Commonwealth Bank of Australia : 2023 Annual Report

2023

Annual Report

Commonwealth Bank of Australia

Contents

Overview

About this report 2023 highlights How we create value Chair and CEO's message

Creating value

Delivering on our strategic priorities

Our commitment to sustainability

Sustainability performance

Financial performance Managing our risks

Our approach to corporate governance

Directors' report

2	Directors' report	82
3	Remuneration report	88
4

• Financial report

	Financial statements	119
	Notes to the financial
	statements	127
8	Directors' declaration	265
18	Independent
auditor's report	266
40	Additional
50
60	information
	Security holder
66	information	277
	Five-year financial
	summary	285
	Profit reconciliation	288
	Glossary of terms	290
	Contact us	304

We have been working to better understand our customers so that we can deliver a superior

Acknowledgment of Country

We respectfully acknowledge the Traditional Owners of the Lands across Australia and pay our respect to their Elders past and present. Our registered office is located on the Lands of the Gadigal Peoples.

The release of this announcement was authorised by the Board.

Commonwealth Bank of Australia ACN 123 123 124

Commonwealth Bank Place South, Level 1, 11 Harbour Street, Sydney NSW 2000

9 August 2023 111/2023

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seamless experience, while supporting them through uncertain times.

We aim to be the trusted financial partner in the lives of all of our customers. In times of rising costs and interest rates, CBA remains well positioned to continue reimagining banking and to help Australia's economy become more digital, resilient and sustainable. Our purpose is more relevant than ever, building a brighter future for all - we are ready to support.

2

About this report

Our corporate reporting suite contains detailed information on CBA's strategic priorities, risk management and corporate governance frameworks, as well as our financial, non-financial and sustainability performance. Transparent reporting

2023 highlights

3

2023COMMONWEALTH ANNUAL REPORTBANK

is essential in communicating to our shareholders and other key stakeholders. We continually evolve our reporting to align with best practice, feedback from our stakeholders, and legislation and frameworks.

Access our full reporting suite online at commbank.com.au/investors

Our reporting suite

Climate Report

commbank.com.au/2023climatereport

Corporate Governance Statement

commbank.com.au/corporategovernance

Profit Announcement

commbank.com.au/results

Pillar 3 Report

commbank.com.au/results

Investor Discussion Pack

commbank.com.au/results

Sustainability Appendix

commbank.com.au/reporting

Global principles and policies

We are signatories or members of programs that	We provide transparent reporting on our progress in line with
align with our values and sustainability goals.	legislation and seek to align to industry recognised standards.
		Net-Zero		Modern Slavery
		Banking Alliance		Act 2018

Financial

$10,188m

Statutory NPAT

5%

$27,237m

Operating income

10%

43.5%

Cost-to-income ratio

2.8%

12.2%

Capital ratio

CET1 (APRA, Level 2) 70 basis points

$4.50

Dividend per share, fully franked

$10,164m

Cash net profit after tax (NPAT)

6%

Group cash NPAT by business unit

▲ 6%

Retail Banking Services

$5,158m

Business Banking

$3,973m

Institutional Banking and Markets

$1,031m

New Zealand

$1,356m

Non-financial

#1

Net Promoter Score® (NPS) Retail, Business and Institutional banking

35%

of retail customers consider CBA their main financial institution (MFI)

79%

people engagement

860,000+

shareholders,

78% Australian owned

Total shareholder return (TSR)

142% 10-year

72% 5-year

16% 1-year

OVERVIEW

CREATING VALUE

DIRECTORS' REPORT FINANCIAL REPORT ADDITIONAL INFORMATION

We are members of international programs of action.	We document our principles in our policies,
		procedures and frameworks.
		View our public policies at commbank.com.au/policies

Financials are presented on a continuing operations basis, except the Common Equity Tier 1 (CET1) capital ratio which includes discontinued operations. Comparative information has been restated. All figures relate to the full year ended 30 June 2023 and comparisons are to the year ended 30 June 2022, except for people engagement which is as at March 2023. For data sources, see Glossary on pages 290-303.

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How we create value

Our value drivers

Highly engaged and capable team

Talented and accountable teams	Our business
deliver the Bank's strategy and
have the greatest impact on
our customers, communities
and shareholders.
Retail banking
Strength of customer
relationships and franchise		Learn more on page 56.
Largest bank in Australia, with
strong customer relationships
and engagement.

What makes us unique

1

Strong customer relationships

CBA's trusted brand attracts a leading share of customers, and its distinct propositions result in a deeper customer engagement.

Value created

Shareholders

$10bn

returned to shareholders via dividends and share buy-backs during FY23

$3,532

dividend amount received by average retail shareholder

See Delivering for shareholders on page 51.

Our people

89%

of employees are proud to work for CBA

44%

women in Executive Manager and above roles

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2023COMMONWEALTH ANNUAL REPORTBANK

OVERVIEW

CREATING VALUE

Technology leader, history of innovation

Leadership position in digital banking through considered investment in digital infrastructure, artificial intelligence and innovation.

Business banking

Learn more on page 57.

2

Better understanding of customer needs and risk

These strong relationships provide the foundation for understanding and meeting more of our customers' needs, as well as better managing risk.

See Engaging our people and evolving our culture on pages 25-29.

Customers and communities

#1

DIRECTORS' REPORT

Organic capital generation, strong balance sheet and risk management

Disciplined capital management, balance sheet strength and leading risk management practices create flexibility for us to support

Institutional banking

Learn more on page 58.

3

Superior customer experience and insights

Net Promoter Score (NPS) Retail, Business and Institutional banking

66.3

RepTrak reputation score

See how we are supporting our customers and communities on pages 30-35.

FINANCIAL

customers while managing economic headwinds.

ASB New Zealand

Learn more on page 59.

A deeper understanding of our customers and their needs means we can deliver distinct

Environmental and social

REPORT

Commitment to sustainability

Focused on sustainable practices, policies and decisions to create long-term value for all stakeholders.

propositions that create value for customers and builds stronger customer relationships.

$44.7bn

of sustainability funding since June 2020

4,478

Financial Independence Hub (participants supported, since inception)

See Our commitment to sustainability on pages 18-39.

ADDITIONAL INFORMATION

Our purpose

Living our values of

Building a brighter future for all

See Engaging our people and evolving our culture on pages 25-29.

Our strategy

Build tomorrow's bank today for our customers

See Delivering on our strategic priorities on pages 8-17.

• CHAIR AND CEO'S MESSAGE

Supporting our customers in all the ways we can

Our strategy reflects a bolder ambition and our commitment to use the strength of CBA to support our customers, invest in our communities and provide strength and stability for the broader economy.

Strong results

Our results demonstrate our continued focus on supporting our customers, investing in our communities, and providing strength and stability for the broader economy. Our operating performance reflected strong volume growth and an increase in the Group's net interest margin. With tighter and rapidly changing financial conditions we have taken a prudent approach to managing risks including credit, interest rate, funding and liquidity risks.

Our conservative balance sheet is a highlight of our result and provides flexibility to navigate uncertainty and support our customers while delivering sustainable returns. We declared a final dividend of $2.40 per share, fully franked, resulting in a full year dividend of $4.50.

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2023COMMONWEALTH ANNUAL REPORTBANK

OVERVIEW

CREATING

We recognise that many Australians are feeling under pressure in the current environment. As the nation's largest bank, we will continue to help and support our customers. This includes helping them save on everyday expenses, navigate

a changing economic environment and plan for the future.

For our retail and home loan customers, we introduced flexible features to make it easier to manage repayments and save on interest. We also increased the rates on

a number of our savings products and provided budgeting and spending tools in the CommBank app. For our business banking customers, we helped maximise cash flow with

a new short notice deposit account and made it easier for them to obtain funding through digital investment and process improvements. We remain ready to help our customers with financial assistance for those who need it.

We have also prioritised combatting the rise in scams and fraud, helping customers stay safe through early detection and prevention. We announced two new initiatives

to protect customers from scams: NameCheck, designed to help customers avoid mistaken payments; and CallerCheck, which allows customers to verify a caller and identify themselves safely through the CommBank app. Since launch, NameCheck has helped more than 11,000 customers avoid

potential mistaken payments through flagging unrecognised account details. We recognise that the system is only as safe as its weakest link,

so we are planning to make the NameCheck technology available to government organisations and other trusted partners, encouraging a broader national approach to fight scams and fraud.

Executing our strategy

We continue to execute our strategy of building tomorrow's bank today for our customers. Our strategy reflects a bolder ambition and our commitment to use the strength of CBA to support our customers, invest in our communities and provide strength and stability for the broader economy.

With 35% of Australian consumers and 25% of Australian businesses naming us their main financial institution, deep customer relationships are a key differentiator. Our considered multi-decade investment in technology, data and analytics capabilities has resulted in high customer engagement - enabling us to better understand their needs and provide the best banking experience.

The Bank's Customer Engagement Engine, powered by artificial intelligence (AI), is one of the key tools we are using to deliver more personalised and relevant experiences to our customers digitally, and empower our customer-facing teams

to do the same. With 7.8 million customers using our CommBank app, AI-enabled features like Bill Sense and Benefits finder are playing an important role in giving customers greater visibility and control of their money to help tackle cost of living challenges. We recently launched a new version of the CommBank app, app 5.0, which provides dynamic navigation, more personalisation and further integration with CommSec. It has also been built to enable us to offer customers more enhancements at a faster pace in the future.

CBA's strategic investment in business banking, and focus on strengthening customer relationships, has resulted in growing our customer base to over one million customers. We continue to work towards being a leading business bank, and are focused on delivering superior customer experiences for both our retail and business customers.

Learn more about our strategic priorities on pages 8-17.

Beyond the APRA

Prudential Inquiry

Remedial Action Plan

We made significant progress under CBA's Australian Prudential Regulation Authority (APRA) Prudential Inquiry Remedial Action Plan, focused on improving our governance, culture and accountability. Importantly, we reset our cultural foundations including the Bank's purpose and values.

The changes represent an evolution in the way we want to deliver outcomes for our customers, communities, our people and shareholders.

In recognition of this progress, the remaining operational risk capital overlay of $500 million imposed on the Bank was released by APRA in September 2022. We are focused on sustaining this progress and continuously improving and strengthening the changes made to live our purpose and values, in particular instilling a strong culture that encourages the right mindsets and behaviours.

This approach continues to resonate with our people, and overall engagement remains high at 79%, with continuing high levels of pride across the organisation.

Learn more about our culture ambitions on pages 25-26.

Progressing our sustainability agenda

We continue to embed our sustainability commitments and priorities into the Bank's strategy and risk management practices to create long-term value for our stakeholders. This year we reviewed our Environmental and Social (E&S) policy settings and updated our E&S Framework. We also performed an environmental, social and governance materiality assessment to identify stakeholder priorities for us to consider and support decision making.

We welcome legislative and policy initiatives that help guide industry and communities to meet Australia's ambitious climate targets and encourage investment to support Australia's transition to a net zero economy. We are committed to working closely with communities, businesses, industry leaders and governments to encourage a holistic approach to emissions reductions. By bringing stakeholders together, we can share knowledge and collectively address the challenges associated with the transition to

a more sustainable future.

Read our 2023 Climate Report.

Ensuring good governance

Upholding a high standard of governance is essential in delivering on both our strategic and sustainability goals. Our approach sets the foundation for the way we conduct business and deliver outcomes.

The Board and management are focused on testing CBA's strategic settings to ensure they remain appropriate in our current context. We look for ways to improve customer experiences and advocacy, by investing in key areas such as cyber security and scams and fraud.

Learn more about our corporate governance practices on pages 66-73.

Outlook

The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment. However there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians.

We will continue to invest in our business and execute on our strategy to deliver our purpose of building a brighter future for all.

On behalf of all the Board and Executive Leadership Team, we would like to thank all our people for their hard work and commitment

• and to you, our shareholders, for your ongoing support.

Paul O'Malley

Chair

Matt Comyn

Chief Executive Officer

VALUE

DIRECTORS' REPORT FINANCIAL REPORT ADDITIONAL INFORMATION