Morning, shareholders. My name is Helen Dalley and I am 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 vote and ask questions. I'd like to begin by acknowledging the traditional custodians of the land on which we meet today, the Jagera and the Turrbal peoples of the Greater Brisbane area, and pay our respects to their elders, past and present. I extend that respect to Aboriginal and Torres Strait Islander persons who are here today and on the webcast. We're hosting this year's meeting in person at the Brisbane Cricket Ground, better known of course as the Gabba. We welcome shareholders to the Legends Room and welcome those watching us via the live webcast.
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 Gabba staff and security team and listen for further instructions via the public address system. We ask that you now switch off your mobile phone or put it on silent during the meeting. In addition, please don't take any photographs or film or record the meeting. Before I hand over to your Chair to formally open the meeting, I'll briefly outline the processes that will help shareholders to participate. Thank you to those shareholders who have submitted questions prior to the meeting.
We have sought to address many of these questions throughout the remarks that will be made by the Chair and the CEO in their formal addresses to the meeting. Firstly, I'll deal with questions and voting for those attending in person and then how to submit questions for those viewing online. When registering your attendance today, you would have received a colored card. You need your card to ask a question or re-enter the meeting. 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 are a joint holder.
If you are a shareholder and a proxy holder and have two yellow cards, it is important that you complete both yellow voting cards, one in your own right and the second one 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, and we have six around 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 a customer question, please speak with the representatives from our group, customer relations, and customer advocate teams who will be available after the meeting in the foyer outside the 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're 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 at the top and bottom of the screen. Your questions will be placed in a queue. 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 two comments or questions from each shareholder for each item of business. This applies to both in person and online questions. For those submitting online questions, we ask you submit each question separately. Please note that your questions will be limited to 532 characters. If you exceed the limit, you will be unable to submit your question. You'll need to shorten it and resubmit.
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 then answer. If we receive a number of similar questions, it is possible these questions could 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 provide the individual support you 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 is now my great pleasure to introduce Paul O'Malley, your Chair.
Good morning and thank you, Helen, for your welcome to everyone here in the room and online, including the traditional custodians of the land. Thank you all for attending today. I'm pleased to welcome you to our 2025 Annual General Meeting. I am informed that we have a quorum present and I declare the 2025 Annual General Meeting of the Commonwealth Bank of Australia open. A notice of meeting has been distributed and I will take it as read. I would now like to introduce your Board, the Chief Financial Officer, and the Group Company Secretary.
From my far right, Simon Moutter, Chair of the People and Remuneration Committee, Kate Howard, Mary Padbury, Peter Harmer, Chair of the Audit Committee, Jane McAloon AM, and Vicky Clarkson, Group Company Secretary, and from my far left, Robert Whitfield AM, Chair of the Risk and Compliance Committee, Julie Galbo, Alistair Currie, Lyn Cobley, Alan Docherty, Chief Financial Officer, and Matt Comyn, our Chief Executive Officer and Managing Director. Also with us today are other members of the Bank's Executive Leadership Team. Elizabeth O'Brien, the Lead Audit Partner from our external auditor 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 2025 and is available to respond to any specific questions you may have in relation to this audit. This is Commonwealth Bank's first Annual General Meeting in Brisbane since 2018.
Your bank has a strong presence in this state. We have over 2.2 million retail customers here and more than 200,000 business customers. More than 2,500 of our people are based here in Queensland, with almost half of those in Brisbane. Commonwealth Bank also has a long history in Queensland. Our first Brisbane branch opened on Monday, 20 January 1913, adjacent to the General Post Office in Queen Street in the CBD. That same day, we opened a branch in Townsville, the first branch of the Commonwealth Bank outside of the capital cities. In 1993, our first customer service contact center opened in Brisbane, with its employees receiving 89,000 calls over the year. More recently, in 2022, we established a technology hub here in Brisbane CBD to provide a base to help grow the state's tech community and skills.
Commonwealth Bank's purpose, building a brighter future for all, continues to inspire us to deliver for our customers. Australia has had a fortunate 30 years with our economy, living standards, and wealth growing faster than most developed countries. However, a sustained increase in the cost of living and the cost of running a business weighs on households and businesses. Community concerns about housing affordability, energy supply, and intergenerational equity continue to grow. Historically, in challenging times, the strength of CBA has provided peace of mind for customers and created value for our shareholders. We remain committed to helping the nation prosper and to improving living standards for all Australians. Inspired by our purpose, we are focused on our strategy of building tomorrow's bank today for our customers. We set this strategy four years ago.
Since then, we have made progress in supporting our customers through changing economic conditions, investing in our people and technology, and becoming a safer and stronger bank. Being the bank for all Australians is at the heart of our strategy. This year, we again refined our strategy to continue responding to our changing operating context and navigate complex geopolitical and competitive challenges while also taking a long-term view to help support Australia's economic growth over the coming decade and beyond. Our strategy highlights commitment to supporting the national agenda. It prioritizes investment in technology that provides customers with better, faster, and safer banking, and it invests in our people and branches to better serve our customers and communities.
Our conservative approach to managing capital and our strong balance sheet help CBA to support our customers and the nation through economic cycles, invest for the future, and deliver sustainable returns to you, our shareholders. Being the trusted financial partner for Australian retail and business customers is key to our strategy and long-term success. We aim to remain at the center of our customers' financial lives, helping them access housing, grow and protect their wealth, and start, run, and grow their businesses. We are committed to building deeper and more meaningful relationships with our customers, understanding their needs, and providing tailored support. This is never easy, yet we are focused on this journey of improvement. This longstanding commitment has helped us become Australia's leading transaction bank for retail and business customers. One in three Australians and one in four businesses trust us as their main financial institution.
Our customers are increasingly seeking personalized high value experiences and seamless service, and more are choosing to bank with us digitally. By using leading technologies like AI, we aim to create digital experiences our customers will value. We must listen to our customers' experiences and expectations so we can continue to improve. We know many of our customers are feeling financial pressure and uncertainty about their futures. Our CEO Matt Comyn will elaborate on how we're supporting our customers through ongoing cost of living challenges. CBA has Australia's largest branch and ATM network, and more than 40% of our branches are located in regional areas. We remain committed to regional Australia. We have kept all regional CBA branches open since 2023, and in 2024 we reopened 15 regional Bankwest branches as CBA branches.
We're also committed to helping to address domestic and family violence and financial abuse in Australia, a problem that is more widespread than one might expect. Our Next Chapter initiative provides free and confidential support to victim survivors no matter who they bank with. Next Chapter's innovation program supports not-for-profit organizations that deliver innovative responses to financial abuse recovery. It offers access to grants of up to $200,000 as well as executive support and mentoring from CommBank. Next Chapter Innovation is now in its third year and has provided more than $1 million in grants to date. The organizations selected for this year's program are specifically focused on helping to address financial abuse in First Nations communities. Improving financial inclusion for First Nations customers and communities remains a priority. In July we released our Reconciliation Action Plan, or RAP, for the years 2026- 2028.
It focuses on strengthening relationships with First Nations communities, providing meaningful career opportunities, supporting First Nations business growth, and improving access to banking products and services. This RAP has received Elevate status from Reconciliation Australia. Keeping customers' accounts safe and secure is vital. Fraud, scams, cyber threats, and financial crime continue to impact many Australians. We have more work to do and remain focused on investing to help protect our customers and our communities. This year we invested more than $900 million to help better protect our customers. Our efforts have led to a 76% reduction in customer losses from scams since the peak in late 2022. Matt will speak more about this. In the 2025 financial year, CBA's cash net profit after tax was $10.25 billion, an increase of 4% on the previous year.
This was supported by lending volume growth in our core businesses, stable underlying net interest margin, and a lower loan impairment expense, partly offset by higher operating expenses due to inflation and accelerated investment. We declared a fully franked final dividend of $2.60 per share, taking the total dividend for the financial year to $4.85 per share, $0.20 higher than the total 2024 dividend. We returned $8 billion to you, our shareholders, in dividends and share buybacks, benefiting the more than 13 million Australians who own Commonwealth Bank shares directly or through their super funds. Our strong balance sheet enables us to maintain the necessary investment to deliver resilient and safe banking services, support our customers and the economy, and stay focused on disciplined execution. We maintain conservative financial settings to be well prepared for a range of economic scenarios.
As the bank for all Australians, we remain committed to helping our customers and supporting Australia's transition to net zero by 2050. On 13 August, we published our climate disclosures in our annual report. This year we also reviewed the settings in our environmental and social policy and framework, in line with our commitment to do so at least every two years. Our ENS framework reflects the minimum requirements through which we seek to manage ENS impacts. The framework has long recognized Australia's need for a secure energy platform. We seek to get the balance right. In these requirements and throughout the review, we considered relevant environmental and social issues and varying stakeholder perspectives. As an example, the decarbonization of the national power grid is an essential step in Australia's transition.
We note the Australian Energy Market Operator's, or AEMO's, Integrated System Plan and the investment required to supply electricity reliably to homes and businesses. As Australia transitions to a net zero economy, our policy settings continue to reinforce our climate strategy, and our lending portfolio will continue to evolve alongside Australia's energy transition. Strong governance alongside maintaining the right organizational culture and instilling accountability is essential for delivering good risk outcomes. The Board's governance approach is based on accountability, effective delegation, and appropriate oversight to support sound decision making. The Board establishes the risk appetite for the bank, which has a well-developed approach to managing financial risks. We also remain focused on retaining the important progress we have made in managing non-financial risks. These include understanding the steps being taken to protect the bank and its customers from cybersecurity threats and financial crime.
We engage with the Executive Leadership Team regularly, and the People and Remuneration Committee undertakes thorough discussions when reviewing executives' performance. The Board fully supports management decisions that strengthen our balance sheet rather than temporarily maximizing short-term earnings. Our framework is designed to provide the right balance between delivering shareholder returns, customer outcomes, and investing for the future. I will stand for re-election at this meeting for my final three-year term with the support of the Board. Current Non-Executive Director Lyn Cobley will also stand for re-election at this meeting with the support of the Board. Alistair Currie and Jane McAlhoon AM will today stand for election as Independent Non-Executive Directors with the support of the Board. Alistair was appointed to the Board in late March.
He has a strong background in banking with executive experience in institutional and business banking, transaction banking, as well as technology and operations including cyber and financial crime operations. Jane joined the Board at the start of this month and brings over 30 years of business governance experience. Consistent with Jane's intention to review her portfolio of other commitments following her appointment to the CBA Board, she has announced her retirement from Energy Australia and Monash University Council effective December 31, 2025. At the conclusion of today's AGM, Independent Non-Executive Director Mary Padbury will retire from the Board. Mary joined the Board in June 2016 and has been a member of the Nominations Committee and People and Remuneration Committee. On behalf of the Board, I wish to thank Mary for her considerable contribution to CBA.
Your extensive governance and regulatory experience and knowledge of people and culture matters have been invaluable, as has your humor. The Board will remain focused on maintaining a balanced mix of skills, experience, and perspectives to address current and emerging risks and opportunities, as well as facilitating robust development discussions. One of the Board's key roles is appointing the CEO and ensuring appropriate succession plans. We have been pleased with the performance of Matt as CEO. As I mentioned, I will stand for re-election today for my final three-year term. Our intention and expectation is that the decision as to the appointment of the next CEO will be made by the Board led by my future successor as Chairman. Shareholders, this year we have made good progress refining CBA's strategy to better position us for the future and bring our purpose to life.
We have continued to support our customers and communities through changing economic conditions while keeping the bank safe and strong and delivering sustainable returns for our shareholders. I wish to thank those whose support and hard work makes it possible for CBA to deliver on its purpose for our customers, communities, and shareholders and for all our stakeholders, my fellow directors, our dedicated leadership team, and our people who strive every day to exceed our customers' expectations. I also thank our loyal and diverse customers who choose to bank with us, the communities we support, and you, our shareholders. I now invite our Managing Director and CEO Matt Comyn to address the meeting.
Thank you, Paul, and good morning, everyone. This year we're focused on supporting our customers, providing stability to the economy, and investing for the future. We know many Australians have found the past four years challenging, particularly dealing with cost of living challenges. This past year has brought some relief through easing inflation, lower interest rates, and tax cuts. Many households are now experiencing a rise in disposable income while savings and consumer confidence are growing. However, we recognize the cost of living remains a challenge for many. Households remain stretched, and global issues are creating uncertainty. This year we've supported our customers in a number of ways. We have provided more than 139,000 tailored payment arrangements for those most in need. We've made it easier to access help for those feeling financial pressure, and we have seen a 19% reduction in home loan cases in financial hardship.
Being the trusted financial partner for Australian retail and business customers remains key to our strategy and long-term success. One in three Australians and one in four businesses call the Commonwealth Bank their main financial institution. This year we helped more than 140,000 households to buy a home, lent $42 billion to businesses to help them grow, and paid over $22 billion in interest to savers. Every month m ore than 3 million customers use our digital money management tools to better understand and manage their finances. These are all easily accessible in the CommBank app, which now has more than 9 million active users and more than 12.7 million daily logins. Our financial fitness program offers Australians practical online tools and relatable content designed to build confidence and mastery over their personal finances.
We relaunched CommBank Yellow, one of Australia's largest loyalty programs, to offer customers even more value through their relationship with us. So far, CommBank Yellow has delivered more than $135 million in benefits, rewards, and discounts to our customers, including more than 360,000 of our business customers. We've also provided easier lending access with more than 10,000 loans to small businesses written through Biz Express and auto decisioning, resulting in as little as 10 minutes between instant approval and funding. Our branch-owned and bank-owned ATM network is the largest in Australia, and we have $145 million planned for upgrades this financial year. We remain committed to regional Australia and have kept all of our regional CBA branches open since 2023. These efforts are reflected in our Net Promoter Score, which tracks the strength of our customer relationships.
We currently hold the number one NPS ranking across the major banks in the consumer, business, and digital categories. Technology is reshaping what our customers expect from us. In the last financial year, we accelerated investment by $300 million in line with our strategic priorities. Our consistent investment in technology, data, and analytics allows us to deliver more personalized experiences for our customers and make it easier for our people to serve our customers. Last month, we reached a major milestone in our multi-year Enterprise Wide Technology Transformation Program, completing the full upgrade and migration of our SAP core banking platform to Amazon Web Services Cloud, the largest system of record migration in our history and one of the largest of its kind globally. We've been using advanced analytical technology for many years to better serve our customers, including our customer engagement engine.
To strengthen our internal capabilities, we've partnered with global leaders to bring the best of AI to our customers and to our people. We've also established our own tech hub in Seattle, where we rotate 200 of our people each year to connect with our partners to accelerate their learning and to bring back more advanced skills to Australia. Building world-class AI and engineering talent is central to our technology ambitions. We hired 2,000 engineers in the last financial year, and we're providing our people with AI skills and tools so we can deliver the best customer experiences and outcomes. Technology is central to how we help to protect customers from increasingly sophisticated threats like scams and cyber attacks. Scammers continue to prey on our communities, and every dollar that a scammer takes from a customer by deceiving them is, of course, a dollar too much.
Helping customers keep themselves safe and secure remains one of our top priorities. Over the past year, we've invested more than $900 million to combat fraud, scams, cyber threats, and financial crime. To help protect our customers, we've scaled up our alert system, now sending 10 times more alerts to customers via the CommBank app to help them identify suspicious transactions in an Australian banking first. We've deployed thousands of AI-powered bots to actively engage scammers on voice calls and WhatsApp chats. Our name check technology has been used 110 million times, preventing over $880 million in mistaken and scam payments. We actively engage with customers to provide information about evolving scams and fraud threats, and this includes community sessions in our branches and new education campaigns that aim to encourage conversations about the dangers of scams between generations.
These efforts have led to a 76% reduction in customer losses from scams overall since the peak in 2022. We must remain vigilant. We know there is still more for us to do to help protect Australians from financial harm. Scams are ever-evolving and often very complex. CBA is focused on helping protect customers as scammers become increasingly sophisticated. While we always aim to get things right, if we do identify certain scam cases where we got our assessment wrong, we will make things right for our customers. We remain committed to keep delivering our own innovations as well as working on a whole-of-ecosystem approach that includes digital platforms and telecommunications companies. Our financial results for the 2025 financial year reflect our customer focus and disciplined execution of our strategy.
For the full year, our cash net profit after tax was $10.25 billion, an increase of 4% on the previous year, driven by strong operating performance and lower loan impairment expense. Throughout the year, we maintained strong liquidity, funding, and capital positions. We've been focused on consistent operational execution and investing for the long term. We further strengthened our balance sheet and remain well positioned to support our customers and the broader economy and deliver a sustainable dividend for you, our shareholders. Building a brighter future for all also means investing in our communities. One way we do this is through our people's charity, the CommBank Staff Foundation. In financial year 2025, the foundation awarded 175 community grants of $20,000 to organizations across Australia, double the value of grants in past years. Five regional grant recipients were also awarded an additional $100,000 to amplify their work in the community.
The Staff Foundation also supports long-standing charitable partnerships such as Can for Cancer. In 2024, almost 8,500 of our people took part in this initiative, which has raised over $20 million for cancer research since it began 11 years ago. We've also strengthened our investment in football, Australia's biggest participation sport, by expanding our partnership with Football Australia. CommBank is now the naming rights partner for the Socceroos, joining the CommBank Matildas, the ParaMatildas, and the ParaRoos. We continue to support the growing Football Fund in partnership with Football Australia. This year, the fund provided an additional 118 grants to community clubs and associations to increase women's participation in football. Our performance this year and the support we're able to provide our customers and communities is made possible because of the care, courage, and commitment demonstrated by our people every day.
I'm deeply grateful to work alongside them, and I thank them all for their dedication. Our people take pride in their contribution. Our people engagement was 84% in our most recent survey. Looking ahead, economic growth in Australia remains below trend but is recovering. While we recognize many are still finding the current conditions challenging, there is some positive momentum. Inflation is back within the target band, and what we expect to be a modest rate cutting cycle is underway. Economic growth and productivity are the foundation for improving living standards and real wages. We welcome the government's focus on this area and have sought to constructively contribute and represent the views of our more than 10 million customers. Our purpose to build a brighter future for all reflects our enduring commitment to Australia.
We are proud of our role as the bank for all Australians and how we contribute to our country. As we look to the year ahead, we will continue to invest in our business and execute on our strategy to bring our purpose to life. We will remain focused on supporting our customers, investing to protect our communities, and providing strength and stability to the broader economy. I'd like to thank our customers, our people, and you, 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 four items of business to be considered today. These are the first, consideration of the 2025 financial statements and reports. Second, the re-election and election of directors. Third, the adoption of the 2025 remuneration report and fourth, the grant of securities to our CEO Matt Comyn. The voting exclusions for item three and four 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 2two to four inclusive.
We will now move to the first item of business, which is to receive and consider the financial report, the Directors' report and the auditor's report of the company for the financial year ended 30 June 2025. 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 audit. I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on this item. 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? I have a question at microphone number one.
Chair, I would like you to just call Fanning .
Thank you. Welcome, Mr. Fanning.
Thank you very much, Paul. I haven't been to an AGM for a few years, but I've been certainly to many in the past. I have two questions relating to the items of business. One is about the CET1 ratio and this might be a question for Alan even. There is about $10 billion in excess capital on the books, which seems to be a rather conservative figure to say at least. Is there any planning in the future or is it going to be straight back to the board to perhaps better utilize some of the $10.1 billion in excess capital or CET1?
Thank you, Mr. Fanning. Sorry, do you want to give me your second question? Yes, go ahead.
The second question is, Paul, you spoke about 40% of regional bank branches are still in regional Australia, and somewhere in the annual report it actually mentions that there could be a review in 2027. Now, what is the medium term stance of the bank in regard to maintenance of regional representation across all states?
Thank you very much for your questions. The first one I'll address. The CET1 ratio is a form of capital that we're required to retain on our balance sheet as part of our balance sheet strength, and I think very good pickup that we have a surplus of CET1 capital. In the presentation and the speeches, we talked about the importance of the Commonwealth Bank having a very strong balance sheet. When you invest in a bank or you provide your deposits to a bank, it's fundamentally important that we've got the capacity and the strength to manage both your investments but also your deposits, and for us to be able to provide loans to customers through all parts of the economic cycle.
The Board has taken the view, with the support of management, that we need at the Commonwealth Bank to have a very strong balance sheet, and a surplus of the CET1 ratio is a way that we absolutely ensure that is the case. We're proud of the fact that we have a conservative balance sheet. There's a management committee that looks at that monthly, the Board looks at that every single cycle, and we look to make both short and long term decisions on capital. If I just take you back to a recent example, during the coronavirus epidemic when so many Australians were struggling, financial work was restrained in many instances, there was an increase in unemployment.
The fact that we had a strong balance sheet gave us the capacity to provide support to customers either through forgiveness of payments for a period of time, extension of loans, many, many vulnerable engagements with customers. What an excess of capital over CET1 does is gives us the ability to support our customers when it matters. I would expect that we would continue to look at that both monthly and every Board cycle and annually at both long term geopolitical and economic trends, trends in the Australian economy. I think that you would expect to see us maintain a very strong balance sheet a long time into the future. If I move to bank branches, there's been a massive change in the way that Australians undertake banking.
If we go back over the last 30 years, I mentioned in my speech how lucky we've been in Australia in many respects to have such a strong economy relative to so many other developed economies in that time. Well over 90% of our interactions with customers have gone from being all in the branch to predominantly being online. With online engagement, customers have the flexibility to bank 24/7 throughout the year. That's an expectation that our customers now have today. Not everyone wants to bank online. There are people who want to go to branches and have human interactions. At the Commonwealth Bank , we've made the decision to maintain the largest branch and ATM network in the country. As you've rightly picked up, and as I mentioned, 40% of those are in the country. Your specific question is what is our posture on that into the future?
We're very committed to being the bank for all Australians. We have made a commitment to maintain our regional branches in full for a three-year period through to the date that you mentioned. We will continue to look at how our customers want to interact where we can. We will absolutely keep the branches open. At the moment, we've made a commitment not to shut regional branches, but we have to respond to the way that our customers engage. One way we've done that is we've kept branches open where customer throughput has really dropped off, but our staff actually might close the branch early during the day and then go online and support customers over the phone.
It has the double benefit of keeping a branch open longer than might otherwise be the case, but also keeps locals employed in banking and they're great employees to be able to support our customers, whether it's in the local area or more broadly across Australia.
Interesting. Thank you anyway.
You're welcome.
Hi there too.
Thank you. Might go to microphone number six.
Chair, I would like to introduce Julieanne Mills from the Australian Shareholders Association.
Welcome, Julieanne.
Thank you. Chair Julieanne Mills, on behalf of the Australian Shareholders Association and representing 1,096 shareholders and more than 2.8 million votes, the Australian Shareholders Association would like to congratulate you on another great result and your continued leadership in governance and support for Australia's economy, your customers, and your shareholders. The question is around AI. AI is one of the most discussed topics at the moment and we seem to be in an escalating race to keep up with no end in sight. We appreciate the benefits that it has brought and will bring to CBA. We have concerns about the risks attached to, in particular, data privacy and sovereignty and the increase in potential cyber attacks and scams, the cost to benefits of this, and the costs to the benefits of this accelerating need.
Can you give us your perspective on this, please, and discuss the safeguards you have in place. Can I continue with another question?
Absolutely. I might need to prompt you if I miss the first part.
It's related to the energy use. With the intended use of AI, it will require large-scale data centers, which are known to use gigawatts of power. If you intend to keep your data in Australia, then we will need significantly more power. How do you intend to power these data centers while also meeting your commitment to net zero by 2030?
Thank you for your questions, Julie anne, and just to acknowledge the very constructive engagement we have with the Australian Shareholders Association, yourself and your colleagues. We value the feedback we get and very much appreciate your questions. AI is definitely the topic of the day. There are varying views as to what AI is, varying levels of understanding of what it is, what it might be and how it's going to change the world or not. In terms of CBA, we're seen as a very large company within Australia. We are very lucky that we've got so many customers that support us and interact with us and that we've got so many shareholders who invest in us. Often, if you read the media and the press, we're seen as one of the biggest companies in Australia.
Our competition today is both Australian companies and global companies, particularly technology companies, who are injecting services competitively and often for the benefit of customers into Australia. A lot of those global companies, and if you take half a dozen of them, their market capitalization is greater than the entire Australian economy. As a bank, we need to understand, and as an important Australian institution, what the global technology development is and how that technology is going to be used to compete globally and engage with customers, but also how that global technology is going to compete and engage with Australian customers, in direct competition with CBA, but also in direct competition with every company in Australia.
It's a global phenomenon or change that we need to be at the forefront of understanding so that we're in a position to answer your question in the context of today, 5 years' time and 30 years' time. The first thing I'd say about AI is that it's evolving very, very quickly. It does require significant electricity and technology and data centers to power. To answer your second question, our commitment to decarbonisation of the electric grid is clearly set out in our environmental and social framework. Like all users of electricity, there has to be a decarbonisation of electricity. The Australian Electric Market Operator has indicated that between now and 2050, both data centers and other aspects of energy use are likely to double demand in Australia.
We have a national challenge to invest in the energy infrastructure that can reliably and safely power Australia and all of its needs from a decarbonized perspective, but also with firming. The data centers have to fit within the total pool of energy and address how the total pool of energy in Australia is actually managed. Coming back to the first point, and I'm sure there'll be other questions on AI, there are many risks associated with AI and there are many opportunities associated with AI. In terms of the risks, it's the role of the board to be as educated and informed as possible on how AI is being used. It's really hard to actually go anywhere to read the textbook or speak to the expert who has the total picture.
We're on a journey to work with the leading academics in the world and we've started a program with the Massachusetts Institute of Technology that the entire board and ELT is working on over multiple days of education to understand the theory, the technology, the processes, and the governance requirements of AI. We're also engaging with the leading developers of AI, AI programs, large language models, Google, Anthropic, OpenAI, and Microsoft. We need to speak to the experts because where the experts are at, in many respects, is far ahead of where the academics are at. We then need to understand the use cases to which AI is being used and we need, as I said, from a governance perspective, to manage the things that you mentioned, the risks, the data, the privacy, and the security.
It would be our intent, and it is our intent, that our data is actually securely held in Australia and therefore the power requirements that you referenced in terms of where AI goes, we have a very rigorous process around the methodologies that we put on each of the use cases. We talk about that at Management Risk forums, Non-Financial Risk forums, at data forums, privacy forums, cyber forums, all within the bank, which flows through to our Risk and Compliance Committee, but also comes through our People and Remuneration Committee and the Audit Committee. In terms of the governance, up to the board, where the board interacts with management to make sure that we've got the right ethical framework, the right policies, and that the right policies are actually put in place and managed.
In terms of some of the uses and some of the more detail, I'm going to pass to Matt now just to elaborate on that. I do think we'll get additional questions and really look forward to actually talking about the topic in a bit more detail.
Yeah, I think you've covered a lot of ground, Paul. Perhaps I'll just sort of underscore a couple of things. I do think in the topic of AI, one thing that is very important is that Australia has a deliberate strategy and we understand this should be a national priority, because I do think it's going to be important for Australia to be able to compete and of course, businesses within that. I think as a shareholder, sometimes if you, perhaps if you read in the media and you're seeing the escalating capital expenditure that's going on, particularly in the U.S. and a small number of companies, perhaps to allay those fears, we are not participating in that escalating capital expenditure that's quite narrowly contained within a handful of companies.
That said, as Paul mentioned, we're partnering with a number of those companies which we consume or work with them to deliver services. We're certainly investing in AI, we're trying to build capability across the whole organization and then primarily thinking about how we can deliver much better customer experiences. You touched on a couple of the real areas of focus and risks for us in terms of how some of this technology will be used against us for scams, fraud, cybercrime. It's perhaps one of the ways that we're looking to use it to defend our customers. On the other side, just looking through all of the service experiences, how we can better use that. You identified very well a number of the risks which are really important, including data security, data privacy, understanding how we use customers' information that that's appropriately managed within their reasonable expectations.
For us, both delivering great customer experiences as well as managing all of the risks from that use, as Paul touched on, is a significant priority for the organization.
Thank you.
Thank you. I'll now go to microphone number two. Thank you.
Chair, I'd like to introduce Paul Blackmore .
Welcome, Paul, and good to see you again.
Nice to see you as well.
Paul Blackmore from the Finance Sector Union. We represent bank workers, including those who work at the Commonwealth Bank . I'm actually joined by one of our members who's going to ask a question later. Her name is Catherine. On the topic of artificial intelligence and its impact on workers, I've just got a broader question around job security in the industry. Recently we've seen a large swathe of job cuts occur. ANZ is an example of 3,500 that's been announced. Westpac, Bendigo, BOQ as well. With larger numbers of cuts, there are heightened job security concerns in the industry. We'd like to know what commitments CBA can give to its Australian workforce that their jobs are safe and they're not going to see those large scale cuts that we've seen elsewhere.
Thanks very much, Paul. Employees are at the center of how we operate and deliver as a bank. I think we have an aligned objective in that context. Thank you very much for your question. If I go back 30 years, how the Commonwealth Bank presented to customers was fundamentally through direct engagement, through branches, with kind of centralized services. As I mentioned before, there's been a dramatic shift in how customers engage with us and how we have to engage with customers. Fifteen years ago we didn't have phones, we didn't do everything on our phones. As a bank, we have to be relevant and engage with customers and deliver the best engagement and services to customers that we can. But we need to do that from an Australian context, with Australian employees delivering Australian customer service.
The technologies may come from overseas, as I mentioned in the earlier answer, but we've got really good capabilities, we have excellent education, and we have excellent people who are motivated to help us transition from what used to be the way we banked 30 years ago to the way we bank today or people bank today. So over decades, we have always had to adjust our workforce to make sure that we present in the right way with the right skills, capabilities, and experience to deliver the best customer service. At the CBA , we want to be the number one bank in Australia. We want to have the best customer service of any bank anywhere. So how we go about making sure that we have the right skills requires a lot of thought.
We've got an engagement here with Griffith University to help develop skills in Australia around people who can help us manage financial crime. We have a relationship with the University of South Australia to help develop tech skills, particularly in AI. We want to make sure that Australia has the capability and the talent to support our needs. Very specifically, we have over 50,000 employees. We've got major operations in New Zealand, here in Australia, and a service center in India. 37,000 of those employees are in Australia. Over the past 12 months we have increased the number of Australian employees because that's what we need from a talent and skills perspective. We have to support our New Zealand operation through ASB Bank.
There are a lot of New Zealander employees and over many decades we've accessed service capability out of India, which is an incredible talent pool, but usually through third parties. So what we've done over the last three years is actually set up our own subsidiary in India and hire those third party employees into CBA as direct employees with CBA. We're transitioning from what might have been third party service providers, helping us with our investments in our operations, into a CBA entity so that we can help manage them as valued CBA employees and they can help us in Australia as you move to digital and online. Customers historically knew that banks opened at 10:00 A.M. and they shut at 4:00 P.M. in the branches because there was a lot of work to do before opening and after closing.
In a digital engagement, customers want us to be available 24/7. It actually makes sense to have people operating in different time frames to support that 24/7 service for our customers. Better customer engagement does require different ways of thinking. To come right back to your specific question, we have 37,000 employees in Australia, the vast majority. I see that being the case going forward for a long, long time. In the last 12 months we actually net increased our number of employees here in Australia.
Just a follow up question because it is relevant. I was going to come back and do it, but I might as well.
Go for your life
band-aid off.
Do it now. It's about CBA India, and you touched on your commitment to Australian employees here. What we've seen in your financial reports over the last five years is the ever-increasing number of FTEs over at CBA India. I think it's around 6,800 now. It's grown by 138% since you first reported it back in 2022. I acknowledge what you've said about the local FTE increase in the last year, but balance that out over that same time period with India. It's actually gone down by 3%. We'd really like to understand what more the bank could be doing to make sure that you have got the skills here in Australia to do the work that is currently being done over in India, or that you keep transferring work over to India. I'll take you back. I think it was last year somebody asked the same question about offshoring.
I asked you back in Sydney, and you at that stage had said it's about the skills and not having the skills at scale here in Australia. I've heard you talk about your investment, but we're still seeing the numbers in India go up and up. What's the long-term plan? How are you going to upskill people here and look to bring some of those numbers back into Australia?
Thank you. I think we have an aligned objective. I think we all want to have more Australians working with the right skills and capabilities. That's why I referenced our engagement, direct engagement with universities, because it's really important that universities understand what large businesses want in terms of skills, and we can actually jointly develop programs in relation to India. I mentioned the 24/7. We also have a significant capital investment program to upskill our tech, and we're attempting to hire and are hiring as many engineers in Australia as possible to have those skills. In some respects, we get the benefit in India of having people working now directly for CBA. We're still insourcing. We're not done with making. We're still using outsourced third-party providers in India. We're still bringing them inside, and they appear as capital expenditure in our accounts.
We're still working on hiring them into CBA because we would prefer to have direct CBA employees wherever we operate. Those individuals have also worked across multiple areas of financial services with different competitors, and we're able to get the benefit of that as well. Coming back to Australia, it is our intent to make sure that we have the right skills, that we work and listen to your organization and take the feedback as well, which I very much value today, and that we can continue to go on the journey together. As I mentioned in AI, it's fast evolving. Who might know where the new competition comes for, and to secure Australia, to secure the Commonwealth Bank , to secure employment for Australians, we've got to understand how that works and work with everyone in Australia to develop that.
To make sure that I address those questions kind of completely holistically, I'm going to defer to Matt and just get him to add to both of your questions, if I may.
Thanks. Thank you. To, I guess, both Pauls, if I may, I'll sort of try to answer narrowly in India and then perhaps come back to the sort of point of principle where you started. I mean, your numbers are correct, it's just over, I think, 6,800. I would distinguish. There's about 2,500 of those roles that were formerly done by Indian companies in India. We'd refer to those as application service providers. As part of our broader investment in technology and having the capability in house, we've brought those roles. Instead of paying a service provider that's international, they're now CBA employees, albeit in this case in India. And then within that, the majority of the growth comes in a couple of areas. One, we've substantially, as I covered, increased our investment envelope. A number of those skills we've been able to require in India.
It's not that we aren't looking in Australia and we are continuing to hire and we are bringing capability in the same way that we opened an office in Seattle and we're rotating teams of 20 or sometimes 30 through that office to increase their capability and bring them back to the market. The Indian market is a very large one, so that has primarily been a big driver. Perhaps the largest, and I won't go through an exhaustive set, would be in financial crime. We've got more than 3,000 employees that work in financial crime compliance. This has clearly been a very important area of focus. For US financial institutions, many other sectors, the demand for those resources will continue to grow as more industries are required to increase their financial crime compliance.
We've partnered with universities, in this case Griffith University, to try and build more local capability in Australia. Again, it's very difficult to build the capability, experience at the numbers that we were looking for now. They're sort of the biggest drivers around our operation in India. As Paul said, of course, we are very focused on the Australian market and I mean more broadly, what at our heart do we seek to do? We want to deliver great experiences for our customers, support financial growth and financial stability within Australia. We seek to, or we can only do that by having great people who are highly engaged that work as they do very hard to support our customers. We seek to deliver a balanced and reasonable and sustainable rate of return for any business.
We have to periodically look at whether we've got the right skills, capability, the way we're organized to make sure that we're delivering not only the best customer experiences today, but into the future. Paul touched on a really important point. It's not just the competitors that we would, traditionally would be seen as our competitors. The other major banks, there are a raft of other competitors, both domestic, international and assuredly more international competitors. And so we have to make sure that we retain our competitiveness. We're able to deliver a very compelling and competitive offer to our customers. We can deliver for our owners, some of which obviously are represented in the room today. I say all of that in terms of the background and context. But of course, even though we have, as Paul said, 37,000 people in Australia and we added to the Australian workforce, that doesn't diminish.
Obviously, if you're an individual that's impacted, irrespective of, I guess, the supporting rationale, that of course is challenging and I think in the way that we're engaging certainly into the future, acknowledging the uncertainty around AI with both our employees and with the Finance Sector Union, we think that there's more that we can be doing in that area because we could see the uncertainty. We're not entirely sure how the market's going to evolve over the next three to five years. It does strike us that there's perhaps more that we could be doing and we look forward to being able to do that.
Thanks very much. Thank you. We have a question at microphone six.
Chair, I'd like to introduce Julieanne Mills from the Australian Shareholders Association.
Welcome back, Julieanne.
Thank you c hair.
On behalf of the Australian Shareholders Association, I'd like to raise once again the topic of hybrid AGMs. For several years we've encouraged CBA to allow shareholders to participate and vote either in person or online at a hybrid AGM. Hybrid meetings make it easier for those who can't travel, boost overall participation, strengthen engagement with the Board, encourage more shareholders to vote, and increase transparency for all shareholders. CBA generally reflects best practice in shareholder engagement and inclusivity. It's time CBA made a commitment to a hybrid AGM too. Will CBA do a hybrid AGM for 2026?
Thank you, Julieanne. We've had the discussion. We do think, and thank you very much for holding us accountable to being best practice. We do think that we're delivering a very good experience. We're moving around the country. It's great to be back here in Brisbane. We do allow pre-submission of questions and real-time submission of questions. We are trying to be as inclusive for everyone. We'll talk about the point again, but I won't make any commitments about the 2026 AGM at today's AGM.
Thank you.
Thank you very much. If we go to microphone number one.
Chair, I would like to introduce Kaz Kazim.
Welcome back, Mr. Kazim. It's good to see you again.
Thank you. I'm sorry I missed the opening addresses, Mr. Comyn and yourself.
We can do it again if you'd like.
Love it, because it'll give me an understanding of what you'd say then, whether you'd praise the team that does the work and enable the bank to do what it does.
We definitely did that. The presentations are available online anytime you'd like to listen to them.
I'm inclined to agree with you about artificial intelligence application. The uncertainty, I think, is best illustrated by Deloitte's ongoing problems. They haven't understood, and what they've done is a total disaster. I hope, for whatever reason, the CBA avoids engaging with people who they can't trust. If you do, then there is a written contract for them to tell exactly what it is, who they consulted, and how they use artificial intelligence to generate the reports that they have.
Thank you. I'll take part of that as a comment, but I think the critical point I'd take away from your comment is the importance of governing AI and its use. I think in the earlier answer to the question from Julieanne at the Australian Shareholders Association, the Board being in a position with the support of management to have all of the processes in place to govern both the ethical use, the compliance use, the data, the privacy, and really understanding the use cases to which AI is used and how data within that is used. I think your point is well made, that getting governance right is absolutely essential and we concur with that.
I think the ongoing education for the staff is probably one of the measures you're probably taking. The main point I want to ask is I apologize that I wasn't able to attend last year. Was that a decision that—by the way, I've been a lifelong customer from the time I opened an account at the University of New South Wales at age 16. I've seen the changes, a lot of them are very good. And I think it was a couple of years ago that the CBA closed the branch and they didn't tell us. Getting to the real point, basically last year there was an issue that was raised and it came before a court, Federal Court. Justice Bromwich gave a very damning indictment on wage theft. How and when did that happen?
Why was the bank engaged in continuing wage theft over a period of time only to be given such a damning indictment by a judge? $10.4 million, I think he said, was the maximum they could fine the bank because that's what the law allowed. If you are employing these people and you trust them, and I assume the basic—any business relationship is based on trust, would your staff then feel comfortable and be productive?
I think to answer your question very specifically, it is absolutely essential that we as a bank ensure that our staff are paid the appropriate amounts at all times. We made an error some time ago in relation to the payment. I think it was in long service leave. We remediated those payments immediately, but quite appropriately we were before the courts because of that error. I think you hit on a point which is fundamentally important, that we need to make sure, as I said, that we undertake our payment of staff as appropriately and accurately as should be required by a very high standard. We hold ourselves to that standard. At a point in time we did not meet that, but we rectified that as quickly as we could.
What sort of relationship do you have with the Finance Sector Union?
We're working on developing that relationship, and Paul is here today asking questions, which we very much appreciate. One of the great things, and it is two questions at a time, but you're welcome back. I'm going to pause at the moment. One of the great things about the AGM is the opportunity for shareholders to come and ask questions and to hold us to account as you're doing. The engagement, the Finance Sector Union is important, but maybe Paul can comment about that when he gets back up. Thank you very much. I'm going to come back to you after I give someone else a go, if that's okay.
Just one quick comment, if I may. I'd never attended an AGM and I worked on the assumption that most business leaders worked on an ethical basis. It was the first time I went to Adelaide, I think it was 2013, and when I learned that the bank had given advice where the Queensland seniors had, almost a fairly large number of Queensland seniors had lost their life savings. What I'm saying is that's what triggered my interest in attending AGMs and asking questions, and that's what I'm doing. Thank you for what you've said so far and I hope the collaboration continues with the staff.
Thank you very much.
Okay, thank you.
We're going to move to microphone two, and then we'll take a pause in the room and go to questions online.
Thank you.
Chair, I'd like to introduce Catherine.
Welcome, Catherine.
Thanks. I just came today to ask a question about in light of the recent redundancies where there were 45 people made redundant, where there was a backflip on that redundancy and jobs were offered back. Not all the jobs were the same job that these people had been made redundant from. I just wanted to know what specific measures, if any, you have in place now to safeguard current staff from having their roles displaced by AI and also offshoring. Also, can you please outline what guardrails you have or policies that have been introduced to support job security and transparency during this period of technological change.
Thank you, Catherine, and thank you for coming and asking your questions today. I acknowledge how difficult that process was. I'm going to get Matt to comment in detail at the moment, but an assessment that 45 roles were no longer required as a result of changes we made. We made a mistake. We didn't adequately consider all the relevant business considerations, and I think that's been communicated. We've talked about AI today and the importance of understanding both the risks and opportunities on that. More importantly, I think the point that you raise is that we have to be, and it's the same point that Mr. Kazim made. We have to be very thorough in the way that we support. We do have to make changes in the business from time to time. That is inevitable, but we have to do that respectfully.
We can't afford to make mistakes, and we can't afford to impact our people. If we do, we need to rectify that and provide the support as much as possible. Without talking to the specifics, we have addressed the learnings from those situations through both the People and Remuneration Committee and the board. We're engaging with management on those learnings to ensure that future processes are baked in such that the risk of that happening again is very much mitigated. I'll just get Matt to comment, perhaps in a bit more detail.
Sure.
Thank you. I just want to acknowledge how difficult the situation is for you individually and thank you for coming along today and asking the question. Perhaps by way of background for people who aren't as familiar, when we make any changes to technology and that has an impact on an individual's role, it's incumbent upon us, as it should be, to engage appropriately and determine whether any roles will be impacted. In this particular instance, and I think you were one of those 45, when we did that assessment, we incorrectly estimated the demand for those roles going forward. We basically incorrectly calculated that those roles wouldn't be required, whereas indeed they were required and had to re-engage with the employees that we'd said their role was no longer required to say it is. Of course, that's an unnecessarily challenging process.
I understand we've apologised to each of the employees impacted by that. I think two other things. One, I think it is going to be important and I would say we will continue to have to look at how we can better serve our customers. In this particular instance, in terms of being able to support our customers in near real time with a lot of capability and audience automation, particularly in areas around disputes, scams, and fraud, it's not that we won't. At times that will require difficult decisions that may have an impact on employees. I think the way we engage with employees, how we think about that over time, how we try to develop and retain as many of those skills as we can, is really important and that's certainly a priority for us going forward.
Thank you again for coming today and asking that question. We might go online. Thank you, Helen.
Thank you, Chair. This is a question from James Hyland. Given the bank's significant investment in artificial intelligence, data, and digital platforms, how is the Board testing the underlying assumptions behind these investments? What is the potential impact on profitability and capital discipline if the current AI-driven productivity and revenue expectations fail to materialize or the broader AI sector experiences a correction?
Thank you very much for the question, James. I think, in part, I've addressed that the Board must focus on the governance, the ethical framework, and all of our risk attributes as we look at how AI might be controlled, considered, or deployed inside the Commonwealth Bank . We are investing in understanding, and as I mentioned, the competition is not just domestic, the competition is global. We're a very small investor in AI relative to global investment, as Matt referenced, but we have to be at the forefront of investment in Australia to understand it, because it's really important for the safety and security of Australia and Australians and our customers. Customers need to understand how AI can be used, both for us, but also against us in terms of the use cases.
One area where AI is definitely helping, and I think it's benefiting everyone at the moment in our business, is that those who do coding and help program our systems are able to use some of the AI tools and be much more productive and, in many respects, safer in that underlying coding. There is absolutely a productivity benefit there. Given our investment, it actually means we can do more investment more quickly and more cost effectively. It's not seeing a reduction in work per se, how those uses are then used, for instance, in financial crime, where there's a lot of transactional activity to assess the level of economic crime in Australia and get underneath that. AI might be able to help us there, but that's work in progress. That is an example of an area that would be absolutely fantastic for Australia's security and safety.
But we're still working on the process in terms of the return on investment. At the moment, our investment capacity is such that we believe we're getting a return because of the learnings, but also the areas of productivity I talked about. We have to move very methodically in terms of deploying additional capital and making sure that we will get a return for that capital. I think as a Board and a management team, there's a very considered conversation about that, and it is on the agenda at every Risk and Compliance Committee and every Board meeting that we have, because of the importance of getting it right.
Chair, this is a question from shareholder Aris Papulius. What does your vision of the workforce of the future look like in 2030 that will keep the group growing in net profit while maintaining your social commitments as an organization?
I've talked to an extent already about the shaping and changing of the workforce from where it was, say, 30 years ago. We're hiring a lot of engineers, Australian educated, as many as possible into our business because there is so much engineering that goes into the technology that supports the bank, the interaction with customers, and the security around cyber, data privacy, and data use. The workforce of the future is going to continue to develop evolving skills in tech in particular. Engineering and the types of engineering around systems programming are very different to where it was 30 years ago, but it evolves reasonably slowly in the scheme of things. Our workforce has remained reasonably steady over a long period of time, but there is a shift and we see that particularly in graduates coming out.
We're hiring a lot more engineering graduates than perhaps people who might have worked in the branches, yet branches remain really important. As to 30 years out, I don't have an answer for 30 years. What I do know as a Board is that we're looking, trying to look a decade out and really drive into the workforce planning of what our workforce might look over 10 years. At this stage we've got a lot of questions. We don't necessarily have all of the answers.
What we do know, and I've mentioned a number of times today, is we have to work with local universities to actually develop the skills that we're seeing utilized overseas so that we have a scale or critical mass of people with those skills in Australia that CBA can hire, but for which there's dramatic competition in Australia from the other banks and from other companies to hire those same skills. We've got to grow the collective Australian pool, not just the CBA pool.
This is a question from shareholders Michael Hopkins and Australian Management Systems Proprietary Ltd. Can you assure shareholders that you will cease to fund any projects which maintain or expand the coal industry? Such funding is completely at odds with net zero by 2050 and the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius. Achieving this means leaving coal in the ground.
Thank you very much for that question. We've been very clear in our environmental and social framework and in the climate report that is part of our annual report, what our commitments are in relation to the environment. We have a very clear glide path on what we will or won't do with thermal coal. We've effectively said we will be out of thermal coal lending by 2030. We also acknowledge AEMO, which I mentioned earlier, their requirement. They are the Australian Energy Market Operator. They have an integrated system plan, and what that basically says is that to get to net zero by 2050, it highlights what investment is required in renewable energy, in transmission, but also firming capacity in the form of natural gas-fired plants.
As an example, the 2024 plan, which had a higher number than they do the plan every two years, than the 2022 or the 2020 plan, said that by 2050 we'll need 15,000 MW of gas-fired generation to support the renewables infrastructure. We don't have that at the moment. In our plan, we basically said that we will support net zero. Our aim is net zero by 2050. That requires a decarbonized electricity grid. That transition will not happen without the support of natural gas plants. We're looking to businesses and Australia to actually work out how to manage that plan, but consistently, very specifically to thermal coal. We have a very clear policy on thermal coal, and we're adhering to that, and we're meeting our target requirements there.
Chair, this is a further question, actually from shareholder James Hyland. As more Australian homes become effectively uninsurable due to heightened flood and bushfire risk and the continual building of houses on floodplains, how is the bank assessing and managing the long-term impact of climate-related risks on mortgage security values and future earnings? What adjustments are being made to lending standards, risk pricing, and geographic portfolio limits in response? Is the bank working with government to stop housing being built in high-risk areas?
There's a lot in that question. Thank you. Firstly, I think I acknowledge that for those who do experience harm, whether it's through floods or fires, our immediate action is to respond and support those communities. I think we have a track record of doing that. Being there in the moment when something occurs is fundamentally important. It's a skill set and an investment in mobile bank branches, but also supporting volunteers that we're absolutely focused on. If I now step right back out, as a bank, I talked about the strength of the balance sheet. We need to make sure that we have a balance sheet that can absorb shocks. Sometimes those shocks are macroeconomic shocks, sometimes there are a COVID pandemic and other times they are shocks because of the physical impacts of climate change.
We see those on the news, you know, more often than we need to. We've got to make sure that the balance sheet can withstand those shocks. As I mentioned earlier, when they do occur, we need to be able to support customers in need. We have disclosed in our climate component of the annual report various scenarios that have cyclones and floods and fires in larger parts of Australia than one might perceive. We can demonstrate in our modeling the scenario is very clearly set out in the annual report that our balance sheet can withstand those shocks. As I mentioned, there'll be individual harm, pain and concern as a result of that. As a bank, we have to help in the moment. We've also got to have a balance sheet that can support that and the scenarios are clearly disclosed.
The federal government has also recently released some similar scenarios, and we feel that we have the balance sheet to support that in terms then of where buildings are built and supporting individual customers. We do work with insurance customers, insurance companies and the Insurance Council to try and support policies that make access to insurance more available for existing homes. We do need to be very thoughtful and map out where heightened risks are, where new homes might be built. I think there are areas where planning should restrict the development of new houses because they may not be insurable. Looking after those who have a home is really important. Having very thoughtful discussions with both the insurance industry and governments on where new homes are built is also very important.
Chair, this is a question from shareholders Stephen Shaw and Jasmine Shaw. Does CBA intend to go fully digital with AI and disallow cash through telemachines in the near future?
I think cash is still absolutely critical, and we've demonstrated by our actions over the last few months working with the industry to make sure the cash supply and cash availability continues. Conceivably, I think cash will be around for a very long time. We actually invest a lot of money in making sure cash is available, even though it has much more diminished use. For instance, from 2007, cash payments were about 70% of all payments. In 2022, they were only 13% of all payments. Cash will be around, I think, for a long time to come, and CBA is supportive and working to make sure that that remains the case.
Chair, this is a question from shareholder Dr. Janice Caulfield. What is the nature and extent of the bank's investment in the Israeli government or its institutions?
I'm going to pass to Matt on that one.
No investment, obviously, in foreign government to the extent that we would have any individual exposure or facilities with any company, and this includes in various geographical regions, they would be subject to the standard ENS framework. A range of different considerations, including things like sanctions.
I think sanctions is a really important part. There are government rules around who one can lend to and where there are specific sanctions. We do our best to adhere to those, following the appropriate regulatory frameworks. We might come back into the room, Helen, and then I'll come back online in a moment. We have another question from microphone number one.
Chair, I would like to introduce Paul Fanning. Welcome back, Paul. It's a great first name you have.
Yes, lok, I'm referencing pages 32 and 33, the annual report, business unit performance recently. I'm sure the Board and the executive be aware that Morningstar put out a.
Report about.
The tier one banks and the percent of the market that they have had in loans assumably relates to consumer mortgages. Macquarie Bank is nibbling away very considerably at the tier one banks. I think Macquarie has got about 5% of the market now. Where does CBA see itself in, given that 53% group contribution from retail banking and a large portion of that would be home loan mortgages? Is the model that Macquarie has very much digital and the back end is running cheaper than what the CBA. Conversely, there are obviously physical bricks and mortar branches. So where does the CBA see itself in that context? Academic question, but probably worthwhile considering.
It's a very good question. Thank you. I think it goes to a number of themes. One is CBA is the bank for all Australians and we've made a decision that we will continue to support all Australians, whether they're digital natives, whether they're in the city or whether they're in the country. That comes with a cost and a responsibility. I'll just reiterate that we talk about long-term support for Australia having the right balance sheet and sometimes one sub-optimizes on finance because of that. As you say, it's more expensive to have a branch in the country given the level of service than it might be if you don't have a branch. That's a responsibility that we at CBA take very seriously.
Competition is coming very intensively to compete, whether it's a new domestic entity that's doing very well, which you've just referenced, or it's a global tech company. We have to have the best engagement with customers. We've set our target of MPS 30 and we are working to make sure that our customers see CBA as the best bank to engage with, the best products and services, the best app, but also the best global reach. As competition evolves and develops, we need to look at that, understand that, and respond. We focus on having the best service so that customers will have a transaction account with us, turn around mortgages as quickly as we can, have competitive rates, but respond very quickly when we have questions.
I think it's an area that the Board focuses on a lot and it's kind of worth hearing to Matt more specifically on the specifics of some of that competition. Again, just to acknowledge, I think your question cuts to the heart of the issue in Australia. Banking is very competitive. The nature of the banking competition is changing and it's incumbent on us as a Board to look as far forward as possible to see what those trends are and to actually make sure that Matt and the team are responding as competitively as possible so that CBA continues to be the bank for all Australians, but to deliver the returns that shareholders are relying on.
Thank you and good morning Mr. Fanning, nice to see you again. Maybe just underscoring a couple of things that Paul said. It's a very important question because the competitive context is shifting quite considerably, and whilst you referenced there about 6% of market share, which is sort of loans outstanding, they're a much larger competitor in terms of new loans being written every month. One of the reasons is because they're very focused on a narrow set of customers, and that actually highlights a number of the tensions and the trade offs that we feel very acutely. We need to make sure that we're very competitive and we can deliver a very competitive offering against new competitors and what will undoubtedly emerge whilst trying to, as best we can, honor our legacy of being able to support branch based services, multi channel, serving every customer.
We offer a breadth and depth of services that no other financial institution provides, and we're proud to be able to provide that. We also have to, for our shareholders, make sure that we can maintain relevant competitive context and we're able to develop and deliver well into the future. It's a very important strategic question and something that we certainly seek to strike the right balance.
Just one supplementary one, page 30 again, 32, 33. This may be one even for our own two chipping them if he likes. Each of the four bank units, Retail, Business, Banking, Institutional, and New Zealand. Is the bank happy with NIM or net interest margin? Where do you see it moving in the competitive landscape, and is there any medium or long term that the bank wishes for each of the four business units to find itself in? That's my second question. Thank you.
You want to have a crack? Yeah.
Thank you, Mr. Fanning and Echo. Mads, great to see you back at the CBA AGM.
Yeah, we were very pleased over the.
Twelve months period to June to see the underlying net interest margin was stable.
Across the group and within each of.
The individual business units. Again, we're very pleased with the volume and rate trade off, which is an incredibly important part of the operational and financial performance of the groups across each of our businesses. We're really pleased to see those trade offs be managed very well. That allowed us to deliver that stability and that very important financial metric of net interest margin, the headline interest margin actually increased over the period, although there was some revenue neutral adjustments in the liquids balances that we held over that period. The underlying position was stable. That was a very good outcome relative to what we've seen across the industry. All of the businesses are again very focused on the year ahead and the years ahead to maintain strong performance relative to industry on that important measure.
Thank you, All. Thank you, Paul. Thank you, Matt.
Thank you, Mr. Fanning . Move to microphone number two.
Thank you. Chair, I'd like to introduce Michael Kelly.
Welcome, Mr. Kelly.
Thank you very much. I've been a lifetime customer and an original shareholder, but it's my first meeting.
Oh, welcome.
Thank you. I've got a question regarding the security holder information and the major shareholders. The first four listed on page 378. In the report hold 53% of the shareholding. Down below there, this might be just my misunderstanding of how. The report works. There's the substantial shareholding. Report between State Street, BlackRock, and Vanguard. Who I believe are all interrelated. Very various ways, and they hold 19%. Where do they fit within the top 20? Because they're not listed up there, and I don't understand that.
You actually ask a very good question. What happens is that shareholders sometimes have their shares held by a custodian. What we report in the top 20 shareholders is actually the custodial ownership of the shares, and then those custodians might hold shares on behalf of multiple investors. What we see is the custodian component, but we've separately broken out, and I'm not quite sure which of the substantial shareholders, which custodians they use. They might be across more custodians than just one. In many respects, the three primary shareholders down the bottom actually beneficially own the shares, but they're held through a custodian organization. For instance, HSBC Custody, JP Morgan Nominees, Citicorp Nominees, and BNP Paribas Nominees. The custody and nominees refers to the fact that they're holding shares on behalf of another entity.
Does the board see any threat in? The fact that 53% are held by those international banking and financial custodians?
We're a freely traded shareholding. We have pretty good insight to the actual companies that own our shares. We engage with them. I wouldn't use the term threat. I feel like what we want is people like you who are very long term holders of the shares and they're freely able to trade the shares. It would be generally through the Australian Stock Exchange. They go through those processes. I'm not sure that that in and of itself is necessarily a risk that we should be too concerned about. Thank you. Thank you very much for your question. We might go back online. Thanks, Helen.
Thank you, Chair. This is the third question from shareholder James Hyland on this item of business. How would you like me to proceed?
I'd be happy to take that question, and then we might move on to others. Thank you.
With CBA opening branches in Nauru to support the Australian government in countering Chinese influence in the Pacific, what is the bank strategy for the Pacific? Is the bank looking to expand into other South Pacific nations?
I think it's factually accurate that we've opened a branch in Nauru at the request of the Australian government. It's part of making sure that we work in the national interest without forecasting what may or may not happen in the future. We're fully focused on making sure that that branch operates appropriately, safely, and securely. That's where the team is endeavoring to put time and effort. It takes a lot of work to actually manage a branch offshore, and I commend the team on the work that they put into that. We might move on. Thanks, Helen.
There are no further questions on this item of business at this time.
Thank you. We might finish up on this item of business online and just come back to the room for the final questions. Microphone number three.
Chair, I would like to introduce you, Justin.
Welcome, Justin.
Thank you, Chair. Welcome to the Brisbane Ground, the best cricket ground in Australia.
The last time I was here was 1975, and I was very young, and I saw Greg Chappell score a century. I'm hoping today goes just as well.
That's awesome. I'm sure we've all been in branches when a staff member has encouraged someone to do their banking online. Some may say manipulated, some may say forced. That's the direction everything was going in. The natural consequence of that, of course, would be you can close branches because people don't go into branches anymore. Down where I am on the Gold Coast, Coolangatta's closed, Burley's closed, Nerang's closed. I think there's another one where I am in Surfers Paradise. The branch is still there. Bank of Queensland's closed. Westpac closed. ANZ still exists, but they don't carry cash. Bank with no cash. There's probably a country and western song in that. I see where all this is going and some of the concerns I've heard in the room today. There's more concern about it all than I thought and online questions as well.
I'm worried the bank might be in a battle that you can't win. I understand you're in the fight and you've spent $900 million and you're hiring engineers and all that's great, but it seems like a fight and a war of banking's own making. Go online, do your banking online. Great. We've won that one. Close the branches. We can do that. We've won that one. Now we can all get scared. Scammed, right? People are getting scammed and whatever the deal is. $900 million invested in fighting it. That's great. My question after my whole spiel there is, can the bank just afford to pay out people when they get scammed? Is the bank, given the direction they've gone in with digital banking, everything, just now on the hook for losses? If anyone gets scammed, just pay it back, give them the money.
Is it on the bank now to protect itself from losses? If so, is there a pool of money somewhere to just compensate people for losses? No questions, just compensate. And because I've heard of a couple of errors that have occurred lately that I didn't really know about. You've apologized for whatever those errors are. If errors are going to continue and this fight against scamming is not going to come off, or if AI or the sophisticated scammers get even better, again, feels like a fight you can't win. If so, is there a compensation pool to fix it?
Thank you very much, Justin. First thing I'd say is if you do have specific questions about banking in branches in your area, we do have Group Customer Relations people here, so feel free to have a direct conversation with them after the meeting. You're very welcome to do so. In fact, I'm sure someone will come and see if you've got anything specific there. I think I'm going to address your question with a few angles. Firstly, as I've mentioned, we're committed to having the most number of branches in Australia. People are changing the way they bank. Most people want to bank online, many don't. We have the branch network. We'll continue to invest in that. In terms of online, you highlight scams, frauds, and cyber risk are three really critical risks that the globe, every company in the world, has to address as we evolve digitally.
CBA has been at the forefront of working on the scams prevention framework and setting up industry bodies to report telephone numbers that saw scams. The platforms online, where there are investment frauds and all sorts of scams that might come up into people's feeds. Education and a national framework, a regulatory framework sponsored by government, supported by industry, are absolutely critical. And pools of telcos, banks, and other industry participants have to work together to basically make Australia a harder target for scammers. That's activity number one: we have to work collectively, and I commend the CBA team and some of them are on the video at the beginning who are absolutely at the forefront of defending and supporting Australia defend against scams. We have to make sure that CBA is as rock solid as is possibly the case.
As you mentioned, we're investing hundreds and hundreds of millions of dollars on doing that. That's a ticket to the game of being a digital bank in Australia today. We have to make sure that the education programs are in place, and I think we all have experiences about telling our parents or our kids not to respond to emails where you don't know who the person's from and make sure you click on the, send a link to see whether that's the real email or a facade. If in doubt, ditch it. If you're a customer of CommBank and you're using the app, hopefully you're engaging and seeing lots of alerts as to where you're depositing the money. Is it the right account? Is it an account that's come out of left field? Is it an account that we've seen issues?
At the end of the day, though, there are losses which are very regrettable and make a big impact on customers. Where we're at fault in that process, we do engage and address that as we should. There are times, though, where people, despite prompting multiple, multiple times, will still make a payment. In a situation like that, there is some ownership of the customer in that payment. We've also put friction in. You know, crypto is a really interesting investment for many people who've done very well, others not so well. Slowing down some of those payments, we've seen a big reduction in investment fraud skills costs to our customers. It requires an ecosystem, it requires everyone to be involved in it, it requires customer education, and we've got to do our part.
I believe our team is as good as anyone in the country and as good as many in the world at actually making sure we've got the right framework to address what is awful: scams, frauds, and cybercrime. Thank you very much for your question. We have one final question online, and then I'm going to move to the next all of business, and there will certainly be more time to ask additional questions through those items. Helen, thank you, Chair.
This is from shareholder T Yeo. CBA is very highly rated by the market. What do you think are the main differentiating points, and more importantly, how sustainable are these going forward?
Thank you very much for the question. I think everything we do today as a Board, as a management team, and as our employees is to be the very best bank that we can, to provide the best services in the most timely way and be relevant to our customers, both in the current market competitive context. If we do that, if we do it safely, soundly, securely, responsibly, and build trust with all of our customers, then the market will determine what that is worth and how they respond to that. We have to focus on our own business, on the Australian economy. Just as an aside, one of the benefits to CBA is if the Australian economy grows, CBA grows. The correlation is that we're intertwined with the Australian economy.
One of the things that we've been doing to also support Australia's growth and CBA 's growth is to really participate in the productivity conversation that's been underway. I'll just note that Matt Comyn was the only sitting CEO of a public listed corporation who was actually at that productivity roundtable in Canberra recently. The first pillar of our strategy is to try and make Australia a better place economically and socially because that's good for Australia, but it's equally good for the CBA . To be frank, when self-interest aligns with the national interest, it's really good and easy to try and do the right thing. Coming back to the question, be the best bank we can, have the best people to support us do that, but also to engage to try and make Australia the best place it can possibly be.
Just as an aside, with Queensland having all of the footy trophies, it's probably not much better than being Queensland and Australian at the moment. I'm going to close this order of business at the moment and move on to the next item on the agenda. Item two relates to my re-election, the re-election of Lyn Cobley, and the elections of Alistair Currie and Jane McAlhoon AM. The resolutions will be dealt with separately as Item 2A relates to my re-election. I'll ask Peter Harmer to chair the meeting for this item.
Thank you, Paul. Good afternoon. Good morning, shareholders. The Board considers that all directors standing for election or re-election are independent. Each director standing for election or re-election will briefly address the meeting regarding their candidacy. Item 2A is for the re-election of Paul O'Malley, who retires in accordance with the company's constitution and, being eligible, offers himself for re-election. The Board, with Paul abstaining, recommends the re-election of Paul O'Malley as a Director. I now invite Paul to address the meeting.
Thank you, Peter. Thank you for the opportunity to speak as a candidate for re-election to our Board. My executive and director experience is detailed in the Notice of Meeting. I joined the CBA Board in January 2019 and have served as your Chair since August 2022. I chair the Nominations Committee and sit on the Audit, People and Remuneration, and Risk and Compliance Committees. If re-elected, I will continue to focus on the Board's core responsibilities: disciplined strategy, oversight of balance sheet strength and operational resilience, risk culture and oversight, and succession and talent, all directed to sustainable long-term value for shareholders. I will keep engaging with stakeholders, supporting our people to deliver for customers, and constructively challenging management on performance and risk.
I confirm that I remain independent, free from any relationships that could compromise my judgment, and that I have the time and capacity required for the role. With your support, I look forward to continuing to contribute to the success of CBA on behalf of shareholders, customers, our people, and the communities we serve. Thank you.
Thank you, Paul. I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on this item. I also invite shareholders and proxy holders to submit questions online. Are there any questions? We have no questions in the room at the moment. Do we have any questions online?
No questions online at the moment, Chair.
If there are no further 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 2A, Paul O'Malley's re-election. I will now hand the meeting back to the Chair to move to item 2B.
Thank you very much shareholders for that support, and thank you, Peter. I'll now move to item two. I'm going to come back to Brisbane more often. I now move to item 2B, which is for the re-election of Lyn Cobley, who retires in accordance with the company's constitution and, being eligible, offers herself for re-election. The Board, with Lyn abstaining, recommends the re-election of Lyn Cobley as a Director. I now invite Lyn to address the meeting.
Thank you, Chair, and good morning, shareholders. I speak to you today as a candidate seeking re-election to the CBA Board. It has been an absolute privilege for me to contribute over the past three years to an organization that plays such an important role in our communities. I'm an experienced banking and financial services leader with more than 30 years in senior roles across Australian and global banks, including as Group Treasurer of CBA throughout the global financial crisis. I currently serve as a Director of Miso Blast Ltd. and as a member of the Macquarie University Council, where I chair the Finance and Facilities Committee. On the CBA Board, I serve on the Risk and Compliance, People and Remuneration, and Nominations Committees.
I draw on my deep banking, treasury, and markets experience to oversee financial risks and encourage the Board and management to be ambitious in setting goals and disciplined in delivery. My background spans strategy, people and culture, technology, and operating in highly regulated environments. This equips me to address the challenges and opportunities ahead for CBA and for the Australian economy, including sustainability and climate-related risk and opportunity. I confirm my independence and that I have the time and capacity required for the role. Thank you for the opportunity to serve as a Director on this Board, and I ask for your support in my re-election. Thank you.
Thank you, Lyn. I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on this item. I also invite shareholders and proxy holders to submit questions online. Are there any questions? Helen, anything online?
No questions, Chair.
If there are no further 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 2B, Lyn Cobley's re-election. I'll now move to item 2C, which is for the election of Alistair Currie, who was appointed as a Director of the company since the 2024 AGM and, being eligible, offers himself for election. The Board, with Alistair abstaining, recommends the election of Alistair Currie as Director. I now invite Alistair to address the meeting.
Thank you, chair, and good morning, shareholders. It is a privilege to put myself forward for election as a Non-Executive Director of CBA. I joined the Board in late March this year, and I've seen firsthand the Board's strong commitment to CBA's purpose of building a brighter future for all. I bring more than 30 years of experience in international banking, having held senior roles in the UK and the U.S. as well as various other countries in Asia and the Middle East. My most recent role was Group Chief Operating Officer of Barclays plc. My background spans institutional, commercial, and consumer banking, transaction banking, trade, finance, technology, and operations. Senior roles across these business areas come combined with risk management, governance, and leadership. Experience equipped me to contribute effectively to the Board's oversight of strategy, risk, and performance.
I first came to live in Australia in 2008, and I became a proud Australian citizen in 2017. Having spent most of my recent working years based in the UK, it is outstanding to be spending much more time in Australia again and a great honor to be on the Board of one of Australia's finest companies. I confirm my independence and that I have the time and capacity required for the role. With your support, I look forward to contributing to CBA's continued success for the benefit of all shareholders. Thank you.
Thank you, Alistair. I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on this item. I also invite shareholders and proxy holders to submit questions online. Are there any questions, Helen?
No questions at this stage, chair.
If there are no further 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 2C, Alister Currie's election, I'll now move to item 2D. Item 2D is for the election of Jane McAloon AM, who was appointed as a Director of the company since the 2024 AGM and, being eligible, offers herself for election. The Board, other than Jane, recommends the election of Jane McAloon AM as a Director. I now invite Jane to address the meeting.
Thank you Chair and good morning shareholders. It is an honor to be considered by you for election to the CBA Board. As a Non-Executive Director I joined the Board on the 1st of October and in this short period I've observed a disciplined Board with a clear focus on governance, risk, and long-term value. I currently serve as Chair of BlueScope Steel, as a Non-Executive Director of Alliance Australia, and an independent member of the Allans Advisory Board. I'm also currently Chair of EnergyAustralia and a member of the Monash University Council. As indicated by the Chair earlier and when my appointment was announced, I have reviewed my portfolio of commitments to ensure appropriate capacity for the CBA role. I will step down from my roles with EnergyAustralia and Monash University at the end of this year.
With more than 30 years' experience in governance and executive leadership, including roles at BHP, AGL, and within the New South Wales Government, I bring expertise in strategy, governance, stakeholder engagement, and people and culture. I confirm my independence and that I have the time and capacity to meet all Board obligations. I look forward to applying my experience to support the Board in delivering long-term value for all shareholders. Thank you.
Thank you, Jane. I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on item 2D. I also invite shareholders and proxy holders to submit questions online. Are there any questions, Helen?
No questions on this item.
If there are no further 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 2D, election of Anne Templeman-Jones, I'm now going to move to item 23. Just before I do that, Matt was going to clarify a point that I think I.
Might have made earlier, just very briefly if I could. Thank you, Paul. I just want to refer back to a question, I think it was by Mr. Hyland, and it was in an area around climate scenarios, which is obviously a complex area. Our climate scenarios are set out in our annual report. The comment that is both there and that Paul referenced in terms of our balance sheet resilience to those scenarios is specific to those scenarios. We also referred to the National Climate Risk Assessment, which was actually published nationally after our annual report was published. I just want to make that clarification, and we will continue to evolve our analysis and assessment in future years.
Yeah, I think that's helpful. I think we're going to look at those in more detail when we next do our climate scenario. I should have separated those two more effectively. Thanks for the clarification, Matt. The next item on the agenda is item three, the resolution to adopt the remuneration report of the Company for the financial year ended 30 June 2025 in accordance with the Corporations Act. The vote on this resolution is advisory only. The remuneration report is included in the bank's 2025 annual report, which is available on our website and some hard copies are available here. Today, the bank and the Executive Leadership Team has delivered consistent, strong performance in the 2025 financial year.
The remuneration outcomes approved by the Board reflect the disciplined execution of our strategic priorities, improvement in employee engagement outcomes, and strong progress to safeguard our customers and communities while delivering some sustainable returns to our shareholders. This year, the People and Remuneration Committee completed a comprehensive review of the bank's executive remuneration framework in the context of emerging local and global market trends. The review concluded that the current framework remains fit for purpose, is aligned to shareholder value creation, and is compliant with regulatory requirements. Our executive remuneration framework is made up of four: fixed remuneration, 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, rewarding sustainable financial and non-financial performance and shareholder value creation over the long term.
External remuneration benchmarking undertaken during the 2024 financial year identified fixed remuneration for the Executive Leadership Team as not competitively positioned relative to CBA's size, scale, and performance. As a result, the Board took action to address remuneration competitiveness in the 2025 financial year. Fixed remuneration increases were provided to the CEO and six other executives, key management personnel. The increases are designed to improve competitiveness against peer banks and offshore comparator groups and to support retaining the executive talent required to deliver our strategy, continued high performance, and value for our shareholders. When determining executive performance target, the Board considers past performance, internal forecasts, and external expectations to set targets that are stretching and aligned to strategic areas of focus. Scorecards are designed to have an appropriate weighting to individual and collective measures across a balanced scorecard comprising shareholder, customer, people, leadership, and strategy execution.
Performance in these categories are indicators of sustainable shareholder value over the long term. In addition, the Board completes an overarching assessment of revenue risk, reputation, and values. 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 these performance areas. The Board considered a number of significant risk matters and executive accountability in the 2025 financial year, which for the Executive Leadership Team resulted in two downward adjustments and one upward adjustment to remuneration outcomes in response to risk and reputation matters. The People and Remuneration Committee will continue to focus on people and remuneration strategies and practices to attract and retain the best talent, motivate our people to deliver long term sustainable performance, and reward them for doing the right thing.
I now invite shareholders and proxy holders in the room to move to a microphone to ask any questions or make comments on this item. I also invite shareholders and proxy holders to submit questions online. Are there any questions? Microphone number one Chair I would like.
To introduce Paul Fanning..
Welcome back, Mr. Fanning.
As promised, I do have three questions if I may on REM policy.
We're going to do two in the first instance, if we may, and give others a go, but then feel free to come back.
Page 185, can you give us some color or context? What is CPS511, which requires material weighting to non-financial measures for variable rem? On page 196, looking at Matt's performance in the last 12 months, it seems like Matthew excelled in nearly every area, but there seems to be non-financial customer where it was 75% outcome. All the other metrics were well exceeded, over 100%. Can we get some color on each of those two?
Absolutely.
I would like there is one other.
I'll bear with you. Far away.
Okay, thank you. On page 218, loans to KMP exceeding $100,000. Interesting. I'd like to know a little bit more, and I think shareholders probably like to know a little more about how and why this occurs and what are the conditions.
Thank you. I just commend your use of the annual report. It's very good to get such specific questions. CPS 511 is a requirement of the Australian Prudential Regulatory Authority in relation to remuneration and it came out of the Royal Commission, which puts guidelines on how banks and financial institutions can remunerate their staff. It is very prescriptive around the allocation between each component of remuneration, whether it's short term variable reward or long term variable reward, that a key component of that has to be on non-financial risk, not just financial attributes. We have to be in compliance with CPS 511 and our remuneration framework is in compliance with CPS 511. That is specifically what that is. It is a regulation that tells us the frameworks that we're allowed to operate within in remunerating our key staff.
The question on 196, basically what that is is both the financial targets that the Board gives to management, Matt and the management team each year, and the non-financial targets. You're right, Matt does do a very good job and I commented on that in my speech. The Board is absolutely satisfied with Matt's performance and his commitment to the bank. In relation to the customer metric, the Board gives metrics to management at the start of the year which they aim to meet or exceed to actually attract that component of their remuneration, the customer metric which the Board set for the management team, and the management team did go after that, but they did not meet the full metric that we set and therefore that component of remuneration was not paid out in full. That's how the incentives work. We have a target of MPS 30.
We want to be and have a great engagement with our customers. There is a whole lot of detail behind how the management are working to deliver that. We continue to focus on that. In the 2025 year, the team and Matt did not meet all of those attributes, notwithstanding a whole lot of hard work and focus. In relation to page 218 loan to KMP, what's really nice is that some of our key executives are also customers of the bank and they enter into mortgages and other financial activities and they borrow money from the bank on a purely commercial basis. If there are loans over that amount that you mentioned, we have to disclose them to demonstrate that there is no conflict and there's absolute transparency on the financial relationships between our key staff and the bank. Thank you. Thank you very much.
Questions on rim.
Thank you. Thank you very much. We might move online.
Helen, there are no questions on this item, chair, at the moment.
Given there are no more questions online and no further questions in the room, I now put the resolution on the remuneration report to the meeting. I note that the Board recommends that shareholders vote in favor of item 3. On the screen are 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 three: adoption of the 2025 remuneration report. I will now move to item four. Item four is a resolution for the grant of securities to the CEO Matt Comyn. The Company is proposing to grant the following securities to Matt Comyn under the Company's employee equity plan: 10,616 restricted share units as his 2026 financial year Long Term Alignment Remuneration or LTAR award, and 10,616 performance rights as his 2026 financial year Long Term Variable Remuneration or LTVR award.
Together, these elements of the CEO's remuneration support a focus on sustainable shareholder value creation, with the LTAR performance assessment considering consistent performance in leadership and strategic execution, reflecting long term risk and performance outcomes, and providing sustainable long term shareholder alignment. These grants will be in the form of restricted share units for the LTAR and performance rights for the LTVR. The CEO's LTAR awards are subject to a pre-grant assessment by the Board, and the Board approved the full grant of restricted share units as a result. If shareholders approve this item today, Matt will be granted 10,616 restricted share units. These units will be granted in two tranches, with 50% restricted for four years to 30 June 2029, and 50% restricted for five years to 30 June 2030.
Matt will only receive value from this grant after the restriction period and subject to the outcome of a pre-vest assessment. The restriction periods provide long term alignment of the CEO's remuneration outcomes to your interests as our shareholders. The LTVR performance rights will be subject to performance measures over the period 1 July 2025 to 30 June 2029. These measures are described in detail in the Notice of Meeting. In summary, 50% of the award is subject to a relative total shareholder return measure compared to a peer group of the 20 largest companies by market capitalization on the ASX at 1 July 2025, excluding CBA and resources 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 four-year performance period, the performance measures will be tested and the number of performance rights that vest will be determined. Vested performance rights will be automatically exercised to shares, subject to dealing restrictions for a further holding period of 2 years to 30 June 2031. Vesting of the restricted share units and performance rights follows the end of the restriction and performance periods respectively, and any shares subject to the holding period will be subject to malice consideration. This is consideration of 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 they vest, the awards are also subject to clawback. This ensures 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, MAPP will receive dividend equivalent payments in respect of the restricted share units, but only following vesting. MAPP will not receive any value for franking credits. Any shares allocated to MAPP 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 to move to a microphone to ask any questions or make comments on this item. I also invite shareholders and proxy holders to submit questions online. Are there any questions, Helen?
No questions on this item, chair.
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 four. Details that 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 four, the grant of securities to the CEO Matt Comyn. That concludes the final item of business on today's agenda. Please complete your yellow voting card 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.
As mentioned previously, 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 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 on your experience today by contacting us via the Investor Center or on our website. I now declare the meeting closed, subject to finalization of the poll. Thank you very much, everyone.