businesses , perhaps the sort of speed and rate of disruption is also , a you know , question of debate know , I think one of the things has been important in terms of why .
Speaker #1: Customers will still have that preference for a face-to-face experience with either a broker or for a significant decision. I think people still value that.
Alan Docherty: I would have incorrectly forecast the proportion of mortgages that would have gone to digital when we started sort of thinking about this 15 years ago. It's been a lot slower. But look, I think it's important to think things through and assume they're going to happen more rapidly. I think, in our case, we think we're well prepared. And I think there's very few sectors of the economy that aren't thinking about some of the disruptive potential. And obviously, the rate and pace of change, particularly some of the agentic services that are out even in the last month, certainly, there's been some pretty significant share price reactions to a number of global industry and software providers.
Matt Comyn: I would have incorrectly forecast the proportion of mortgages that would have gone to digital when we started sort of thinking about this 15 years ago. It's been a lot slower. But look, I think it's important to think things through and assume they're going to happen more rapidly. I think, in our case, we think we're well prepared. And I think there's very few sectors of the economy that aren't thinking about some of the disruptive potential. And obviously, the rate and pace of change, particularly some of the agentic services that are out even in the last month, certainly, there's been some pretty significant share price reactions to a number of global industry and software providers.
Speaker #1: I would have , you know , incorrectly forecast the proportion of mortgages that would have gone to digital when we started sort of thinking about this , you know , 15 years ago .
Speaker #1: And it's been a lot slower. So, but look, I think it's important to think things through and assume they're going to happen more rapidly.
Speaker #1: I think in our case, we think we're well prepared. And I think there's very few sectors of the economy that aren't thinking about some of the disruptive potential.
Speaker #1: And , you know , obviously the rate and pace of change , particularly with some of the , you know , agentic services that are out even in the even in the last month some pretty share price there's been significant , certainly number to a global industry and software .
John Storey: I mean, just quickly on a second question, obviously, a lot of talk, I guess, has been going over the last few weeks, months around increased levels of competition within the market. And obviously, you've got a very interesting slide, slide 73, 74, just around your new business volumes that are up significantly, 24%, half-on-half, right? I wanted to just get your views on to what extent this growth that you've ultimately seen reflects some of the competitors actually stepping back from the market, right? So I'm thinking specifically around some of the regional banks. And then, obviously, ANZ is going through a period of restructuring. How sustainable is this level of new business growth that CBA is showing?
John Storey: I mean, just quickly on a second question, obviously, a lot of talk, I guess, has been going over the last few weeks, months around increased levels of competition within the market. And obviously, you've got a very interesting slide, slide 73, 74, just around your new business volumes that are up significantly, 24%, half-on-half, right? I wanted to just get your views on to what extent this growth that you've ultimately seen reflects some of the competitors actually stepping back from the market, right? So I'm thinking specifically around some of the regional banks. And then, obviously, ANZ is going through a period of restructuring. How sustainable is this level of new business growth that CBA is showing?
Speaker #10: And then just quickly on second a question , obviously , a lot of talk . I guess this morning , certainly over the last few weeks , months around increased levels of competition within the market and obviously you've got a very interesting slide .
Speaker #10: Slide 7374 just around your new business volumes that are up . You know , significantly , 24% , half and half , right ?
Speaker #10: I wanted to just get your views on, you know, to what extent, you know, this growth that you've often seen reflects some of the competitors actually stepping back from the market.
Speaker #10: Right . So I'm thinking specifically around some of the regional banks and obviously ANZ , you know , is going through a period of restructuring , know , how sustainable is this level of new business growth that CBA is showing .
Alan Docherty: Well, I mean, we'll see. It remains to be seen. But I mean, I think we executed well in the period. We're certainly planning to continue to do that. I mean, look, I do think it's quite interesting in terms of some of the share shifts on the deposit side and then on the asset side. I think where your returns are under pressure and you're not able to generate returns above the cost of capital, it's pretty hard to still let grow its system. Yes, there's disruption. I guess the other point occurs to us as we look at both capital ratios across the industry and what we would anticipate the DPS profiles might be at some of those institutions, it would probably tend to support pretty disciplined pricing.
Matt Comyn: Well, I mean, we'll see. It remains to be seen. But I mean, I think we executed well in the period. We're certainly planning to continue to do that. I mean, look, I do think it's quite interesting in terms of some of the share shifts on the deposit side and then on the asset side. I think where your returns are under pressure and you're not able to generate returns above the cost of capital, it's pretty hard to still let grow its system. Yes, there's disruption. I guess the other point occurs to us as we look at both capital ratios across the industry and what we would anticipate the DPS profiles might be at some of those institutions, it would probably tend to support pretty disciplined pricing.
Speaker #1: Well , I mean , we'll see I think remains to be seen . But I mean , I think we , you know , executed well in the period .
Speaker #1: We certainly are planning continue to do that . I mean , look , I do think it's quite interesting in terms of some of the share shift on the deposit side and then on the asset side , I think where your returns are under pressure and you're not able to generate returns above the cost of capital , it's pretty hard to sell it , grow it system .
Speaker #1: Yes , there's there's disruption . I guess the other point is it occurs to us , as we look at both , you know , capital ratios across the industry and what we would anticipate the DPS might profiles be at some of those institutions .
Alan Docherty: I think, clearly, where there's volume share shifts between institutions, that tends to, at times, lead to not particularly disciplined pricing. I think this has been a really good period for the half. I think it's an interesting equation, at least as we look forward and think about, well, if it's higher credit growth and the RWA consumption that comes with that, shouldn't plan, as your base case, that record low loan losses are going to continue. Investment, certainly for us, we're increasing. And we think that's important from a competitive perspective as well as to be able to support broader resilience objectives. But maybe that financial equation looks a little challenged, perhaps, for some. And so, I mean, look, I think we're thinking about how best to compete in that environment.
Speaker #1: It would probably start it would tend to support pretty disciplined pricing . And so , you know , I think clearly where there's volume share shifts between institutions , that tends to at times lead to not particularly pricing .
Matt Comyn: I think, clearly, where there's volume share shifts between institutions, that tends to, at times, lead to not particularly disciplined pricing. I think this has been a really good period for the half. I think it's an interesting equation, at least as we look forward and think about, well, if it's higher credit growth and the RWA consumption that comes with that, shouldn't plan, as your base case, that record low loan losses are going to continue. Investment, certainly for us, we're increasing. And we think that's important from a competitive perspective as well as to be able to support broader resilience objectives. But maybe that financial equation looks a little challenged, perhaps, for some. And so, I mean, look, I think we're thinking about how best to compete in that environment.
Speaker #1: I think this has good period for the for disciplined the it's quite I think a you know , an I think it's interesting at least as we look forward and think about , well , if it's higher credit growth and the IWA , that consumption that comes with that shouldn't plan as your base case that , you know , record low loan losses are going to continue .
Speaker #1: You know, investment certainly for us, we're increasing, and we think that's important from a competitive perspective, as well as to be able to support, you know, broader resilience, I think.
Speaker #1: objectives . I But maybe that financial equation looks a little looks a little challenged , perhaps for some . And so I mean , look , I think we're thinking about how best to , to compete in that environment .
Alan Docherty: I think, hopefully, at least this six-month period has been probably one of our better periods of execution in market.
Matt Comyn: I think, hopefully, at least this six-month period has been probably one of our better periods of execution in market.
Speaker #1: And I think, hopefully at least, this six-month period has been probably one of our better periods of execution in market.
John Storey: Excellent. Thanks so much, Matt.
John Storey: Excellent. Thanks so much, Matt.
Melanie Kirk: Thank you. Our next question comes from Matt Dunger.
Melanie Kirk: Thank you. Our next question comes from Matt Dunger.
Speaker #10: Okay, thanks so much, Matt.
Matt Dunger: Yes. Thank you for taking my questions. Can I ask a deposit question in a different way? The 79% deposit funding stands out versus the peers. You've flagged you're expecting higher growth in higher-rate deposits. And we noticed that NetBank Saver didn't reprice as much as some of your peers through 2025. So why compete on price when you're already leading deposit growth? Is there a target at CBA to continue to strengthen the deposit funding mix?
Matt Dunger: Yes. Thank you for taking my questions. Can I ask a deposit question in a different way? The 79% deposit funding stands out versus the peers. You've flagged you're expecting higher growth in higher-rate deposits. And we noticed that NetBank Saver didn't reprice as much as some of your peers through 2025. So why compete on price when you're already leading deposit growth? Is there a target at CBA to continue to strengthen the deposit funding mix?
Speaker #3: Our next thank you question comes from Matt Dunga.
Speaker #11: taking Thank you for my Yes . questions . Could I ask the deposit question in a different way ? The 79% deposit funding stands out versus the peers you've flagged .
Speaker #11: You're expecting higher growth in in higher rate deposits . And we noticed that net saver didn't reprice as much as some of your peers through 2025 .
Speaker #11: So, compete on price when you're already leading deposit growth? Is there a target at CBA to continue to strengthen the deposit funding mix?
[Analyst] (various): Yeah. I mean, we're predominantly deposit-funded. We want to keep it that way. We've been impressed with the execution on the deposit gathering. It's a foundational relationship. It drives MFI. It drives, as you can see in the numbers we've disclosed, a 90% relationship between retail transaction account and home lending, propensity to have your home loan with CBA, higher in the business bank. So it's an important part of the franchise. We want to continue to gather deposits. Now, we're in a competitive market for deposits. Hence, we've got a very attractive offer on not only Gold Saver, very, very, very attractive rate on Gold Saver with a very high proportion of balances that achieve that rate. We've also got very competitive term deposit offers.
Alan Docherty: Yeah. I mean, we're predominantly deposit-funded. We want to keep it that way. We've been impressed with the execution on the deposit gathering. It's a foundational relationship. It drives MFI. It drives, as you can see in the numbers we've disclosed, a 90% relationship between retail transaction account and home lending, propensity to have your home loan with CBA, higher in the business bank. So it's an important part of the franchise. We want to continue to gather deposits. Now, we're in a competitive market for deposits. Hence, we've got a very attractive offer on not only Gold Saver, very, very, very attractive rate on Gold Saver with a very high proportion of balances that achieve that rate. We've also got very competitive term deposit offers.
Speaker #5: Yeah , I mean , always we're predominantly deposit funded and we want to keep it that way . We've been you know , you know , impressed with the execution on the deposit gathering .
Speaker #5: And it's a foundational relationship. It drives MFI. It drives, as you can see in the numbers we've disclosed, a 90% relationship between retail transaction account and home lending.
Speaker #5: You have your propensity to, with CBA home loan, higher in the business bank. So we, you know, it's an important—an important part of the franchise.
Speaker #5: We want to continue to gather deposits . Now we're in a competitive market for deposits , and hence we've got a very attractive offer on not only goal saver , you know , very , very , very attractive rate on goal saver with very high proportion of balances that achieve that rate .
[Analyst] (various): So the 12-month term deposit specials that you've seen across the industry, I mean, they're up 45 basis points in the last 6 months. So that's an important part of the franchise. We'll compete effectively in there. We've been happy with the improvement in the deposit ratio. I think it's a game of inches, though, on the deposit ratio. It's a large balance sheet. We're continuing to compete well for deposits. We don't have particular targets that we set around that particular ratio. We want to keep funding as much of our lending growth as possible through deposits. And pleasingly, in this 6-month period, deposit growth outpaced lending growth, even though we had a very high level of lending growth relative to a very high system.
Alan Docherty: So the 12-month term deposit specials that you've seen across the industry, I mean, they're up 45 basis points in the last 6 months. So that's an important part of the franchise. We'll compete effectively in there. We've been happy with the improvement in the deposit ratio. I think it's a game of inches, though, on the deposit ratio. It's a large balance sheet. We're continuing to compete well for deposits. We don't have particular targets that we set around that particular ratio. We want to keep funding as much of our lending growth as possible through deposits. And pleasingly, in this 6-month period, deposit growth outpaced lending growth, even though we had a very high level of lending growth relative to a very high system.
Speaker #5: We also got very competitive term deposit offers . So the , you know , the 12 month term deposit specials that you're seeing across the industry , I mean , they're up 45 basis points in the last six months .
Speaker #5: So you know that you that's an important part of the franchise . We're you know we'll compete effectively in there . We've got you know , we've been you know we've been happy with the improvement in the deposit ratio .
Speaker #5: I think it's a game of inches, though, on the deposit ratio. It's, you know, it's a large balance sheet. We're continuing to compete.
Speaker #5: Well, don't deposits have particular targets that we set around a particular ratio? We want to keep funding as much of our lending growth as possible through deposits.
Speaker #5: And pleasingly , in the six month period , deposit growth outpaced lending growth , even though we had a very high level of lending growth relative to a very high system .
[Analyst] (various): We were able to retire AUD 2 billion of long-term wholesale funding, which, again, helps in terms of the overall earnings profile and the interest margins. We don't have particular targets that we set around that. We just try and keep things in balance and make sure we've got a strong deposit gathering franchise.
Alan Docherty: We were able to retire AUD 2 billion of long-term wholesale funding, which, again, helps in terms of the overall earnings profile and the interest margins. We don't have particular targets that we set around that. We just try and keep things in balance and make sure we've got a strong deposit gathering franchise.
Speaker #5: So we were able to retire a couple of billion dollars of long term wholesale funding , which again , is , you know , helps helps in terms of the overall earnings profile and the interest margin .
Speaker #5: So we don't have particular targets that we set around that; we just try and keep things in balance and make sure we've got a strong deposit-gathering franchise.
Matt Dunger: Thank you very much. If I could just follow up on the credit quality side, talking about bad debt charges being low, you just referenced some of the peers setting capital returns policies based on that. But you've seen the external refinancing of corporate exposures bringing down the arrears. Just wondering if this reflects your conservative lending settings or you're seeing competition for this corporate business as it refis out?
Matt Dunger: Thank you very much. If I could just follow up on the credit quality side, talking about bad debt charges being low, you just referenced some of the peers setting capital returns policies based on that. But you've seen the external refinancing of corporate exposures bringing down the arrears. Just wondering if this reflects your conservative lending settings or you're seeing competition for this corporate business as it refis out?
Speaker #5: Yeah .
Speaker #11: you very Thank much . And if I could just follow up on on the credit quality side , you're talking about bad debt charges being being low .
Speaker #11: You just referenced some of the peer-setting capital returns policies based on that. You've seen the external corporate exposures, refinancing, and bringing down the arrears.
Speaker #11: Is this just a reflection of your conservative lending settings, or are you seeing competition for this corporate business as it reaches out?
[Analyst] (various): Yeah. We've continued to see, I mean, there's always going to be an element of external refinancing across each of the bank's portfolios. So we've seen some of that over the last sort of 6 and 12 months, in particular, within our business bank in particular. It's a competitive market. We've seen some continued aggressive pricing offers in market, particularly at that top end of the business bank. I think we'd called that out 6 and 12 months ago. That's continued into the last couple of quarters. We are seeing some banks compete more on credit risk appetite. And we've seen some external refinancing from our portfolio. So yeah, I think that's a function of the competitive market for business bank and that we're in at the moment.
Alan Docherty: Yeah. We've continued to see, I mean, there's always going to be an element of external refinancing across each of the bank's portfolios. So we've seen some of that over the last sort of 6 and 12 months, in particular, within our business bank in particular. It's a competitive market. We've seen some continued aggressive pricing offers in market, particularly at that top end of the business bank. I think we'd called that out 6 and 12 months ago. That's continued into the last couple of quarters. We are seeing some banks compete more on credit risk appetite. And we've seen some external refinancing from our portfolio. So yeah, I think that's a function of the competitive market for business bank and that we're in at the moment.
Speaker #5: we've Yeah , continued to see I mean , there's there's always going to be an element of external refinancing across each of the banks portfolios .
Speaker #5: So we've seen some of that over the last, sort of, six and twelve months in particular. Within our Business Bank in particular, you know, it's a competitive market.
Speaker #5: There's , you know , we've seen some some continued aggressive pricing offers in market , particularly at that top end of the business bank .
Speaker #5: I think we've called that out six and twelve months ago. That's continued into the last couple of quarters. We are seeing some banks compete more on credit risk appetite.
Speaker #5: And we've seen some external refinancing from our portfolio. So I think that's a function of the competitive market for business banking that we're in at the moment.
Melanie Kirk: Thank you. The next question comes from Ed Henning. Ed, do we have you on the line? We might just move to the next question. Perhaps we can come back to Ed if the line comes back. The next question we'll take is from Tom Strong.
Melanie Kirk: Thank you. The next question comes from Ed Henning. Ed, do we have you on the line? We might just move to the next question. Perhaps we can come back to Ed if the line comes back. The next question we'll take is from Tom Strong.
Speaker #3: The next question you . comes from Ed Henning . And do we have you on the line ? We might just next move to the question and perhaps we can come back to Ed if the line comes back , the next question will take us from Tom strong .
Brendan Sproules: Oh, thanks, Belle. Tom Strong from Citi. Just a couple of questions. The first, on the replicating portfolio, it contributed a basis point in the half. And your commentary suggested that much of that came in the December quarter. How should we think about the replicating portfolio over the next couple of halves, just given the material step-up in swaps that sit sort of 50 to 100 basis points above the cash rate now?
Tom Strong: Oh, thanks, Belle. Tom Strong from Citi. Just a couple of questions. The first, on the replicating portfolio, it contributed a basis point in the half. And your commentary suggested that much of that came in the December quarter. How should we think about the replicating portfolio over the next couple of halves, just given the material step-up in swaps that sit sort of 50 to 100 basis points above the cash rate now?
Speaker #12: Oh , thanks , Mel . Tom Strong from Sydney , just a couple of questions . The first on the replicating portfolio . It contributed a basis point in the half in commentary suggested that much of that came in the December quarter .
Speaker #12: How should we think about the replicating portfolio over the next couple of halves? Has given the material step up in swaps that sit sort of 50 to 100 basis points above the tractor rates.
[Analyst] (various): Yeah. Yeah. There'll be, the tranches will perform well at current swap rates. Now, the swap rates have proven to be, obviously, fairly volatile over the past 12, 18 months. But yeah, current levels of swap rate, I mean, there'll be a pickup in each of the tranches. So if you think about the size of a Replicating Portfolio, it's something like AUD 2 billion that we'll reinvest at current swap rates each month. And so yeah, that'll be a function of where swap rates move, expectations for interest rates more broadly, and the level of the deposits that we choose to hedge at any point in time. So yeah, that'll be a supportive element.
Alan Docherty: Yeah. Yeah. There'll be, the tranches will perform well at current swap rates. Now, the swap rates have proven to be, obviously, fairly volatile over the past 12, 18 months. But yeah, current levels of swap rate, I mean, there'll be a pickup in each of the tranches. So if you think about the size of a Replicating Portfolio, it's something like AUD 2 billion that we'll reinvest at current swap rates each month. And so yeah, that'll be a function of where swap rates move, expectations for interest rates more broadly, and the level of the deposits that we choose to hedge at any point in time. So yeah, that'll be a supportive element.
Speaker #12: Now ?
Speaker #5: Yeah , yeah , there'll be , you know , the tractors will perform well at current swap rates . swap the have obviously fairly volatile over the past Now rates proven to be 12 to 18 months .
Speaker #5: But at current levels of swap rate , I mean , there'll up in be a pick each of the tractors . So if you think about the size of a replicating portfolio , it's something like $2 billion .
Speaker #5: That will reinvest at current swap rates each month. And so, yeah, that'll be a function of where swap rates move, expectations for interest rates more broadly.
Speaker #5: And the level of the deposits that we choose to hedge at any point in time. So, yep, that will be a supportive element.
[Analyst] (various): I mean, the equity tracker, we called out last time round, if you go back 3 years where swap rate was then, it's pretty similar to where swap rate is today in the 3-year part of the curve. And so we're not going to see much tailwind on equity tracker but replicating portfolio, given it's a 5-year tracker. We've probably got another 2, 3 halves of positive earnings momentum as those, if you go back sort of 4, 5 years, we were still in some pretty low rate environment. Some of the trackers that we put on there are coming up for reinvestment at much higher current rates. So yeah, 2 or 3 halves of earnings momentum from replicating remain.
Alan Docherty: I mean, the equity tracker, we called out last time round, if you go back 3 years where swap rate was then, it's pretty similar to where swap rate is today in the 3-year part of the curve. And so we're not going to see much tailwind on equity tracker but replicating portfolio, given it's a 5-year tracker. We've probably got another 2, 3 halves of positive earnings momentum as those, if you go back sort of 4, 5 years, we were still in some pretty low rate environment. Some of the trackers that we put on there are coming up for reinvestment at much higher current rates. So yeah, 2 or 3 halves of earnings momentum from replicating remain.
Speaker #5: I mean , the equity tractor we called out last time round , you know , if you go back three years where swap rate was , then it's pretty similar to where swap rate is today .
Speaker #5: And the three year part of the curve . And so we're not going to see much tailwind on equity tractor . replicating But portfolio given it's a five year tractor .
Speaker #5: You know, we've probably got another two or three halves of positive earnings momentum, as those—if you go back sort of four or five years.
Speaker #5: We were still in a pretty low rate environment. Some of the tranches that we put on there are coming up for reinvestment at much higher current rates.
Speaker #5: So yep, two or three halves of earnings momentum from replicating remain.
Brendan Sproules: Right. Thanks, Alan. Just a second question around business deposits. I mean, we look at the strong growth in the business bank, but net of offset accounts, a lot of this growth has come from more expensive TDs. And the business MFI did sort of slip slightly half-on-half. I mean, how are you seeing competition for business deposits more broadly, given a number of your peers are spending pretty considerably to emulate your success here?
Tom Strong: Right. Thanks, Alan. Just a second question around business deposits. I mean, we look at the strong growth in the business bank, but net of offset accounts, a lot of this growth has come from more expensive TDs. And the business MFI did sort of slip slightly half-on-half. I mean, how are you seeing competition for business deposits more broadly, given a number of your peers are spending pretty considerably to emulate your success here?
Speaker #12: Great . Thanks , Thanks . Alan . And just a second question around business deposits . And when we look at the strong growth in the business But net bank .
Speaker #12: Of offset accounts, a lot of this growth has come from more expensive TDs. And the business MFI did sort of slip slightly, half and half.
Speaker #12: I mean, how are you seeing competition for business deposits more broadly, given a number of your peers are spending pretty considerably to emulate your success here?
[Analyst] (various): Yeah. I mean, it's a competitive market for deposits, both on the retail side and the business bank side. We've been pleased with the deposits that we've gathered. I mean, the new business transaction account openings have continued at pace. I think we're up 7% in net BTA accounts opened over the past 12 months. So pleased with that. Yeah, we did. I think there's a little bit of volatility. It's a 6-month moving average on MFI. I think we're up 40 basis points year-on-year in the longer-term trend. I think we're up 300 basis points over the last 5 years. So you'll see some oscillation one half to the next. But the overall momentum within MFI, I think, goes to the good execution within that franchise over multiple years.
Alan Docherty: Yeah. I mean, it's a competitive market for deposits, both on the retail side and the business bank side. We've been pleased with the deposits that we've gathered. I mean, the new business transaction account openings have continued at pace. I think we're up 7% in net BTA accounts opened over the past 12 months. So pleased with that. Yeah, we did. I think there's a little bit of volatility. It's a 6-month moving average on MFI. I think we're up 40 basis points year-on-year in the longer-term trend. I think we're up 300 basis points over the last 5 years. So you'll see some oscillation one half to the next. But the overall momentum within MFI, I think, goes to the good execution within that franchise over multiple years.
Speaker #5: I mean, it's—yeah, it's a competitive market for deposits, both for REIT on the retail side and the business bank side.
Speaker #5: We've been pleased with the deposits that we've gathered . I mean , the new business transaction account openings have continued at pace . I think we're up 7% in beat BTA net accounts opened over the past 12 months .
Speaker #5: So pleased with that . Yeah , we did , we did . I think there was a there was a there's a little bit of volatility .
Speaker #5: It's a six-month moving average on MFI. I think we're up 40 basis points year on year, in the longer term trend.
Speaker #5: I think we're up 300 basis points over the last five years . So you'll see some oscillation one half to the next . But the overall momentum within MFI I think goes to the , you know , the good execution within that franchise over multiple years .
[Analyst] (various): Yeah, there's been, I think, some, as I mentioned, Ellis, we've got some attractive rates on the term deposit product as well. That did particularly well in the six-month period within the business bank, which we're pleased with. It's a good stable source of funding for the strong lending growth that we're doing in that division.
Alan Docherty: Yeah, there's been, I think, some, as I mentioned, Ellis, we've got some attractive rates on the term deposit product as well. That did particularly well in the six-month period within the business bank, which we're pleased with. It's a good stable source of funding for the strong lending growth that we're doing in that division.
Speaker #5: And yep , there's been you know , I think some as I mentioned earlier , we got some attractive rates on the term deposit product as well .
Speaker #5: And that did particularly well in the six month period within the business bank , which , you know , we're pleased with . It's a good stable source of funding for the strong lending growth that we're doing in that division .
Brendan Sproules: Great. Thanks, Alan.
Brendan Sproules: Great. Thanks, Alan.
Melanie Kirk: Thank you. That brings us to the end of the briefing. Thank you for joining us. Please reach out if you have any follow-up questions. Thank you.
Melanie Kirk: Thank you. That brings us to the end of the briefing. Thank you for joining us. Please reach out if you have any follow-up questions. Thank you.
Speaker #12: Great . Thanks , Alan
Speaker #3: you .
Speaker #3: That . Thank brings us to the end of the briefing . Thank you for joining us . And please reach out if you have any follow up questions .
