Chairman and CEO's review

June 10 June 2010 vs June 2009
Operating Income ($m) 18,823 6%
Operating Expense ($m) 8,601 5%
Cash NPAT ($m) 6,101 42%
Statutory NPAT ($m) 5,664 20%
Cash EPS (cents) 396 34%
Return on Equity - Cash (%) 18.7 370 bpts
Dividend per Share - Fully Franked (cents) 290 27%

Good financial result

The Group's ongoing commitment to, and disciplined execution of, its five strategic priorities underpinned another good operating and financial result.

The Group delivered a cash net profit after tax for the year ended 30 June 2010 of $6,101 million, up 42 per cent.

A final dividend of $1.70 per share fully franked was declared, an increase of 48 per cent on the prior year. The total dividend for the year was $2.90, taking the dividend payout ratio to 74 per cent.

Significant progress across Strategic Priorities

The Group has made significant progress over the past four years across its five core strategic priorities. The good financial result achieved is testimony to the successful execution of this strategy.

The strong momentum which we have built up behind these strategic initiatives over the last four years has continued into 2010 and it is particularly satisfying that we have again been rewarded with the accolade of 2010 Money Magazine "Bank of the Year" Award along with similar awards from a number of local and international organisations.

Enhancing our position

The Group has maintained its strong financial position which is reflected in its long term credit ratings with Standard and Poor's and Moody's Investor Services which remained unchanged at AA and Aa1 respectively. The Group is one of only a handful of global banks to have retained its AA rating.

Consistent with our desire to be a strong and successful bank and, in recognition of the continued uncertainty in the economic and regulatory outlook, the Group has elected to maintain high levels of capital and liquidity. While funding remains expensive, the Group is already well advanced with its 2011 financial year funding programme.

The Group has also retained its conservative approach to provisioning with total provisioning of $5.5 billion as at 30 June 2010.

The Group invested more than $1 billion over the last 12 months in a range of initiatives to enhance customer experience and drive further process and productivity improvements. The Group's largest single investment, the four year Core Banking Modernisation programme, remains on schedule at its half way stage and achieved a number of key milestones this year including the migration of all customer information and over 1 million term deposit accounts to the new system.

We have also continued to balance the needs of our customers and shareholders. In a year where global financial markets (particularly in the second half) were volatile and unpredictable we wrote over $100 billion in new loans and advances, the majority of which was to retail and small business customers. We also, provided competitive interest rates and reduced or eliminated a range of fees. Our good result and strong capital position have enabled us to pay out $4.5 billion in dividends to our shareholders with over 80 per cent ending up in the hands of Australian residents.

The Group continued to focus on sustainability during the year with a range of initiatives implemented. Communication on our sustainability performance was enhanced by the release of our first Sustainability Report in October 2009. A summary of our achievements this year can be found in the Sustainability section of this Review.

Conservative Outlook

Recent uncertainty over the pace of recovery in the United States and Europe has increased the downside risk to the domestic economy and has not helped domestic business and consumer confidence, both of which remain fragile. This fragility manifested itself in a slowing in the underlying momentum in our business in the second half of the 2010 financial year.

As a result we are cautious about the outlook for the coming year and intend to retain our conservative capital and liquidity settings for the foreseeable future, so that we are able to provide support to our customers in these uncertain times.

Our latest result is testimony to the Group's strong financial position and its robust and sustainable business model. This performance is also a tribute to the enormous commitment and dedication of our hard working people, who are delivering great outcomes for our customers and shareholders.

Finally, we would like to thank our customers and shareholders for their continuing support for the Commonwealth Bank of Australia.

David Turner signature
David Turner
Ralph Norris signature
Ralph Norris
Chief Executive Officer

11 August 2010