Shareletter ISSUE 6 // APRIL 2011

WELCOME

On 9 February 2011, the of (the Group) reported a Net Profi t After Tax (“NPAT”) (“statutory basis”) for the half year ended 31 December 2010 of $3,052 million, which represented an increase of 5 percent on the prior comparative period. NPAT (“cash basis”) for the half year was up 13 percent on the prior comparative period to $3,335 million. Return on Equity (“cash basis”) increased by 70 basis points to a healthy 19.2 percent. Cash earnings per share was up 12 percent to $2.14.

a number of headwinds. Competition is intense with depositors benefiting from historically high margins while wholesale funding costs also remain at elevated levels. The residual impacts of the Global Financial Crisis are still being felt, particularly in northern hemisphere economies. The outlook for the domestic economy remains positive as the resource sector continues to outperform. Against this backdrop, the Group remains cautiously optimistic about the outlook for the balance of the 2011 financial year. We are well placed to benefit from the improvement in consumer and corporate confidence and the increased level of economic activity which should accompany that recovery. We would like to thank you, our customers and our shareholders for your continuing support for the Commonwealth Bank Group. Dividend The Board declared a fully franked interim dividend of $1.32 per share, up 10 percent on prior year interim dividend. The increase takes the payout ratio (“cash basis”) to 61.7 percent which is broadly in line with the interim payout ratio for prior years. David Turner Ralph Norris Chairman Chief Executive Officer Outlook While the Australian economy continues to perform well and other advanced economies are showing signs of improvement, the domestic banking industry still faces

Cash NPAT Contribution from each business unit NPAT (Cash basis – $m) All dates shown as of the 31st of December * Pro forma cash NPAT 3,700 % NZ % OTHER $234m $117m 07 04 3,250 % BWA % RBS 07 $224m 41 $1,383m 3,000 % WM % B&PB 2,750 11 $359m 15 $506m 2,500 % IB&M 15 $512m 2,250

2,000

1,750 • RBS – Retail Banking Services • WM – Wealth Management • B&PB – Business and Private Banking • BWA – Bankwest * • IB&M – Institutional Banking and Markets • NZ – New Zealand 06 07 08 09 10 Another solid fi nancial result in what remains a challenging operating environment. The result is testimony to the consistent and effective execution of our strategic agenda as well as our disciplined approach to cost management.

KEY COMPONENTS OF THE RESULT INCLUDE:

The Australian banking investment markets 2010 was 2.12 percent, businesses performed well continued to improve. down 6 bps on the NIM for in a period of subdued the corresponding period system credit growth. Better margins contributed in the prior year. to a much improved result Solid growth in lending for ASB Bank in the Operating expenses balances with total average competitive New Zealand (before investment spend) interest earning assets up market. grew a modest 1.4 $26 billion to $574 billion. percent. Bankwest performed Strong growth in retail and strongly on the back of a Capital strengthened with business average interest better operating the Group’s Tier 1 ratio up bearing deposits up $32 performance and lower 56 bps from 30 June billion (11 percent) to $319 impairment expense. 2010 to 9.71 percent. billion. The Group’s net interest Loan impairment expense Improved earnings from margin (“NIM”) for the half declined 48 percent. Wealth Management as year ended 31 December

STRATEGIC INITIATIVES perform well and experiencing solid Trust and Team Spirit growth in lending volumes. Customer The Group maintains a very strong Consistent execution of key satisfaction remains a key priority and and consistent level of people strategic priorities underpins is evidenced by the Group being engagement, achieving world’s best a solid and improved result recognised as equal number one in practice at the 76th percentile of performance, highlighted by the whole-of-market business Gallup’s global benchmark. This result continued high levels of banking segment in five out of the reflects the valuable commitment and investment in the business. past six months in the DBM Business dedication of our people. Financial Services Monitor. Customer Service Profi table Growth The Group’s journey to being Number Technology and Operational Over the years, the Group has 1 in Customer Satisfaction remains on Excellence pursued considered and prudent track. The Group remains pleased The Group has made excellent growth opportunities in Asia, including with the significant progress achieved progress with the continuing roll-out China, Vietnam, Indonesia and India. In so far and is determined to achieve of our Core Banking Program. All retail January 2011, the Group completed the its vision of being Australia’s finest customer information, term deposit, capital injection for the first bank in our financial services organisation savings and transaction accounts now County Banking initiative in China. through excelling in customer service. operate on the new SAP platform. This represents in excess of 10 million Business Banking customer accounts which makes it Our Business Banking growth the largest banking migration in strategy is progressing with Business Australian history. and Private Banking continuing to

SHARELETTER 100 YEARS OF SERVICE AND SUPPORT Commonwealth Bank will soon celebrate 100 years of service and support of the Australian community, starting from 1 July 2011.

A program of activities is being designed that will focus on Commonwealth Bank’s heritage, its important role in contemporary Australia, and the contribution it will continue to make to Australians in the future. The Commonwealth Bank of Australia was founded under legislation, namely Commonwealth Bank’s first branch at 317 Collins Street, , which opened on the Commonwealth Bank Act, 15 July 1912 enacted by ’s Labour Government on 22 December 1911. offices throughout Victoria. Today, the of community partners. As a major With Mr (later Sir) Denison Miller, Commonwealth Bank has over 45,000 Australian institution, Commonwealth ex-Bank of NSW Inspector, heading staff, offering integrated financial Bank will also look to turn on a party a staff of twelve, the Commonwealth services to over 13 million customers for the whole community. Bank opened for business on 15 July and has operations in 12 countries. 1912. It offered savings bank facilities The Group will celebrate with all of its initially at its solitary branch, 317 main stakeholders – its 13 million Collins Street, Melbourne and at 489 customers, 800,000 shareholders, agencies located in money order post 45,000 staff and its extensive network

We are committed to assisting affected by the floods. Customers customers, community groups and can seek special funding through others affected by these floods and new overdraft facilities or increased will continue to support the long limits and will pay no establishment rebuilding process. fee nor be charged any interest for the first 3 months of the loan; As a demonstration of the commitment, the Group announced a package of The Group activated Emergency measures which included: Assistance Packages which offer help to businesses and personal A $50 million Compassionate customers to overcome the Assistance Fund for CommInsure difficulties they face on a case-by- home insurance customers who are case basis; not covered under their policy for riverine flood; The Group made approximately $2 million in cash donations and A Commonwealth Bank Community has also collected donations from COMMONWEALTH BANK Group Flood Assistance Fund of staff and customers totalling over HELPS FLOOD $5 million was set up. This fund will $44 million; and AFFECTED CUSTOMERS be distributed to not-for-profit community groups who have Over and above this, CommInsure Like all Australians, all of us in suffered damage or loss as a result has already made $8 million of the Commonwealth Bank Group of the floods; ex gratia payments to its insurance have been touched by the customers in Queensland and devastating fl oods that impacted The Group has set aside $1 billion Victoria. Queensland, northern New South in funding for business and Wales and Victoria this summer. agri-business customers who were

ISSUE 6 | APRIL 2011 SUSTAINABILITY

Customers The Group’s 2010/11 Reconciliation In July 2010, just six months after the Action Plan was released in December launch of the Commonwealth Bank 2010 and builds on our commitment Foundation’s StartSmart Primary to reconciliation in the areas of program, the Foundation received financial services, employment, an Australian Business Award for enterprise support, education and Innovation for the development of financial literacy. For more detail see the youth financial literacy program. www.commbank.com.au/rap. For the six months to 31 December 2010 the StartSmart Primary Environment Our staff participating in a staff fundraising program reached over 62,000 The Group improved its result in the barbeque to raise money for the Prostate primary students. 2010 Carbon Disclosure Project, Cancer Foundation of Australia scoring 92 out of 100 in the Carbon The Group’s second Viewpoint report Disclosure Leadership Index and OUR SUSTAINABILITY covering the economic health of the securing a place in the top 10 percent nation and the impact of the of the Global 500 for the second year. PROGRESS resources boom in mining areas was released in September 2010. Visit Governance As the Group continues on www.commbank.com.au/viewpoint The Group released its second annual its sustainability journey, long- to read the report. Sustainability Report on 22 October term sustainability is becoming 2010 covering sustainability more deeply embedded in the Community performance for the 2009-2010 Group’s business strategy and In November 2010 the Grants for financial year. The report includes integrated into core behaviours. Grassroots Cricket program rolled out information on sustainability initiatives for a second year, with 220 local and can be accessed at www. People men’s, women’s, children’s and commbank.com.au/sustainability- Our Indigenous School Based Trainee Indigenous cricket clubs around reporting. Program continues to grow in Australia receiving a $1,000 cash strength, with 21 School Based grant plus $750 worth of equipment. Trainees completing their traineeship The number of grant applications Commonwealth Bank received increased by 42.8 percent Sustainability and 47 new trainees commencing with Report 2010 the Group in December 2010. The from the previous year’s program. Group is committed to maintaining up to 80 trainees per year. In November 2010, the Commonwealth Bank Staff Community Fund awarded In December 2010 the Group released a total of $550,000 in grants to 69 its updated Disability Action Plan, Australian children’s charities and highlighting progress to date as well as community groups. setting out further improvement goals and actions. Initiatives have been set The Group’s health partnerships out to support both our people and received strong support from staff, customers with a disability. See www. with more than $215,000 fundraised commbank.com.au/disability- for the Prostate Cancer Foundation of The Commonwealth Bank Sustainability action-plan for more information. Australia and over $440,000 in diary Report 2010 sales and fundraising for the Breast Cancer Institute of Australia.

IMPORTANT CHANGES TO DIVIDEND PAYMENT STAYING IN TOUCH The most secure and safest method of receiving your dividend You can update your personal details, including is by direct credit. With effect from the 2011 final dividend mailing address, payment instructions, email payment, the Group will only pay cash dividends to shareholders address and communication options online at with registered addresses in Australia, United Kingdom and www.linkmarketservices.com.au/public/ New Zealand by direct credit. Dividend cheques will no longer investors or contact Link Market Services be issued. It is important that shareholders who have not Limited on 1800 022 440 / +61 2 8280 7199 or provided their nominated account details should do so by 19 by email at [email protected] August 2011 to Link Market Services Limited by mail or online. Subscribe to an email service notifying you of Shareholders will continue to receive a dividend statement in news on our Shareholder Centre the nominated format (electronic or paper). www.commbank.com.au/shareholder ADV10102 070311 SHARELETTER ISSUE 6 | APRIL 2011