2020 Annual Report
We can.
Together.
How we create value
Our strategic priorities 8
Focus on financial
performance 18
2020 highlights 2
Chairman’s message 4
CEO’s message 6
Overview
Our commitment
to sustainability 28
Focus on sustainability
performance 46
Managing our changing
isk landscape 55
Responding to COVID-19 risks 56
Our cu
ent risk priorities 58
Our approach to
corporate governance 62
Board priorities during XXXXXXXXXX
Board of Directors 67
Executive Leadership Team 70
CONTENTS
P.14
Best in
digital
We aim to
provide the best
digital banking
experience by
inging together
market-leading
service, technology
and innovation.
P.6
Delivering for our
customers and
communities
We have been focused on
supporting our customers and
communities, especially through
this year’s challenges.
The release of this announcement was authorised by Kara Nicholls, Group Company Secretary.
Commonwealth Bank of Australia | ACN XXXXXXXXXX | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000 | 12 August 2020
161/2020
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How we create value
Our strategic priorities 8
Focus on financial
performance 18
2020 highlights 2
Chairman’s message 4
CEO’s message 6
Overview
Our commitment
to sustainability 28
Focus on sustainability
performance 46
Managing our changing
isk landscape 55
Responding to COVID-19 risks 56
Our cu
ent risk priorities 58
Our approach to
corporate governance 62
Board priorities during XXXXXXXXXX
Board of Directors 67
Executive Leadership Team 70
CONTENTS
P.14
Best in
digital
We aim to
provide the best
digital banking
experience by
inging together
market-leading
service, technology
and innovation.
P.6
Delivering for our
customers and
communities
We have been focused on
supporting our customers and
communities, especially through
this year’s challenges.
The release of this announcement was authorised by Kara Nicholls, Group Company Secretary.
Commonwealth Bank of Australia | ACN XXXXXXXXXX | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000 | 12 August 2020
161/2020
Building a more focused
ank to deliver for our
customers, underpinned
y innovation and a
strong balance sheet.
Responding to
COVID-19 risks
We have taken action to ensure
operational resilience and to
address the risks associated
with COVID-19.
Directors’ report
Directors’ report 72
Remuneration report 78
Financial report
Financial statements 106
Notes to the financial statements 113
Directors’ declaration 268
Independent auditor’s report 269
Additional information
Security holder information 278
Five-year financial summary 285
Profit reconciliation 288
Glossary of terms 290
Contact information 301
P.56
We can.
Together.
Service
Innovation
Strength
2020
Our purpose
To improve the financial wellbeing of our customers
and communities.
Our values
We do what is right
We are accountable
We are dedicated to service
We pursue excellence
We get things done
Our business areas
Retail Banking Services
Business and Private Banking
Institutional Banking and Markets
New Zealand (ASB)
Our strategy is to become a
simpler, beer bank that delivers
alanced and sustainable outcomes
for our customers, community,
our people and shareholders.
Our
ands
Commonwealth Bank is the largest bank and best known
financial services
and in Australia.
2020
highlights Financial highlights
Group
Operating income
$23,758m
0.8%
Net interest margin
2.07%
2 basis points
Deposit funding
74%
FY19 69%
Cash NPAT
$7,296m
11.3%
Statutory net profit
aer tax (NPAT)
$9,634m
12.4%
Capital ratio
CET1 (APRA, Level 2)
11.6%
90 basis points
2
Top quartile TSR
outperformance
elative to peers
Customers Community
Value
created
Our people Shareholders
$3bn
tax expense – one of
Australia’s largest taxpayers
89%
of employees are proud
to work at the Bank
$5.8bn
paid to our 41,778
people in salaries and
superannuation
39,000+
people and delivery
partners enabled to work
emotely during COVID-19
41%
women in
Executive Manager
and above roles
100%
of Australian
electricity needs
from renewable
energy sources
377,214
students enrolled in Start
Smart financial education
$10m
commitment to bushfire
ecovery grants
17m
customers served
$106bn
of new lending for
Australian home buyers
$650m+
in loans under the
Government’s Coronavirus
SME Guarantee Scheme,
50% of scheme lending
888,000+
shareholders,
78% Australian owned
$2.98
dividend per share,
fully franked
$5.3bn
eturned to shareholders
as dividends
$2,420
dividend amount
eceived by
the average
etail shareholde
61.6
Average of peer
companies: 67.1
81%
Global top 10%
threshold: 84%
#1 Net Promoter Score
(NPS) in consumer
and business banking
Top quartile among
peer companies for
eputation improvement
Top 10% globally
for our employee
engagement score
Our targets
Our progress
Financials are presented on a continuing operations basis, except statutory NPAT, dividend per share and Common Equity Tier 1 (CET1) which include discontinued
operations. All figures relate to the full year ended 30 June 2020 and comparisons are to the year ended 30 June 2019, except employee engagement which is
30 April 2020 compared to 30 April 2019. For data sources, see Glossary on page 293.
Total shareholder
eturn (TSR)
(11%) 1-yea
8% 5-yea
151% 10-yea
#1 mobile app and
internet banking NPS
#2 consumer NPS
#3 business NPS
$27bn
of new lending for
Australian businesses
RepTrak
eputation score
Employee
engagement
3
CO
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EALTH
BAN
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2020 AN
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RT
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VERVIEW
H
O
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W
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D
IRECTO
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RT
FIN
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AD
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FO
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ATIO
N
Shortly a�er the Commonwealth Bank
of Australia commenced operations
in 1912, the world was gripped by the
Spanish flu pandemic of 1918. Now,
as then, the Bank’s purpose is to
support the financial wellbeing of our
customers and the community, and to
provide strength in uncertain times.
This past year has been extremely
challenging for many of our customers,
the economy and the Australian
community at large – initially due
to bushfires and drought, and more
ecently due to the coronavirus
pandemic. We have therefore been
determined to provide financial relief
to households, keep working capital and
credit flowing for businesses, deliver
performance for our shareholders, and
facilitate economic activity and financial
stability more
oadly.
Our people and the Bank’s leadership
team have done an extraordinary
job and responded quickly and
eectively to the demands of
COVID-19 – by meeting customer
needs and supporting the delivery of
the Government’s stimulus initiatives.
This has included helping businesses
access JobKeeper and being the largest
lender to small and medium sized
enterprises through the Government’s
coronavirus loan guarantee scheme.
A simpler, be�er bank
Throughout the year, the Bank’s
leadership team has continued to
deliver on our strategic priorities,
with a focus on becoming a simpler,
eer bank. We have made substantial
progress on divesting and ceasing
our wealth management businesses,
which has allowed management to
focus on the performance of our core
anking businesses and on providing
the best banking experiences for
customers. It has also created capacity
for ongoing investment in our market-
leading digital assets and in innovation
for future growth. We have continued
to make significant improvements
in the management of non-financial
isk, including beer operational risk
and compliance practices, thereby
supporting balanced and sustainable
outcomes for all of our stakeholders.
Business performance
and dividends
The business performed well in 2020,
with the strong focus on operational
excellence driving growth in our core
anking businesses. Cash net profit a�er
tax was, however, lower primarily due
to the $1.5 billion impairment provision
taken for the expected impacts of
COVID-19 on our customers and the
economy and consequent credit losses.
Prudent balance sheet management
underpinned the Bank’s resilient
funding and liquidity positions. Strong
capital discipline resulted in a Common
Equity Tier 1 capital ratio of 11.6%
at 30 June, well above the Australian
Prudential Regulation Authority
(APRA) ‘unquestionably strong’
enchmark of 10.5%, and substantially
above the regulatory minimum of 8%.
The Bank’s strong capital position and
operational performance continues
to support returns for shareholders.
The final dividend of 98 cents per
share reflects the guidance issued by
APRA in July, that for the remainder of
the calendar year, banks should retain
at least half of their earnings. The final
dividend payout ratio is 49.95% of the
Bank’s second half statutory earnings.
Combined with the interim dividend of
$2.00, this takes the full year dividend
to $2.98 per share, fully franked.
Regulatory and
compliance update
We have made significant progress on
implementing the recommendations
from the 2018 APRA Prudential Inquiry
into CBA, and have now submied more
than three-quarters of the milestones
outlined in our resulting Remedial
Action Plan (RAP). The Prudential Inquiry
Report, information on our RAP, and the
independent reviewer’s (Promontory)
quarterly progress reports are available
at: commbank.com.au/APRA.
We are also well advanced on
implementing the recommendations
of the Financial Services Royal
Commission. We are engaging
constructively and transparently on
maers that are being considered
y regulators as a result of the Royal
Commission or otherwise under
investigation. Meanwhile, we continue
to focus on remediating processes
and systems, and have delivered
efunds of more than $730 million
to customers since 2015. Our priorities
have included significant ongoing
investment in our financial crime
prevention and detection capabilities.
CHAIRMAN’S MESSAGE
Strength in
uncertain times
Our progress on key strategic, risk and governance
priorities, together with the strength of our balance
sheet and capital position, mean the Bank is well
placed to deliver for our stakeholders.
4
https:
www.commbank.com.au/about-us/our-company/our-response-to-apra-prudential-inquiry-report.html
Shortly a�er the Commonwealth Bank
of Australia commenced operations
in 1912, the world was gripped by the
Spanish flu pandemic of 1918. Now,
as then, the Bank’s purpose is to
support the financial wellbeing of our
customers and the community, and to
provide strength in uncertain times.
This past year has been extremely
challenging for many of our customers