The accounting case study is attached and the cba financial report is also attached.
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 risk landscape 55 Responding to COVID-19 risks 56 Our current risk priorities 58 Our approach to corporate governance 62 Board priorities during 2020 63 Board of Directors 67 Executive Leadership Team 70 CONTENTS P.14 Best in digital We aim to provide the best digital banking experience by bringing 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 123 123 124 | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000 | 12 August 2020 161/2020 This is an interactive PDF designed to enhance your experience. The best way to view this report is with Adobe Reader. Click on the links and use the home button in the footer to navigate the report. 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 risk landscape 55 Responding to COVID-19 risks 56 Our current risk priorities 58 Our approach to corporate governance 62 Board priorities during 2020 63 Board of Directors 67 Executive Leadership Team 70 CONTENTS P.14 Best in digital We aim to provide the best digital banking experience by bringing 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 123 123 124 | Ground Floor Tower 1, 201 Sussex Street, Sydney NSW 2000 | 12 August 2020 161/2020 Building a more focused bank to deliver for our customers, underpinned by 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 balanced and sustainable outcomes for our customers, community, our people and shareholders. Our brands Commonwealth Bank is the largest bank and best known financial services brand 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 relative 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 remotely 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 recovery 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 returned to shareholders as dividends $2,420 dividend amount received by the average retail shareholder 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 reputation 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 return (TSR) (11%) 1-year 8% 5-year 151% 10-year #1 mobile app and internet banking NPS #2 consumer NPS #3 business NPS $27bn of new lending for Australian businesses RepTrak reputation score Employee engagement 3 CO M M O N W EALTH BAN K 2020 AN N U AL REPO RT O VERVIEW H O W W E CREATE VALU E D IRECTO RS’ REPO RT FIN AN CIAL REPO RT AD D ITIO N AL IN FO RM 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 recently 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 broadly. 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, beer 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 banking 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 risk, 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 banking 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’ benchmark 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 by 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 refunds 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