Commonwealth Bank of Australia Aktie

[Presentation]

Good morning, shareholders. My name is Helen Dalley, and I'm your MC for today's Annual General Meeting of the Commonwealth Bank of Australia. My role is to help shareholders understand how the meeting will work, including how shareholders can vote and how shareholders can ask questions.

I would like to begin by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation and pay our respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander persons here today and on the webcast.

We're hosting this year's meeting in person at the Hyatt Regency in Sydney. We welcome shareholders to the grand ballroom, and we also welcome those watching via webcast online.

Your safety is a high priority for the bank, so I'll briefly outline the venue's safety procedures. If an emergency occurs, the Chair may need to adjourn the meeting and ask everyone to walk towards the exit signs. If that happens, please follow all directions from the Hyatt Regency staff and the security team and listen for further instructions via the public address system.

We ask that you now please switch off your mobile phone or put it on silent during the meeting. In addition, please don't take photographs or film or record the meeting. Before I hand over to your Chair to formally open the meeting, I will briefly outline the processes that will help shareholders to participate. Thank you to those shareholders who have submitted questions prior to the meeting. We've sought to address many of the themes in the questions throughout the remarks that will be made by the Chair and the CEO in their formal addresses to this meeting.

In a few moments, I'll address how to submit questions for those viewing online. But first, I'll deal with asking questions and voting for those who are attending in person. And we're thrilled to see so many of you attending in person. Now when registering your attendance today, you would have received a colored card. You need your card to ask a question or to reenter the meeting room.

Yellow cards are for shareholders and proxy holders who may speak and vote. Blue cards are for shareholders who may speak but not vote as they have already lodged a vote or they're a joint holder. If you are a shareholder and proxy holder and have 2 yellow cards, it is important that you complete both yellow voting cards, one in your own right and the second as a proxy for your nominating shareholder. All other persons holding red or green cards are welcome to attend but may not address the meeting or vote.

Before voting, the Chair will introduce each item of business separately and then invite questions. For those here today, the Chair will ask shareholders and proxy holders who wish to speak to move to the closest microphone located in the room. Please show your yellow or blue card and provide your full name to the microphone attendant who will introduce you to the meeting. If you are not here in your own personal capacity, please also identify the shareholder you are representing to the microphone attendant.

Questions should be confined to the business of the meeting. Questions about individual banking or personal shareholding matters will not be put to the meeting. If you have an individual banking or customer question, please speak with representatives from our group customer relations and customer advocate teams who will be available after the meeting in the foyer just outside this room.

To the extent you are able, if your question relates to a particular item of business, please ask your question when we come to that item. I'd also ask that you are respectful of others during the meeting so that we can have a constructive discussion on all matters.

Shareholders or proxy holders viewing the webcast who wish to submit an online question now or during the meeting can do so by selecting the Ask a Question button located at the top and bottom of your screen. Your questions will be placed in the queue, and we encourage you to submit questions now to assist us in getting through as many of your questions as possible.

To allow as many shareholders as possible the opportunity to participate today, the Chair will accept up to 2 comments or questions from each shareholder for each item of business. Now this applies to both in-person and online questions. For those submitting online questions, we ask that you submit each question separately. And please note that your questions will be limited to 532 characters. If you exceed that limit, you will be unable to submit your question, you'll need to shorten it and then resubmit the question.

When questions for each item of business are ready, I will introduce the shareholder by name, and I will read the question for the Chair to answer. If we receive a number of similar questions, it is possible these questions may be grouped and answered collectively. Questions submitted that relate to customer or personal shareholding matters will not be put to the meeting. You will be contacted at the conclusion of the meeting to follow up the individual support you may need. For those viewing the webcast, further information about how to contact CBA is available by selecting the Contact Us button located at the bottom of the screen.

It's my great pleasure to now introduce your chair, Paul O'Malley.

Good morning, and thank you, Helen, for welcoming everyone here in the room and online and acknowledging the traditional custodians of the land. Thank you all for attending today. I'm pleased to welcome you to our 2026 Annual General Meeting. I'm informed that we have a quorum present, and I declare the 2026 Annual General Meeting of the Commonwealth Bank of Australia open.

A Notice of Meeting has been distributed, and I'll take it as read. I would now like to introduce your Board, the Chief Financial Officer and the Group Company Secretary. From my far left, Alistair Currie; Julie Galbo, Jane McAloon, AM; Lyn Cobley, AM; Alan Docherty, our Chief Financial Officer; and Matt Comyn, our Chief Executive Officer and Managing Director.

And from my far right, Peter Harmer, Chair of the Audit Committee; Kate Howitt; Rob Whitfield, AM, the Chair of the Risk and Compliance Committee; Julie Coates; Simon Moutter, Chair of the People and Remuneration Committee; and Vicki Clarkson, our Group Company Secretary. Also with us today are the other members of the bank's executive leadership team. Elizabeth O'Brien, the lead audit partner from our external audit at PwC, is also in attendance today. Elizabeth was the lead audit partner for the external audit of the financial statements for the financial year ended 30 June 2026 and is available to respond to any specific questions you may have in relation to this audit.

The 12 months since our last AGM have been marked by heightened uncertainty. Global geopolitical tensions have intensified, technology is moving rapidly and expectations from customers, communities and regulators continue to rise. Many Australians are feeling cautious and continue to make careful decisions about how they spend, save and manage their money. Our purpose, building a brighter future for all, is increasingly relevant in uncertain times. It reflects our commitment to Australia and guides how we support our customers, engage with our communities, strengthen the nation and provide sustainable returns for our shareholders.

Our strategy, Building Tomorrow's Bank Today For Our Customers, focuses on deepening customer relationships, delivering better and more consistent experiences continuing to invest in technology and capability and maintaining strong risk discipline. Disciplined execution of our strategy remains key to delivering long-term value for all shareholders -- for all stakeholders, especially our shareholders.

At the heart of the bank's strategy is growing our share in retail and business banking. Productivity, wages and living standards depend on sustained investment in productive capacity. This is why we are intentionally growing lending to Australian businesses to support Australia's economic growth that underpins our standard of living. This year, the Board has spent considerable time examining the opportunities and risks associated with artificial intelligence.

We see AI as having the potential to help improve customer experiences, strengthen productivity and enhance the bank's ability to manage risks such as fraud and scams. At the same time, we recognize the importance of strong governance and responsible adoption. Our CEO, Matt Common, will say more about how CBA is using AI across the organization.

Cost of living pressures and higher interest rates continue to affect households unevenly, while businesses are managing elevated input costs and supply uncertainty. Matt will elaborate on how we're supporting customers through these ongoing challenges. We have the largest branch and ATM network in Australia and more than 16,000 of our people serve our customers directly every single day. Earlier this month, we keep -- we committed to keeping all 281 of our regional branches open until at least the end of 2030.

We're also investing $140 million this year to upgrade our branch network. As more customers choose digital banking, branches remain important for people and businesses when they need more complex support or value a local relationship. Improving financial inclusion for First Nations customers remains a priority. Alongside our branch teams and our indigenous customer assistance line, our First Nations Reach program expands access to essential banking services and builds financial capability through community visits.

Since March of 2024, we have supported more than 5,200 customers across 29 locations covering 38 communities. One of our most important responsibilities is helping customers stay safe. Economic crime continues to impose real costs on households, businesses and trust in digital systems. The Board has maintained its focus on the bank's investment in helping to protect customers and communities, recognizing these threats evolve alongside technology. We support a system-wide approach to economic crime with government, telecommunications, digital platforms and financial institutions taking coordinated action to help reduce harm.

This year, we have invested more than $1 billion to help protect customers from fraud, scams, cyber threats and financial crime. Matt will speak more about this. CBA's cash net profit after tax was $11 billion, an increase of 7% from the previous year. The final dividend was $2.70 per share, delivering a total FY '26 dividend per share of $5.05 fully franked. We returned $8.3 billion to shareholders, benefiting more than 14 million Australians who own CBA shares directly or through their super funds.

The Board sees the bank's balance sheet strength as both a strategic asset and a resilience mechanism. Balance sheet strength is essential to maintaining confidence, funding the economy and supporting customers when conditions deteriorate. We remain focused on preserving strength across capital, liquidity and long-term funding and provisioning, recognizing that resilience must be built before it is actually needed.

Delivering returns above the cost of capital is essential. This is what allows us to keep lending, be there for our customers, invest in our franchise and pay a sustainable dividend. Affordable, reliable and secure energy including through the transition to net 0 is critical to underpin economic prosperity. As the bank for all Australians, we remain committed to supporting our customers and communities through the period of significant structural change.

The Australian Energy Market Operator, AEMO, identifies that renewable energy connected by transmission and distribution, firmed with storage and backed up by gas presents the least cost way to supply secure and reliable electricity to consumers as coal plants retire and while meeting government policies.

AEMO also forecasts gas shortfalls in the coming years, and the Australian government has announced its intention to establish a domestic gas reservation scheme, which will seek to deliver energy security and stable natural gas prices. Delivering a more secure, reliable and affordable energy system will require sustained investment at scale, particularly in generation, storage, and enabling infrastructure. Our environmental and social framework recognizes Australia's need for a secure energy platform.

We continue to make progress against our commitment to support Australia's transition to net 0 by 2050. We remain on track for 12 of our 15 sector-level financed emissions, goals and targets. Having achieved our 2025 operational emissions targets, we set a new 2030 target to reduce our Scope 1 and 2 operational emissions by 75% against the 2020 baseline. We've also observed growing focus on nature-related risks. We recognize the importance of Australia taking action to maintain, restore and enhance nature and biodiversity.

Our approach to nature is informed by our experience managing climate-related risks, being methodical and deliberate, building our understanding from evidence and working with relevant customers as expectations and external requirements evolve.

Since 2023, we have progressively enhanced our understanding of nature-related risks. Our initial analysis identified agriculture as a priority sector, and we have since continued to build our geospatial capabilities and strengthen our risk assessment processes. Agriculture is fundamental to Australia's economy, our regions and our national prosperity.

Farmers have stewarded the land in Australia for over a century and are responding to a changing operating environment, including rising input costs and changing market expectations while navigating state, territory and federal regulations. Many farmers have long adapted their practices to improve productivity, manage costs and strengthen resilience, including by investing in their natural assets. This can include native revegetation, tree planting and improving the management of soils and waterways.

Some shareholders have called for a pathway to deforestation-free finance. Forest loss can have impacts on nature, but not every instance of land clearing is the same and evidence of clearing on a property doesn't by itself tell you what the appropriate banking response should be. Governments and regulators set and enforce the law. Our role is to understand the issue, consider relevant risks through our established processes and make careful decisions about customer relationships.

We have made progress this year, including completing an initial portfolio level analysis of potential forest loss in our business bank agribusiness portfolio, making targeted updates to our risk assessment process and providing additional banker training. Ongoing monitoring of relevant external developments and continued learning from our analytical work will inform whether changes to our current approaches are appropriate. Effective governance, a strong risk culture and clear accountability helped the bank to deliver good risk outcomes and to maintain trust.

The Board has continued to oversee the bank's management of financial, nonfinancial and strategic risks, supported by the Risk and Compliance and Audit Committees. The risk culture support -- the right risk culture supports innovation and supports our ambition to exceed customers' expectations. Sustaining it requires persistent focus and a commitment to preserving the corporate memory of the Prudential Inquiry.

Risk culture measures during the year showed continued progress while also highlighting areas for further improvement. Our annual risk management declaration to the Australian Prudential Regulation Authority assists the Board in identifying the material risks when we need to strengthen our approach. Areas of focus include cybersecurity, operational resilience, fraud and scams and financial crime compliance. Technology, including AI, is central to the group's strategy, and we take the responsible use of AI seriously.

Risks associated with AI are managed by our existing risk management framework and our group AI policy and standard and are supported by 6 responsible AI principles. Gen AI guardrails have also been developed to help manage key risks. Succession planning remains a focus so that the bank has the right executives in the right roles, leading with the right behaviors and values to deliver our strategy and enhance franchise value. With the support of the People and Remuneration Committee, we thoroughly review executive performance, tenure and succession plans.

Turning now to the Board. Current independent nonexecutive directors, Simon Moutter and Rob Whitfield, AM, are standing for reelection with the support of the Board. Simon will stand for a 3-year term and Rob for a 1-year term, in line with our Board appointment, renewal and performance policy. We consider it appropriate to extend Mr. Whitfield's tenure beyond 9 years given his banking, finance and risk expertise and his leadership as Chair of the Risk and Compliance Committee.

Julie Coates will today stand for election as an Independent Non-Executive Director with the support of the Board. Julie joined the Board at the start of September. She is a Non-Executive Director of Wesfarmers Limited and Scentre Group Limited and has a breadth of experience in the retail, consumer goods, construction, manufacturing and building products sectors. To be effective, your Board needs to understand how the operating environment is shifting and its implications for the bank business model. Directors need diverse skills and experience to apply considered judgment. They are required to keep learning, use values to balance stakeholder perspectives and participate in respectful but rigorous debates.

Stewardship requires directors to be clear on trade-offs, disciplined on capital and to never lose sight of the people and communities impacted by our decisions. The Board takes seriously its responsibility to oversee sound long-term decision-making for the bank, supporting strong outcomes for our customers and shareholders and helping to build a resilient banking system for all Australians. By helping our organization prosper through uncertain times, we can be there for our customers when they need us most and contribute to the resilience of the Australian economy.

I sincerely thank my fellow directors for their care and diligence, Matt and the executive leadership team and our people for their hard work and for our customers for choosing to bank with us. I extend my appreciation to you, our shareholders, for your long-term support of CBA. I now invite our Managing Director and CEO, Matt Comyn, to address the meeting.

Thank you, Paul, and good morning, everyone. This year, we've stayed focused on supporting our customers, helping protect communities and investing in Australia. We know 2026 has been a challenging year for many Australians. The impact of higher interest rates and cost of living pressures has not been shared evenly and for some households, it has become harder, not easier, as the year has gone on. Whether our customers are managing their personal finances, running a business or both, we are here to support them if they need it.

This year, we activated emergency assistance for customers impacted by severe weather. And in the last financial year, we established 147,000 payment arrangements for customers experiencing financial difficulty. Being able to support customers when it matters starts with knowing them well. 1 in 3 Australians and 1 in 4 Australian businesses call us their main financial institution. That trust is what allows us to keep lending and supporting our customers. Last financial year, we provided $50 billion of new lending to businesses, supporting investment, growth, productive capacity and employment across the economy. We helped our customers buy more than 150,000 homes and provided $17 billion in finance for new housing supply.

A continuing focus for us has been getting closer to our customers and better understanding what matters most to them at key moments in their lives. Over the year, we saw improvements in our retail and business customer journeys, helping us address customer pain points and improve our end-to-end experiences. Our focus on delivering consistent customer experiences supported us in maintaining our #1 position among major banks in the consumer Net Promoter Score, or NPS, a position we've held for almost 4 years.

In September, we also maintained our #1 position among the majors in business and institutional NPS. And while our results are encouraging, there is still more work to do. Our customer focus and the consistent execution of our strategy are reflected in our results for the 2026 financial year. We grew at or above system in all 5 core product categories: home lending, business lending, consumer finance, household deposits and business deposits. This is the first time any major Australian bank has done this in the past 15 years.

Importantly, it was not achieved by sacrificing margin. Cash net profit after tax increased by 7% to $11 billion. Cash earnings per share increased by $0.44. This allowed the Board to declare a fully franked dividend of $2.70, taking the full year dividend to $5.05 per share. The strength of our franchise and prudent settings enable us to support customers, invest in our business and deliver sustainable shareholder returns. Nowhere is that investment more important than in helping to keep our customers safe. As Paul mentioned, economic crime continues to impose real costs on our customers and the community.

Threats continue to evolve quickly, increasing their potential to harm our customers and communities, and we recognize there is always more to do. Last year, we invested more than $1 billion to help protect customers from fraud, scams, cyber threats and financial crime. And every day, we send around 40,000 proactive warning alerts via the CommBank app.

Since September 2024, we've provided customers with 5.9 million notifications via intelligent warnings for first-time payments. And while AI is making scams more sophisticated, it is also an increasingly important part of how we detect harmful and suspicious activity. We're using human-sounding AI bots to engage and help disrupt scanners in real time. These bots have held more than 350,000 conversations via calls or messaging since August 2025.

From helping protect customers to serving them, technology, including AI, is central to our strategy of Building Tomorrow's Bank Today For Our Customers. We believe AI could be the most significant technology shift we have seen. It presents an opportunity to improve productivity, strengthen services and help make Australia more capable and Australians more prosperous. As customers increasingly use AI to search, compare, decide and transact, we believe the value of a trusted primary relationship will continue to increase.

This year, we began a phased rollout of CommBank Companion to a select group of customers. Companion is an AI-powered conversational experience with the CommBank app that provides information about our customers' personal and business finances. In Business Banking, Banker Workbench is in an AI-enabled workspace that brings together data, tasks and insights so bankers can spend more time with our customers. Central to how we use AI is being able to use it safely. Reflecting our focus on responsible AI, leadership and talent development, we were ranked #1 in -- the #1 bank in Asia Pacific and #4 globally for AI maturity in the 2026 Evident AI Index.

Realizing the AI opportunity will require regulation to keep pace. An effective regulation should help build trust in AI while ensuring global technology companies operate in accordance with Australian laws and standards and that as much of the economic value that is created is then captured in Australia.

Building a brighter future for all also means investing in our communities. One way we do this is through our Next Chapter program, our long-term commitment to help address domestic and family violence and financial abuse in Australia. Our Next Chapter team continues to provide free and confidential support to victim survivors no matter who they bank with. And this year, the team provided support through over 19,300 individual interactions.

Another way is through our annual community grants. And this year, 180 community organizations across Australia were recognized, each receiving a grant of $20,000. And 6 of these grant recipients were voted by our people to receive an additional $80,000 to amplify their impact in the community. Football is Australia's largest grassroot sport, and we're now its largest supporter in Australian history. CBA has been proud naming rights partner of the CommBank Matildas since 2021. And this year, we expanded our partnership with Football Australia to support all Australians to play regardless of age, gender, ability or location.

We know that providing exceptional experiences for our 18.6 million customers is only possible through a skilled and dedicated workforce that reflects our customers and our communities. I'm deeply grateful to work alongside them, and I thank them for their dedication.

People engagement remains high at 85%, up from 84% in September 2025. This is the highest level recorded under the current methodology. The combination of understanding our customers and deepening engagement with our people means we can support customers through challenging periods and continue to deliver sustainable returns for our owners.

We're also helping our employees build skills for the future. This year, we announced a 3-year $90 million program to help our teams build skills and capabilities as technology reshapes the way we work and the way we serve our customers. Some tasks will change, some roles will evolve and new roles will continue to emerge. We want to be transparent with our people about that and to help them prepare early.

Looking ahead, growth is slowing across the economy and inflation remains too high. And it will take time for higher interest rates to bring inflation back into the target range. We also expect more frequent and more volatile international shocks, which Australia has little control over. That makes productivity more important than ever, building more homes, delivering reliable, low-cost energy at scale and adopting technology, including AI, across the economy will all be critical.

Notwithstanding that, the economy remains resilient, and we should be optimistic about Australia's long-term potential. Despite a demanding environment, we enter the 2027 financial year from a position of strength with a clear focus on execution and continuing to support our customers. Our purpose, building a brighter future for all reflects our commitment to Australia. As we look to the year ahead, we'll stay focused on investing in our business and executing our strategy to bring our purpose to life.

I'd like to thank our customers, our people, our shareholders for your ongoing support of the Commonwealth Bank of Australia. Thank you.

Thank you, Matt. As Chair of the meeting, I formally declare the poll on all resolutions open and that the poll will close 15 minutes after the meeting closes. You may now vote on all resolutions. MUFG Corporate Markets is the returning officer for this meeting with responsibility for overseeing the voting process. There are 5 items of business to be considered today.

These are: number one, consideration of financial statements and reports; two, the reelection and election of directors; three, the adoption of the 2026 remuneration report; four, the grant of securities to the CEO, Matt Comyn; and five, resolutions requisitioned by a group of shareholders. The voting exclusions for Item 3 and 4 are set out in the Notice of Meeting, where undirected proxies have been given or default to the Chair of the meeting, they will be voted in favor of Items 2 to 4 inclusive and against Item 5.

We will now move to the first line item of business, which is receive and consider the financial report, the sustainability report, the Director's report and the Auditor's report of the company for the financial year ended 30 June 2026. While there is no resolution for this item, there is an opportunity for shareholders to ask questions on the reports, management of the company and on the audits. I understand that some shareholders may wish to ask questions in relation to Item 5. When we reach this item, a representative from the requisitioning shareholders, will address the meeting to share some remarks.

I ask that to the extent possible you hold your questions in relation to Item 5 until after these remarks. I now invite shareholders and proxy holders in the room who wish to ask questions or make comments on Item 1 to move to a microphone. As a reminder, please show your yellow or blue card and provide your full name to the microphone attendant who will introduce you to the meeting. I also invite shareholders and proxy holders to submit questions online. Are there any questions? Microphone #4.

Chair, I would like to introduce Mr. Paul Blackmore.

Welcome, Mr. Blackmore and good to see you again.

Good to see you as well. Paul Blackmore from the Finance Sector Union. We represent CBA workers across Australia. Firstly, congratulations on the record profit. What I do want to ask is, despite this record profit, we've still got a situation where your employees remain concerned about their ongoing job security. We recognize the investment you've made in your Future Workforce Program, which is detailed in your annual report and the associated platforms that are designed to assist with reskilling and support impacted employees.

But like I said, job security remains a true concern for your employees. And already this year, we've seen about 1,000 jobs cut from Australian-based employees here at CBA. So I'll come to the question, what assurances can CBA give to its staff that their jobs are secure and they won't be next on the chopping block?

Thanks very much for your question and for your engagement. And I do note that there has been constructive conversations with you and your representatives about the EBA. So that is positive. We have a really important role in Australia at the CBA and that's to support the nation and its businesses and the communities and whether that's from lending money or cybersecurity, through our technology platforms supporting communities through our branch networks, our ATM and we've given the comment about maintaining our regional branches through to 2030. None of that we can do without capable, committed and skilled employees and the Commonwealth Bank is incredibly fortunate to have almost 50,000 employees and 35,000 in Australia, who commit to supporting the bank and its customers and all its stakeholders every single day.

So we are fortunate that we have such capable and committed employees as a Board, making sure that we focus on supporting our employees to do the right thing for themselves and the bank. And you mentioned the Workforce Program. We have to invest in our people as the world changes. Technology is evolving rapidly. I'm sure there will be many questions on AI, but AI as a skill, that I'm sure many people in this room and online use, is changing and complementing the way that we can work. The skills that we need to do that do require investment.

And as a bank, I think we're leading in the way that we are working out the skills matrix that our employees have, helping share with them and understand the skills that they have, giving them the opportunity to expand those skills to have more opportunity, whether it's within the bank or whether they choose to go elsewhere. We have to support Australia proceed into what is quite a changing world.

In terms of the specific questions of commitments, our commitment is to our employees and to give them the best opportunity to have the best personal future that they can have. And to the extent that that's with the CBA, that's great. If it's elsewhere, we want them to be successful elsewhere as well. There's no ability to give a blanket commitment to any individual or to the nation. We are seeing competition today come from tech firms outside of Australia who are deploying AI and taking Australian businesses out of the chain and directly engaging with customers.

As a bank, we need to work with our employees to make us the best bank to support the most Australians that we possibly can, and we can't do it without employees. I think the very specific answer to your question is that we are committed to supporting our employees, benefiting from their contribution to all of our stakeholders and making sure that we underpin and invest in their ability to build their capabilities and experiences and this bank can't deliver anything without the support of our employees.

Thank you. I've got some of your employees here who are going to ask some questions as well around AI and other matters.

I appreciate that. Thank you very much. We go to microphone #3.

Chair, I'd like to introduce [ Adam Verwey ].

Welcome, Adam.

Hi, Chair. The bank created a human rights grievance mechanism in 2023 available to First Nations persons in Australia. This is a great thing to have. However, all the other big banks have a human rights grievance process available to all communities that face human rights impacts from that bank's lending. So my question is whether the bank has a plan to expand its human rights grievance mechanism to include all impacted communities aligned with the other big banks.

Thank you. We at CBA focus on a lot of really important topics, including human rights or modern slavery. For instance, we've spent time on that in this last Board cycle. We take a very broad approach to our roles and responsibilities for supporting all of our stakeholders and making sure that we have the right policies and frameworks and some more support mechanisms within the bank for bank customers, but also for bank communities. We outreach into the communities, and I mentioned the process of the indigenous community outreach program.

So we will continue to reflect on what others do, but really focus on what we think is the right balance to engage with all of our stakeholders, including in the process that you identified. There are some things that we do better than others and some things that we can always learn from. One of the benefits of today's meeting is to listen and reflect on the questions that were asked, the challenges that are given. And to, in a considered manner, go back to our Board table and speak to management about the things that we can always improve.

As a bank, we're on a journey, we're always trying to do better. We aren't necessarily the best at everything, but we try to learn from everyone. So thank you for your question, and we'll reflect and take on notice your challenge to us today. We go to microphone #4.

Chair, I would like to introduce Max.

Welcome, Max.

Thank you. I work in our Cybersecurity Department at Commbank. Widespread concern on our floors is the in-office mandate, which arbitrarily forces workers to be in the office on half of our working days. This introduces many issues, but most critically, it measurably decreases our performance and impact the effectiveness of engineering and cybersecurity teams to the point where it delays responses to urgent situations. As a major financial institute, these issues are vital. Is CommBank aware of these productivity issues caused by the in-office mandate and the potential impact that presents to stakeholders such as myself? And how do the benefits of this in-office mandate outweigh the problems it causes?

Well, Max, firstly, thank you for coming along and asking the question today. It's -- we take, as I mentioned, all of the feedback seriously. And as an employee, I think it's great that you've come and asked the questions that you've asked. We believe that -- and I'll get Matt to comment specifically in a moment, but we believe we struck the right balance in requiring people to work in office, at least 50% of any given month, particularly those in our corporate offices. Our frontline staff really don't have an option. They have to come to the branches or go into the contact centers. We don't anticipate any significant alteration to our current policy. But we do assess on a case-by-case basis, those requests that come from employees specifically on whether to provide exceptions and there are exceptions. To the specifics of your question, though, I will ask Matt to comment further.

Yes. No. Thank you, Paul. And I just want to reiterate. Thank you very much for coming along Max and asking the question. And if you're -- since you're in our cyber team, you know how much importance we're putting on that topic. I really want to thank you and the broader team for all of their hard work. Look very consistent with what Paul said. We believe that the existing policy, which requires people to be in office for at least 50% still provides for enormous flexibility. We do see real value in bringing and having our teams in the office. We see the benefits of that.

We do believe there's also scope for personal flexibility. And I mean, based on the amount of very high-quality work that our cyber teams have been doing over many years, but particularly this year, I think, at least from our perspective, we've struck the right balance between flexibility and quality of work and creating the best environment for our teams.

We'll go to microphone #1.

Chair, I would like to introduce [ Michael Sanderson ].

Welcome, Mr. Sanderson. It's good to see you again.

Yes, good to see you, too.

We both look younger.

I was told at a parliamentary committee hearing where I was giving evidence that the terrible I hear gives away my age.

Mine used to be bright red. It's very disappointing.

First thing, just a couple of comments. I'd like to make an apology for my friend and colleague, Mr. [ Sol Kripke ], who planned to be here this morning, but in this digital age, his flight got bumped. And, yes, is it logical for him to get here in time?

Just another suggestion. This is taking a bit of a leaf out on him. The Millionaires Clubs, the Macquarie Bank, they have a system where they get through a general business first. And then they do the quarterly questions at the end of it, those who are suffering from bank profit-induced austerity can get a free feed or leave. I found it worked quite well. There was no restriction or whatever.

Anyway, questions, my first question. I traveled down to Sydney from the major city of Kurri Kurri, which, by the way, doesn't have a bank. When the CBA promised to protect regional branches, why did it adopt the ARIA+ definition that can classify regions such as Albion Park, Kingscliff, Lara, Belmont and Kurri Kurri as major cities, even though other government frameworks treat them as regional? Was the Board aware of this sleight of hand definition would exclude such communities from the pledge? And will it now review that classification?

Thank you very much for your question, Michael. As we mentioned, we're absolutely committed to regional Australia and have extended our commitment to December 2030 for our existing regional branches. We do look where there is a higher density of branches closer to population centers, and I note your question about the definition, but where there is a reasonable period, a reasonable distance, a reasonable time for branches to remain open and where we look at the traffic through those branches and the ability of customers to travel from one to another, that's a decision that's been taken. But to reiterate for those branches in regional areas that are open now, they will remain open until 2030. So I can't kind of answer the question any more comprehensively than that.

You did say that you wanted -- with the advent of this new technology, you wanted to interact with consumers on a more regular basis. How do you do that if consumers have to fly in some cases to get to a branch because it's too far away or travel even half hour, that's shifting the cost on to the consumer on the back of -- it just doesn't gel.

I understand your point. We do look very closely at the traffic through the branch. And as I think we've said previously, 92% of all of our engagements, it's probably potentially high now is online. We have many customers who only want to operate online or use engagement centers. But where there is traffic in the branch, as I said, we're investing over $140 million in those areas where there is more activity to broaden that physical footprint so that customers have a better experience where that is necessary. It's -- it is a challenge. It's a trade-off. It's a balance. We were the first bank to make a regional commitment, and we've extended that. But very specifically, I think you're getting into some detail. I might just ask Matt to comment on it as well.

Just only to add that there may well be other methodologies. This is a methodology that the industry has used. It's very consistent. There's no change to that methodology. And so as Paul has recognized, we thought it was important to provide certainty. We do have the largest branch network. We have twice as many ATMs as any other financial institution where, as Paul touched on making significant investments and notwithstanding the frequency and how many of our customers are engaging with us online, we recognize the importance of having the right branch network to support customers, both in regional and remote areas, but also for some who prefer face-to-face. We also, of course, provide funding into Australia Post that has access to several thousand post offices around the country to also provide many of the services that we would be able to do so in branch.

I don't know if you saw the Australian Post retail inquiry. You got the CEO there just gutting Australia Post. It's going to be pretty hard to do banking business with a parcel locker. But anyway, I think it's probably enough on that one. I got my second question here.

I think there were 2 questions, Mr. Sanderson.

I thought it was one...

I'll give you another one, but I know you'll be back. But after that, I will rotate around the room, if that's okay.

Okay. This one to do with preservation of cash and essential banking infrastructure. Your 2026 annual report emphasizes CBA's responsibility to maintain essential banking services, including access to cash. However, in CBA's submission to the Council of Financial Regulators and the ACCC, CBA relied on industry projections that cash would account for just 4% of payments in 2030. Subsequent Reserve Bank research found that cash use has stabilized at approximately 15% of consumer payments in 2025. That's up a little bit from previous years.

The 4 major bank cartel are seeking a 20-year authorization for a jointly controlled wholesale cash pool that would -- while temporary [ Armaguard ] support expired in June of 2026. What financial benefits, governance powers and obligations would CBA obtain under the proposed cash pool? What independent evidence shows this will secure regional and remote cash access? And would the CBA support a nationwide whole of system cash network using Australia Post Logistics underwritten by the Commonwealth?

I'm sure there was only one question in that, so I'll do my best to answer. The first thing I'd say is that we think that cash will be used in Australia for a long period of time to come. We spend approximately -- I think that Matt will correct me if I've got it wrong, but over $400 million making sure that cash is available and can be distributed in the company. And I think one anecdote is there's more cash in circulation today than there has ever been.

So CBA is committed to supporting cash and making sure that cash is available as broad as is possible. In terms of the specifics that you talked about, I know Matt has been focused on making sure that we're able to deliver on those commitments, and I'll get him to add some additional comment there.

Yes, no. Thank you, Paul. Look, I think the most important point would be there is a long-term commitment to make sure that cash is being delivered across the economy safely and efficiently. While the proportion of payments using cash may reduce, there's still, as Paul touched on, a lot of cash in circulation. Understandably, people use cash infrequently, but still value it. I cannot foresee a time when cash isn't being distributed around the country. I mean, specifically because it won't be -- people -- most people won't understand some of the context around what you were saying with a commercial cash pool.

In effect, we pay a provider as to a number of other financial institutions and some retailers for cash to be distributed. There's another financial institution, which actually sort of does that directly. This is a joint venture across the major banks, precisely to the question of what would we anticipate our economic benefit to be? $0 is the economic benefit that we would anticipate to be yielded from the commercial cash. We see it as a service that needs to be provided. The purpose of the joint venture is to have the parties who are otherwise bearing the costs basically being able to do that on a breakeven basis to ensure sustainability. This is an important long-term issue for which we are committed to making sure that we are making the necessary and suitable contributions to ensure that cash is delivered safely and efficiently.

Why don't push...

We're going to pause there, if we may and...

I just want to get a quick comment on this. Why don't you push the federal government to undertake a properly funded national cash distribution system. You've both got them to do a Royal Commission. I'm sure [ young Jimmy ] would -- if you've told him do it, he'll do it.

I'll take that as a comment. Thank you, and we're going to move to microphone #4. But I do know you'll be back and you're very welcome to ask further questions.

Chair, I would like to introduce Mr. [ Vincent Myer ].

Welcome, Vincent.

My name is Vincent, I similarly work at a bank in cybersecurity as well. And we noted in your annual report that the headcount in your offshore subsidiary in India has increased again. That being said, at a much smaller rate of growth compared to previous years. Report this year also note that CBA has leased a new building in Bangalore, able to fit thousands more staff. And this has heightened concerns about the movement of work and with it, the data that goes offshore.

So from this, I have 2 questions. One, what is CBA's long-term plan for the work and consequently, the customer data handled in that work in CBA India? And second of all, what is CBA doing to ensure it retains sovereign control over, a, customer data; and b, sovereign capability for these critical functions and also maintaining the risk around this data?

Thank you very much for your question. So just by way of context, before we established CBA India, we did buy services or get support from external service providers in India through contracts. We took the view, Board and management that we should actually have a stand-alone CBA business in India, a part of the whole group that actually would see us transferring from third-party service providers into a CBA employee direct business. We thought that gave better career progression for the people that we were using in India, brought them into the CBA Group. We could then manage and make sure that the work was allocated in the best way and the most efficient way coming back to Australia.

We've also made sure that the broad and widest amount of work possible is done in Australia. But as we go to financial crime, in particular, over the past 5 years as we've had to ramp up dramatically the amount of people focused on financial crime as have all of the financial institutions in Australia and around the world, there wasn't necessarily the capability and experience in Australia to meet that need such that we could comply with our legal obligations.

So we did add people in India in that context. I think you'll find that the numbers are reasonably stable. You mentioned about a new building. We had people in a number of buildings. We're trying to consolidate that again for better understanding and better capability. In terms of privacy, customer data security, we have very clear controls as to how all of that has to be managed within the CBA context. And we make sure through our Line 1, Line 2 and Line 3 controls that all of those requirements meet both Australian legal but our own policies and procedures. So that is an ongoing and important aspect of the group.

And if I come back to the broader question, as I commented with Paul a moment ago, we have to invest in Australian skills and capabilities. And you're in the cyber team, we're investing heavily in the cyber team. We've got great capability in Australia, but the risk and opportunity to do better in cyber requires us to invest in skills and capabilities, and we're doing that absolutely substantively in Australia, but we do need to look from complementary skills all around the world, and we've hired people from offshore into Australia to complement the teams.

And Matt is going to take us through a little bit more detail to address some more of the specifics in sort of your question.

Just a couple of specific points. One, the building that you're referring to has the establishment of that facility has been underway for many years. And that's important because I also want to say that there's no plans to increase the number of employees. Paul has talked through in terms of why the facility was established and predominantly the basis of what sort of work we're doing there.

So number one, I think to your broader question, no, we're not planning to increase the number of employees in India. And then secondly, all of the data and systems of record remain in Australia.

We move to microphone #1.

Chair, I would like to introduce [ Allan Goldin ].

Welcome, Alan.

Hello, Mr. Chair. How are you today?

Very good. Good to see you again.

Yes. It's nice seeing you. You do look younger. I don't. I always look older these days, unfortunately. I'm here representing the Australian Shareholders' Association. We're representing -- we have proxies -- sorry, we have 2,645,000 shares, which is entrusted to us by 1,031 shareholders. I won't make a comment. This is not a comment or a question, but if you want to talk about how Macquarie conducts their AGM as someone who monitors them for a number of years, I have a different view than the speaker before me on the -- I think this is a better procedure.

But putting that aside. I have a few questions, but I'll limit myself to 2 questions. And if others don't ask the other ones, you'll see me back later on.

My first one is almost a 2-parter. It's about New Zealand. After failing to monitor compliance issues at ASB, which resulted in a record civil fine, what I want to know in my first part is what actual changes have been made to ensure that the financial abuse and vulnerable customer controls are operating efficiently here. Both of those words were said in the judgment, by the way. In addition to the identified cultural issues, there are financial ones. In the June quarter, ASB won only 12.2% of new mortgages, well down from your usual share of 20%. Now one of your key management people here in Australia is moving as we speak, virtually from the institutional bank to lead ASB Bank in New Zealand. What is her move going to do to change the financial situation there?

That's a broad-ranging question, Alan. I think it goes to the governance of our subsidiary in New Zealand, ASB. So CBA -- first part of your question, I think CBA has been on a journey from the Royal Commission. I mentioned the Prudential Inquiry in my speech, the remedial action plan that was focused on improving our governance and our frameworks to make sure that CBA had the right policies and procedures, the right risk culture, the right governance, the right line 1, 2 and 3 operations within the business, both to maintain our ability to engage with the current business, but also to look to the strategy and the strategic risks into the future.

ASB is going through a similar process. We had changes to our Board, our management team. We did a lot in Australia. And the ASB Board is driving a similar change with the support and engagement of the CBA Board and the CBA management team. The CEO of ASB has been in that role longer than Matt's been in the role of CEO here in Australia, and it was entirely appropriate that, that person was ready to retire. And we went through a pretty good rigorous succession process.

And Sinead, who has run Bankwest, has been our Chief Operating Officer and the Group Executive for the Institutional Bank, is going across to New Zealand to be the CEO of New Zealand, a decision that was made by the ASB Board that has the full support of the CBA Board and management team. And Sinead actually spent time growing up in New Zealand in her earlier years. So is quite familiar with New Zealand. I think she actually even goes to the [ All Blacks ]. So we'll put that...

Great lady. Okay. So there is no -- it's just -- again, there's better oversight than what happened before because you got -- you had to give money back to people, you got fine because it was said your oversight wasn't good enough. So is there more controls put in place? Are you doing the same sort of controls that you do here?

I think very specifically to that answer, the CBA policies and procedures are the policies and procedures that need to be over all of our subsidiaries, except where local law requires a different answer. So we're being more focused on that perspective, absolutely. There have also been -- there's been renewal at the ASB Board level. We have brought on more banking expertise, both from globally and domestic too. Alistair Currie, who is on our Board, has gone on to the ASB Board. And Alan Docherty, who is the CFO, has also gone on to the ASB Board.

So there's been governance renewal at ASB, which I think will help specifically address the points of your questions, which is to make sure the consistency and capability of the governance of ASB is as consistent with that of CBA as we can possibly make it subject to any challenges or changes that the New Zealand law actually requires. And I think, Matt, wants to just elaborate on some of my answer.

Maybe just a couple of quick points. One, Victoria, who's the CEO of ASB, I think, has done a very good job in that role and throughout her career at CBA, which has extended for more than 2 decades. In saying that, of course, it doesn't imply that there isn't more work to do. Like all of us, I think we can always identify things that we would like to be doing better. We're fortunate to have someone of Sinead's quality and the depth of succession and capability inside the organization. ASB has and will continue to be a high priority for the group, and Paul has touched on a couple of the more recent changes.

And then perhaps lastly, I'll just distinguish between the business performance versus some of the regulatory. Having been through the business performance, I think any changes in the volume, I think you are referring specifically to home lending. It tends more to be about the economic returns that are available, specifically the home lending margins inside New Zealand can be very volatile. And I think the team has done a good job to make sure they're not underwriting or originating mortgages below the cost of capital because by definition, that's value destructive.

Right. Okay. My second question. In your annual report, in June, the total impairment provision, I understand that, that doesn't mean that those businesses and individuals are in default or anything else. It means that you're having a watching brief on these ones. But anyhow, that provision was $6.377 billion according to your annual report. What I want to know is, has that increased?

Do you want to talk to the September adjustment?

Well, we -- the numbers that we can talk about today to 30 June. Obviously, we have finished our September quarter, but we will be releasing the results of that in November. I think, look, we spoke about a number of trends, which I think is reasonable to say -- we will say would be continuing to be evident, which is, one, we're maintaining provisions well above the sort of central economic scenario. We think it's important to have loan loss provisions that give us the capacity to deal with a range of different economic scenarios. This is one of the topics that's been on our mind for many years. I think it's very important that the organization remains in a position of strength.

And even though our forecast economic scenario has not changed dramatically, we certainly have the capacity to be able to support customers at a much more adverse perspective. Secondly, in the context of higher rates and slowing economic growth, we're acutely aware of some of the pressures that are being felt across the economy, obviously, in households and more broadly. And so whilst we didn't see and we're not anticipating a rapid deterioration, it is the time to be watching very carefully, but also, of course, to be making sure we're doing everything that we can to be supporting customers where they need that.

Okay. Thank you. And hopefully, other people will ask the questions I want to ask. You won't see me again.

That's right. Alan, did you want to add?

Just a specific response.

Sorry, can we just go to Alan? Yes.

Yes. Just a specific response on the number that you quoted. So that was an increase on the -- that was a June 2025 provision. That was the comparative number. That was about $100 million increase on the June '24 provision. At June 2026, we've got another $100 million on those provisions just in recognition of the rise in geopolitical and macroeconomic uncertainty. So yes, those provisions have increased over the previous 2 subsequent financial years.

That's the point.

Yes. So yes, we'll wait until November, and we'll see where it is. But there is a natural increase that is happening there.

That's the comment I was referring to. So thanks, Alan.

We go to microphone #6.

Chair, I would like to introduce [ Kylie Levo ].

Welcome, Kylie.

Thank you. My question is regarding regional brand -- branch closures. I work for the Finance Sector Union and the FSU welcomed CBA's recent announcement to extend the moratorium on regional branch closures until the end of 2030. While this provides certainty for customers, communities and staff in those regional areas, we are still seeing a continued closure of metropolitan branches. Since the moratorium was first announced in 2023, over 100 metropolitan branches have closed. And already this financial year, that is within the last 3 months, CBA has either closed or announced the closure of 26 metropolitan branches.

With that, my question is 2 parts. Will CBA extend the moratorium to stop the continued closure of metropolitan branches? And how will CBA provide the certainty for its metropolitan customers, communities and staff?

Thank you, Kylie. Thank you for your question. I think customer engagement is just really important, whether it's online or physical. As I mentioned earlier, the way customers bank is changing, and we have to actually change with what our customers present. And that sometimes comes with a challenge, but there are now almost 10 million active app users and more than 2 million customer interactions across voice and messaging services each month. The investment to support customers who want to interact that way is really important, and we will continue to focus on that.

We are proud to have Australia's largest branch network and the most bank-owned ATMs, and we do support Australia at post. So from a physical perspective, the team is always looking at the best way to make sure that we engage with customers and some branches that we are expanding because they're higher traffic, higher demand from our customers. So we will continue to look at the right way to present that network. We've made the commitment today not to close any of our regional branches at least until 2030. But we do have to engage with the way customers engage with us and make sure we appropriately provide the services that they need. Thank you very much. We go to microphone #5.

Chair, I would like to introduce Mr. [ S.K. Peng ].

Welcome, Mr. S.K. Peng.

Good morning, Mr. Chair and Board members and the management team. Thank you for your work for the past year. And thank you very much for all the cybersecurity staff that attended this meeting. This question is about AI. I'm sure many of the shareholders will concern their shareholders' value and our bank account safety with Commonwealth Bank. In view of the recent Medicare and Hugging Face intrusion incident, what kind of measures that the bank have taken to make sure that we will counter fight for this kind of incident in the following 3 aspects.

First, will the company take legal action against an intruder despite of their size, even if they are very big AI companies? Second, what kind of team and AI tools are in place to fight for this kind of intruder incident? Can the bank, for example, react within 24 minutes? Like how can you face that? Third, does the bank have human-oriented AI strategies that is to say, have human in the loop, human oversight on its AI development cycle and moreover, empowering our people, human resources instead of just using AI to cut the human resources.

Thank you. There's a lot in that question. Cybersecurity is an incredibly important Tier 1 risk for the bank and for all of Australia. You've referenced activity outside of the bank. We need to make sure that we've got the capability and the tools amongst our people and some of them are here today to actually ensure that we can understand AI risk, cyber risk and take the steps to protect the external perimeter of the bank, but to monitor the bank's engagement with potential cyber threats, and there's activity every single day on that through so many different challenges. So it's an incredibly important area of focus to us.

I think I mentioned earlier that we spend over $1 billion a year, making sure that we're addressing scams and frauds and cyber risk. So the investment is dramatic. It's in people and capability that is really important and developing those skills in Australia that's important, whether it's at CBA or across the national spectrum of businesses and government. and a credit to Matt and the team who spend a lot of time dealing with government agencies and supporting other Australian businesses, large and small, to both understand and specifically support them with their cybersecurity arrangements as well.

In relation to the hypothetical legal action, that's one for another day, I think. Each cybersecurity threat we address in the moment, but we also have the systems in place to deal with that. If there's ever an event, we would hope that, that does not occur, but we would deal with that in the moment. The entire focus of our technology is to make sure that we can better serve our customers safely and securely and scams and fraud prevention is a critical part of that.

We give our employees the tools and time to learn to use those tools to support us on cyber and to be able to do that more quickly. The one thing about AI is that cyber activity is relentless and much more speedy in its ability to identify vulnerabilities. And Matt has pivoted the organization quite dramatically to lean into that increased risk as well. And it is such a broad topic, and you asked so many questions, I will stop there and ask Matt to elaborate on areas to complement my answers.

Thank you, Paul. And thank you very much for the question. As Paul touched on, look, there's a lot in that, but I'll try and answer fairly succinctly to your 3 points. The first, I think, was around if there was a cyber event, would we be, my words, dissuaded from taking legal action if depending on the origin or the size or scale of the company, no?

No. Just like if there are cyber attacks, like, what is attack on the Medicare system, will the bank take action?

Yes. So we, of course, would reserve any of our legal rights. But by far and away, the most important thing is also then how do you protect and defend the organization and then detect any unexpected or unauthorized activity. Paul touched on it briefly. Cyber is -- has been for many years, one of the most important risks to manage. There's no doubt in my mind. I think it's the -- certainly one of the risks that has deteriorated the [ most so far ] I think there's much heightened cyber risk globally. It is, of course, a huge priority for us. We -- in the last financial year, as Paul touched on, in the areas around cyber, financial crime scams, fraud, we invested more than $1 billion. It's fair to say we have increased our investment in the current financial year in FY '27.

Secondly, I think your question was around specifically sort of [ Hugging Face ] 24 minutes. Maybe I won't go into the stopwatch measurement, but it is necessary. One of the things that is required is to be using the models internally to both respond to any external threats and also to be managing. We have a very capable team to my earlier answer, which we're very grateful for having such skills internally. There is quite a lot of sophistication to be able to run a lot of models and to be using those to be both securing your systems and defending them in as close to real time as you can.

And then the third was really around the sort of human-in-the-loop. So across many aspects, there are a variety of different controls, and this is why I would say it is the most important thing. Ultimately, we retain responsibility for the use of any of those AI tools or models. Of course, often that's human has to be both overseeing the totality of the system. And in some areas, we're moving to increasingly the need to be able to respond, like I said, as close to real time.

And so this is a very challenging dynamic, one that's rightly occupying a lot of our time and investment. But most importantly, using the tools and capability that are available on a global basis, supplemented by what we think and hope is the best cyber team in Australia to defend the organization and to protect our customers and the community.

In response to the second part of the question, I understand that there are regulatory requirements about business continuity and operational resilience, There is a set of scenario that the bank will respond within a certain time frame. I hope that the bank have established cyber securities and this kind of AI intrusion instance as one of the scenario.

Thank you very much. I think just to add to that, there is a requirement on the bank through CPS 230 to make sure that we do focus on resilience, and there are scenarios undertaken with that, and there are minimum service requirements. And that is -- there is oversight on that by the Australian Prudential Regulatory Authority. So there is a whole mechanism within our risk frameworks to make sure that we do focus on resilience, and it is incredibly important. Thank you for your questions. We go to microphone #2.

Chair, I would like to introduce [ John Lisher ] from Cairns.

Welcome John [ Lisher ] all the way from Cairns. If you could just speak into the microphone.

Good morning, Board. I'd just like to firstly thank the Board and all the CBA staff who've contributed to the $11 billion profit. And also, I'm very happy that you've decided to expand the regional program of keeping banks open. Mine is more of a request that leads to a question. But before I say that, I'd just like to mention my father 94, who has CommBank shares, but he can't attend today. He's still going, which is good.

And his big concern was about what I'm about to say next is that -- is there any scope to reopen the Mount Sheridan Commonwealth Bank? Because I'm aware their branch there, that's part of the Cairns area. There's massive development going. There's about 40,000 homes going to be built in that Southern Cairns area and particularly so because after Cyclone Jasper hit the northern area, people have shied away because they had a lot more flood there.

But getting back to the actual request to reopen that Mount Sheridan branch, a lot of the statistics were based on dodging that they used foot traffic and transactions because when it closed in 2022, the statistics used were it was they didn't -- foot traffic and business transactions and so forth were down low. That's because in the previous 12 or 2 years due to various premier shutting down states, the staff in those branches were redirected to other areas, so you couldn't judge the foot traffic.

So my comment is and request is it's not a complaint. It's just a request and all the staff in the areas of Cairns are great. And as we lived in Brisbane and Kulim and they are great, too, is there any scope to reopen the Mount Sheridan branch? My 94-year-old father would be very happy.

Thank you very much, and thank you from coming all the way from Cairns and please pass on our best wishes to your father. He's been very well represented by you today. I'm going to take that question on notice and look to my CEO on the left to see if you can add some specific answer to that one.

Well, again, thank you for the question. And of course, we'll take any personal request on notice. I do know that I understand the nearest branch is about 6 kilometers away or so. But I recognize that would most likely still be far more convenient for your father to visit the existing branch. But I think as Paul has touched on a few times today, we will continue to try to strike the right balance between making sure that we're supporting our customers with the largest branch network, but also recognize that customer preferences and the way our customers are interacting with us is changing very rapidly.

And so that's why we've been prepared to make longer-term commitments in regional areas. You touched on some of the measures, but I mean, ultimately, obviously, more customers who bank with us in areas where we're the last bank or we're one of the few financial institutions is the key determinant of whether we stay in that area over the long term. But as I said, I will pass your request on to our Head of Retail, Angus, who is sitting in the front row here.

Thank you very much. I'm going to take another 3 questions in the room, and then we'll go online. But we will come back to the room and go backwards and forwards a little bit. So if we go to microphone #3, please.

Chair, I would like to introduce Mr. Robert [ Catterson ].

Welcome, Mr. [ Catterson ].

Thank you, Board. Thank you for quite a wonderful performance in this year with this bank in comparison to the other 3 banks operating in this country. It's a wonderful indication that we've got a good Board and a good management team with the bank. Also with your support of female sport in this country with [ Socceroos ] and other female sporting entities with this -- in the community.

But specifically, my 2 questions are, we had the Telstra incident recently with their minor shutdown of half the country. And obviously, Optus had a similar event just recently as well. Are we making sure that our relationship with our telecommunications companies, partners, whatever you wish to call them, are sort of making sure that we're still open for business and making sure that -- these companies make sure that these systems still operate for the benefit of the bank and the businesses and the individuals that they support. That's the first question.

Do you want me -- I'll answer that one first, if you like. But firstly, thank you for your comments about supporting women's sport and we have, as I mentioned, we've got an incredibly committed workforce across CBA that's doing everything they possibly can every day to deliver the best customer experiences. And to our employees, we're extremely grateful for their commitment. In relation to working across the whole of the national infrastructure to make sure that Australians aren't impacted through cyber outages or technical outages, the Board and management take that responsibility extremely seriously.

We have to make sure that CBA has the right cybersecurity, resilience and technology platforms and backup plans to make sure that if there are events that we can respond very quickly to make sure services stay at the best availability possible. The team, particularly through Matt, but also the technology team does work with other Australian companies, as I've mentioned, and specifically with Telstra and Optus to share learnings, share experiences and to provide the support because there is a substantial interdependency of companies to make sure that we collectively can support Australians, whether it's through financial products or telecommunications, but just doing daily online activity.

So yes, national resilience and CBA resilience are extremely important, and it's an area of focus that we invest heavily. And from an engagement perspective, and Matt may want to comment, Matt and the team engage directly with other large and smaller Australian companies to learn from and provide support to any activities associated with service delivery.

Perhaps just to underscore a couple of things, a, the importance of this topic as all of us live our lives more digitally, the service continuity and recovery for all critical infrastructure is incredibly important. We work very closely with the companies that you mentioned and a number of others. Our teams also have the opportunity to sort of debrief and understand privately anything more that would have contributed and also what we could learn from. And notwithstanding this has been one of the best years touch wood that we've had for many, many years on service continuity and reliability.

I add that only to say that we're all fallible. It's one of the things that, I mean, truly worries me in this role is the implications, and this is why we spend so much time and investment and building resilience and recovery and different scenarios and testing those different scenarios. But I also recognize the fallibility of any company of any technology solution. So maybe just to reassure you with how seriously we take this issue.

Yes. Now my second question goes to the whole range of things that you mentioned in the opening video about cost of living, inflation and everything like that. Recently, we've got the Reserve Bank and the reserve bank is talking about future interest rate rises based on inflation, which is totally out of the nation's control. The nation is not spending like while sailors going down to Harvey Normans spending money on big screen TVs. They're spending money on basic everyday items like petrol and third, right? And a lot of these inflationary pressures are internationally based at the present time.

And how dare the Reserve Bank placed more costs on not only itself, the Australian government and the taxpayer, but why should those decisions impact the interest rate decisions that the bank has to make and pass those on to the customers. And also in terms of recent debate about credit card surcharges. Well, I'm a bank shareholder and I'm part of this business. And I think, well, if I go to a coffee shop or if I go to somewhere where there's been a surcharge, they're entitled to run a business, so are we.

So if we go -- and I know Mr. Comyn goes to parliament every 12 months, along with all the other bank CEOs and it's grilled by the government senators, well, why can't we do the same thing and present our case responsibly and assertively to make sure that we look after our business interests and not just towering to either Reserve Bank or Mr. Chalmers.

Thank you for your question, Robert. I think cost of living pressures in Australia are impacting everyone. And the causes of that are widespread, and you've mentioned many of them. But, I think, the first thing to acknowledge is that everyone is feeling that pressure at the moment, absolutely. Inflation certainly contributes to that. And the Reserve Bank governor talks to that, and they have an independent mandate to try and keep inflation within a range of 2% to 3% and to support employment. Inflation has been -- I think in August, it was at 4%. So inflation is outside the range. Inflation is not good for the country. Increasing prices is not good for the country.

And I think your question goes to the point as to what's the best way to address that. As a bank, what's in our control to make sure that we have a resilient balance sheet so that we can support Australians. One thing we've learned and particularly through the COVID pandemic is that when times are tough, as a bank, we've got to stand up and support the breadth of our customers to the best ability that we can. And that can be through providing policy feedback, which Matt does very well, and you've mentioned some of those forums on what should be the right tax policy for Australia? What are the considerations associated with that? What do Australians want? Australians want more support. That comes with challenges as to how to fund that. How do we get inflation down?

Well, the one thing that is very, very challenging on that is productivity. And we've been talking as a bank and Matt's been talking as have the leadership team through strategy sessions on the challenges of improving productivity in Australia because ultimately, we are able to better handle inflation if we can increase the supply of all of the goods and services that we use at a lower cost. And until we address productivity, it will be challenging to actually get everything back to a point where cost of living pressures aren't easy. We also know there are external shocks with fuel. We feel that immediately in our wallets every day when we go to fill up our vehicles.

So I think productivity is really important. As a bank, we lent $40 billion to businesses last year. We have to support customers across the whole of Australia by making sure that we run the bank, and I acknowledge your very first comment, by making sure that we collectively run the bank as effectively as we possibly can, then we've got to have the best balance sheet to continue that support to Australia. But -- there are no easy answers at the moment, but the one that I would suggest we need to focus on as much as we can, and it's everyone's opportunity, regulators, governments, businesses is just to focus on working how to improve productivity.

I can go right around in circles because I think all of us read the papers, all of us pay the bills, all of us have a view and opinion. We're trying to do the best we can to support all of our customers through what is an incredibly challenging time. And as I mentioned in COVID, we learned that by supporting our customers, we help them to get to the other side of the COVID pandemic. We need to make sure we're supporting our customers get through this cost of living crisis and provide counsel and support as best we can as we do that.

And one more. You mentioned COVID. This was the only bank that supported its shareholders through that time compared to the other banks. Thank you.

Thank you. And I think that just highlights the importance of having great people and a strong balance sheet. If we go to microphone #1.

Chair, I would like to introduce [ Peter Star ].

Welcome, Mr. Star.

Matt, and to the Head of the Business Banking over there on the left to Mike as well. You've touched on some things in your speech there. We talk about the Royal Commission and things like that and what the bank has been doing. And I think that's a credit to you and both Matt that you embrace those things and turning around things, which is good.

I noticed that some concerns I had in relation to -- that I raised with Matt, and Matt acted very quickly in relation to his picture and Alan Kohler's picture being spooked for people to open accounts and things. And these are the things that concern me, and I know it concerns others in the room, and it was mentioned yesterday at the Telstra and I raised it with Vicki and Craig Dunn about. For everything good in AI, the concerns I have and others have, and other shareholders in the room about AI can just put Matt's picture and Alan Kohler and tell people open accounts. And it astounds me that people actually go and do that, thinking that Matt and Alan Kohler -- thank God, Matt's got it pulled down. But maybe Matt could speak to that and about the other issues that are going on with scams. And I have a second question, but I'll wait for those answers. Thanks, Paul.

Thanks, Mr. Star. Scams and frauds are just -- they're a toxic kind of praying on Australians and investment scams in particular, and with the use of AI. AI is so good now that you sometimes do not know whether you're talking to a real person or not. I'll get Matt to talk to the specifics. But just to reiterate, we are spending a vast amount of money to both understand the threat, but also to repulse the threat. And the bad actors are working harder and harder to actually try and get money off Australians. I think the understanding how proliferating the scams can be is important.

One thing I'll acknowledge is that Matt and the team, our cyber team, in particular, spend a lot of time engaging with government on the scams prevention framework, which will come into effect in March. And as I mentioned earlier, making sure that there's a collaboration between the banks, the telcos and the platforms that host a lot of that activity and that there's a sharing of information real time to take down system-wide the avenues that are being used by scammers is really important.

So there are some gaps in the national defense at the moment, if I put it that way, that the Scams Prevention Framework when it rolls out, will hopefully address, particularly by bringing in those platforms that actually are outside the scope at the moment and who host a lot of those scams. So that focus is really important to the specifics of Matt.

I mean just to add, I mean, historically, many of those scams were sort of poor quality. And perhaps to varying degrees, it was easier to discern the difference. I think we should prepare for the reality that the quality of those scams and the likeness or authenticity will be harder to detect. That said, I will never be promoting an investment on any social media. So -- but the quality will get better and better, unfortunately, which again highlights why it's so important that we are using the technology to protect our customers.

As Paul touched on, I think the most important thing over the next 12 months will be the rollout of the Scam Protection Framework. And what that simply means is there's obligations on financial institutions and telcos, but also the tech platforms, a number of whom operate globally, and there's a requirement for them to operate under those laws and conditions. And one of the aspects of that is exactly in the example that you raised, when something like that is detected, then there is a time frame by which it needs to be taken down to minimize the number of people that could be deceived. And I think this is an important and complex piece of legislation, but one that when it is executed and done well, will strengthen protections in Australia and hopefully makes Australia less of a target for a number of the offshore jurisdictions, which specifically target Australia in these areas.

And secondly, Paul, and again, it goes to Matt is that I've noticed that -- thanks to you, Matt, that Halis Yaman from CommSec who you organized to work with me and fix things up is absolutely tremendous. And I'm very keen how the AI technology now in CommSec being used about to summarize things in that. And I think that's a very good thing, Matt. And again, I just want to personally thank you. We've caught up at a number of the things at the Hilton in March.

And you always ask me, did I get things out of that? And thanks to you, I got a lot out of it. And I know that when you speak at those events, people really focus on what you have to say because it's really important. And just generally for the shareholders in the room, if you haven't listened a week or so ago, Matt was interviewed by Alan Kohler, and I can highly recommend that -- to the shareholders in the room just to have a listen. I think it's well worth to listen to that. But again, I want to thank you, Matt.

Thank you very much, Mr. Star. And for your gracious comments. Did you have anything you want to add, Matt?

Well, I guess, to confirm the interview with Alan was real in that instance. Unlike some of the scam ads, and I know that [ Halis ] in our CommSec team enjoys supporting you. It's nice to see you.

We'll go to microphone #6.

Chair, I would like to introduce [ Michael Vanderclaw ].

Welcome, Michael.

I'm an employee and engineer the SRE team. Chair, the CBA's latest published WGEA figures, show a median total remuneration gender gap of 26.8%. During enterprise bargaining, the bank rejected incorporating specific gender pay gap commitments or targets into the enterprise agreement, citing its existing reporting and governance processes. Does the Board consider those existing arrangements adequate? And if the current gender pay gap is unacceptable, what measurable reduction is the Board committed to achieving over the next 3 years?

Thank you, [ Michael ]. I think you asked a question on an incredibly important topic, which is to make sure that for equal role and experience that there's equal pay. And we focus on gender pay gap in 2 broad areas. One is to make sure that when we have people doing jobs that they're paid the same for doing those jobs. And as experience goes up, that's reflected. The WGEA data you're talking to looks at the total pay of females versus males within CBA. And we have a structural area which we have to invest in.

Tech jobs tend to get paid more than direct customer service jobs and tech jobs, and it kind of goes all the way back to university and education where there tend to be more males going into STEM roles, science, technology, engineering than females. So we have to start right back at the beginning and make sure that we support females to finish maths and sciences at high school to go more into STEM at universities and then attract them at an equal rate or a higher rate than men into the engineering roles where we're increasingly investing because that's fundamentally in banking where more of the higher-value jobs are.

So in terms of your question as to what we're doing, we're absolutely talking about it at the Board, but we've got to focus on that investment to make sure that we're actually supporting young women with the best opportunities to get the higher-paying jobs. And that to me is the fundamental issue within the WGEA that, that data highlights, and it's not something that's just germane to the CBA. It's across financial institutions. It's across all companies in Australia, and I think it's a very important area of focus.

I have a follow-up. Chair, the bank also relies on existing reporting and governance processes, but the published WGEA figures are too aggregated to assess where the gender disparities exist in promotion and remuneration within comparable employee cohorts. Does the bank conduct longitudinal analysis of these outcomes by gender, grade and job family? And will it publish appropriately anonymized results so employees and shareholders can independently assess whether its measures are working?

Yes. Thank you. We provide focus on gender balance at Board, ELT, group executives, all the way through to executive managers, and we have actual targets to make sure we get that gender balance right, and we're working on those targets all of the time. It does take longitudinal focus. It's an area that we have to keep investing in, making sure that we're assessing having the right group of people applying for jobs, supporting diversity through those applications, making sure that we have assessment and support so that there's not a bias going through those decisions and that making sure in job families, as I said, that there is deep analysis to ensure same pay for same activity.

So the Board focuses on that. The management team focuses on that. We engage on that all of the time. So we report our targets, and we do provide commentary on that, and we do the WGEA reporting. But internally, it is much more specific. And I think we're comfortable with the way that reporting is. But I think your question is it's the same question that directors and management ask of each other every time we look at that issue. But I'll go back to your first question, Australia needs investment to make sure that we get gender diversity into those jobs with really good opportunities into the future, and it's an area where we can all improve in supporting that focus.

If those analyses are done, though, surely you can commit to publishing them.

I think there's a lot of things that we are asked to do, and we'll continue to revise our processes and our reporting. We get very substantive reporting across so many aspects, including how we support employees. So I'm going to leave the answer to that question there at the moment. Thank you very much, [ Michael ]. I think we're going to go online now for some questions for a period of time.

Thanks, Chair. We have a question from shareholder, [ David Brice ]. Does CBA consider AI technology a threat to how CBA operates as a business, considering CBA is renowned not only as a banking institution, but as a technology company?

I think we see AI as both an opportunity for the bank and for Australia, but not without its risks. And I think there have been many questions today about cybersecurity in particular, and Mr. [ Star's ] questions around scams and frauds, AI will certainly improve the bad actors' ability, whether it's cyber or scams and frauds, but it gives us the opportunity to actually make sure that our controls are more comprehensive, that we can respond to challenges more quickly. We can improve the speed with which we patch systems, for instance.

So there's an opportunity, which I think Australian nationally and businesses individually and individuals all have the ability to participate from. But there is absolutely no doubt that it brings threats with it. So we have to understand both sides of that equation and CBA is investing heavily to make sure that we've got the right people with the right tools and the systems and processes and the right thinking around where those threats might be to address that challenge.

Chair, we have a question or a comment from shareholder, [ Ian James ]. CBA needs more branch staff and better security like it had previously. When asked, staff agreed that removal of tellers is not good and exposes customers to risks. Also, talking to staff in public areas doesn't allow customers privacy or security. Staff are stressed and always apologizing for long queues and wait times. Don't make them apologize, just fix the staffing problem.

Yes. Thank you very much. I think we take all of the feedback seriously. We survey ourselves. And as Matt mentioned earlier, our staff engagement under the current methodology, which has been going for some time, is as high as it's ever been. But that doesn't mean that our frontline staff don't have challenging experiences. We note that staff safety, given the cost of living crisis becomes more challenging because customers are feeling pain and they can be absolutely appropriately engaging with our staff at times and other times, not so much.

So investing in the right security, the right balance in the branches, the right branch footprint, which, as I mentioned, is bigger than any other bank or institution -- financial institution in Australia. Getting that balance right is important. We have 16,000 staff engaging with customers every day. We take what they do seriously. We do our best to support them, but we also take the feedback as such that you've just provided seriously as well.

Chair, a question from shareholder, [ Mary Lutzo ] waiting times experienced on the 13 2221 line are still not fully addressed. About 2 months ago, I rang the number and after waiting 10 minutes for any response, the line was closed. I rang a second time the same thing happened. I had to ring 3 times to finally get a reply. This shows bad service.

I'm sorry you had that experience, and I understand that waiting can be frustrating. As Matt mentioned earlier, we've got the heads of the businesses here at the moment. I think they will be taking feedback specifically as it relates to that line. And to the extent that there are issues that need to be addressed, they'll be addressed with.

Chair, a question from shareholder, [ Tracy Farley ]. Has CBA considered the broader economic impact of replacing human workers with AI, including the effect on household incomes, consumer demand and its customer base? And does CBA believe there is an ethical way to use AI?

I think the answer to the last point is absolutely yes. AI, as we mentioned a number of times, has both substantial opportunities to improve the customer experience and to support employees sometimes taking away more mundane work, but giving us the opportunity, whether it's in cyber to respond to more threats, if it's in customer to actually respond more quickly to customers' needs in areas where we were talking vulnerability and how people are challenged through the cost of living crisis, some people want to talk to a human. Some people just want to report their issue using technology. So having both avenues available and available effectively is really important.

How AI evolves is going to be really important. And in supporting our staff and making sure our staff have the best opportunity, we are investing in skills and skills evaluations and prompting our employees to take time to actually develop their skills and to potentially take postings in other areas of the banks to actually grow their opportunities as well. So we see almost a democratization of the benefits of AI being incredibly important. There have to be customer benefits. There have to be employee benefits. We need to get some productivity out of it, but it is all work in process, but an area of focus that the Board and the management team are taking very seriously.

Chair, we have a question from shareholder, G A Smith Super Proprietary Limited. Is the company always going to be a big fish in a small pond or does it have plans to expand to other markets such as Southeast Asia and the Pacific regions?

So CBA is very much focused on the core markets of Australia and New Zealand. We have, in the past, expanded into an Asian footprint, but we're stepping back from that. We do have offices in the U.S., the U.K. and in Europe to support our Australian customers in their activities in those countries or offshore companies that come back into Australia.

I'm not sure that we're a big fish in a small pond. There's a lot of competition in Australia. There is so much more we can do to support Australians and New Zealanders meet their financial needs and build a brighter future for them that we also invest heavily in on which to get a return for shareholders. So I wouldn't say that we're interested in expanding offshore. I think what we want to do is do a better job in the markets that we are in because we see so much opportunity to improve, to grow and to be successful.

Chair, this is a question from shareholder, Mr. [ Julianne ] [indiscernible]. Mr. Comyn, AEMO forecast East Coast gas demand to decline substantially as electrification accelerates, while the federal government's gas reservation policy is intended to ensure adequate domestic supply. Further, the Grattan Institute's recent Out of Gas report makes the case that gas needs to be treated as a declining backup fuel rather than a growth industry. Against that backdrop, does CommBank consider entirely new export-scale gas provinces such as the Beetaloo Basin unnecessary for Australia's future energy security and affordability needs?

Thank you. Secure, reliable and affordable energy, including through the renewables transition is critical to underpinning Australia's economic prosperity. According to AEMO and others, gas will remain important for peak reliability in some industrial users. Specifically, they say, as we transition to renewables, there does need to be some gas peaking capacity to firm renewables. That's really important.

Recognizing the role of gas in domestic energy security, the Australian government announced the domestic gas reservation scheme, which if passed by Parliament will be fully operative on the 1st of January 2028. So the existing government sees that some level of domestic gas reservation is important.

To the specifics of your question, our financing of the fossil fuel sector is subject to our Environmental & Social Framework, and it puts restrictions on our ability either by definition to glide paths transition plans or new project financing to brand-new gas fields. And it's pretty clear as to what our obligations are under that framework. So I think I will leave it there, but we've been very clear. We've had good engagement. We've been absolutely transparent in our sustainability report, and we're really focused on making sure that we meet our transition targets. And the E&S framework helps us to do that.

Chair, this question is from shareholders, [ James and Catherine Bates ]. Why was the Spearwood branch closed and customers not given notice? I turned up at the branch only to find both the building and the ATM closed. I use the ATM regularly and the bank facilities occasionally, but was given no prior notice of its pending closure. I now have to travel over 10 kilometers to access banking services, not good enough.

I'm sorry you had that experience. And I understand as we've had the conversations today, how important branches are to so many of our customers. Branch closures are assessed on a case-by-case basis. And we do give customers at least 6 weeks' notice via letters to regular customers and notices in the branch, and we let local and state federal MPs know about that as well. I'm very sorry that you didn't get appropriate notice there, but that is the methodology that we follow. But again, sorry, I think there's a...

I just maybe just very quickly to add, Paul, if it's helpful. We do send notification, as you said, to all customers. I think we -- that is limited to customers who have used the branch in the prior 6 months. So -- but perhaps we could have a conversation after the AGM and make sure that nothing was missed.

Chair, another question here from shareholder, [ Chris Burra ]. If house prices fall 30% on average across Australia from recent peaks, what impact will that have on CBA?

CBA has a very mature risk management framework that looks at all of the financial risks across all of our lending and other exposures effectively running then scenarios on changes that could be quite dramatic, whether it's the physical impacts of climate change, whether it's house price falls or whether it's unemployment increases, which are -- those latter 2 are a significant impact on financial risk.

We run that methodology and that process and determine what provisions we should have on the balance sheet to give us a shock absorber or a buffer against scenarios that might have significant adjustment financially for Australians. As a Board, we're very comfortable that the scenarios are robust. There are always times where unexpected events occur. The best way to do that is for us to follow our risk management framework, undertake the methodological work and then make sure that we have the balance sheet with the right provisions to protect against that. So that is the methodology we follow.

It is -- it has kept us in good stead, but it's an area of focus in our Board Risk & Compliance Committee that we spend significant time on and real time with the cost of living crisis, even more so, I think financial risk and supporting Australia and having a resilient balance sheet has never been more important than it currently is at the moment.

Chair, this is a question from shareholder, Rita Mazalevskis. What Board-level controls ensure that where CBA lends to a small business against the directors' guarantee and pre-existing home mortgage that CBA assesses the business' capacity to repay rather than relying on property equity, compliance with the banking code and guarantor protections and that CBA retains evidence of that assessment and informed consent and independently verifies all contractual and statutory requirements before enforcing against the guarantor's home, including the legacy facilities.

I think without referring to individual circumstances, to the extent that we have customers who have economic challenges, we have a whole framework which has matured over time. We were discussing it just in the last couple of days, but we have to make sure that we are there to support customers, to communicate effectively, to communicate early and then make sure we follow all of the appropriate policies and procedures, either internal or externally imposed.

We do our best to deal with that every single day. But again, with the cost of living crisis real time, making sure that we're there to support customers as quickly and clearly as we can through difficult circumstances is certainly front of mind for us and the team.

Chair, this is a question from shareholder, [ Stephen Mayne ]. CBA has been News Corp's main Australian bank for decades. The Australian newspaper reported on August 21 that our CEO is in a relationship of sorts with News Corp journalist, Laura Jayes. In light of this, what is the Board doing to provide oversight on any dealings between CBA management and News Corp, such as the recent nationwide housing affordability campaign in the News Corp newspapers that was sponsored by CBA. How are we managing the optics of this delicate situation? And does the Chair have any comment on the recent media?

Thank you very much. I think the first to say, and I think a number of shareholders have talked about it today is just how good a job Matt is doing and how committed he is to supporting Australia, the bank, but our customers. And from a Board perspective and a Chair perspective, Matt's work ethic, focus and dedication to CBA has never been in question. There is no conflict and the transparency around conflicts that exist within the Board and amongst the management team has been absolutely appropriate. So I'm just going to leave it there.

Chair, we have a question from shareholder, Rita Mazalevskis. Who within CBA is responsible for conducting the independent pre-enforcement review before court proceedings or enforcement actions are commenced or continued. Is that review conducted by a person or function independent of collections, recoveries and the external solicitors or agents conducting the enforcement? Second question is, if CBA has commenced or is continuing court enforcement without first satisfying the contractual, statutory, regulatory or internal preconditions required for that enforcement, is the Board advised and do they immediately intervene?

Thank you. Again, I won't talk to specifics, but there are very clear processes within the banks and review and assessment steps across all aspects of individual loans and their circumstances. And there are committees of review involved coming at that from equity, legal, regulatory and internal policies and procedures that have to be followed to go through that process. And the Board does review that process in totality and then management implements that process in specificity. Matt, would you like to add further?

Perhaps joining that question with the earlier question, and again, of course, not commenting on any specific circumstances, and you've touched on many of these points, Paul. But of course, when we lend, we apply all of the relevant credit and risk assessments. I think one of the questions is around sort of records, all relevant records are retained. One of the things that at all times we're looking for is any signs of financial hardship or support. We do have specialist teams that are in place to be able to support customers precisely in some of the financial hardship circumstances and then perhaps just to underscore that enforcement is a last resort.

Chair, this is a question from shareholder, [ Chris Burra ]. When are you going to improve customer service at CBA? CBA NetBank is great. CommSec is excellent. CBA customer service, both face-to-face and over the phone, not so good. Staff are often not so friendly and often incompetent. The CBA regional branches are few and far in between, often dilapidated and are depressing and distressing. And why do we have to go into a CBA branch with the ever-declining number of branches to confirm our identity when ING, Macquarie Bank, Rabobank and ubank can do the same thing online or over the phone.

Thank you. I think the best way to step that up is to say that we are always focusing on delivering the best customer experience, both in person, where we have the largest in-person network in Australia and online. I'd have to push back and say that our people are well trained, capable and do an incredible job. There are times where individual experiences might not meet the customers' need, and we take that feedback and there are processes of challenging or escalating. But our people do undertake substantive training on both an introductory but an ongoing basis.

In terms of comparing services with others, we are always making sure that we're investing as heavily as we can as to provide the best customer experience, both holistic and individually. I think I'll leave the answer there. We're going to move back now into the room, and we have a question at microphone #1.

Chair, I would like to introduce Michael Sanderson.

Welcome back, Mr. Sanderson.

I wasn't expecting that. Yes.

If you've got nothing to ask, happy for you to sit down.

You wish. The destruction by Ukraine of 3 of 6 Yandex data centers has caused severe disruption to digital banking, the Russian economy and AI. Cash held outside banks have increased to 17.5%. Is it in the interest of shareholders for CBA to continue to undermine branches in cash? Or is this a CBA fallibility? [indiscernible] Yes.

I think I talked about operational resilience before, and we've talked about cash supply. We're absolutely committed to making sure that we maintain the branch network that we have in regional areas, make sure we've got the footprint that optimizes customer requirements in the city. And I note that there's always different views on that. We do think that cash will be around for an extended period of time, and we're supporting that process. And data security, data privacy are fundamentally important parts of our risk matrix, and we spend considerable amounts of investment to ensure that we have a resilient and safe network. So I think they're all parts of what we've already talked about today, but that would be the answer that I would provide to your question.

I just find a bit counterintuitive where you're pushing people into digital. And then you say cash is declining as a consequence. That's a self-reinforcing feedback loop, taking on board that you think that cash is going to be down to 4% in 2030, just doesn't wash. The logic is not there.

I'll take that as a comment. Thank you.

And then on the data centers, Ukraine bombing a data center in Russia is not transferable to our market. But we've got a looming energy crisis, whereas the lack of energy can take out data centers. For instance, in the major city of Kurri Kurri, we've got a brand-new gas-powered service station, power station as a consequence of the Morrison government. Lo and behold is a data center going in right next door of the old aluminum smelter at the site, which will take 80% of the capacity of that particular brand-new renewables has never supplied an economy. I'm talking wind and solar here of the planet. There is no proof that concept works. I get on a message. Do you want to comment on that or you just go to the floor?

I think as I mentioned before with AEMOs, you do need gas firming with renewables. That's an important step. I think with data centers, more importantly, there's a national conversation underway as to how to support the power and water that go to data centers. I think that's a really important conversation. I think you highlight a very specific local instance in Kurri Kurri. But I think nationally, making sure that we've got the right balance in supply to support industry broadly and consumers specifically is an important part of national energy policy.

My second one. This relates to debt. I just want to break it into 2 because I've got 2 responses based on your yes or no answer. Does CBA consider that the debt level in Australia is a macroeconomic issue? That's a yes or no one.

Yes. Look, we come back to how do we make sure that we support Australians in the services that are necessary and the services that they demand, both nationally and locally. How do we make sure that we have the right tax policy, the right productivity so that we can actually get inflation into the right spot to support Australians. And then how do we, as a bank, when we look at the economy, make sure we've got the right balance sheet and products and services to support Australian. That's the way that we look at the totality rather than the specific number that might sit within a national government debt target.

So I think, as I've mentioned, productivity is really important. It's hard. We need to continue to try and focus on improving productivity nationally and locally. And then we've got to do our job at the bank, and we're endeavoring to do that to the best of our ability.

That was a long [indiscernible] talk about me going on. Let's talk about -- well, private -- we hear a lot about the sky is falling, the sky is falling. The government has a $1 trillion debt. But we never hear about private debt. Private debt is around $4.87 trillion. It's 168% of GDP. And if you listen to the likes of Dr. Steve Keen that states that private debt was central to the Great Depression and the GFC, should shareholders be concerned about the level of private debt. This is not CBA's, part of it, substantial part.

I think I'll refer back to the answer to my first question, which is from a CBA perspective, an individual perspective, a corporate perspective, we've all got to make sure we understand how to balance our cash flows going forward, how to manage the growth of an economy, where to lend to support that economy, where we are in the cycle to maintain our economic settings. I think it's a really broad question or comment that you're making. I think we look at the totality of the Australian environment. We look to how CBA sits within that, and we try and support our customers, large and small, to manage their own personal or private situations, but also for us to support the policies that might help support Australia grow economically and bring down the cost of living. So there are so many aspects of what the bank has to do and how we lean into that, that I'll kind of provide that broad answer, and I think leave it there, if that's okay.

So the bank doesn't have any underlying concerns about the $4.87 trillion.

I think we look at the total economy and our settings with that economy, and we're doing our best to support the economy. I [indiscernible] to answer that. I think that's the best way that I'll answer that question. We're going to do a couple more questions in the room, and then we'll move to the next item of business, that there will be further opportunity to continue to ask questions. So if we go to microphone #4.

Chair, I would like to introduce Mr. Thomas Wells.

Welcome, Thomas.

Thank you, Mr. Chair. My name is Thomas. I work in the actual the financial crime section of the bank, specifically law enforcement agency. First, I just want to say, indeed, you're right, it's an area of the bank that's growing very quickly due to the risks that they present in society today that we need to manage. More to my question, it's -- I have 2 questions from my section. First about AI. So CBA has been actively working to integrate AI into the workflow of its employees, improve productivity and as such. However, some employees like myself, our roles are quite critical for CBA to meet its regulatory obligations, particularly in regard to money laundering and Counterterrorism Act.

Furthermore, as we saw recently in the news, I think someone else alluded to it earlier, the Medicare incidents between that and AI. There's growing concern among regulators in terms of what information AI can access and also what it may be able to do with that information. So my question is, what regulatory risk does AI propose to CBA? And is this something that employees such as myself should be concerned of in terms of how it might impact myself and my role, particularly in terms of accountability if an incident takes place?

Thank you again, Thomas. And just to reiterate, I really appreciate the questions from employees today. I think they're really pertinent. And they hopefully give shareholders a perspective on the breadth of things that we all collectively have to address and to make sure that we've got the right strategic focus on risk, the right internal policies and procedures. We've got the right -- and we're investing in our employee capability. And there's just a plethora of areas and risk that we need to focus. But I'm going to get Matt to specifically comment on your individual components of your question.

Yes. Look, I mean, given the nature and the number of questions in this area, maybe I'll just spend a couple of minutes on it. And look, I think rightfully, the volume of questions to me signifies, I think, the importance of this topic, both more broadly to Australia and to the CBA, and maybe I'll touch a little bit on briefly how we're managing that, including in important areas. So just very quickly, I mean, this technology is quite transformational and has a number of risks, both risks in terms of -- that need to be managed in the day-to-day, but also strategic risk.

I mean one of the unique aspects of this general purpose technology and a general purpose technology like electricity will have implications on the broader economy. It's also dual use. One of the reasons why it's very good at helping in engineering and software development. It also means it's very good at cyber. So we have to -- I think there are risks in using the technology. There are clearly risks in not using the technology. In areas, as you said, in cyber and in financial crime, we've expanded our resources, our regulatory compliance, but most importantly, the outcomes of protecting our customers and the community are always at the forefront of our minds.

There are a variety of different protections that need to be in place about how we're using the technology. As I said earlier, we retain accountability and responsibility for the use of it. But this -- it will be a source of change across the broader economy. It's one of the things that we are very focused on is both how we can be implementing it responsibly, safely, distributing those benefits more broadly so that our customers are receiving a better experience.

We're also protecting our customers. As Paul has touched on, I do think there will be opportunities for productivity. There will be changes to people's roles over time. I don't know about the exact pace of those changes, but I think it's really important for us to be able to talk openly about how we're thinking about it, trying to prepare both our people by our workforce capability investments, the broader economy so that we are as well prepared as possible as a company, but also as a nation. And I think this is going to be one of the most important priorities over the next few years, and we'll continue to engage both internally and also externally on this topic.

Thank you. In terms of my second question, hopefully, this one is a little shorter, but it came to me while I was listening. Part of my role involves getting orders from courts with instructions on how we should manage accounts of our customers. Obviously, we treat these with the utmost importance due to the seriousness of these kind of court orders and the instructions that they give to us the bank. I noticed that in my time working in financial crime, they rely almost entirely on branches to function. And to me, it's a concern of mine that if we are required by the judicial system to make our customers go to a branch in order to comply with orders involved by court, how is that going to -- how is our [indiscernible] -- how is branch closures going to affect that? And is CBA in a position to perhaps apply pressure to regulators and as such to maybe try to develop a better way to serve our customers rather than making them drive to a branch to uphold a court order.

Thomas, I'm going to ask if you bear with us and if it's possible to take that offline and talk to one of the leaders who are here, they'd be very happy to get your input to that. I note that we have to comply with court orders, but you're suggesting a concern about the process that might be followed. And I think getting into the detail of that as to what our processes are and considerations that you might be bringing to that. So if you're amenable to that, we'll get someone to just get your input afterwards if that is okay with you. If you don't want to do that, that's also absolutely fine.

No, I appreciate that.

Thank you very much, Thomas. We go to microphone #1.

Chair, I would like to introduce [ Bruce Bennett ].

Welcome, Mr. Bennett.

Thank you, Paul, and I appreciate how you've been conducting the meeting. It's been very useful. I noticed that last night, Wells Fargo, JPMorgan and Citi had some really good results last night, and I'm sure you're aware of those. Of course, Bank of America had a bit of a handicap with its time, but other than that. What I'm asking is you mentioned earlier in your comments that the bank has many opportunities to grow its business in Australia and New Zealand. And I'm wondering whether the Board has any plans to expand the Board's investment banking operations so as to improve the returns for shareholders. That's the first question.

Second question relates to branch closures. I'm wondering whether when you consolidate banking, you could think about opening some banks on -- some branches on Saturdays, so you to avoid that sort of congestion that takes place when you combine the branches down. But the main one is in relation to the bank's opportunities in investment banking.

Mr. Bennett, on the second one, I've just noticed that the head of the retail bank is taking a note on that one. So that's -- that comment is acknowledged. In relation to investment banking, we have an institutional bank that is supporting large customers and particularly supports them with market risk, whether it's hedging or commodities risk, which is commodities. We support customers who are using investment banks in transactions by providing them with financial services in stepping out to be an investment bank in the way that others might think of that. I don't think that, that's part of the core activity that we would be interested in. Beyond that, the services that we currently provide, which we're very comfortable providing.

So I know there will be more questions, but we're going to move on to the next order of business. So Item 2 relates to the reelection of Simon Moutter and Rob Whitfield AM and the election of Julie Coates. The resolutions will be dealt with separately. The Board's recommendations in relation to Item 2 were approved prior to the appointment of Julie Coates on the 1st of September 2026, as it was the Board's confirmation that all directors standing for election or reelection are independent. Each director standing for election or reelection will briefly address the meeting regarding their candidacy. Item 2(a) is for the reelection of Simon Moutter, who retires in accordance with the company's constitution and being eligible, offers himself for reelection. The Board, with Simon abstaining, recommends the reelection of Simon Moutter as a director. I now invite Simon to address the meeting.

Thank you, Chair, and good morning, shareholders. I'm pleased to stand for reelection to the CBA Board. I joined in September 2020, and I currently chair the People & Remuneration Committee, and I'm a member of the Risk & Compliance Committee. My executive background is in leading large and complex organizations through significant periods of change. I spent 7 years as the Managing Director of Spark New Zealand. And before that, I was the CEO of Auckland International Airport, and that followed on from roles in the telecommunications and energy sectors.

I continue to hold leadership and governance roles in New Zealand, including as Chair of Kainga Ora, the country's public housing agency. These roles give me a direct perspective on the New Zealand economy and business environment, which is an important market for the CBA Group. Throughout my executive career, I've helped organizations I've worked with drive change through smart business strategies, technology adoption, digital transformation and implementing modern ways of working. And over my time with CBA, technology investment and business transformation have been a significant focus of the Board.

As the group continues to invest in technology and considers opportunities and risks represented by AI, I believe my experience enables me to continue to make a useful contribution. As Chair of the People & Rem Committee, I guide the committee's work on executive succession and talent, workforce development and the group's remuneration framework. And I also enjoy contributing to our work on the leadership, capability and culture needed to deliver sustainable outcomes for customers and shareholders. I remain independent, and I have the capacity and commitment to continue to serve effectively as a director. It's been a privilege to serve on the Board, and I would welcome the opportunity to continue to contribute. I'd appreciate your support in my reelection. Thank you.

Thank you very much, Simon. I now invite shareholders and proxy holders in the room who wish to ask questions or make comments on this item to move to a microphone. I also invite shareholders and proxy holders to submit questions online. Are there any questions? I don't think we have any questions at the moment, so I might move on.

I now put the resolution to the meeting. Please mark your voting card in relation to Item 2(a), Simon Moutter's reelection.

[Voting]

I'll now move to item 2(b). Item 2(b) is for the reelection of Rob Whitfield AM, who retires in accordance with the company's constitution and being eligible, offers himself for reelection. As Rob has served for more than 9 years, he's standing for a further 1-year term only. The Board is satisfied that his skills and experience, including as Chair of the Risk & Compliance Committee, continue to support his reelection and that he remains independent. The Board, with Rob abstaining, recommends the reelection of Rob Whitfield AM as a director. I now invite Rob to address the meeting.

Thank you, Chair. Ladies and gentlemen, my appointment as a Non-Executive Director to the CBA Board was announced back on the 4th September 2017 and was elected by you, our shareholders at the 2017, 2020 and 2023 AGMs. I am seeking your support for my reelection as a director to the Commonwealth Bank Board for just a further 12-month term. It has indeed been a privilege to serve on the Board. I remain deeply committed to the bank, its customers, its people and creating sustainable long-term value for you, our shareholders.

Over the past year, I've also had the opportunity to chair the independent panel conducting the ASIC commissioned inquiry into the governance, capability and risk management of the Australian Securities Exchange, the ASX. That experience has given me a unique and very current perspective on the governance and regulatory environment facing major Australian institutions operating critical infrastructure, not simply from the perspective of being regulated, but from the perspective of understanding the issues regulators are examining, the expectations they are placing on boards and management and what effective governance looks like when placed under significant scrutiny. Those lessons are directly relevant to the CBA as it navigates increasing regulatory expectations alongside rapid changes in technology, AI, cyber risk, financial crime and customer expectations.

My experience across banking, financial markets, risk and governance, combined with those learnings gained from chairing the ASX inquiry, enable me to bring a particularly informed view to these challenges. I thank shareholders for the confidence you've placed in me to date, and I look forward to continuing to serve you as a Director of CBA should you decide to support my reelection today. Thank you.

Thank you, Rob. I now invite shareholders and proxy holders in the room who wish to ask questions or make comments on this item to move to a microphone. I also invite shareholders and proxy holders to submit questions online. Are there any questions? I don't think there are any questions online or at the -- sorry, have a question. The Microphone #1.

Chair, I would like to introduce [ Alan Golden ].

Welcome back, [ Alan ].

Look, we find it a bit strange. We understand the constitution. The reason it's only a 1 year. We will support it this time. We think that Mr. Whitfield is very good, but we do find it strange. What my question has to do with more is, can we see what the votes are before we're asked to vote? And can they also be left up long enough for us to actually see them because the last election, the vote came up and it was like 1.5 seconds. Could we actually see them?

Sorry, I can't see them.

You can see...

We put up the last vote, if that's possible for Simon.

Great.

You put up your hand, Alan, when you reckon it been up there long enough.

Long enough.

Thank you. In terms of the methodology, we're doing it after the vote, but we're going to take that on notice and reflect to next year, if that's okay, but we'll definitely keep them up there longer. So I think Simon has been reelected. Congratulations, Simon.

There are no further questions. If there are no further questions, I'll now put the resolution to the meeting. Details of the direct and proxy votes received prior to the meeting in relation to this resolution are displayed on the screen. And so the vote is up there. You can now mark your voting card in relation to this item, which is Rob Whitfield's reelection.

[Voting]

And as we can see at the moment, 98% of the vote is cast for the resolution, subject to those in the room who are adding their vote today. So congratulations, Rob. And just to comment on the 1-year term. Under the constitution and policies of the bank, directors are elected by you, our shareholders, for a maximum of 3-year terms. But after that, it is possible for electors to vote for a further year up to 3x for a director to be extended. And thank you, Bret. We thought that having Rob on board for another year was the right thing for the bank and for you, our shareholders, and that's why we put the recommendation to the meeting.

I'll now move to Item 2(c). Item 2(c) is the election of Julie Coates, who is appointed as a Director of the company since the 2025 AGM and being eligible, offers herself for election. The Board recommends the election of Julie Coates as a director. I now invite Julie to address the meeting.

Thank you, Chair, and good morning, shareholders. I'm very pleased to have joined the CBA Board as a Non-Executive Director and to put myself forward for election by shareholders today. I was attracted to the opportunity to join CBA because few organizations have the same connection with Australians and Australian businesses or play the same role in supporting the Australian economy.

Having spent most of my career in large customer-facing businesses, I was particularly drawn to CBA's ambition to improve the everyday experience of millions of customers. For more than 30 years, my career has spanned the retail, consumer goods, construction, manufacturing and building products sectors. Most recently, I was the Managing Director and Chief Executive Officer of CSR Limited. Earlier, I held senior roles at Goodman Fielder and Woolworths, including as Managing Director of BIG W and as the Chief Logistics Officer and the Human Resources Director of Woolworths. Alongside my executive career, I have served on a number of listed boards. And today, I am a Non-Executive Director of Wesfarmers and Scentre Group.

Much of my career has been spent close to the operational realities of large organizations. It has given me a strong grounding in bringing strategy to life through disciplined execution, delivering for customers and understanding what it takes for large organizations to perform consistently at scale. I look forward to bringing that perspective to the Board's work. I am independent and have the capacity to give the role the time and focus it requires. I respectfully seek your support for my election and look forward to contributing to CBA as a member of the Board. Thank you.

Thank you, Julie. I now invite shareholders and proxy holders in the room who wish to ask questions or make comments on this item to move to a microphone. I also invite shareholders and proxy holders to submit questions online. Are there any questions?

If there are no further questions or no questions, I now put the resolution to the meeting. Details of the direct and proxy votes received prior to the meeting in relation to this resolution are displayed on the screen. Please mark your voting card in relation to Item C, 2C, Julie Coates' election. And congratulations, Julie, and welcome.

The next item on the agenda is Item 3, the resolution to adopt the remuneration report of the company for the financial year ended 30 June 2026. In accordance with the Corporations Act, the vote on this resolution is advisory only. The remuneration report is included in the company's 2026 Annual Report, which is available on our website, and some hard copies are available here today. The bank and the executive leadership team have delivered consistent, sustainable performance in the financial year.

The remuneration outcomes approved by the Board reflect how it has exercised its judgment in assessing executive performance in the context of the operating environment and with regard to shareholder customer, people and risk outcomes. Our remuneration policy settings and frameworks have supported the execution of our strategy. This has delivered sustainable shareholder outcomes, improved experiences for our customers maintaining a strong focus on our risk culture and supported the skills, careers and engagement of our people.

As outlined in the report, our executive remuneration framework is made up of 4 components: fixed remuneration and short-term variable remuneration or STVR, long-term alignment remuneration or LTAR, and long-term variable remuneration or LTVR. Together, these elements are designed to provide market competitive remuneration and rewarding sustainable financial and nonfinancial performance and shareholder value creation over the long term.

Executive scorecards are approved annually by the Board and include weightings, measures and targets that are calibrated to reflect strategic priorities, market practice and regulatory requirements. Performance is assessed against clearly defined targets with recognition given to contribution that extends beyond core role requirements.

In determining outcomes relative to target, the Board adopts a holistic approach, considering both the degree of stretch and the impact achieved. As you've heard in my opening remarks and Matt's address, the performance of the bank has been strong overall across the balance of financial and nonfinancial performance areas.

The Board considered a number of matters relating to risk and reputation in the 2026 financial year, which for the executive leadership team resulted in 3 downward adjustments to remuneration outcomes. The People and Remuneration Committee will continue to monitor and refine the bank's remuneration frameworks so that it attracts and retains high-caliber talent meets applicable regulatory requirements and supports the delivery of sustainable customer community, shareholder and risk outcomes.

I now invite shareholders and proxy holders in the room who wish to ask questions or make comments on this item to move to a microphone. I also invite shareholders and proxy holders to submit questions online. Are there any questions?

I'm just going to go back for a moment to a question online in relation to Julie that was missed. So if we could pass to that? If that's -- no, it might...

Sorry, we don't have a question from Julie, but we do have one on this item, if they're in.

We'll stay online for a moment and then we'll come back to the room. Thank you.

Chair, just before I ask this question, if I could ask those in the room to just make sure you've turned off your mobile phone or put it on silent as there are a number of phones going off and it's distracting. Thank you.

We have a question from shareholder, Stephen Mayne. Did any of the 5 proxy advisers, ACSI, Ownership Matters, Glass Lewis, Aida Bliss and ASA recommend a vote against the Board's recommendations on any of today's resolutions, including this remuneration report item?

If so, what reasons did they give and did this translate into any material protest votes whilst the actual reports from most of these groups, excluding ASA, our confidential, the recommendations are not, and it is the standard for companies to be across this detail on the voting recommendations and inform shareholders when asked?

Thank you very much for the question. I think the question has been asked before. Proxy holder information, we don't disclose the results or recommendations. They're provided by the proxy holders as I understand it. We disclosed the votes as they appear in the AGM today, and that information is available for everyone both here and online once the polls are closed. But we always take on board feedback as to how we run the meeting and our communication, and we do everything we can to be as transparent as possible. Thank you.

No further questions online at this stage.

Thank you. We'll come to the room if there are any questions in the room. If there are no further questions on the remuneration report, I now put the resolution to the meeting and note that the Board recommends that shareholders vote in favor of Item 3. On the screen are the details of the direct and proxy votes received prior to the meeting in relation to this resolution.

Please mark your voting card in relation to item 3, adoption of the 2026 remuneration report. I think we can all see those votes on the screen.

I'll now move to Item 4. Item 4 is a resolution for the grant of securities to the CEO, Matt Comyn. The company is proposing to grant the following securities to Matt under the company's employee equity plan, 12,192 restricted share units as his 2027 financial year long-term alignment remuneration and 12,192 performance rights as his 2027 financial year long-term variable remuneration.

Together, these elements of the CEO's remuneration support a focus on sustainable shareholder value creation. The LTAR is designed to align executive interest with those of shareholders and drive collective focus on the value of CBA over time. The CEO's LTAR awards are subject to both the pre-grant assessment by the Board and the Board approved the full grant of restricted share units.

The pre-grant assessment considers individual nonfinancial people and leadership and strategy execution outcomes and future financial factors, including a long-term approach to capital and balance sheet settings.

As a result, if shareholders approve this item today, Matt will be granted 12,192 restricted share units granted in 2 tranches with 50% restricted for 4 years to 30 June 2030 and 50% restricted for 5 years for 30 June 2031. Matt will only receive value from this grant after the restriction period and subject to the outcome of a pre-vest assessment.

The LTVR performance rights will be subject to performance measures over the period 1 July 26 to 30 June 2030. These measures are described in detail in the notice of meeting. But in summary, 50% of the award is subject to a relative total shareholder return measured compared to a peer group of the 20 largest companies by market capitalization on the ASX at the first of July 2026, excluding CBA and resource companies.

The other 50% of the award is subject to a relative total shareholder return measure compared to a financial services peer group. Following the end of the 4-year performance period, the performance measures will be tested and the performance rights that vest will be determined.

Vested performance rights will be automatically exercised to shares subject to dealing restrictions for the further holding period of 2 years to 30 June 2032.

Vesting of the restricted share units and performance rights following the end of the restriction and performance periods, respectively, and any shares subject to the holding period will be subject to malus consideration.

Malis considers whether there have been any serious or material matters and may lead to the Board reducing the awards, including to nil, prior to vesting. If the vest, the awards are also subject to Quebec. This is designed so that the outcomes appropriately consider risk accountabilities and reputation outcomes.

Restricted share units and performance rights do not carry any voting rights. To align these awards with shareholder experience, Matt will receive dividend equivalent payments. In respect to the restricted share units, but only following investing, these dividend equivalent payments will include the value of any franking credits.

Any shares allocated to Matt on vesting of the restricted share units and performance rights will carry the same rights as ordinary shares, including with respect to voting and dividends. Full details are outlined in the notice of meeting.

I now invite shareholders and proxy holders in the room who wish to ask questions or comments on this to make item to move to a microphone. And I also invite shareholders and proxy holders to submit questions online. I apologize, that was a mouthful. We'll go to a question online.

Chair, this is a question from shareholders, Stephen Mayne. At the 2023 AGM, I asked CEO, Matt Comyn, to summarize his past LTI grants as to whether they have vested or lapsed. The Chairman monopolized the response, so let's try again with the CEO speaking for himself.

Could Matt please summarize his share ownership history at CBA, including LTI vesting and on market trades. Please don't say look it up in the annual report and through ASX announcements. It's complicated, and our extremely numerous CEO could actually summarize the situation in 60 seconds, including recent sales?

Thank you, Mr. Mayne. I will note that I'm the Chair of the meeting, so I'll decide who answers the question. And you'll notice during the meeting, I have got a lot of support for that, but remuneration is actually a board responsibility, and it's more important, I think that the chair talks to the remuneration than the individual concern.

But specifically to answer your question, Matt was appointed CEO in April of 2018 and his LTVR grants, 97% of those have vested and 3% forfeited. While he was granted a GE or vested while he was the CEO, 55% of vested and 45% have forfeited, with the total vesting as CEO, basically 79% vested and 21% forfeited.

He's also acquired shares through performance being met through variable rem. And there is more information in the remuneration report. But in summary, a large proportion have vested, but there is a proportion that has not so vested. We will come into the room, and we have a question at microphone #4.

Chair, I would like to introduce Mr. Paul Hatfield.

Welcome, Mr. Hatfield.

My question is in result ends with the 12,192 shares. The share is actually purchased on the open market or does that result in an increase in issued capital for the bank?

I believe those shares result in an increase in issued capital for the bank, but I just need to check. Sorry, the rights -- good clarification. So the share rights. So until -- as share rights, they are amortized over the life of the term of the vesting period of the a restriction period of 4 years. So they go through the -- I believe they go through the P&L, and we'll clarify this afterwards. But then once they actually vest, the share is actually becomes an issued component of share capital.

Yes, they're basically, I think they're synthetic rights that obviously track and then understanding the vesting in the resolution.

Yes. They're issued at vesting. So there's an expense incurred over time, and then they actually are issued as shares as an increase in capital if they actually are awarded and meet the performance hurdles. Apologies for the confusion.

Microphone #1.

Chair, I would like to introduce Mr. Peter Starr.

Welcome back, Mr. Starr.

Yes. Thank you, Paul. Sorry, I had to duck out. I was just stuck up to another AGM that we're requiring -- but I got back.

We kept going just so you can make it.

I heard that you referenced me in one of your remarks, thank you. In relation to the shareholders I represent in that we'd just like to say that the Board as a whole in what they're proposing for Matt, we're fully supportive of that.

There's no doubt that under your leadership, Matt. And I was wondering your biggest skeptics during the Royal Commission and we since resolved those things. But let me tell you and for you, too, Paul, your leadership after you took over from Ms. Livingston, who I caught up with just recently.

But certainly, what's proposed there, I think is very fair and reasonable. I think that we're fully supportive of it, the shareholders I represent. So we have no issue with that. And we just like to say that we -- to the Board, we see vital for Matt continuing I know there was a little bit of speculation, but I don't want any speculation here.

We firmly believe, while he's there running the bank, as the CEO, the bank is in a very, very good position and likewise yourself and the board. So we fully support that. Thank you.

Thank you very much, Mr. Starr. We appreciate those comments. And we know that you have challenges over the years quite appropriately so, and appreciate that challenge. Thank you.

If there are no further questions, I now put the resolution to the meeting and note that the Board recommends that shareholders vote in favor of Item 4. Details of the direct and proxy votes received prior to the meeting in relation to this resolution are displayed on the screen.

Please mark your voting card in relation to item 4, the grant of securities to CEO, Matt Comyn. And I will just clarify when those shares vest, they are actually purchased on purchased on market, they're not issued capital. So I apologize, I didn't get that right straight off the cuff. Thank you.

I'll now move to Item 5, which comprises 2 resolutions requisitioned by a group of shareholders. The resolutions are proposed under Section 245N of the Corporations Act and are set out in the notice of meetings as Items 5A and 5B.

Item 586 an amendment to the company's constitution. It requires a special resolution to be passed. That is and must be passed by at least 75% of the votes cast by shareholders entitled to vote on the resolution. Item 5B is a contingent advisory resolution that only will be only put to the meeting if resolution 5a is passed by shareholders.

Consistent with the company's approach to welcoming shareholders' feedback, a reasonable opportunity will be provided at the AGM today for questions from shareholders on Items 5A and 5B, even if Item 5B is not ultimately put to the AGM.

The Board respects the rights of shareholders to seek to amend the company's constitution -- the board does not, however, consider that the change to the constitution proposed by Item 5A to allow shareholders in general meeting by ordinary resolution to an express an opinion, ask for information or make a request to be in the shareholders' best interest.

The Board recommends that shareholders vote against it. The Board is responsible for making decisions that are in the company's best interest. The proposed amendment would provide a platform for a group of shareholders to promote any number of matters that may not be in the best interest of the company and shareholders as a whole.

The Board considers that it would be inappropriate for any 1 issue promoted by shareholders to be given increased prominence over another. This could impact the Board's ability to make decisions effectively and in the best interest of the company.

As I've mentioned, Item 5B is an advisory resolution. It requests that CBA disclosed a pathway to deforestation-free finance. My opening remarks address the topic of nature more broadly and this advisory resolution specifically. The Board considers that the company's current approach is appropriate having regard to the evidence presently available as it preserves the company's ability to determine whether and how its response should change as evidence and circumstances develop.

As outlined in the Notice of Meeting, the Board recommends the shareholders vote against both items 5A and 5B.

I would now like to give Jolene George from the Australian Conservation Foundation which supported the resolutions on behalf of groups of shareholders an opportunity to address the meeting and thank Joe line and the ACF for the engagement that they've had with myself and Matt and the team. It has been very professional and much appreciated. Thank you, Jolene.

Good afternoon to the shareholders here. Of course, Mr. Comyn, Mr. O'Malley and members of the Board. We finally got here to Item 5. So well done to all of us for hanging on. Thank you for the opportunity to speak. I'm here on behalf of almost 200 shareholders who have co-filed the proposals before you today.

The proposal speaks to the bank's intent to address deforestation in Australia, by which I mean the clearing of natural forest often critical habitat for threatened species like koalas and greater gliders, and many species that exists nowhere else on this planet outside of Australia.

On the topic of nature and biodiversity, I believe that there's many points that were actually in furious agreement on. For example, we know that nature underpins our economy and research shows that more than half of GDP or nearly half of GDP is directly dependent on nature.

We also agree on the importance of Australian agriculture to our economy, to our food security and to regional communities. And I'm sure all of the Board will agree that farmers are among some of the best custodians of our land in Australia.

Yet new research by the Australian Conservation Foundation has linked CBA's financing to properties where significant deforestation is occurring, affecting thousands of hectares of land.

Your recent disclosure reinforced this, suggesting that up to 0.5% of total committed exposure or by our calculations, around 32% of your lending to agricultural customers may be linked to significant deforestation. That is a material finding, nearly 1 in every 3 lent to agricultural customers potentially linked to deforestation.

Further, despite the bank enhancing your analytical capabilities, CBA still cannot tell shareholders whether the deforestation it has identified involves the destruction of threatened species habitat, whether it is potentially unlawful or if it's contributing to the erosion and sediment runoff that is damaging the Great Barrier Reef and therefore, the economies that depend on that natural treasure.

These are not peripheral questions. They go directly to the environmental, regulatory, reputational and financial risks that the bank needs to understand and manage. While we very much welcome the analysis and appreciate the work of your staff in taking this important step, this is not where the work ends, but only where it begins.

In your annual report, you acknowledge the increasing pressures faced by farmers through extreme weather, changing climate patterns and pressures on water and soil. All things impacts known to be made worse through deforestation.

These pressures threaten agricultural customers' income and assets as well as the bank's loan collateral and the credit risks arising from this require a clear response. In fact, the impacts from deforestation are almost certainly negative for all of your customers, the vast majority of your customers perhaps with the exception of those few customers doing the damage in order to increase short-term profits.

This brings us back to the role of the bank of CBA in addressing these impacts in the broader interest of the economy, the agricultural sector, your shareholders and to the fairness of the majority of your customers who are doing the right thing.

Some of your peers have done similar analysis and concluded that they do have a role to play as lenders in addressing deforestation through the means available to them. We understand, unfortunately, that this is not the conclusion. This conclusion is not shared by CBA. This is why shareholders today are asking CBA to disclose a pathway to deforestation free finance over time.

It does not prescribe the methods the bank must adopt or ask for a commitment to deforestation free to be implemented tomorrow but it does ask for a shift in the direction of travel, a credible pathway and transparency about progress.

A clear strategy from the bank can not only protect shareholder value but protect its customers in the wider agricultural industry from the actions of a small minority that is that is tarnishing the reputation of the wider sector.

Regardless of the outcome of today's vote on behalf of shareholders, I urge the Board not to look away from this issue and to critically challenge what may be sold to you is a good news story that the steps taken so far have been sufficient. We urge you to dig deeper into this analysis to understand the underlying risk and what the data shows as well as what's hiding and what's not yet known.

And to rigorously debate and consider the appropriate role that the bank has on this issue. Identifying the risk is an important first step. The next step is to demonstrate how the bank will meaningfully address it. I ask shareholders to support the resolutions before you today. Thank you.

Thank you very much, Jolene, and thank you for your patience at time. Sometimes it takes a while to get to item 5. While we respectfully oppose the resolutions proposed. We share your focus on this important issue and appreciate your engagement. I now invite shareholders and proxy holders in the room who wish to ask questions. or make comments on Items 5A or 5B to move to a microphone. The vote on these items is conducted separately and Item 5B is a contingent resolution that only will only be put to the meeting if Item 5A is passed by shareholders.

I'll now move to questions. I think we have a question at microphone #4.

Chair, I would like to introduce Mr. Martin Mansfield.

Welcome, Mr. Mansfield.

Thank you. Good afternoon, everyone. I am a Commonwealth Bank shareholder, as are my brother, my wife, her brother and sister and my daughter. So there's a lot of us in the family who are CBA shareholders we are all very aware of risk. As Jolene has just mentioned, ACF, Australian Conservation Foundation Research shows that just under half of Australia's GDP is directly dependent on nature.

But we also know that nature in Australia is under severe stress. 2,119 species of animals and plants are under threat of extinction. I'm a keen bird watcher and 1 in 6 Australian bird species are at risk of extinction. So 113 different ecological communities.

And just this morning, we're learning about the mass starvation of flying foxes in New South Wales and Victoria. They are vital pollinators, including of agricultural products. And some entire ecosystems are at risk of collapse. The Murray-Darling system is a good example as evidenced by mass fish killings and widespread salination.

So it's really very simple. We cannot continue the way we are. If we do, nature will collapse and therefore, so will our economy. This will have a devastating effect on all Australians and all companies, including, of course, the Commonwealth Bank and us as shareholders.

The 2 leading causes of environmental stress and collapse in Australia are climate change and deforestation. So in order to protect itself and its shareholders, the bank must do a lot more to reduce and indeed eliminate its financing of deforestation.

The bank's strategic response, as outlined in the sustainability report is woefully inadequate. It talks about enhancing its understanding of future related risks considering relevant lending risks through established processes and supporting customers by helping build awareness.

But these will lead to a little, if any, reduction in the financing of deforestation. By contrast, the strategy contained in Resolution 5B would be a very good way to start reducing that financing of deforestation.

So my question is this, in light of what I've just outlined, why aren't you and the Board doing more to reduce and, if possible, as soon as possible, eliminate the Commonwealth Bank's financing of forestation in order to reduce the stress on nature and therefore, stress on the Australian economy, thereby significantly reducing risks to the bank and to us as shareholders?

Thank you very much for your question and comments Mr. Mansfield and for the time to prepare and present those. There's a lot in that. I've said a fair bit already on our focus, and you've actually quoted faithfully our annual report. I think we are continuing to understand and that means both engagement and awareness, engagement and awareness with yourselves, with the ACF with Jolene and the team, but also with farmers and with regulators with parliamentarians with the community.

Not all deforestation is the same, and that's something that I think is absolutely acknowledged by ACF and ourselves. So as it specifically goes to farming in Australia, just a bit of background.

The Environmental Protection Act, so the I'll just get it right. The Environment Protection and Biodiversity Conservation Act of 1999 was amended such that on the first of December of 2025, there were changes in federal law to bring more of the supervision, regulation and statutory enforcement over deforestation into federal legislation and effectively by the Environmental Protection Agency.

And the Board's view is that having an environment, a national environmental protection agency with absolute supervision in this area, either identifying issues of illegal or clearing activity that doesn't meet their requirements is actually an important thing for us to acknowledge and understand.

Our bankers who we're educating on this process are engaging with our customers and I think education and engagement are really important. But I think an area of difference perhaps is that the EPA, we believe it is their role to make a decision as to where deforestation has occurred, and that EPA itself says that there's no such thing as a blanket approach.

One of the challenges with the proposed resolution is it does bring a blanket approach it uses terms of no banking of deforestation. The EPA set itself says that there's a dramatic range in what may or may not occur, what might or might not be appropriate and what their responses might be depending on the nature of deforestation or land clearing approved or otherwise.

And so we're very focused on reading the EPA's guidance, understanding that guidance. But the journey continues, and I think our engagement with yourselves, we will learn from that.

But we also engage with farmers to get their perspectives and their state legislation, and now there's a broader and clearer federal legislation with an environmental authority whose job it is to make sure that the legislation is adhered to.

Our role as a bank is to support our community, support the farmers, focus on our sustainability area, but also to better understand this important topic. And it may be that we say more in our annual reports going forward, but that's part of the education and learning process, and we take the engagement and feedback very seriously.

Could I just ask the Board then to as soon as possible, move beyond just understanding and awareness to really assessing where financing of deforestation is happening and trying to eliminate that and make sure it doesn't happen again.

So I think making good steps, but I encourage you to take further I guess, more stringent steps as soon as possible.

We'll take that feedback. If I move to microphone #3?

Chair, I would like to introduce Bonnie Graham from the Australian Ethical Investments.

Welcome, Bonnie. Thank you for coming.

Good afternoon, Chair and members of the Board. Australian Ethical is an institutional investor in CBA, and we are also a co-filer on this resolution. CBA has committed to the goals of the Paris Agreement. It supports Australia's national emissions reduction targets, and it recognizes the importance of Australia protecting and restoring nature and biodiversity as you mentioned in your address this morning.

We know that halting commodity-driven deforestation is integral to achieving those goals. CBA's own analysis identified that around 1/3 of its Australian agricultural portfolio is potentially linked to deforestation station. And yet in its notice of meeting, CBA suggests that from a credit risk management perspective, its current approach is appropriate.

So my question is, does the board accept that CBA should be concerned not only with the risks of deforestation that the financing presents to the bank itself, but also where the CBA's financing contributes to the fire station in ways that undermine Australia's ability to achieve its climate and nature goals?

We've been working on a very comprehensive approach to sustainability since before 2020, but our sustainability report over the past 5 years has demonstrated a principled and policy-driven approach that's very considered that in the -- if I use as an example, the reduction of CO2 emissions by our finance industrial customers, has reduced from 24% of our finance emissions to 4% over the past 5 years.

So a very considered, thoughtful approach that we took time to engage with our customers and to understand the issues and to work with our customers to reduce those issues.

So as we look at the way we're focused on nature broadly and deforestation or land clearing specifically, we are going to continue to engage with yourselves, with farmers and farming groups and with the national authorities and understand statute and actually work through methodically what steps if any, that we need to take.

One thing we've learned as we've gone through sustainability, making commitments before we have the right policy procedure, education and engagement is not the right way to go. But taking seriously the issues that you actively raised today is absolutely important and then being very considered on how we learn from that. and determine how we might amend policies in the future is the process we followed. I think it served us well. I think it served Australia well.

And the EPA itself says that one has to take a proportionate and considered approach considering a range of factors, and we're doing the same things. It may not be as much or as direct as you're asking for today. But in our view, taking time to get the policies and procedures and any potential amendments to that right is the right way to go, which is why we oppose the resolution today.

I very much respect that the bank reserves the rate obviously adjust its approach as you look at more evidence as it comes available. Is that fair to, I guess, suggests that the Board then does accept that there is a risk beyond just that risk to the bank that the Board should be concerned about regarding CommBank's broader commitments to climate in nature?

I think we take the totality of our risks, whether it's credit, our customer engagement processes and the protocols that we have to follow when we're talking to customers, and potentially adjusting or not adjusting their loans. There's a whole series of protocols that have to be followed there.

And in relation to nature more broadly, I think there's a range of factors that we need to consider and we are considering and I think over time, we all learn from engagement with yourself and your colleagues, but also with our customers who have perspectives as well.

And we'll very methodically work through our own understandings and when necessary, we'll make changes. But if they're made, we've done on a very considered and informed basis. Thank you very much for coming today. We have a question at microphone #2.

Chair, I would like to introduce Pablo Berrutti.

Welcome, Mr.Berrutti.

Thank you, Chair. I just wanted to ask in relation , there's a couple of questions here, but if you could take them in turn, I'd be grateful -- the number of 30 -- up to 30%, 32% of the agricultural exposure has been stated twice and you haven't contested it.

Would you it's not in the annual report, but if you reverse out the numbers, it comes to roughly that, do you accept that up to 30%, maybe 32% of the agricultural book could be exposed to significant deforestation as per the annual report?

I think the information that we provided in the annual report is vetted, it's reviewed, it's gone through a whole series of quality assurance processes. Through the course of the meeting today, different numbers and different percentages that are given to us on a whole range of factors.

We take those on board, we note them, -- but this is not the forum to actually agree or disagree with numbers that are put into the meeting without the full disclosure, the methodology is understood and the caveat.

So I'm listening to what you're saying, I'm acknowledging what you're saying, but I'm not going to validate numbers that are put that aren't numbers that we've generated and undertaken our normal verification processes.

Sure. And just -- thank you, Chair. And just as a follow-up, if it were the case, and presumably, you would have the opportunity to go following the meeting and check those numbers, that it was 1 in 3 almost dollars that has exposure deforestation.

And given that WWF has said that the East Coast of Australia is a deforestation hotspot that we have an ongoing and long-term issue with deforestation in this country.

And you yourself reflected earlier in the meeting on the APRA report and the findings from the APRA report that the bank in the past has been slow and complacent to take on new risks and assess and deal with new risks as they've emerged but 30% would seem like an awfully high number of given the nature of this issue?

I'll just go back to the EPA's guidance. Each matter is assessed on its individual merits. And I think the difference when you're talking to a bank is that we need to understand each customer situation and broad numbers aren't necessarily indicative and the EPA says it itself and its guidance aren't indicative of what's actually happening on the ground.

We have to get that bit right, but it's not for me to verify the persuasive or facts put on the table in this meeting itself. But as I said, we listened to what we're being told, we will reflect on it. and the engagement will continue. And it's a really important topic, and we've acknowledged that.

Thank you very much. We're going to move to a question online.

Chair. We have a question from shareholder, Stephen Mayne. You are well short of AGM best practice. The proxies were not disclosed early to the ASX with the formal addresses. There's no live online voting, and you've never disclosed head count data as many other companies have.

How many shareholders voted by proxy on this proposed constitutional amendment and what sort of communication campaign did you run to get out the vote? Also, has there been a material protest vote against the Board's recommendations on these 2 shareholder resolutions and how many shareholders attended in person today?

There's a lot in that. We will be reporting the data and information from the AGM as we always do. Our engagement this year has been the same as engagement in previous years. We take engagement with shareholders very seriously. We work on our disclosures through what is a 405, I think, page annual report with all of the sustainability remuneration policies and procedures necessary.

I don't know that there's much more we can disclose that is not in the report. But as I've said, we will always listen I think that there's very good information presented to us in terms of challenge, whether it's on regional branch closes, whether it's on cost of living, whether it's on productivity, whether it's on nature, there's certainly a wide range of very important topics that we need to discuss.

But to the specific broad point on what we're doing don't report out of the AGM, I think we're comfortable with our processes we'll continue with those, but as I always do, we will reflect on the feedback that we received.

No more questions online at this stage.

I don't believe there are any more questions in the room. I now put the resolution to the meeting and note that the Board recommends that the shareholders vote against Item 5A, but I would just think those who've come for the questions they've asked and the manner in which those questions have been asked. That's very much appreciated.

Details of the direct and proxy votes received prior to the meeting, they believe there's someone filming there at the moment. They might be taking a photo of the [indiscernible].

Prior to the meeting in relation to this resolution are displayed on the screen. Please mark your voting card in relation to Item 5A to amend the company's constitution. As I noted earlier, Item 5B is a contingent resolution, it will only be put to the meeting if 5A is passed by at least 75% of the votes cast by shareholders entitled to vote on the resolution.

Given the direct and proxy votes received prior to the meeting in relation to item 5A, Item 5A will not achieve that threshold. So Item 5B will not be put to the meeting. Consistent with our approach to welcoming shareholder feedback, we've already provided a reasonable opportunity for questions on the matter of Item 5B.

That concludes the final item of business on today's agenda. Please complete your yellow voting cards and place it in one of the ballot boxes that representatives of MUFG corporate markets are now holding or that are near the exits.

If you need any assistance with completing your voting card, MUFG representatives are available in the room to assist you. The results of the poll will be released on the ASX and made available on the bank's website later today. I declare that the poll will close 15 minutes after the meeting closes.

Thank you all very much for your attendance today, either here or online, and for your continued support of the Commonwealth Bank of Australia, I invite you to join the Board and leadership team for refreshments outside the room at the conclusion of the meeting.

I encourage you to provide us with your feedback and your experience today by contacting us via the Investor Center on our website. I now declare the meeting closed, subject to finalization of the poll. Thank you, everyone.

Hello, and welcome to the results briefing for the Commonwealth Bank of Australia for the full year ended 30 June 2026. 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 business and the financial results. Our CFO, Alan Docherty, will provide details of the financial results. Matt will then come back and provide a summary and outlook. 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.

Thank you very much, Mel, and good morning, everyone. This is a strong full year result, which has enabled us to continue to support customers, protect communities and invest in Australia. This year, we delivered disciplined growth across all domestic franchises while maintaining stable underlying margins and strong capital funding and liquidity.

Cash net profit after tax increased by 7%, and statutory profit increased by 8%. Cash earnings per share increased by $0.44. This allowed the Board to declare a fully franked dividend of $2.70, taking the full year dividend to $5.05 per share. Conditions became more challenging through the second half for our customers with higher rates affecting household spending and savings, housing activity moderating and arrears increasing from low levels.

In a demanding environment, we enter the 2027 financial year from a position of strength but with a clear focus on execution and continuing to support our customers. CBA grew at or above system in all 5 core product categories: home lending, business lending, consumer finance, household deposits and business deposits. This is the first time any major Australian bank has done this in the past 15 years.

Importantly, it was not achieved by sacrificing margin. Our underlying interest margin has remained stable, supporting consistent pre-provision profit growth and reinvestment. That performance was delivered in an intensely competitive market. We remain focused on continuing to convert our strong franchise position into sustainable risk-adjusted returns while preserving margin, credit and capital discipline.

Volume growth and stable underlying margins drove operating income growth of 6.2%. Operating expenses increased by 5.6%. This reflected inflationary pressures as well as deliberate investment in technology, resilience, customer protection and service capability. Our pre-provision profit increased by 6.5%. We were able to grow earnings while continuing to invest materially in the future capacity of the bank.

Our competitive advantage begins with trusted primary customer relationships. Each wave of technology has allowed us to better serve our customers. Digital increased the frequency and convenience of engagement. Data and analytics improved personalization, protection and risk decisions. And we believe AI could be the most significant technology shift we've seen.

As customers increasingly use AI to search, compare, decide and transact, we believe the value of a trusted primary relationship will increase. By using AI safely and at scale, we can provide more personalized trusted support, protect customers more effectively and help them make better financial decisions. Realizing that opportunity will also require regulation to keep pace.

Similar financial activities and risks should attract equivalent customer protections and obligations, whether they are delivered by a regulated bank or through an AI platform. Disciplined execution of our strategy over many years has delivered sustainable performance. Customer advocacy is an important measure. We also assess franchise strength through a broader set of measures, which includes the number of customers who choose us as their main bank, active transaction relationships, engagement and retention, deposits and risk-adjusted earnings generated by those relationships.

Over the past decade, household and business deposit balances have doubled. More than 97% of home lending customers and more than 90% of business lending customers also hold a Commonwealth Bank transaction account. Business lending balances have also more than doubled over the decade, while home loan balances have increased by approximately 2/3.

The growth in business lending is particularly important because it supports investment, employment and productive capacity across the economy. The result is a bank that is larger and stronger, but also more digitally capable and more deeply engaged with our customers. Customer focus, disciplined execution and investment in the franchise continues to deliver better outcomes. We've held the leading consumer Net Promoter Score for 44 consecutive months.

We also retain leading positions in institutional banking and for retail and business digital banking. More Australians choose us as their main bank during the year. We added 655,000 retail and 90,000 business transaction accounts. Proprietary channels represent 65% of home lending flows and 79% of business lending balances. We also improved lending turnaround times, automated more decisions, increased the speed at which we deliver technology change and reduced the incidence and duration of technology disruption.

The retail bank performed well with operating performance increasing by 6%. More than one in three Australians identify CBA as their main financial institution, with retail MFI share increasing to 34.2%. Retail transaction accounts increased by 6% and home lending balances by 7%. More than 9.6 million customers now use the CommBank app, generating more than 14 million log-ins each day.

That engagement creates an opportunity to make the bank more useful in customers' everyday financial lives. CommBank Companion is an early example. It is a secure AI-powered conversational experience designed to help customers better understand their finances and make better decisions about spending and saving. Our priorities are to deepen those main bank relationships, make the app the place customers manage more of their financial lives and keep improving our service offering.

The Business Bank delivered another strong year. Operating performance increased by 10%, and business banking now contributes over 40% of the group's cash profit. Over the past 12 months, we've reduced time to credit decision by 30% and increased funding per banker by 15%. We've extended CommBank Companion to more small business customers, and we've started using agentic capability across our lending process, including our first controlled end-to-end business loan pilot.

The opportunity here is to make better, faster decisions, reduce administrative work for our customers and our bankers and allow our people to spend more time helping businesses invest and grow.

Institutional Banking and Markets had another solid year with operating performance up 5%. We hold the leading institutional Net Promoter Score among the major banks, added 33 transaction banking mandates and grew operational deposits by 13%. The institutional franchise also contributes $70 billion of net deposit funding while supporting customers' financing and risk management needs.

CommBank iQ, our data and analytics venture, continues to deepen client insights with 5x more client engagement compared with 2022. Momentum moderated in the second half as markets income softened and competition and mix affected margins. Our focus is to convert client activity into deeper relationships, greater cross-sell and better capital efficiency.

ASB continued to grow its customer franchise with more lending and customer deposits, both increasing by approximately 6%. Full year operating performance was broadly stable, although earnings conversion weakened through the second half as margins declined and loan impairment expenses increased. ASB retains a strong customer franchise and a leading reputation in New Zealand.

Technology leadership is fundamental to how we serve and protect customers, how we operate efficiently and how quickly we can adapt. We've been investing heavily to better protect our customers, improve customer experiences and to modernize technology and automate processes. We've committed significant resources to cyber and security, including in safely deploying frontier cyber models and automated patching tools.

We're using AI to help customers take more control over their banking activity. We recently expanded access to a new agentic feature called Companion in the CommBank app and 1/3 of customers that have been given access have adopted it and half of their queries relate to managing their spending and saving. Our virtual messaging now handles 86% of conversations end-to-end. We've launched a range of tools to help our frontline teams better serve customers and have seen improvements in banker productivity.

New AI tools and greater investment have also accelerated our technology modernization agenda. This year, we moved our core banking system to the cloud, replatformed our data estate and built a range of new modern applications that support key customer systems. In financial year 2027, we're pursuing three outcomes: stronger protection for customers and the community, faster and more personalized service to deepen primary relationships and better performance through lower unit costs, greater capacity and faster change.

We will measure progress through customer engagement, service quality and resolution times, losses prevented, delivery speed, unit costs, realized financial benefits and risk-adjusted earnings. We're already seeing value from our AI agenda and expect gross benefits to exceed investment levels next financial year. We'll continue to calibrate our investment settings to the external context, overall capacity and to the financial and non-financial benefit realization.

Loan losses remain low, although leading indicators softened during the second half. Troublesome and non-performing exposures were 0.94% of total committed exposures, higher than December, but lower than a year ago. The number of home loan customers in hardship increased in the past 6 months, but remains 15% below its recent peak. We remain well provisioned for a range of economic scenarios. Total provisions are $6.5 billion, which is $2.7 billion above our central economic scenario.

Our balance sheet remains strong with 79% deposit funding. The weighted average maturity of long-term funding is 5.2 years, and we hold $191 billion of liquid assets. Our common equity Tier 1 capital ratio is 12%, comfortably above the regulatory minimum. This strong position allows us to continue to support our customers to fund growth and invest for the long term.

The effects of inflation and higher interest rates have been substantial, but they've not been evenly distributed. Global shocks and low productivity have led to persistent inflation. As a result, the cash rate has increased 425 basis points since May 2022. And the impact on households has been significant. Compared with 5 years ago, Australian banks pay an additional $164 billion in interest to depositors and wholesale funding providers, and receive approximately $139 billion more in interest on loans.

This represents a significant redistribution of interest income across the economy. The increase in mortgage repayments has been concentrated among households aged approximately 25 to 55. These households are consuming fewer goods and services than 5 years ago. Our retail offset balances also declined during the half as some customers drew on accumulated savings.

There's been a lot of interest in home loan application volumes. We've seen application levels decrease by 15% since May, but subsequently have stabilized. National dwelling prices have fallen by approximately 2.8% since their March 2026 peak, having increased nearly 70% in the past 7 years.

We've stayed focused on supporting customers, protecting communities and investing in Australia. We've helped our customers buy more than 150,000 homes and provided $17 billion in finance for new housing supply. For customers experiencing difficulty, we've established 147,000 payment arrangements during the year. We provided $50 billion of new lending to businesses, supporting investment, growth, productive capacity and employment across the economy.

We're also helping our employees build skills for the future. This year, we announced a 3-year $90 million program to help our teams build skills and capabilities as technology reshapes the way we work and the way we serve our customers.

And before I hand to Alan, I want to give some sense of the scale and complexity that our people support. Each day, we process approximately 25 million payments, analyze 38 billion signals for potential cyber threats, lend $135 million to businesses and help 600 customers settle a home purchase.

The other figures on the slide show the breadth of our responsibilities across customer support, financial crime, fraud, scams, cybersecurity and the operation of the payment system. That scale does not lower the standard expected of us. It illustrates both the responsibility we carry and the continuing investment required to meet it.

Australians should expect broad access to banking, safe and reliable service, prompt identification and resolution of issues and support when they need it most. Meeting those expectations requires sustainable returns, pricing that reflects cost and risk, the capacity to continue investing and the ability to evolve how we serve customers as their needs continue to change.

We aim for very high reliability. But when issues do arise, we focus on how quickly the issue is identified and how effectively it is resolved rather than an assumption that every risk can be eliminated or prevented. Equivalent obligations must be applied to all market participants. This balance is essential if we are to continue serving all Australians, investing at scale and financing productive growth.

And with that, I'll hand to Alan to go through the results in more detail.

Thank you, Matt, and good morning, everyone. Starting with the results overview. We've set out here the aspects of our current operating context that are front of mind, how we are responding to changes in our context and the long-term franchise implications of our actions. At a macro level, household disposable incomes are under increasing pressure, and we have seen a softening in housing credit applications.

Technological innovations are accelerating rapidly, creating both new risks and new opportunities and geopolitical developments remain a source of risk to the global and domestic economies. Against that backdrop, our response continues to be deliberate and disciplined. We have again carefully managed volume and margin trade-offs, and our operational and financial performance helps us create the capacity to invest in maintaining and extending our competitive advantage in technology and deepening customer relationships.

This approach has yielded consistently strong financial outcomes, and that has again been the case over this most recent financial year. We are acutely aware of the risks inherent in our current operating environment. For some time, we have been alert to the risk of an exogenous global event. And more recently, we have seen some risks emerge in the domestic macro outlook.

That's why we continue to strengthen our balance sheet in order to both support customers and protect shareholder returns under a broad range of economic scenarios. As set out in the bottom right chart, we are carrying historically low levels of refinancing risk in our funding stack. Our credit provisions have capacity to absorb losses. And through our interest rate hedging, we are balancing short-term consumption of capital against long-term earnings stability.

This slide sets out the usual reconciliation between statutory and cash profits for the year. There were modest movements in the usual non-cash items during the period, which resulted in statutory profits of $10.9 billion and a slightly higher cash profit of $11 billion.

Breaking down the components of cash profit, operating income grew 6.2% over the year, reflecting strong operational outcomes and lending and deposit growth. This allowed us to continue to invest in the franchise with underlying operating expenses increasing 5.6% over the year. Notable expense items of $170 million were recognized in the first 6 months of the financial year, largely due to the settlement of a long-standing legal proceeding in New Zealand during the September quarter.

Loan impairment expense increased 8.5% over the year with a larger increase in the second half, reflecting higher collective provisioning for forward-looking risks with incurred losses remaining low as our retail and business customers continue to demonstrate resilience despite softening economic conditions.

The effective tax rate for the year was 30%, and that is also our expectation for the 2027 financial year. This resulted in cash profit growth of 7.1% over the year. Looking firstly at operating income. We delivered growth of 6.2% over the year. Net interest income increased strongly, up approximately $1.6 billion, supported by strong and profitable growth in lending and deposits.

Other operating income also contributed, growing $196 million over that period. Revenue momentum was slightly weaker in the sequential half, growing 1.2% at the headline level or 2.9% after adjusting for a lower second half day count. Other operating income reduced slightly in the second half, largely due to weaker retail foreign exchange revenues and lower trading income.

Turning to the net interest margin and looking at the movement over the most recent 6-month period. Margins increased 2 basis points over the half, of which 1 basis point related to Treasury and Markets. Underlying margins were 1 point higher with the benefits from deposit hedging and portfolio mix more than offsetting lower lending margins.

The pressure on lending margins over the sequential half was a combination of cash rate lag, competition and the effect of new business mix. In home lending, we have written more fixed rate loans which are at tighter spreads to floating rate loans. And in the Institutional Bank, our loan origination was skewed to lower risk investment-grade borrowers with a commensurately lower margin.

Operating expenses increased 5.6% over the year. The drivers are largely unchanged over recent years. We are seeing inflationary impacts on wages, IT vendor cost inflation continues to run at mid-single digits and cloud computing volumes have increased. At the same time, we continue to invest in technology infrastructure and AI capabilities alongside enhanced frontline capacity and operational resilience.

We continue to self-fund much of that investment through productivity initiatives, realizing approximately $400 million in incremental cost savings over the past 12 months. As a management team, we have long been mindful of our responsibility to ensure not just that we grow the franchise, but that we grow in a sustainable and profitable manner.

Over the last 5 years, while we have seen a variety of operating conditions and changes in competitors' postures, we have sought to maintain discipline on volume and rate trade-offs and as a result, have grown our share of industry net interest income.

We have also built strong management accountabilities and rigor around the identification and delivery of productivity savings. These two elements combined have created the capacity for us to invest in the franchise. Annual investment spend has grown approximately 30% over the last 5 years, and this has made a demonstrable contribution to our strong growth in operating profitability.

It's important to stress that our appetite for discretionary spending is contingent upon the creation of that capacity. In the event of deterioration in operating conditions and weaker top line outcomes, we retain the flexibility to manage our cost envelope and pre-provision profit outcomes.

Turning to credit risk. Loan impairment expense was $788 million, representing a loan loss rate of 8 basis points. This compares with 7 basis points in the prior financial year. Home loan arrears have increased over the course of the last 6 months, up 10 points to 73 basis points. Some of that increase is seasonal. However, there are clearly pockets of customer stress given cost-of-living pressures and higher interest rates.

If we take a longer view, our current mortgage arrears are only 5 basis points higher than pre-COVID levels, at which time the cash rate was approximately 300 basis points lower. This is reflective of strong portfolio credit quality and customer resilience. As ever, the key variable for consumer credit quality is the overall health of the jobs market, which remains in robust condition.

Personal loan arrears increased noticeably, up 31 basis points in the last 6 months. This reflects pressure on household disposable incomes as well as our deliberate portfolio risk appetite settings and the risk-adjusted returns for this portfolio have increased strongly over the course of the year.

In the corporate portfolio, troublesome exposures increased by approximately $600 million over the last 6 months, while nonperforming exposures remained relatively stable. The increase in troublesome largely relates to downgrades to six single names across a variety of industry sectors. We do not expect to incur losses, given either our high level of security coverage or the strong equity position of the underlying counterparty.

Overall, corporate troublesome and non-performing exposures as a percentage of our portfolio remain modest at 95 basis points, still below the levels we have seen over each of the last 2 financial years.

Given the softening domestic macro environment and continued global geopolitical uncertainty, we've maintained strong loan loss provisions, increasing collective provisioning by $140 million over the last 6 months. Individually assessed provisions remain unchanged over the period. Total recognized provisions are now $6.5 billion, and we continue to hold a material buffer above our central economic scenario.

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 8% over the year, taking our customer deposit ratio to 79%. We also maintained a historically low proportion of short-term wholesale funding and a conservative weighted average maturity of long-term funding.

This provides us with a relatively longer tenure and more stable base of liabilities, which provides additional protection should credit spreads widen from the benign levels that exist today. On capital, our common equity Tier 1 ratio reduced by 30 basis points to 12.0% with strong capital generation, net of dividends, offset by the high level of franchise lending growth.

IRRBB risk-weighted assets increased by $6.5 billion over the last 6 months, consuming 16 basis points of common equity Tier 1. Over the year, and adjusting for the impact of the new regulatory standard, the impact was 28 basis points. This was a result of our approach to structural hedging that aims to provide earnings stability through the cycle at the cost of short-term capital headwinds in periods of rising rates.

The final dividend increased $0.10 to $2.70, taking the full year dividend to $5.05. This represents a payout ratio of 77%. The dividend will be fully franked, and the dividend reinvestment plan will be offered with no discount and fully neutralized.

On the top right chart, you can see our headline payout ratio is moderating back towards the middle of our payout range. On the bottom right chart, you can see that periods of stronger credit growth have traditionally involved activation of share issuance under our dividend reinvestment plan. Given strong capital surpluses, that hasn't been the case in recent years, but it's a tool that remains available to us in the years ahead.

In closing, this slide sets out our long-term approach to support growth and returns. Our balance sheet strength lays the foundation to support franchise growth and investment. That investment and continued discipline in the management of our capital base positions us well to continue to deliver sustainable returns to our investors.

I'll now hand back to Matt for the economic outlook and closing remarks. Thank you.

Thank you, Alan. Let me close with a few words on the economy. Economic growth was strong in 2025, but inflation emerged due to productive capacity constraints across the economy. Global supply shocks drove inflation higher in early 2026. We saw the peak of house prices in March this year, coinciding with the second of 3 cash rate rises.

These higher rates had the intended effect of slowing household consumption and the economy more broadly. Higher interest rates and inflation are placing uneven pressure on household incomes and economic activity. Inflation remains too high, but should moderate as the economy slows.

There is understandably a lot of focus on short-term movements in house prices, given they represent a large share of household wealth. But Australia's deeper housing challenge is our inability to build enough homes quickly and affordably.

Residential construction productivity has declined materially. Construction times have increased and taxes, charges, regulation, infrastructure and labor constraints have raised the cost of new supply. Sustainable increases in living standards require stronger productivity and greater productive capacity.

Australia needs faster and more coherent execution across housing, energy, infrastructure, technology and skills. That means confronting trade-offs, measuring outcomes and ensuring that individual policies make sense collectively. The economy remains resilient, and we should be optimistic about Australia's long-term potential, but existing wealth does not guarantee future living standards. It depends on our ability to invest, adapt and build the capabilities required for the future.

Financial year 2026 demonstrated the value of sustained investment in our customer franchise. We grew across every major domestic product category, maintained stable underlying margins, strengthened primary customer relationships and continued investing in technology, resilience and customer protection. This translated into stronger earnings, a higher dividend and a strong starting position for this financial year. The external environment is now more demanding and less predictable. Growth has slowed and geopolitical risks remain elevated.

In financial year 2027, we will focus on deepening customer relationships, converting franchise growth into sustainable risk-adjusted earnings, maintaining discipline in volume, margin and capital choices and improving productivity. We remain focused on supporting customers, protecting communities and investing in Australia.

We will continue to take a long-term approach, make deliberate trade-offs and adapt as quickly as possible as conditions change. We'll continue working to earn the trust of our customers and the community. And none of this is possible without the commitment of our people.

I'll now hand to Mel, and we look forward to your questions.

Thank you, Matt. For this briefing, we will be taking questions from analysts and investors. [Operator Instructions] I'll now take the first question from Andrew Lyons. Andrew?

Can you hear me, Mel?

We can. Thank you.

Sorry about that. You've spoken to a 17% decline in mortgage applications on PCP. And despite this, your macro team still expects mortgage credit growth in the 4% to 6% range, which, at the top end, would appear optimistic. Just given the various moving parts in assessing how applications translate to credit growth, can you perhaps talk to how the management team expects credit growth to sort of play out over the next 12 to 24 months?

Yes, sure. Look, and I mean, as you can see, the applications did fall during that period, but you can see have stabilized. We think the weakest week was, I think, the last week of June, the spot even of the first week of August, slightly above that. I think Alan and our collective view would be we'd be in a tighter range, probably in the 4% to 5% over the course of the year. I think you're probably at the lower point before you start to adjust for offsets, which seem to be growing much less than in prior years.

And also the repayment profile, we think is going to change slightly. So I'm not exactly sure between a few of us who will be closest to pin, but I think we're probably in that 4% to 5% range over the course of the year, accepting that there, of course, will be some volatility around that, but at least things seem to have stabilized, and we expect an improvement into later stages of FY 2027.

That's great. And Alan, maybe a question for you. Your total provisions to credit risk-weighted assets fell slightly in the half. However, since December '25, we've obviously had a number of rate rises, tension accelerated in the Middle East, and policy-induced house price declines and, I guess, broader softening macro trends. And so the reduction in the CP perhaps appeared a little surprising. Can you maybe just talk to the various drivers that have seen you come to this outcome, please?

Yes. I mean there's always a number of moving parts within the provisioning estimate that we make in each period. You'll recall that in the March quarter, I think we moved ahead of some of the -- we've already seen two of the rate rises by the time our quarterly came out, it was -- the third rate rise was pretty much baked.

And we've seen the change in the geopolitical environment. So we've moved, I think, ahead of where maybe you've seen some of the June quarter provisioning changes across the industry. So over the 6-month period, as I mentioned, strong increase in collective provisioning over that time.

Obviously, it's a period of strong credit growth as well. So you've got the denominator effect of higher credit risk-weighted assets over both the March quarter and the June quarter. So overall, we've been, in terms of collective provisioning coverage to credit risk-weighted assets, at the top end of industry for many years.

We're comfortable with the level of provisions that we hold. We get very granular in terms of the different customer cohorts where we think there are forward-looking risks that we need to be alive to. And so we're very comfortable with the level of provisions that we currently hold well above the central economic scenarios.

The next question comes from Jon Mott.

Can I just ask a question on the mortgage pricing. So we've seen wholesale funding costs come in quite substantially to post-GFC lows. And this appears to have been used to cut mortgage pricing in June and opened a bit of a price war across the industry in recent weeks and months.

You've been adamant, Matt, over time that you need the industry to write mortgages above the cost of capital. If funding costs do start to normalize and we actually move out from post-GFC lows, what would the strategy be there? Is it possible for you to start moving your mortgage pricing back out? Or are we effectively just locking in low-returning mortgages if funding costs start to normalize somewhat?

Yes. No, thanks, Jon. Maybe I hope it's not the latter. So let me maybe go back a little bit because you're right. I mean, funding costs are origination margins improved over the course of the year, but it's a function of funding costs, as you touched on.

I think as we look at sort of flow origination RoTE end of the financial year, up on the start, sort of flat on December. There's probably some detail, I'm sure, Alan is looking forward to going through in the one-on-ones. There's a lot of pricing activity in the market.

We did increase in June, we would say, on the back of a number of other pricing changes, a little bit more of the reemergence of cashback. One institution didn't ever fully take it away. We've seen another -- we've seen some interesting tactics as well around just various pricing strategies and $500,000 and $1 to sort of drop out of quickly, which I think a lot of you are using to track.

So I mean, look, ultimately, we take a step back from that and say, yes, there's a risk around funding costs. We're watching the profitability very closely. When you've got the five largest players, one presumably wanting to continue to grow well above, all of the others wanting to probably be there or thereabouts on system and obviously noticed the comments from Westpac.

Underlying that, if the question is, is there a change in our strategy where we're going to be preferencing volume over margin and risk-adjusted returns? No. And we expect that with that market construct and dynamic, we need to manage that very carefully, including one of the risks that you mentioned.

I mean we certainly have reduced discounting at various points of time. But of course, it's a very competitive market. And I think we've all seen as volume slows, that typically, at least for a period of time, does see maybe more of a focus on volume. So look, we'll just continue to go to market as effectively as we can, balancing all of those areas, and we're acutely conscious of the return and the distribution of returns across both channel, borrower characteristics and LVR.

Can I ask a follow-up question on the brokers? Because the flow through the broker channel is up to a 10-year high at 49%. And when you actually break down, it's obviously a very rapidly changing environment. But over the half, what we saw was broker originations flow appears to be down 4% half-on-half, but proprietary is down 14%.

So you're seeing a bigger slowdown in prop versus broker. Is that behavioral where brokers just appear to be working harder in a slowing environment to -- they eat what they kill, to write more business and keep going? Or is there -- what's driven that change in the broker versus prop flow?

Yes. Look, I think, again, there's a combination of factors. I think that's broadly right in the context of the market and I guess, the structure of payments that are -- the way the broker channel is obviously very dependent on activity.

Look, and I'd say, I mean, obviously, over a long period of time, the broker channel has established itself in terms of growth of distribution. Look, I think the other factor for us as well during that period, we certainly made some tightening of a variety of things, including to some of our settings to restrict some flow in some areas where we were seeing higher indications of irregularities.

They're easier to sort of detect in the proprietary channel, even though they would be present across the market. We expect there will be a gradual improvement in that over time. And again, we will obviously support our customers through the broker channel. But if we have the opportunity to serve our customers directly, then of course, that will continue to be a priority for us.

The next question comes from Carlos.

Carlos Cacho from Macquarie. On Slide 68, you called out an expectation that you'll double your gross benefits from AI to sort of the $400 million in FY '27, and that will be greater than investment. Can you give any color in terms of how you expect to see that flowing through, if that's cost avoidance or revenue, or how we'll see those benefits in the income?

Yes. Thanks, Carlos. Look, we've got a number of use cases that some are mature, some are in flight and in pilot, and we're expecting to have a number that are coming to fruition over the course of the next 12 months and beyond. So I guess the summary answer would be it's going to be a number of things.

And so what we're talking about there is the gross benefits. And so for example, we've disclosed, over the last couple of years, some of the improvements we've made to engineering velocity, which we're really pleased with, and we're getting a lot more done with our investment envelope. That's one of the reasons why we feel comfortable maintaining the dollar amount.

Our target is to maintain the dollar amount of the investment envelope over the next 12 months because we think within that lower real-term spend, we're actually going to get a lot more done, given the velocity improvement. So that's one of the benefits that we measure.

Obviously, there are also revenue -- realized revenue and realized cost benefits that form part of that number. We've seen some of that in the current financial year. So you've seen that emerge. That's part of the reason why we've delivered record annual productivity saves in the current period. We're also seeing revenue benefits emerging in both the retail bank and the business bank in particular. And we're excited about a number of the pilot programs that we've got in place right now.

We talked about business Banker Workbench, which takes a lot of the pressure off the business bankers. They can spend more time with customers. We can continue to improve our fundings per banker that drives -- it's one of the reasons we've driven consistent above-system performance on business lending growth.

And so there's a number of things that we are investing in, and we're seeing bearing fruit, and we've got a reasonable degree of expectation that will continue to bear fruit over the years ahead.

Great. And then just my second question is about the economic forecast that drive your provisioning. I know that you did increase the weighting towards your downside in the period. But I also note that your forecast only incorporated a 1.3% fall in house prices this financial year, which 1 month in, we're halfway there. So it would seem there's probably risk. So I'm just wondering what's the sensitivity if we were to see a larger house -- fall in house prices like peers are starting to expect now for your provisioning?

Yes. So our central scenario, we changed a number of elements to the central base case. And that led to near enough a $300 million increase in the expected credit loss under the central scenario that's part of the overall loan loss provisioning increase that we've seen over the 6 months and over the 12 months.

And direct answer to your question, it's not particularly sensitive to the change in house prices. When you're talking low single-digit changes in house prices given the very strong security coverage and very low levels of actual losses that we've seen in that portfolio historically, it's not particularly sensitive to that. It's much more sensitive to things like the unemployment rate, as you can imagine, and the broader macro indicators.

We've increased the unemployment rate outlook in line with some of the Reserve Bank forecast that we've seen and other market observers. We've also, obviously, reflected the slow in real GDP growth. So those things have already led to a reasonable increase in the central scenario.

And as you observed, we increased the weighting to the downside scenario over the first quarter, which was a material driver of why overall provisioning levels were up. So direct answer to the question is the house price changes won't move the needle very much at all.

The next question comes from Andrew Triggs.

Perhaps for Alan, just interested in Slide 26 on the group margin walk. Alan didn't provide a lot in terms of the outlook there, and I appreciate there's a whole host of positives and negatives heading into next half. So perhaps could you elaborate on what you're seeing in both in terms of mortgage competition, deposit competition mix, basis risk and then some of the tailwinds that you also see, including some roll-off of rate lag headwinds?

Yes. I mean, I think from a competition perspective, that's something that everyone will have a view on in terms of the ongoing competition across home loans. We're seeing some price-based competition within business lending as well. That's been relatively persistent over the last sort of 3 halves. You haven't seen much of that emerge in terms of our divisional net interest margins or on our group margin walk, but that's an area we're continuing to focus on.

Within deposits, look, I think term deposit spreads, you've seen some compression in term deposit spreads with some of the good offers that are available to term deposit customers and there's the ongoing churn towards higher-yielding savings deposits within the deposit mix.

Against that, I'd say, wholesale funding spreads, look, they're very benign. They remain benign. Basis risk, bill-OIS spread has remained benign. We're also seeing very strong growth in business lending, and we get a positive mix effect with strong growth in business lending relative to lower-margin home lending. And given the changes in system outlook around housing credit versus business credit, I think that's a source of positive margin performance in the period ahead.

We're also going to enjoy, I think, another 12 months of tailwind from our replicating portfolio set. If you go back and look at 5-year swap and how that's moved over the last 4, 5 years, we've still got a significant tailwind to come in the year ahead.

So look, I know there's a number of estimates around how each of those factors are going to move. I'm not going to add to that here and provide specific guidance, but I think we're all very well aware of all the moving parts, how they apply across the industry and how they apply to CBA, but they're all the factors that we're watching.

Yes. And maybe just another one on costs. IT expense growth was 16% this year, and the 3-year CAGR looks to be around 11%. It's now 20% of total OpEx. You referenced some improved benefits from AI coming through. But just broadly speaking, how you sort of think about the annual pace of tech spend growth in the medium term?

Yes. I mean I sort of touched on it earlier. We've taken the posture to -- we've got productivity saves within the technology team, but we've decided to reinvest that and get more done. And so while we're seeing good gross productivity there, we've decided not to realize that. So that's one of the reasons why the technology, both the technology labor cost and also the IT cost, the functional IT cost that you see, is continuing to grow above inflation.

Vendor IT inflation is a factor we've talked about. I think that's going to continue to be a feature of this space. And as we migrate more of our platforms and processes on to a cloud environment, cloud compute volumes that's been a volume-related cost, which is one of the reasons why we're significantly above inflation in the technology line. So look, I think technology costs as an overall proportion of our cost base have been on an upward trend for a number of years. I think that trend is very likely to continue.

The next question comes from Richard.

It's Richard Wiles, Morgan Stanley. I've got a couple of questions. Firstly, Matt, Slide 74 shows that the 4-week rolling average for mortgage applications is sort of stabilizing as you've called out. What's interesting in that chart is the trends at the start of the year were pretty similar to last year, even though rates were rising this year. The divergence has actually occurred since May.

So can I ask you, do you think it's a budget rather than the rates that have caused this fundamental shift in the demand for mortgages? And can you highlight any sort of reasons why investors in established properties will come back into the market over the course of FY '27, unless we see some very significant house price falls?

Yes. No, thanks, Richard. I mean look, I mean, clearly, there's a number of factors contributing. I mean I think applications actually peaked in October. So house prices peaked in March and have reduced in the 4 months since then.

I think you can generally see applications that are falling, obviously, from October 2025 and, over time, increasingly both from affordability constraints, clearly, inflation expectations and the first rate hike in Feb and then two more subsequent, the last being on the -- I think it's the 5th of May to 4.35%.

Then you overlay that with economic uncertainty on a global basis, an oil shock and yes, taxation changes. I think we're also coming off a very high prior year because I think if we look at Q3, sequentially, it's weak. But actually, versus the prior corresponding period, it's actually sort of significantly above that.

So I mean, I think '26 was financial year, and particularly the first half, was a very strong year in terms of credit growth. I mean, if I think we would have exceeded our expectations and particularly, obviously, in the context of investor lending. So that overall mix, clearly, we're not going to see credit growth like that in '27. I think now, we've seen some stabilization, as we've called out this morning. Clearly, there's some likely to be some volatility.

And like many markets, it can be quite sentiment-driven. Like seasonally, we tend to see a bit more of a pickup. I guess part of our base case would be if you believe that rates are on hold for the rest of this year, which, obviously, opinions vary, and a couple of cuts into '27, we'd expect some demand to be going into the market in expectation of rate cuts. But I mean, we've tried to provide a useful sort of time series.

We can see -- obviously, we split out in terms of owner-occupier investor, we can see a reduction in terms of refi as well as subsequent purchases. I think it's just one of those things we're going to continue to keep an eye on. But as I said earlier, I guess our base case is probably a couple of percentage points lower credit growth in '27 and ballpark, that it's about $50 million NII for every percentage point.

A little bit of the offset, as I said earlier, was a lower growth in offsets. We're seeing that. We saw that dip retail offsets for the first time as we sort of cast that forward. We think that's lower. And obviously, the repayment profile is starting to slow down. So that probably just helps a little bit both of those factors to get closer to the 5% than the 4%.

Okay. And my second question relates to sort of mortgage pricing spreads and profitability. A few years ago, you pulled back from the mortgage market quite noticeably because you thought pricing was irrational. You had a quarter where your home loan balances actually fell. How far are mortgage margins above that level today? Or alternatively, how far would you need to see mortgage rates fall from current levels before you got back to that type of situation again where you thought that returns just didn't justify growth?

Yes. Look, we clearly were not at that stage from our perspective, as I said, I sort of touched on the RoTE and origination over the course of the year and relative to December. Now there's a lot of granularity within that, as I said, in terms of borrower characteristics and channel. So we're still seeing the vast majority above -- across the industry above hurdle rates.

But that's not signaling that we're hoping margins have got further to fall. I think for a variety of factors, we will continue to compete effectively. We're certainly not going to be preferencing volume over margin. As you mentioned, Richard, that period, we could see a rapid acceleration in discounting, I think, on the back of a rapid expansion on net interest margins from liabilities or deposits during the cash rate hikes.

We were probably surprised that there wasn't much of a reaction to our reduction in volume. So look, I think, as I said earlier to Jon, we're acutely conscious of both being able to support customers and to be able to focus on risk-adjusted returns, and margin is an incredibly important aspect of that, and we're going to need to operate definitely in the year ahead.

Our next question comes from Matt Wilson.

Matt Wilson at Jarden. Just looking at your rate of software capitalization, it's running at 2x at the rate of peers. Look over the last couple of years, you've capitalized $1.6 billion of costs. Peers are actually down $100 million. Your cap rate is 52%, your peer average is 25%. I know you'll tell me that you're investing in IT ahead of your customers, but IT has a shorter and shorter life. And the reality is your peers are also investing in technology. Can you walk us through the differences in policy?

I don't think there's any differences, particularly in policy, Matt. I think there's been a difference in investment appetite and capacity to invest. And I think the top line performance as well as the incremental productivity savings have enabled us to continue with the investment appetite that we've had.

So we keep a close eye on capitalized software, the gap between the annual amortization charge and the amount that we're capitalizing. You've obviously seen over each of the last 3 years, I think there was something like $130 million of additional annual amortization that's come through as we continue to sort of deploy some of that technology.

The point of amortization is that you're recognizing the expense at the same time that you're realizing the benefits. And that's why from a pre-provision profitability perspective, we've delivered strong financial outcomes as the combination of those two things. So we're investing. We're comfortable with the net present value that we're generating from those investments. But we understand that the cash spend is the drag on common equity Tier 1, and that's the drag on organic capital generation. And so that's the gross cash spend that we focus on.

Are we getting bang for buck on that spend? We're comfortable that we are. And as I mentioned in the talk track, we're adjusting our appetite depending on the productivity that we're generating within our own teams as well as the broader operating conditions. And so that's one of the reasons why despite you're going to see, obviously, inflationary impacts on wages and vendor IT cost inflation over the course of the next 12 months. We're going to hold that annual cash spend at the $2.4 billion level.

So that means a real-terms drop in the amount that we're investing, but we're comfortable we can actually get even more done in 2027 than we got done in 2026. And so we're pleased with that. We're pleased with the work that we're getting done, the processes that we're building. And we're keeping a close eye on managing the amortization headwind that we'll see over the next 2 or 3 years.

That's good clarity. And secondly, you actually touched on this slightly in response to your answer to Jon Mott on the sort of prop versus broker channel dynamics. But could you provide an update and some clarity on the issues of money laundering that appear to be affecting the home loan market? Is there something simmering away there? It's obviously been in the press over the last 6 months. You haven't made a comment yet you're the largest operator in the home loan market in Australia.

Yes. No, happy to do that, Matt. Look, I think, as you said, it has been covered in the press, we don't provide a running commentary, but I think it's well established that we -- as you would expect, monitoring the market very, very closely and potential cases of fraud have been a factor for as long as financial institutions have been around.

We saw some particular typologies that would, in our mind, fall into potential loan irregularities. We reported those to the relevant parties and stakeholders. We, along with many financial institutions, have been working with AUSTRAC and the Fintel Alliance, which I think have been extremely useful. I think it's a great asset for the nation to be able to pull together data from so many different sources to seek to understand that.

I mean, specifically to your question, based on our investigations to date, haven't identified evidence of professional money laundering or links to organized crime. As you would expect, at any point in time, we're looking at all sorts of different changes in the risk environment, some of those through lending and obviously, the Tranche 2 changes to the law, which bring in scope assets like home lending and real estate agents, I think, helped to even provide a fuller picture.

But it continues to be an area of focus for us narrowly in the areas that we've covered, but also more broadly, I'd say the risk landscape, obviously, in areas like cyber, but not limited to that, in economic crime, scams, fraud, financial crime, I think significant changes over the last 12 months.

And I think the reality is that is likely to continue both domestically and internationally. I think the environment which we're all operating in is more complex and more demanding, and that's one of the factors.

The next question comes from Brian.

Congratulations to everyone on a high-quality result. That said -- and I just want to go back to Matt Wilson's question, a slightly different interpretation of the capitalized software. So if we have a look on Page 17 of the results, we can see that just in the second half, you start up with $2.84 billion, you spent $634 million, amortized away $433 million.

If we annualize that $433 million second half charge, it suggests that you're amortizing this software over about a 3.5-year life, which actually seems really, really short. And I appreciate the fact that everything is accelerating quite quickly.

But if we have a look at some of the IT developments you're doing, potentially they've got a much longer life, I would have thought, than 3.5 years. Could you just give us an explanation what's driving that relatively short amortization life versus the narrative, which is that we're continuing to invest to actually create long-term competitive advantage?

Yes. I mean there's quite a spectrum of useful lives within the capitalized software. You can imagine we've talked about the multiyear tech modernization program that we're running, which is building a lot of the refresh in the entire technology estate. We've moved our main Omnia data platform onto the cloud, for example, during the course of the past 6 months, our core banking systems have been migrated onto that sort of next-generation platform.

When you make those sorts of infrastructure changes, they tend to have a longer useful life. You can go well north of 5 years. In fact, the core banking system, when we first built it, the amortization period was 10 years. We've got a similar program going on in the ASB in New Zealand at the moment where there's basically a core banking modernization as well as a number of other technology modernizations. They're in that infrastructure category. So they've got useful lives 5 years-plus.

Then on the other side of the coin, to the extent that you're improving your digital applications, your digital distribution channels, I think we've seen the pace of change there continue to increase. So we've shortened the useful lives if you look at some of those types of investments. So the weight average comes back to, I think, what was a relatively conservative useful life across the broader portfolio, given the mix of investments that we have.

But to Matt's point, it's an area we focus on. We obviously take the capital deduction the minute we spend the money. So in some ways, it doesn't matter from an accounting point of view, what the amortization looks like. What matters is what's the capital that you're generating on each of the investments that you're making and you're getting value for money. So that's very much a focus.

So that cloud infrastructure stuff is going through the capitalized software line?

The migration to cloud itself we expense, but to the extent that you're rebuilding technology platforms, a new cloud-based platform, which we have done for a lot of the AI foundations that we've built, for example, then they treated as infrastructure. Infrastructure is about, I think, $0.5 billion of gross spend in this period, and that attracts a longer useful life than the weight average.

Alan, the second question is a kind of obscure one. You've got a fantastic slide that talks about the interest rate risk in the banking book. What we can see is that it seems to be the embedded gain is probably more driven by 3-year bond rates. We can see 3-year bond rates going up over the period, but the embedded loss move was probably slightly positive from memory.

Just going back on that, the other obscure, which doesn't kind of -- I'd like to understand why, but also and above that, the high-quality liquid assets that all of the banks own probably will be much more state government debt than basically federal government debt. And while I appreciate that it doesn't necessarily flow through the P&L, it does flow into the reserves.

Could you talk to us about the practical impact because it's been speculated this week of what would happen if we saw a rating downgrade on New South Wales and Victorian state debt, earnings and capital?

So on the overall trend on IRRBB is very sensitive, as you say, to 3-year swap rates. And so we've seen those swap rates increase 30 basis points in the last 6 months. They peaked probably around March time and have come in a little bit from March. So you'd have seen in our quarterly Pillar 3 report that the interest rate risk in the banking book is down $2 billion or $3 billion over the June quarter. So the swap rate moves have been the key sensitivity there.

To the point on semi-government holdings, I mean, look, it's a large proportion, and it's -- the market is -- I think the major banks in Australia have got their fair share of semi-government bond holdings. We continue to support that bond issuance. The credit spreads on state governments -- all state governments has actually improved over both the 12-month period and the 6-month period, and you've seen that come through as a sort of positive mark-to-market on our investment securities revaluation reserve, which has been a sort of tailwind to capital over the last 6 and 12 months.

To the extent that you've seen -- you'd, first of all, see market weakening to the extent there was any issues around state government finances manifesting, you'd see that in a widening credit spread. That would translate through our mark-to-market on those assets, and you'd also see an impact on IRRBB through the credit spread risk element. So that's one of the things we take into account.

We stress-test our capital very regularly. One of the key elements of that and the key areas of volatility that we monitor is IRRBB. And we've seen volatility in that, which has been rate-driven, but there can also be credit spread-driven volatility there as well. But we continue to monitor that, stress-test it and then make sure that our weightings to the various asset classes on the HQLA stack are commensurate with the volatility that we've got risk appetite for within our capital stack.

So it's capital, not earnings, and we'll wait and see. But you guys are confident that you've got it covered. This is despite the fact you think residential stamp duty, which drives most state government revenue line is certainly set to decline. Is that a summary of it, Alan?

Yes. There's a number of -- we take a number of stresses on credit spreads across the state government exposures that we hold. We're comfortable with the level of exposure that we have, and we can manage the volatility within either rate moves or credit moves.

The next question comes from Brendan.

Brendan Sproules from Goldman Sachs. Alan, I just had a question around your dividend slide, Slide 33, where you show us that in the last 5 years, you've had significant levels of capital return, obviously, a high payout ratio, you've neutralized the DRP. I guess when I look across this slide, I see the dividend payout peaked.

Obviously, you said the buyback won't be extended. And we actually saw the core Tier 1 ratio fall, I think, around 30 basis points this half. Just given the very strong credit growth, are we moving back, say, over the next 5 years, in your mind, back to that funding growth that we saw sort of pre-COVID, where you will be using DRPs and other measures to try and to fund the growth of the balance sheet?

Thanks, Brendan. I mean, yes, we look at different scenarios. And certainly, one scenario would be that you continue to see a very strong level of overall credit growth across the economy. And in the event that you see that strong level of credit growth and we're getting our share of that credit growth, then you'd see capital consumption from growth in credit risk-weighted assets. And then we're managing the capital actions accordingly.

I mean one capital action you can take, if you thought that was going to unfold, is the dividend payout ratio and where it sits within the broader payout policy range. You can see we've paid at 77%. We've signaled that we're approaching the middle of that range. DRP, whether you activate or continue to neutralize is obviously another capital management lever. It's not a lever we've had to pull over recent years. We've had very strong capital surpluses. But it's a tool that remains available to us.

Now there are other scenarios that you could see unfold. I mean we've spent a bit of time on this call talking about a slowdown on housing credit growth relative to the very strong levels we've seen. Housing credit drove about 1/3 of our volume-related credit risk-weighted asset accretion during the course of the last 12 months. And so that element of credit risk-weighted asset capital consumption is likely to slow over the next financial year relative to the last -- certainly the last financial year where it's been incredibly strong.

So we're not signaling whether we will or we won't. That's a decision that the Board will make on each report period, depending on what we see and what we're forecasting, but all those levers are available to us -- remain available to us in the years ahead, and it's a capital management tool that we've certainly used in the past.

And my second question just relates to the performance of the New Zealand division, and I'm particularly looking at Page 76 of the profit release today. It seems to be quite a turn in the momentum of operating income growth in local currency terms. Obviously, you have still a bit of a hawkish central bank over there. Just wondering what has, I guess, changed in the operating environment in that market that has seen quite a turn from, I guess, the first half performance versus the second.

Yes. That's a fair question, Brendan, because I think it has very much been a tale of 2 halves in the ASB from a top line perspective. The big change that we've seen there was actually the increase in swap rates that you've seen in the New Zealand market. So swap rates there were up around 50 basis points from December through to June.

Obviously, it's a very heavily fixed rate home loan market. And the combination of that increase in fixed rates and I think some real intense competitive pricing pressure amongst the banks in New Zealand, seeing a compression of fixed rate home loan margins in the second half. So that's been the #1 reason for that performance.

Now we, over the year, we grew in line with system in New Zealand over that period in the second half, particularly the June quarter, we grew about 0.5x system. So what you're seeing on the operating income line is a combination of weaker margins and also weaker volumes through that period.

So that was the main driver, but we've -- there's a lot of focus on that from a management perspective within ASB. We feel that we've got the volume and the pricing across both sides of the balance sheet into a reasonable shape as we head into the new financial year. But yes, clearly, a tale of 2 halves in terms of the operating performance in ASB this year.

Our next question comes from John Storey. Perhaps we'll come back to John. Our next question comes from Matt Dunger.

If I could ask about the other operating income and the commissions, which haven't had a lot of airplay. You called out, Alan, it was predominantly due to FX that the commissions were 5% lower in the half. You're a clear leader on FX. Is there anything you're seeing here around lower activity in the FX space where household spending, you're suggesting, has been resilient? Are you facing mounting competition here? Has there been market share loss? Or just wondering if you could unpack that.

No. I mean it's not been market share loss. I think there's been -- I mean, one of the areas of consumer spending that's clearly had some impact from discretionary spending perspective since the rate hiking cycle has been on travel-related spend. And we've seen that come through in terms of our retail foreign exchange volumes. So that's one of the drivers there.

I mean there's also, you'll recall, we called out a one-off receipt on the sale of our general insurance business in the prior half. And so that's unwound. Obviously, there's been nonrecurrence of that sequentially. So that's probably as big a factor in terms of the sequential performance on commissions. So no, not so much a market share shift, more just a change in consumer behavior.

I mean we'll see in terms of overall consumer spending behavior and the level of rates in the economy over the next 6 and 12 months. We certainly expect that to continue to be a relatively softer part of consumer spending as we head into the remainder of calendar 2026, and then we'll see how the overall spending picks up in 2027.

If I could just follow up on the gross benefits from AI, you've talked about on Slide 68, you said $200 million in '26 to double in 2027. And does this imply that you're going to get net benefits in 2027 sort of implies what you've said that you were not breakeven in 2026 on the spend versus the benefits? And following from Andrew Triggs' question, Alan, why did you say that you held back realizing some of those gross productivity savings?

Yes. I mean we -- so the answer to the first question, yes, we expect the gross benefits to exceed the level of investment in the next financial year. So at the moment, we're still in -- I describe it as the investment phase. So we're investing a little more than the benefits that we're realizing through '25 and '26. We see that the inflection occurring during the next financial year and gross benefits exceeding the level of investment.

The second part of your question, it really goes to what's your appetite to harvest the gains that you can -- from getting more velocity in code deployment, which we've seen really impressive gains within our technology team around the quality of the code, the amount of code that we can deploy into production, the time that, that takes has continued to shorten.

So I guess with a given amount of resourcing, you can get more done within a 6- or a 12-month period. We've decided, frankly, to get more done. And so while we can measure those productivity gains, we've chosen to continue to reinvest them through the course of '25 and '26, and we're pleased with the output that we're seeing.

Our next question comes from Ed.

This is Ed from CLSA. Just one on costs. You talked about managing your cost envelope going forward and also you're talking about investing for the long term. Can you just talk about what do you think is discretionary within your cost base? Are you just talking about your investment spend and pulling back there? Or is it things like marketing? What is the actual discretionary spend that you can pull back on if you do need to?

Yes. I mean look, there's a number of elements to discretionary spend. I think -- I mean, obviously, something like inflation is not discretionary. There's also a number of commitments that we make from a regulatory perspective when new rules and regulations come in, we have to invest behind that. So there's even elements of the investment spend that you'd say are mandatory, not discretionary.

But within that, there's still obviously a lot of discretion in terms of, to the earlier conversation around the, what level of productivity do you continue to reinvest in the franchise. And the point that we were making through the course of the presentation was you need to create capacity to make the investment. And the sort of order of operations, as we think about it, is how is the operating environment, how is our revenue momentum, and are we creating the capacity through the generation of the productivity.

Because once you've got those pieces in place, then that gives you the flexibility to make an investment decision around the discretionary spend. What's important is to have that optionality because if you don't have the optionality, then it's very difficult to create the capacity to make the spending decisions or make the investments that you think are going to be in the long-term health of the franchise.

So we continue to look at that as many aspects of our spending, which is discretionary. We are comfortable with that spending, but we're prepared to be flexible and adapt as operating conditions change.

Okay. Great. And just a second one, a little bit more on capital. You've touched on a few things. Is there any other mechanical benefits or headwinds coming through from regulation changes that will see a change in your capital in the next half or year?

No. I mean the main thing that APRA have flagged to the market is their work on the changes to the standardized floor around specific asset classes, infrastructure, lending is one element to that. Because we're not bound by the standardized floor, practically, the only implication for CBA is it will probably, to the extent that there's any relief provided on standardized risk weights, increase the headroom that we have to the standardized floor.

But you're well aware of the RBNZ's finalization of their capital requirements, which were a moderation of the previous requirements in terms of the transition period over the next few years. And so I think at the margin, you'll have a slightly less capital-intense New Zealand operation and some changes to standardized floor, but nothing noteworthy, I think, in terms of the overall direction of the capital requirements in Australia.

Our next question comes from Tom Strong.

Tom Strong from Citi. Just wanted to follow up on Matt's question around the productivity and the gross benefits. I guess in the '26 results, you saw productivity constant at $400 million a year versus FY '25. Should we expect that bucket to increase, Alan, as you talk to this inflection point in the gross benefits from AI in '27?

I think what I'd say is within the productivity that we've generated, we'd hope that we can deliver more of that through some of the new investments that we're making. And so within the $400 million, maybe around 10% of that has been related to some of the AI investments that we've made over the past couple of years.

And so we -- I won't guide to the overall level of productivity benefits. We obviously start the year with good aspiration and budgeting and accountability around what we want to deliver, similar to our approach on other lines. I'm not going to give specific guidance on different lines within the P&L, but we always start the year with an aspiration to do more. That's one of the reasons why we make the investments that we make. So we look to achieve more proportionately of those productivity savings through some of the investments that we've made in recent years.

And just a second question on the Institutional Bank. I mean you continue to see very long -- very strong lending growth, but 9 bps of NIM contraction in the half. Is this a mix thing? Or are you seeing competition accelerate in that segment?

I don't think I would describe competition as accelerating. I think competition is always intense in institutional banking. Really, it's a function of the change in the new originations in terms of the mix. So if you look at the proportion of our corporate portfolio that's rated investment grade, that's increased nearly a full percentage point over the course of the last 12 months.

So you can see there's been a skew in our origination towards some of those higher investment grade, lower risk weight customers. So that obviously has a commensurately lower margin within the mix attached to it.

We focus in the institutional bank as we have for many years on the risk-adjusted return. I think we've disclosed the revenue as a proportion of risk-weighted assets that's improved over the 12 months. That's up 3%. And so we're pleased to see that. That continues to be a strong focus for us. So I think it's always been competitive in that part of the market.

We focus very much on total relationship return. And so we've seen strong growth in both lending, but also very strong growth in operational deposits. So the operational deposit growth in Institutional Banking this year was 13%. So very pleased with the nature and breadth of the growth that we've seen there and the strong improvement in risk-adjusted returns.

And we're going to go back to John Storey for our final question.

John Storey from UBS. I just wanted to kind of follow up a little bit, I guess, on what Tom was asking about. I mean it looks like [ Institutional Banking ] business lending, very, very strong, but it doesn't necessarily look like, particularly in the second half of the year, that it's translated into earnings growth, right? And there's definitely been a theme from the call that there's an expectation that retail potentially could weaken as we head into '27.

I'd be interested to get your views on how you think these parts of your portfolio could offset some of the expected weakness that you might see in retail, just given the trends that are outlined in Institutional Banking business.

Maybe I'll just -- a couple of things just to touch on to add to Alan's answer around IB. I mean, look, our focus there remains on sort of risk-adjusted returns. We saw a number of transactions that were originated really in the last 4 months of the year. That tends to -- and some of those are sort of undrawn limits. We tend to see the risk-weighted asset growth. We don't necessarily see the revenue from a timing perspective. So I think we certainly will continue to focus from a return perspective there.

I mean, to Alan's point, IB has been -- has always been competitive. There's not usually much of a surplus between sort of cost of capital. There were some good margins as well in areas like funds finance, particularly when the U.S. market was dislocated around Signature Bank. So some of those are basically refinanced just that, I guess, more normal levels of margin.

But I think look, it's fair to say that like right across the board, managing the individual businesses from a profit after capital charge is really important, and that focus has been in place for a long time within the institutional bank. I think within business, we've seen strong growth. We've gotten a real boost to profitability from the very strong deposit franchise that Mike and the team have built up.

We're getting a bit of a mix effect there because some of the investments in technology, we've been able to grow faster at the smaller end and some of the smaller business lending. We continue to see some real service and underwriting enhancements as well as productivity benefits for our bankers.

And then look, retail, clearly, home lending is going to be competitive. We've grown the consumer finance business over the course of the year. So I think across those three, and Alan has already touched on New Zealand, they tend to be pretty volatile. A lot of the market there is, obviously, priced off fixed rate. And so big movements in swaps, you can see some very significant reductions in the margins that are available.

Some of the New Zealand banks are happy to sort of originate at very low levels of margin because they turn over probably typically every 18 months, they get an opportunity to reprice them. We haven't done as much of that as peers. But I guess, in between across all of the businesses, we feel like there's opportunities to both strengthen the relationship we have with clients as well as manage the profitability, hopefully, to a very high level of discipline.

Thank you. That brings us to the end of the briefing. Thank you for joining us, and please reach out to the team with any follow-up questions. Thank you.

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.

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 $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 $2.35, up $0.10 on the prior corresponding period. This marks the 11th consecutive period of DRP neutralization.

There are 2 features of this result to stand out. The first is the market context. 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 $45 billion or 7% and business lending grew by 12% at 1.3x system. Deposit balances increased by $44 billion in the half. This was our strongest domestic deposit and lending balance growth in a half year reporting period since 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. 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 to 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. 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. And following 15 months at #1, 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 $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. Customer engagement remains a core strength with 9.4 million CommBank app users and 14 million daily log-ins. 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 $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. 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.

We grew lending at 1.3x system, increasing balances by $18 billion in the year. Business Banking lending balances have increased by 87% or $78 billion in the past 6 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 6 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 2 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 #1 position in NPS, supported by improvements in client experience and execution. Our institutional bank plays an important role in providing $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 4 years. ASB saw 1.3x system growth in home lending and business and rural lending. Deposits grew at 1.2x system. Customer deposits and home lending balances have both increased by 41% in the last 6 years by $26 billion and $24 billion, respectively.

The credit environment remains benign. Troublesome and nonperforming 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 $6.3 billion, which is $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 $199 billion. 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.

We've seen record inflows of deposits in the half. We've also seen $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. 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. On average, at-call deposits in Australia are attracting an interest rate, which is 5x higher than in the U.S. and 10x 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.

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 $190 million in benefits to consumers through CommBank Yellow, 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%, 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, 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 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.

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. 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. We have carefully managed volume and margin trade-offs, continue 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 noncash items during the period. 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. 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 $170 million over the last 6 months, largely due to the settlement of a long-standing legal proceeding in New Zealand during the September quarter.

Loan impairment 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. 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. 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 $761 million, supported by profitable above-system growth in lending and deposits. 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, deeper customer relationships, deposit-led growth in our core segments that underpins and proceeds 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 5 years. In home lending, we continue to prioritize and grow proprietary distribution with $55 billion of new fundings originated over the last 6 months through our own channels.

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. 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 5 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 6-month period. The main driver of the 4 basis point reduction over the half was the increased mix of low-margin liquid assets and institutional repos. Excluding those items, margins were 1 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 inflationary impacts on wages and IT vendor cost inflation continues to run higher than CPI. 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 frontline capacity and operational resilience.

We are self-funding much of that investment through productivity initiatives, realizing approximately $222 million in incremental cost savings over the past 6 months.

Turning to credit risk. Loan impairment expense for the half was $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 nonperforming 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 $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 6 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, we remain well positioned to support the current strong level of customer demand for lending growth.

On capital, our common equity Tier 1 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 6 months.

The interim dividend increased $0.10 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. 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 and 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 aimed 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.

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.

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. 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.

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. We're optimistic about the prospects of the economy and we 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.

Thank you, Matt. 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 1 to 2 maximum questions. The briefing will then have the -- sorry, we'll then take the first question from Andrew Triggs.

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. Could you sort of elaborate on those? You seem to have sort of reiterated some of those comments this morning. And specifically, what size 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.

Yes. No, thanks. 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 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. 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 5 years, we've seen the most rapid growth by one competitor in household deposit share growth. In fact, I think it will 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 5-year period outside the major banks. 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. 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.

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. 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. And 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.

And maybe perhaps for Alan. Just the pick apart maybe a little bit more of the slight improvement you referred to in NIM in the second quarter. 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 second half?

Yes. Thank you, Andrew. Yes, between Q1 and Q2, I guess there was a couple of things that changed. I mean, importantly, the replicating is a major factor. The 5-year swap rate, I think, increased 30 basis points between Q1 and Q2. And as the tractors gone 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 and only down a dozen basis points over the second quarter relative to the first. So you had that cash rate headwind in Q1 sort of 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. So that was pleasing. And so we picked up a bit of a mix benefit 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 what the changes we've seen in swap rates. So that will continue to feed through in our tractors in the period ahead.

The next question comes from Jon Mott.

Jon 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 click 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 noninterest-bearing deposits, so excluding offset accounts. You're seeing huge growth. 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. To put it into perspective, I just backs that the average transaction account in Australia jumped by $700 from just over $10,000 to $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 a 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 noninterest-bearing deposits really support the NIM through the second half of '26 and into '27? So can you just explain what happened?

Yes. 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 the -- in one of the macro slides, the improvement that you can see in the savings rate that we continue to see through the course of that half. Yes. 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, another, 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 5-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.

Okay. Just digging into that a bit more. I just going over to the retail bank in the actual result. And if you look at the noninterest-bearing transaction accounts in the -- you can see there, this obviously excludes offset accounts. Big jump again there by $4 billion. So is there anything in particular that happened in that fourth quarter that just drove this much higher because this isn't you're seeing steady customer account growth, it's unusual. And then obviously, this implies what happens into the next half.

Yes. No, I mean it's very pleasing. I think a more like-for-like comparison is going to be December to December growth in noninterest-bearing trend 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 in 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 $47.5 billion we had this time last year and the $50 billion that we landed at 31 December. So yes, strong growth, but I wouldn't annualize the 6-month growth.

Yes. I think there's a bit of seasonality for sure. And Jon, I think Alan touched on it all. I mean, obviously, we'd like to think with all the work that we're doing around the engagement of 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 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 number.

The next question comes from Richard.

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?

Yes. Look, Richard, I mean, we don't, as you know, sort of -- we, 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 to it. 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. And I think we'll be able to maintain between both our CBA 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.

Okay. 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 or cost-to-income ratio at CommBank over the coming years?

Yes. Look, I mean, it's -- 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 the durable competitive advantages. But I think that's one of the major sources of scale. And we've substantially increased sort of operational and 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 that.

That was early 2019.

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 5 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 has 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.

The next question comes from Andrew Lyons.

Andrew Lyons from Jefferies. Alan, just a question on costs. Firstly, the first quarter, 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 the second quarter. 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?

Yes. You'll notice in the detail of the investment spend disclosures we have. 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 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. 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. We see that as 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 the first quarter because you didn't really see it as a source of cost inflation there. But again, that was a quarterly timing issue.

Yes. Okay. And perhaps a question for Matt. It was a particularly strong result in business banking. Your loans are up 9% on PCP NIMs 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 is facing elevated competition driven by both the big 4 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?

Yes. 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 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.

We've seen also capabilities that the team have developed. It is probably one of the things that stood out to us as well as like a very good performance in small business. I touched on some of the growth in products like BizExpress, which is largely unsecured, and we've gone from sort of $30 million to $130 million. Now at some level, they're still relatively small numbers, but it's been a diversification of the lending growth that's been good. Small business would 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 we 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 decisioning -- 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. I think the result is another very strong one.

The next question comes from Carlos.

I'm Carlos Cacho from Macquarie. 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 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.

Yes. I mean, I guess that's been a consistent trend. I mean, I talked earlier about the things that had changed between the first quarter and the second quarter, but one 1 thing that didn't change was the very strong level of growth that we continue to see into the GoalSaver 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 GoalSaver. 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. So that's now up to 87% of balance is attracting that high rate. We can see then on the quarterly trends on margin, it's a consistent headwind. 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 that the growth in that higher rate product.

Yes, I think specifically -- sorry, I was say we're using the GoalSaver 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.

Great. The other question I want to ask you is more around the thinking longer-term asset investments you make. You're clearly investing a lot of money into technology and AI. And I spoke to those vendor inflation headwinds, which appear to be as the tech companies wanting to return on their investment, how do you think about return on those investments you're making? And I guess, particularly how you think about that flowing through higher revenues versus potentially more productivity or lower cost in time?

Yes. 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 that we've called out. I think sure 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 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. And then we've got sort of 97% conversion of those transaction accounts into lending relationships, which has seen us continue to grow well above system in the business bank over the last 12 months.

So yes, the yield from the technology investments we're seeing measurable returns, both on the revenue side and in the cost side. So we've been pleased with that. To your point, and again, that's why we call out the IT vendor cost inflation, there is 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 have deployed those tools. Certainly, over the past period of time, we've been pleased with the return that we're generating through our franchise, 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.

The next question comes from Matt Wilson.

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 ticker 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 2 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 to 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. And on that basis today, they move to Macquarie. I've got a second question.

Yes. 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 to see 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 on to car losses. Question, in terms of AI and technology, we've got a bit of 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, 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 are 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. 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.

And then a second question, probably linked to Richard's second question as well. If we look back over the last 5 years or so, headcount at the enterprise is up nearly 20% despite investments in AI and technology that should be driving efficiencies. But 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?

Yes. Look, I mean, I think that's right. In banking in Australia, there's been a significant increase in headcount. At least in some of our areas, though, as well. I mean it's 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, across 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. 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 are being delivered in this period. We obviously 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.

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 in-sourcing that we had within our technology teams. So we've moved away from third-party suppliers in many respects, brought our own engineers in-house. We're seeing a much more -- much greater velocity, much greater quality, much greater productivity over that 4, 5-year period, as we've conducted that in-sourcing. So that's been a big part of the overall FTE growth. Actually, we're seeing again -- we've called out some of the benefits we're seeing in terms of the engineering capability. Change deployments is up 30%. Over the past 12 months, we're seeing that deployment at greater pace, greater speed and greater quality. And so the work that we've done to in-source into our FTE base the engineering capability, we think is paying dividends.

Our next question comes from Brian.

Thank you. And first of all, congratulations on the stonking result. But more to the point, since you've been speaking, you put on a lazy $3 or $4 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. We're not 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 your harvesting the latency. And does that basically mean that we see a continued dividend growth even when system becomes more averse? And then I have another question as well, please.

Yes. Maybe I'll start, and then Alan can add to it specifically. I mean, Vijay, as I know, we've had this conversation before. I mean a lot of that 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 $2.8 billion. This is clearly still tail risks, particularly on a global basis and some of those are hard to 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. But most importantly, we want to translate a lot of the investments into long-term earnings potential going well beyond 2030.

Yes. I mean the balance sheet settings, we continue to take us sort of through the cycle view. As Matt says, I mean, the provisioning, we're pleased to hold the provisioning at the 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, 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 held maybe 12, 18 months ago. But yes, 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.

Just a second question, if I may. Once again, I really want to congratulate the entire management team on the results. 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 shared labor. I'm just wondering, when we have a look at CommBank, is there a point at which you -- how close are we at the point to which technology replaces people? And I'm not saying you necessarily have to go to retrench people, but natural nutrition 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. And 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?

I think in terms of tech spend and investment and software, I think demand across the economy still sort of outstrip 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. 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 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. There's others that candidly, you can't. But I think the potential over time to improve certainly the performance of every individual to 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. 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 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 3- and a 5-year time frame, 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. I mean I do think sort of governance and transparency and explainability and most importantly, trust with customers and with employees. 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. And yes, I think we're trying to think about this comprehensively and over a long period of time, and we believe it's going to be a source of competitive advantage for CBA.

Our next question comes from Brendan.

Brendan Sproules 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, in this looking backwards this half had record lending growth, particularly strong deposit growth in business banking as 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?

Yes. 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. 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 as in order to maybe slow down some of that demand more broadly across the economy slowdown in that spending. 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. We've got -- our economics team has 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 I think there's maybe some -- you would expect some impact on system levels of credit growth and a higher rate environment. I guess the big question will be 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.

Yes. I think, I mean, if you assume there's a couple of rate hikes. I think it have a modest impact maybe even if it took a percentage point of 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 is 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 certainly, we've kind of extended out the sort of credit growth that we've seen over the last couple of years. And I guess that's sort of our base case to make sure we're going to perform optimally in that environment.

That's great. 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 cost. 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?

Yes. I mean I think that as we've long said, I think the -- I mean, deposits are very competitive, and we're going to continue to see the mix, unfavorable mix impact of that growth in our high rate products. 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. I mean, in the last 6 months, the 5-year funding cost and the wholesale funding markets 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 deposit 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 as that level of wholesale funding spread. 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 -- 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.

Our next question comes from John Storey.

Good set of results. I just wanted to touch quickly just on the business model and potential construction to business model. 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 share in Australia, how prevalent brokers have become -- I mean, what are your views on the likelihood of AI disrupting mortgage brokers. So the disintermediators are becoming intermediated. 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?

Yes. 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 brokers 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 our 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. 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, 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. 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 genetic 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.

One, just quickly on a second question. Obviously, a lot of talk, I guess, is on certainly over the last few weeks, months, around increased levels of competition put in the market. And obviously, you've got a very interesting slide, Slide 73, 74, just around new business volumes that are significantly 24% half-on-half, right? I wanted to just get your views on to what extent this growth that you've often 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 going to a period of restructuring. How sustainable is this level of new business growth that CBA is showing?

Well, I mean -- we'll see, it remains to be seen. But I mean, I think, we executed well in the period. We certainly planning to 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 grow it system.

Yes, there's disruption. I guess the other point is it occurs to us as we look at both capital ratios across the industry and where we would anticipate the DPS profile might be at some of those institutions, it would probably start -- it would tend to support pretty disciplined pricing. And so I think clearly, where there's volume share shifts between institutions, that tends to at times lead to not particularly disciplined pricing. I think it's been a really good period for the half. I think it's quite a -- 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 the consumption that comes with that, shouldn't plan as a 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.

I think -- 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. And I think, hopefully, at least this 6-month period has been probably one of our better periods of execution in market.

Our next question comes from Matt Dunger.

Yes. Could I ask a deposit question in a different way? The 79% deposit funding stands out versus the peers. You 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?

Yes. I mean we're always -- we're predominantly deposit-funded and we want to keep it that way. We've been impressed with the execution on the deposit gathering and it's a foundational relationship. It drives MFI drives, as you can see in the numbers we've disclosed, relationship between retail transaction account and home lending, propensity to have your home loan with CBA higher in the business bank. So we -- it's an important part of the franchise. 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 GoalSaver, very, very attractive rate. On GoalSaver, we've a very high proportion of balances that achieve that rate. We also got very competitive term deposit offer. So the 12-month term deposit especially that you've seen across the industry, I mean, they're up 45 basis points in the last 6 months. So it's an important part of the franchise. We'll compete effectively in there. We've got -- we've been happy with the improvement in the deposit ratio.

I think as 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 the 6-month period deposit growth outpaced lending growth even though we had a very high level of lender growth relative to a very high system. So we were able to retire a couple of billion dollars of long-term wholesale funding, which again helps in terms of the overall earnings profile and net interest margins. 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.

And if I could just follow up on the credit quality side, you're talking about bad debt charges being low. You just referenced some of the peer selling capital returns policies based on that. You've seen the external refinancing of corporate exposures, bringing down the arrears. Just wondering if this reflects your conservative lending settings. Or are you seeing competition after this corporate business as it refis out?

Yes. We've continued to see -- I mean there's always going to be an element of external refinancing across each of the bank's portfolio. 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. There's -- we've seen some continued aggressive pricing offers in market, particularly at that top end of the business bank. I think we called that out 6 and 12 months ago, that's continued in over 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 I think that's a function of the competitive market for business bank and that we're in at the moment.

The next question comes from Ed Henning. We might just move to the next question, and perhaps we can come back to Ed if the line comes back. The next question will take is from Tom Strong.

Tom Strong from Citi. Just a couple of questions. The first on the replicating portfolio, it contributed basis points in the half, and the 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 sits sort of 50 to 100 basis points above the tractor rates now?

Yes. Yes, there will be -- the tractors 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 current levels of swap rate, I mean there'll be a pickup in each of the tractors. So if you think about the size of our replicate portfolio, it's something like $2 billion that we'll reinvest at current swap rates each month. And so yes, that will be a function of the 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 yes, that will be a supportive element. I mean the equity tractor we called out last time around, if you go back 3 years, where swap rate was then, it's pretty similar to where swap rate today in the 3-year part of the curve and so we're not going to see much tailwind on equity tractor but replicating portfolio, given it's a 5-year tractor.

We've probably got another 2, 3 halves of positive earnings momentum as those if you go back sort of for years, we were still in some pretty low in a pretty low rate environment. Some of the tractors that we put on there are coming up for reinvestment at much higher current rates. So yes, 2 or 3 halves of earnings momentum from replicating remain.

Great. And 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 slipped slightly half-on-half. I mean how are you seeing competition for business deposits more broadly given a number of your peers spending pretty considerably to emulate your success here?

Yes, I mean, it's a competitive market for deposits both for REIT 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 we're pleased with that.

Yes, 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. And yes, there's been, I think, some as I mentioned earlier, we've got some attractive rates on the term deposit product as well, and that did particularly well in the 6-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.

Thank you. That brings us to the end of the briefing. Thank you for joining us, and please reach out if you have any follow-up questions. Thank you.