EX-99.1

Highlights

Financial Performance and Business Review

Performance Highlights

Full Year

Half Year

Net Profit after

30/06/06

30/06/05

30/06/06

31/12/05

Income Tax

Statutory basis

3,928

3,400

1,929

1,999

Cash basis

4,053

3,492

1,992

2,061

Cash basis ex HK sale

3,908

3,492

1,992

1,916

The Bank’s net profit after tax (“statutory basis”) for the year ended 30 June 2006 was $3,928 million, an increase of 16% on the prior year. The final dividend of $1.30 is another record and the total dividend for the year is $2.24 per share.

The net profit after tax (“cash basis”) excluding the profit from the sale of the Hong Kong Insurance business increased 12% to $3,908 million.

A more consistent comparison of profit growth is cash earnings per share (excluding the profit from the sale of the Hong Kong Insurance business) which increased 15% on the prior year to 304.6 cents.

The cash EPS compound annual growth rate (excluding the profit from the sale of the Hong Kong Insurance business) for the three years covering the Which new Bank strategy (2004-2006) was 14%.

The performance over the year was supported by:

•		Strong growth in banking income, following average interest earning asset growth of 12% to $275 billion and net interest margin contraction of seven basis points (after adjusting for the impact of AIFRS);

•		Growth in Funds under Administration of 23% to $152 billion supported by both strong inflows and continued strength in investment markets;

•		Solid growth in insurance premiums, operating margins and favourable claims experience;

•		Continued strength in credit quality across the portfolio; and

•		Underlying expense growth of 5% with continued productivity improvements.

The Bank’s results include the full impact of the adoption of Australian equivalent to International Financial Reporting Standards (“AIFRS”) from 1 July 2005. Comparative figures have also been adjusted to an AIFRS basis, other than for the impact of those standards related to financial instruments and insurance. Most significantly, the current year includes the expense of $123 million associated with distributions on hybrid financial instruments. Changes to the Bank’s accounting policies and explanations of the key changes were covered in Note 1 to the Financial Statements of the 31 December 2005 Profit Announcement on pages 33-60.

The result for the six months to 30 June 2006 was solid with net profit after tax (“cash basis”), excluding the profit from the sale of the Hong Kong Insurance business from the first half result, increasing by 4% to $1,992 million.

Dividends

The total dividend for the year is another record at $2.24 per share.

The final dividend declared is $1.30 per share which takes the full year dividend to $2.24, an increase of 27 cents or 14% on the prior year. The dividend has been determined based on net profit after tax (“cash basis”) excluding the profit from the sale of the Hong Kong Insurance business. On this basis the dividend payout ratio for the year is 73.7%.

The dividend payment is fully franked and will be paid on 5 October 2006 to owners of ordinary shares at the close of business on 18 August 2006 (“record date”). Shares will be quoted ex–dividend on 14 August 2006.

The Bank issued $219 million of shares to satisfy shareholder participation in the Dividend Reinvestment Plan (“DRP”) in respect of the interim dividend for 2005/06. The Bank expects to issue around $303 million of shares in respect of the DRP for the final dividend for 2005/06.

Dividends per Share (cents)

Outlook

The Australian economy performed well in 2006 fiscal year, despite some loss of momentum. Business credit growth has been solid, supported by infrastructure and capacity expansion while consumer credit growth has moderated.

The overall environment for the financial services industry is expected to remain highly competitive and as a result margin pressure will continue. Domestic credit quality, high employment levels and business confidence are strong and provide a positive outlook. Economic growth is likely to remain solid although oil prices, increasing domestic and international interest rates, geopolitical instability particularly in the Middle East and the health of the Chinese economy are all factors which could potentially impact the Australian economy.

Commenting on the outlook for the Bank, the CEO Mr Ralph Norris said “I am very happy with our progress in the 2006 fiscal year. The business has performed well and this result has set a benchmark for the industry. We are confident going into the new financial year that we will be a tougher competitor and continue to deliver both revenue growth and productivity improvements. We have earnings momentum and our credit quality is good. We have a clear vision of where we want to go and what we must do to deliver.”

“Taking these factors into account, and in the absence of any exogenous shocks, I expect to see good profit growth for the 2007 fiscal year with the Bank delivering earnings per share growth which meets or exceed the average of our peers.”

2 Commonwealth Bank of Australia

Highlights continued


	Full Year Ended									Half Year Ended
	30/06/06			30/06/05			Jun 06 vs			30/06/06			31/12/05			Jun 06 vs
Group Performance Summary	$M			$M			Jun 05 %			$M			$M			Dec 05 %

Net interest income ⁽¹⁾		6,514			6,026			8			3,259			3,255			—
Other banking income ⁽¹⁾		3,036			2,845			7			1,591			1,445			10

Total Banking Income		9,550			8,871			8			4,850			4,700			3
Funds management income		1,543			1,247			24			828			715			16
Insurance income		742			747			(1	)		356			386			(8	)

Total Operating Income		11,835			10,865			9			6,034			5,801			4
Shareholder investment returns		101			237			(57	)		37			64			(42	)
Profit on sale of the Hong Kong Insurance business		145			—			—			—			145			—

Total Income		12,081			11,102			9			6,071			6,010			1
Operating expenses		5,994			5,719			(5	)		3,027			2,967			(2	)
Which new Bank		—			150			—			—			—			—

Total Operating Expenses		5,994			5,869			(2	)		3,027			2,967			(2	)
Bad debts expense		398			322			(24	)		210			188			(12	)

Net profit before income tax		5,689			4,911			16			2,834			2,855			(1	)
Corporate tax expense ⁽²⁾		1,605			1,409			(14	)		829			776			(7	)
Minority interests ⁽³⁾		31			10			large			13			18			28

NPAT (“cash basis”)		4,053			3,492			16			1,992			2,061			(3	)
Defined benefit superannuation plan expense		(25	)		(53	)		53			(6	)		(19	)		68
Treasury shares		(100	)		(39	)		large			(57	)		(43	)		(33	)

NPAT (“statutory basis”)		3,928			3,400			16			1,929			1,999			(4	)


Represented by:
Banking		3,227			2,913			11			1,638			1,589			3
Funds management		400			351			14			217			183			19
Insurance		215			156			38			112			103			9

NPAT (“underlying basis”)		3,842			3,420			12			1,967			1,875			5
Shareholder investment returns		66			177			(63	)		25			41			(39	)
Which new Bank		—			(105	)		—			—			—			—

Cash NPAT ex Hong Kong Sale		3,908			3,492			12			1,992			1,916			4
Profit on sale of Hong Kong Insurance Business		145			—			—			—			145			—

NPAT (“cash basis”)		4,053			3,492			16			1,992			2,061			(3	)


(1)		Due to a change in accounting policy regarding classification of interest expense on certain non traded derivatives, a reclassification of $29 million between Net Interest Income and Other Banking Income has occurred in the half year ended 31 December 2005. There was no impact on total banking income or on profit.

(2)		For purposes of presentation, Policyholder tax benefit and Policyholder tax expense are shown on a net basis.

(3)		Minority interests includes preference dividends paid to holders of preference shares in ASB Capital.


	Full Year Ended						Half Year Ended
	30/06/06		30/06/05		Jun 06 vs		30/06/06		31/12/05		Jun 06 vs
Shareholder Summary					Jun 05 %						Dec 05 %

Dividend per share – fully franked (cents)		224		197		14		130		94		38
Dividend cover – cash (times)		1.4		1.3		n/a		1.2		1.7		n/a
Earnings per share (cents) ⁽¹⁾
Statutory – basic		308.2		259.6		19		151.1		157.1		(4	)
Cash basis – basic		315.9		264.8		19		154.9		160.9		(4	)
Cash basis – basic excluding the sale of Hong Kong		304.6		264.8		15		154.9		149.5		4
Dividend payout ratio (%)
Statutory		73.3		77.0	(v370)bpts			86.5		60.6	large
Cash basis		71.0		74.9	(v390)bpts			83.7		58.8	large
Weighted avg no. of shares – statutory basic (M) ⁽¹⁾		1,275		1,260		1		1,277		1,273		—
Weighted avg no. of shares – cash basic (M) ⁽²⁾		1,283		1,269		1		1,285		1,281		—
Return on equity – cash (%)		21.3		18.8	250bpts			20.8		21.7	(v90)bpts


(1)		For definitions refer to appendix 24 page 67.

(2)		Fully diluted EPS and weighted average number of shares (fully diluted) are disclosed on page 63.

Profit Announcement 3

Highlights continued


	As at
	30/06/06		31/12/05		30/06/05		Jun 06 vs			Jun 06 vs
Balance Sheet Summary	$M		$M		$M		Dec 05 %			Jun 05 %

Lending assets ⁽¹⁾		266,096		254,947		235,862		4			13
Total assets		369,103		351,193		337,404		5			9
Total liabilities		347,760		331,343		314,761		5			10

Shareholders’ equity		21,343		19,850		22,643		8			(6	)


Assets held and FUA
On balance sheet:
Banking assets		340,254		321,477		304,620		6			12
Insurance funds under administration		20,792		21,217		22,959		(2	)		(9	)
Other insurance and internal funds management assets		8,057		8,499		9,825		(5	)		(18	)

		369,103		351,193		337,404		5			9

Off balance sheet:
Funds under administration		130,721		115,757		100,105		13			31

		499,824		466,950		437,509		7			14


(1)		Lending assets comprise Loans, Advances, and Other Receivables (gross of provisions for impairment and excluding securitisation) and bank acceptances of customers.


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Key Performance Indicators					Jun 05 %							Dec 05 %

Banking
Underlying NPAT ($M) ⁽¹⁾		3,227		2,913		11			1,638		1,589		3
Net interest margin (%) ^{(2) (3)}		2.34		2.43	(9)bpts				2.29		2.39	(10)bpts
Average interest earning assets ($M) ⁽⁴⁾		274,798		244,708		12			282,553		267,169		6
Average interest bearing liabilities ($M) ⁽⁴⁾		255,100		225,597		13			263,203		247,129		7
Expense to income (%)		47.7		50.6		6			47.4		48.1		1

Funds Management
Underlying NPAT ($M) ⁽¹⁾		400		351		14			217		183		19
Operating income to average funds under administration (%)		1.12		1.08	4bpts				1.14		1.10	4bpts
Funds under administration – spot ($M)		151,513		123,064		23			151,513		136,974		11
Expense to average FUA (%)		0.71		0.72		1			0.72		0.70		(3	)

Insurance
Underlying NPAT ($M) ⁽¹⁾		215		156		38			112		103		9
Inforce premiums ($M)		1,223		1,265		(3	)		1,223		1,216		1
Expense to average inforce premiums (%)		36.7		45.5		19			33.6		40.5		17

Capital Adequacy
Tier 1 (%)		7.56		7.46	10bpts				7.56		7.54	2bpts
Total (%)		9.66		9.75	(9)bpts				9.66		9.81	(15)bpts
Adjusted Common Equity (%)		4.50		4.91	(41)bpts				4.50		5.00	(50)bpts


(1)		Underlying NPAT excludes Which new Bank expenses and shareholder investment returns.

(2)		Net Interest Margin for the half year ended 31 December 2005 has been restated due to a change in accounting policy regarding classification of interest expense on certain non traded derivatives.

(3)		After adjusting for AIFRS the underlying variance is seven basis points (full year) and nine basis points (half year). Refer to pages 32 and 33 for the reconciliation of Net Interest Margin.

(4)		Average interest earning assets and average interest bearing liabilities have been adjusted to remove the impact of securitisation. Refer to Average Balance Sheet Page 30.

Credit Ratings

Long–term

Short–term

Affirmed

Fitch Ratings

F1+

Jun 06

Moody’s Investor Services

Aa3

P-1

Jun 06

Standards & Poor’s

AA-

A-1+

Jun 06

The Bank continues to maintain a strong capital position which is reflected in its credit ratings which remained unchanged for the year. Additional information regarding the Bank’s capital is disclosed on pages 47 to 49.

4 Commonwealth Bank of Australia

Banking Analysis

Financial Performance and Business Review

Performance Highlights

The full year underlying net profit after tax of $3,227 million for the Banking business increased 11% on the prior year.

The performance during the year was underpinned by:

•		Continued strong volume growth in home loans, up 10% since June 2005 to $155 billion;

•		Domestic deposit volume growth of 7% since June 2005 to $151 billion including 11% growth in savings accounts;

•		Significant improvement in business lending volumes, up 20% since June 2005 to $76 billion;

•		Net interest margin (after adjusting for AIFRS) decreased seven basis points over the year in a competitive market;

•		Good expense control, with operating expenses increasing 4% compared with the prior year; and

•		Credit quality of the overall portfolio remaining sound.

The underlying result for the second half of the year increased 3% to $1,638 million. The second half performance is impacted by seasonality, including three fewer days, but reflects similar themes to those for the full year.

More comprehensive disclosure of business highlights by key product category is contained on pages 10-15.

Net Interest Income

Net interest income increased by 8% compared with the prior year to $6,514 million. The growth was driven by a strong increase in average interest earning assets of 12% and a seven basis point reduction in net interest margin, excluding the impact of AIFRS. The introduction of AIFRS has not had a material impact on the growth rates for the year.

During the second half of the year, net interest income increased 2% compared to the prior half after adjusting for AIFRS and three fewer days. This was the result of 6% growth in average interest earning assets and net interest margin contraction of nine basis points (after adjusting for AIFRS).

Average Interest Earnings Assets

Average interest earning assets increased by $30 billion over the year to $275 billion, reflecting a $27 billion increase in average lending interest earning assets and a $3 billion increase in average non-lending interest earning assets.

Home lending growth continues to be the largest contributor to the increase in average interest earning assets. Average home loan balances increased by 12% since 30 June 2005 and 4% since December 2005. Following a slight decline in the first six months, domestic home loan market share has remained stable over the second half. ASB Bank continues to grow ahead of the industry.

Personal Lending average balances have increased by 11% since June 2005 and 4% since December 2005. This result has been driven by strong growth in margin loans. Credit card and personal loan growth has been impacted by the repayment of low margin student loans and strong price based competition particularly in credit cards.

Average balances for Business, Corporate and Institutional lending increased 17% since June 2005 and 12% since December 2005.

Net Interest Margin

After adjusting for the impact of AIFRS, net interest margin of 2.34% decreased seven basis points compared with the prior year. The key drivers of the margin reduction were:

Pricing: Includes asset and deposit price margin which has contributed a reduction of three basis points. Most of the price margin pressure is due to strong competition in the business and corporate segment. Both home loan and deposit margin were relatively stable over the year;

Funding mix: average lending asset growth of 13% continues to outpace average retail deposit growth of 8%, resulting in a greater reliance on wholesale funding which has moved from 43% in June 2005 to 45% in June 2006. The change in funding mix has resulted in a two basis point margin contraction; and

Asset mix: strength in business and corporate lending has out paced home loan growth. This has increased margin by one basis point. Average non lending interest earning assets have increased by $3 billion resulting in margin reduction of three basis points.

NIM movement since June 2005

During the second half of the year net interest margin excluding the volatility associated with AIFRS, decreased by nine basis points.

This was mainly due to:

•		Business Lending price pressure of four basis points due to competitive pricing and the full impact of large, lower margin institutional loans written in the first half of the year;

•		Home Loan margin pressure of three basis points due to timing of the cash rate increase and strong price competition; and

•		Funding mix, asset mix, deposit pricing and non lending interest earning assets contributed two basis points to the decline.

Over the last quarter of the year net interest margin was stable at approximately 2.29%.

Additional information, including the average balance sheet, is set out on pages 30 to 33. Page 59 contains further information on the impact of AIFRS on net interest income.

6 Commonwealth Bank of Australia

Banking Analysis continued


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Key Performance Indicators	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Net interest income		6,514		6,026		8			3,259		3,255		—
Other banking income		3,036		2,845		7			1,591		1,445		10

Total Banking income		9,550		8,871		8			4,850		4,700		3
Operating expenses		4,558		4,380		(4	)		2,298		2,260		(2	)
Which new Bank		—		112		—			—		—		—

Total operating expenses		4,558		4,492		(1	)		2,298		2,260		(2	)
Bad debts expense		398		322		(24	)		210		188		(12	)

Net profit before income tax		4,594		4,057		13			2,342		2,252		4
Income tax expense		1,339		1,220		(10	)		691		648		(7	)
Minority interests		28		3	large				13		15		13

NPAT (“cash basis”)		3,227		2,834		14			1,638		1,589		3

NPAT(“underlying basis”) ⁽¹⁾		3,227		2,913		11			1,638		1,589		3


(1)		Underlying basis excludes Which new Bank expenses.


Productivity and other measures

Net interest margin (%) ⁽¹⁾	2. 34	2.43	(9)bpts		2.29	2.39	(10)bpts
Expense to income (%)	47. 7	50.6		6	47.4	48.1		1
Expense to income – underlying (%)	47. 7	49.4		3	47.4	48.1		1
Effective corporate tax rate (%)	29. 1	30.1	(100)bpts		29.5	28.8	70bpts


(1)		After adjusting for AIFRS the underlying variance is seven basis points (full year) and nine basis points (half year). Refer to pages 32 and 33 for the reconciliation of Net Interest Margin.


Total Banking NPAT (“Underlying Basis”)

Australian Retail Products	1,794	1,589	13	900	894	1
Premium, Business & Corporate and Institutional Products	1,038	1,009	3	537	501	7
Asia Pacific	364	291	25	182	182	—
Other	31	24	29	19	12	58

Total Banking NPAT (“Underlying Basis”)	3,227	2,913	11	1,638	1,589	3

Other Banking Income

Full Year

Half Year

30/06/06

30/06/05

30/06/06

31/12/05

Commissions

1,635

1,545

820

815

Lending fees

800

733

411

389

Trading income

505

440

261

244

Other income

175

127

138

3,115

2,845

1,630

1,485

Non-trading derivatives

(79

)

—

(39

)

(40

)

Other banking income

3,036

2,845

1,591

1,445

Excluding the non-trading derivatives impact of AIFRS, other banking income increased 9% over the year.

The introduction of AIFRS requires certain derivatives to be measured at fair value which may result in increased volatility in future periods.

Other Banking Income

Factors impacting other banking income were:

•		Commissions: increased by 6% on the prior year to $1,635 million. The increase was mainly driven by volume increases including a 30% increase in CommSec trading volume;

•		Lending fees: increased by 9% compared with the prior year to $800 million. After adjusting for AIFRS which required $25 million of net fee income to be deferred, lending fee growth was up 13% compared with the prior year. The result was driven by an increase in lending volumes in the business and corporate lending portfolios together with higher volumes in overdraft facilities;

•		Trading income increased 15% on the prior year to $505 million reflecting favourable market conditions; and

•		Other income increased $48 million on the prior year. The current year includes $32 million in relation to the Mastercard initial public offering. The prior year includes $52 million relating to tax consolidation legislation impacting the leasing business. Excluding these items, the increase was mainly due to structured transactions and leasing income.

		Other income in the second half increased by $101 million to $138 million. After adjusting for the impact of AIFRS and timing of asset sales, other income was flat.

The other banking income result excluding the impact of AIFRS and timing of asset sales, increased by 5% compared to the prior half. This result was driven by similar themes to those for the full year.

Profit Announcement 7

Banking Analysis continued

Operating expenses

Underlying operating expenses within the Banking business increased by 4% from the prior year to $4,558 million. Operating expenses were impacted by:

•		Average salary increases of 4% reflecting labour market movements and other inflation-related expense increases;

•		Commencement of a number of projects supporting the strategic priorities of the Bank (including customer service and business banking initiatives) totalling $40 million; partly offset by

•		Ongoing realisation of expense savings as a result of Which new Bank efficiency initiatives.

During the second half of the year operating expenses increased 2% to $2,298 million, mainly driven by the commencement of initiatives supporting the Bank’s strategic priorities.

Banking Expense to Income Ratio

The underlying Banking expense to income ratio improved from 49.4% as at June 2005 to 47.7% in June 2006 representing a productivity improvement of 3%. On an AGAAP basis, the Bank met its Which new Bank productivity target of 48%, with the expense to income ratio down to 47.1%. The improvement reflects strong income growth and good expense control, including the ongoing realisation of Which new Bank savings.

Productivity

Bad Debts Expense

The total charge for Bad Debts for the year was $398 million, which is 18 basis points of Risk Weighted Assets. This is the first year where provisions are calculated in accordance with AIFRS.

During the second half the Bad Debts expense increased by 12% to $210 million. This was driven by growth in risk weighted assets and an increase in provisioning for unsecured lending.

Gross impaired assets were $326 million as at 30 June 2006, compared with $395 million at June 2005.

The Bank remains well provisioned, with total provisions for impairment as a percentage of gross impaired assets of 373%.

Taxation Expense

The corporate tax charge for the year was $1,339 million, an effective tax rate of 29.1%.

The effective tax rate for the second half of the year was 29.5% compared to 28.8% in the first half.

Provisions for Impairment

Impairment provisions as at 30 June 2006 have been assessed under AIFRS. The prior year provisions have not been restated for AIFRS, but have been assessed using the previous Australian GAAP methodology and are not comparable to the current period.

Total provisions for impairment at 30 June 2006 were $1,217 million excluding the pre-tax equivalent General Reserve for Credit Losses ($500 million). The addition of the collective provision and General Reserve for Credit Losses (which is required by APRA) is 0.71% expressed as a percentage of risk weighted assets. The current level continues to reflect:

•		A major portion of the credit portfolio is in home loans which have a lower risk weighting compared with other portfolios;

•		The continuing strong asset quality in the business lending book; and

•		A level of impaired assets which is at the lower end of levels achieved over the past decade.

Risk Weighted Assets on Balance Sheet ($M)

Gross Impaired Assets ($M)

8 Commonwealth Bank of Australia

Banking Analysis continued


	As At
	30/06/06			31/12/05			30/06/05			Jun 06 vs			Jun 06 vs
Total Banking Assets & Liabilities	$M			$M			$M			Dec 05 %			Jun 05 %

Interest earning assets
Home loans including securitisation		167,121			159,339			150,677			5			11
Less: securitisation		(12,607	)		(9,124	)		(10,818	)		38			17

Home loans		154,514			150,215			139,859			3			10
Personal		17,228			15,967			15,668			8			10
Business and corporate		76,044			71,502			63,549			6			20

Loans, advances and other receivables ⁽¹⁾		247,786			237,684			219,076			4			13
Non lending interest earning assets		40,283			39,431			36,273			2			11

Total interest earning assets		288,069			277,115			255,349			4			13
Other assets ⁽²⁾		52,185			44,362			49,271			18			6

Total assets		340,254			321,477			304,620			6			12


Interest bearing liabilities
Transaction deposits		37,079			34,287			34,694			8			7
Savings deposits		41,421			40,030			38,461			3			8
Investment deposits		67,364			67,462			66,087			—			2
Other demand deposits		20,325			19,573			21,806			4			(7	)

Total interest bearing deposits		166,189			161,352			161,048			3			3
Deposits not bearing interest		7,037			7,371			6,978			(5	)		1

Deposits and other public borrowings		173,226			168,723			168,026			3			3
Other interest bearing liabilities		99,976			95,538			72,935			5			37

Total interest bearing liabilities		266,165			256,890			233,983			4			14
Securitisation debt issues		13,505			9,849			12,144			37			11
Non interest bearing liabilities		44,515			40,316			41,422			10			7

Total liabilities		324,185			307,055			287,549			6			13


Provisions for Impairment
Collective provisions		1,046			1,041			1,390			—			(25	)
Individually assessed provisions		171			179			157			(4	)		9

Total provisions		1,217			1,220			1,547			—			(21	)
General reserve for credit losses (pre-tax equivalent)		500			404			—			24			—

Total provisions including general reserve for credit losses		1,717			1,624			1,547			6			11


	Full Year Ended							Half Year Ended
					Jun 06 vs							Jun 06 vs
Asset Quality ⁽³⁾	30/06/06		30/06/05		Jun 05 %			30/06/06		31/12/05		Dec 05 %

Risk weighted assets ($M) ⁽⁴⁾		216,438		189,559		14			216,438		202,667		7
Net impaired assets ($M)		155		219		(29	)		155		217		(29	)
General provisions as a % of risk weighted assets		—		0. 73		—			—		—		—
Collective provisions plus general reserve for credit losses (pre-tax equivalent)/risk weighted assets (%)		0. 71		—		—			0. 71		0. 71		—
Specific provisions for impairment as a % of gross impaired assets net of interest reserved		—		41. 8		—			—		—		—
Individually assessed provisions for impairment as a % of gross impaired assets		52. 5		—		—			52. 5		45. 2		16
Bad debts expense as a % of risk weighted assets annualised (%)		0. 18		0. 17	1bpt				0. 19		0. 19		—


(1)		Gross of provisions for impairment which are included in Other Assets.

(2)		Other assets include Bank acceptances of customers, provision for impairment and securitisation assets.

(3)		Asset quality coverage ratios are not comparable to prior periods due to AIFRS.

(4)		No AIFRS adjustment is made to Risk Weighted Assets in the prior periods as the APRA prudential requirement is to apply previous Australian GAAP.

Profit Announcement 9

Banking Analysis continued

Australian Retail

The Australian Retail Product segment performed strongly over the year, with underlying profit after tax increasing by 13% to $1,794 million. This result is highlighted by strong revenue growth, good expense control and further productivity gains.

Business Review

Over the year, a number of initiatives were introduced to improve the service experience for our customers including:

•

The rollout of CommSee, the Bank’s state-of-the-art customer management system, across our 1,000 strong branch network and seven call centres;

•

The implementation of CommServe, a training program designed to ensure our people are able to obtain maximum value from CommSee in improving Sales and Service outcomes. Over 14,000 staff undertook CommServe training during the 2006 financial year;

•

The refurbishment of a further 133 branches, taking to 384 the number of branches refurbished over the past three years into a design/layout more conducive to effective sales and service;

•

An additional 450 frontline customer service staff;

•

Improved access to Australia’s largest electronic banking and branch network through two new Streamline products with flat monthly fees, and the removal of transaction fees from NetBank;

•

The introduction of a low interest rate credit card (“Yellow”) to meet growing customer demand in this segment of the market; and

•

The pilot of a new customer service model which enables our frontline staff to spend more time on customer service and empowers our branch managers to make decisions about their business best suited to local conditions.

Home Loans

Home loan income has been impacted by the transition to AIFRS which required $35 million of net expenses to be deferred. After adjusting for this, revenue increased 13% compared to the prior year and was driven by solid volume growth of 11% and stable margins over the year.

Whilst second half revenue growth was flat, this was impacted by seasonal factors including three fewer calendar days in the half. From a product growth perspective, second half performance was strong, underpinned by record volume approvals in the June quarter. Second half balance growth was 7%.

Market share fell by 26 basis points over the year to 18.8%. All of this reduction occurred in the first half, where the Bank’s internal distribution channels underperformed reflecting in part the changes to systems and training required. Market share has stabilised over the second half through improved sales in proprietary channels, and selective product changes to raise competitiveness.

Full year average margins have been stable, but were lower in the second half mainly due to timing factors relating to passing on the May 2006 cash rate increase together with a higher volume of lower margin fixed rate lending towards the end of the year.

Consumer Finance (Personal Loans and Credit Cards)

Total income in the Consumer Finance portfolio grew by 11% over the year. The current year includes $32 million in relation to the Mastercard initial public offering.

Total Consumer Finance balances (combined Personal Loans and Credit Cards) decreased by 1% over the year to $11 billion. Second half growth was 1%. Full year growth was impacted by the repayment of low margin student loans in the first half. The market has been characterised by strong price based competition particularly in credit cards.

In March, the Bank launched a new low-rate credit card (“Yellow”) to meet customer demand in this segment of the market. Early results have been encouraging, with approximately 80,000 accounts opened since launch.

Deposits

Deposit revenue increased 6% compared to the prior year, reflecting a combination of strong volume growth, relatively stable margins and higher other banking income.

Deposit balances grew by 8% over the year to $77 billion, with cyclical factors resulting in relatively stronger growth in the first half of the year. NetBank Saver balances grew by $4 billion, with approximately 63% being new funds to the Bank. Total deposit growth was slightly below market, as the Bank continues to pursue a balanced strategy aimed at optimising both growth and revenue outcomes. Net interest margin reduced slightly over the year.

In May, the Bank announced new pricing options on its main personal transaction account “Streamline”, allowing customers unlimited transactions for a fixed monthly fee. These changes provide customers with a greater level of certainty in their day-to-day banking whilst further consolidating the Bank’s competitive position in this segment of the market.

Operating expenses

Expense growth was held to 3% over the full year. This result reflects further productivity gains within the business, with the expense to income ratio falling from 46.2% as at June 2005 to 43.6% as at June 2006. Employee numbers increased by 475 full-time equivalents to 17,253 full-time equivalents as at June 2006, reflecting increases in frontline customer service employees. Higher frontline employee expenses have been substantially offset by productivity and other expense savings elsewhere in the business.

Bad debts

Total Bad Debts Expense for retail products for the full year was $354 million, an increase of 33%. Credit quality on the home loan portfolio remained high with percentage losses at historic lows. Credit card losses as a percentage of balances were stable at 1.96%. Personal loan losses peaked mainly as a result of business booked in 2004. Subsequent tightening of policy and the introduction of new scorecards has improved the quality of more recent business.


Market Share Percentage ⁽¹⁾	30/06/06		31/12/05		30/06/05

Home loans ⁽²⁾		18.8		18.8		19.0
Credit cards ⁽²⁾ ⁽³⁾		20.5		21.4		22.8
Personal lending (APRA and other households) ⁽⁴⁾		16.1		16.0		16.7
Household deposits		29.3		29.6		29.8
Retail deposits		22.2		22.9		23.0


(1)		For market share definitions refer to appendix 25 page 68.

(2)		Comparatives have been restated due to a reclassification between home loans and personal loans by another ADI.

(3)		As at 31 May 2006.

(4)		Personal lending market share includes personal loans and margin loans.

10 Commonwealth Bank of Australia

Banking Analysis continued

Australian Retail


	Full Year to June 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Bad Debts		Profit after
	Income $M		Income $M		Income $M		$M		$M		Tax $M

Home loans		1,239		151		1,390
Consumer finance		727		368		1,095
Retail deposits		1,953		700		2,653

Australian Retail products		3,919		1,219		5,138		2,240		354		1,794

Full Year to June 2005

Total

Underlying

Banking

Expenses

Bad Debts

Profit after

Income $M

Tax $M

Home loans

1,194

Consumer finance

985

Retail deposits

2,514

Australian Retail products

4,693

2,168

266

1,589


	Half Year to June 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Bad Debts		Profit after
	Income $M		Income $M		Income $M		$M		$M		Tax $M

Home loans		615		74		689
Consumer finance		363		195		558
Retail deposits		978		351		1,329

Australian Retail products		1,956		620		2,576		1,108		198		900


	As At
	30/06/06		31/12/05		30/06/05		Jun 06 vs			Jun 06 vs
Major Balance Sheet Items (gross of impairment)	$M		$M		$M		Dec 05 %			Jun 05 %

Home loans (incl securitisation)		144,834		135,990		129,913		7			11
Consumer finance ⁽¹⁾		10,640		10,507		10,720		1			(1	)

Total Assets – Australian Retail products		155,474		146,497		140,633		6			11

Home loans (net of securitisation)		132,227		126,866		119,094		4			11


Transaction deposits		16,993		17,077		16,382		—			4
Savings deposits		38,071		36,306		34,061		5			12
Other demand deposits		19,818		19,977		19,197		(1	)		3
Deposits not bearing interest		2,362		2,478		2,172		(5	)		9

Total Liabilities — Australian Retail products		77,244		75,838		71,812		2			8


(1)		Consumer Finance includes personal loans and credit cards.


Australian Home Loan Approvals by State ^{(1) (2)}		Australian Home Loan Balances by State ⁽²⁾

(1) As of 31 May 2006

(2) Half year averages

Profit Announcement 11

Banking Analysis continued

Premium, Business & Corporate and Institutional

The Premium, Business & Corporate and Institutional product segment delivered underlying net profit after tax of $1,038 million, an increase of 3% compared to the prior year. The result has been impacted by the transition to AIFRS, which has decreased current year income by $55 million, and one-off inclusion of income recognised in relation to tax consolidation legislation changes in the prior year of $52 million. After adjusting for these items, underlying net profit after tax growth was 11%.

Business Review

The Premium, Business & Corporate and Institutional product segment performed well over the year, with the performance highlights including:

•

Institutional Banking customers gave the Bank a strong rating in the latest East & Partners customer satisfaction survey. Of the major banks, CBA retained number one status as principal and secondary transaction bank of the Top 500 corporates and the highest average rating in all key relationship management categories;

•

Development of dedicated mobile lenders, strong servicing for third party brokers, the introduction of a dedicated acquisition sales force for corporate clients and foreign exchange sales force;

•

Recent establishment of five distribution teams being Institutional Banking, Corporate Financial Services, Agribusiness, Local Business Banking and Private Client Services which all provide greater focus on each of these segments as the Bank expands its business banking footprint;

•

The introduction of the Business Online Saver high yield investment account, the Commonwealth Portfolio Loan product and the Business Line of Credit, all of which have reached $1 billion in balances;

•

CommSec has achieved record trading volumes and substantial margin lending balance growth during the year. On 30 June 2006, CommSec executed 47,406 trades to the value of $683 million in turnover. This set an Australian broking industry record for the highest number of trades and turnover by a broker in a single day;

•

Successful implementation of the CommSee customer management system across the business providing Bank employees with a common IT platform and access to common client information; and

•

Further extended specialised client service teams that are now capable of supporting all business clients centrally for most servicing activities.

Outcomes by key product category are summarised below.

Corporate Banking

Corporate Banking includes commercial and corporate transaction services and merchant acquiring.

This line of business achieved income growth of 1% for the year reflecting an increasingly competitive environment. Merchant acquiring in particular has been subject to intense competition in the second half of the year but has increased transaction volumes over the year, which allows the Bank to continue to leverage its scale position.

Financial Markets

Financial Markets includes financial markets and wholesale operations, equities broking (including CommSec) and structured products, capital markets services (including IPOs and placements) and margin lending.

Financial markets income has increased 14% compared to the prior year following improved trading conditions and increased customer flows. Continued strength in investment markets has also resulted in strong CommSec trading volumes while margin lending balances increased 34% over the year.

During the second half, revenue increased by 5% due to a strong March quarter which saw high levels of retail equities trades and increased leverage of high value clients from the Institutional Banking segment.

Lending and Finance

Lending and Finance includes asset finance, structured finance and general business lending.

Lending and Finance income has been impacted by the transition to AIFRS which required $55 million of net income to be deferred. In addition, the one-off inclusion of income recognised in relation to tax consolidation legislation changes impacted the leasing business by $52 million in the prior year. After adjusting for these items, Lending and Finance income increased by 8%.

Lending and Finance assets have increased $16 billion or 18% compared with the prior year. The increase has been driven by continued growth in the Australian and New Zealand syndicated loan market and an increase in volume in structured finance transactions. Bank acceptances have increased by 9% since June 2005 (6% growth since December 2005).

During the second half, revenue increased by 12% due to the continued strong volume of structured finance transactions and the timing of asset sales in the second half including Bankstown and Camden Airports.

Operating Expenses

Operating expenses of $1,570 million was contained to 2% growth compared to the prior year. This was driven by general salary increases and higher employee numbers, mainly to support volume growth in the Financial Markets business, partly offset by significant IT related savings.

Market Share

Business lending market share (including bank acceptances) declined during the year by 10 basis points to 13.1%. The movement from half to half reflects the volatility in the institutional and corporate lending businesses. Institutional lending is particularly sensitive to major funding requirements and is heavily impacted by relative levels of participations in syndicated loan deals.

Asset Finance market share has decreased by 90 basis points to 14.5% since June 2005. The decline reflects the maturity of this business segment, which has been characterised by aggressive price competition coupled with competitor expansion.

Equities Trading market share increased 70 basis points over the year. This result was supported by a 51% increase in value traded compared to market growth of 26%.

Market Share Percentage ⁽¹⁾

30/06/06

31/12/05

30/06/05

Business lending

13.1

13.5

13.2

Asset finance

14.5

15.1

15.4

Equities trading (CommSec)

4.3

4.3

3.6


(1)		For market share definitions refer to Appendix 25, page 68.

12 Commonwealth Bank of Australia

Banking Analysis continued

Premium, Business & Corporate and Institutional



	Full Year to June 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Bad Debts		Profit after
	Income $M		Income $M		Income $M		$M		$M		Tax $M

Corporate Banking		558		394		952
Financial Markets		287		642		929
Lending and Finance		751		441		1,192

Premium, Business & Corporate and Institutional products		1,596		1,477		3,073		1,570		68		1,038

Full Year to June 2005

Total

Underlying

Banking

Expenses

Bad Debts

Profit after

Income $M

Tax $M

Corporate Banking

945

Financial Markets

814

Lending and Finance

1,204

Premium, Business & Corporate and Institutional products

2,963

1,536

1,009


	Half Year to June 2006
	Net		Other		Total						Underlying
	Interest		Banking		Banking		Expenses		Bad Debts		Profit after
	Income $M		Income $M		Income $M		$M		$M		Tax $M

Corporate Banking		282		184		466
Financial Markets		144		331		475
Lending and Finance		382		249		631

Premium, Business & Corporate and Institutional products		808		764		1,572		791		31		537


	As At
	30/06/06		31/12/05		30/06/05		Jun 06 vs			Jun 06 vs
Major Balance Sheet Items (gross of impairment)	$M		$M		$M		Dec 05 %			Jun 05 %

Interest earning lending assets		66,343		60,949		51,584		9			29
Bank acceptances of customers		18,310		17,263		16,786		6			9
Non lending interest earning assets		35,471		35,320		33,993		—			4
Margin loans		5,758		4,664		4,311		23			34
Other assets ⁽¹⁾		19,947		15,711		19,773		27			1

Total Assets — Premium, Business & Corporate and Institutional products ⁽²⁾		145,829		133,907		126,447		9			15


Transaction deposits		16,426		14,155		14,457		16			14
Other demand deposits		37,821		37,074		34,601		2			9
Deposits not bearing interest		3,520		3,675		3,651		(4	)		(4	)
Certificates of deposits and other		20,178		19,243		16,367		5			23
Due to other financial institutions		11,333		9,852		7,964		15			42
Liabilities at fair value through the Income Statement		2,085		2,630		1,580		(21	)		32
Debt issues		77,848		69,854		65,463		11			19
Loan Capital		9,744		9,129		8,356		7			17
Other non interest bearing liabilities		36,703		31,628		32,927		16			11

Total Liabilities — Premium, Business & Corporate and Institutional products ⁽²⁾		215,658		197,240		185,366		9			16


Balance Sheet by Product Segment

Assets
Corporate Banking		3,546		2,982		3,299		19			7
Financial Markets		36,228		29,680		34,104		22			6
Lending and Finance		101,601		94,671		85,935		7			18
Other ⁽²⁾		4,454		6,574		3,109		(32	)		43

Total Assets — Premium, Business & Corporate and Institutional		145,829		133,907		126,447		9			15


Liabilities
Corporate Banking		20,799		18,592		18,659		12			11
Financial Markets		71,594		70,098		67,398		2			6
Lending and Finance		27,303		25,145		21,658		9			26
Other ⁽²⁾		95,962		83,405		77,651		15			24

Total Liabilities — Premium, Business & Corporate and Institutional		215,658		197,240		185,366		9			16


(1)		Other assets include intangible assets and derivative assets.

(2)		Includes Group Funding, Balance Sheet Management and other capital not directly attributed to the product based segments above.

Profit Announcement 13

Banking Analysis continued

Asia Pacific

Asia Pacific Banking incorporates the Bank’s retail, business/commercial and rural banking operations in New Zealand, Fiji, Indonesia and China.

Underlying net profit after tax for Asia Pacific businesses increased 25% to $364 million⁽¹⁾ compared to the prior year. ASB Bank in New Zealand represents the majority of the business.

ASB Bank

The New Zealand economy was characterised during 2006 by higher interest rates under the Reserve Bank of New Zealand’s tightening of monetary policy and strong competition in both deposits and lending. Despite these pressures ASB Bank again achieved solid growth in its asset and liability products. New Zealand lending balances grew strongly again in 2006 however growth rates were slower than 2005 due to tighter economic conditions. Home lending balances grew by 18% to NZD 26.0 billion, commercial loans by 13% to NZD 4.5 billion and rural loans also by 13% to NZD 3.8 billion.

Retail deposit balances of NZD 20.4 billion were 12% higher than 2005. FastSaver and term investments contributed most of the growth in deposits.

Margins continued to come under pressure although competitive pressure eased in the second half of the year.

ASB Bank underlying net profit after tax for the year was NZD 400 million,⁽¹⁾ an increase of 22% over the prior year. This was driven by:

•

Continued growth in home lending volumes above market growth rates. This is the 15^th year of market share growth in this segment;

•

Strong growth in commercial/business and rural lending;

•

Success of the Fastsaver deposit product introduced in November 2004 with balances growing by more than 75% by the end of the year;

•

Net interest margin pressure over the year in a very competitive environment. Most of this pressure was evidenced in the first half with net interest margin flat in the second half;

•

Continued productivity improvements with expense to income ratio of 43.1% for the year; and

•

Sound credit quality.

Other performance highlights include:

•

For the fourth consecutive year, ASB Bank was recognised as New Zealand’s “Bank of the Year” by the UK based Banker Magazine; and

•

ASB Bank continued its leading position in Personal and Business Banking customer satisfaction among the major banks.

Underlying net profit after tax increased 6% in the second half to NZD 205 million.⁽¹⁾ This reflected slower market volume growth, stabilisation of margins and three fewer days.

Other Asia Pacific Business

The highlights in this region during the year were:

•

Purchase of the remaining 49% of the Colonial National Bank in Fiji from the Fiji Government in January 2006. Fiji loans and advances increased by 34% during 2006 to $484 million although liquidity and interest rate volatility issues in the Fiji economy resulted in a more subdued performance in the second half of the year;

•

Acquisition of a 19.9% interest in Hangzhou City Commercial Bank (HZB) for $102 million. HZB is one of the top five City Commercial Banks by assets in mainland China. When combined with our investment in Jinan City Commercial Bank, the Bank now holds interests in two of the top 10 City Commercial Banks in China;

•

Finalisation of the first stage of the Capability Transfer Program with Jinan CCB;

•

Development of a mortgage broking business in Shanghai; and

•

Continuation of the branch expansion program in PT Bank Commonwealth in Indonesia with six new branches added during the year.

Market Share

Market share in New Zealand increased in all major asset categories and retail deposits. Home loan market share increased seven basis points to 23.1% ranking ASB Bank second in the market.

Retail deposit market share in New Zealand was 20.3% at 30 June 2006, an increase of 82 basis points from June 2005.

Fiji lending asset market share increased from 20.5% at 30 June 2005 to 22.5% as at 31 May 2006.

Market Share Percentage ⁽²⁾

30/06/06

31/12/05

30/06/05

NZ lending for housing

23.1

23.2

23.0

NZ retail deposits

20.3

19.9

19.5


(1)		Represents Group Management view for the product segment rather than statutory view.

(2)		For market share definitions refer to Appendix 25, page 68.

14 Commonwealth Bank of Australia

Banking Analysis continued

Asia Pacific

Full Year to June 2006

Net

Other

Total

Underlying

Interest

Banking

Expenses

Bad Debts

Profit after

Income $M

Tax $M

ASB Bank

680

291

971

Other

Asia Pacific

723

343

1,066

521

364

Full Year to June 2005

Total

Underlying

Banking

Expenses

Bad Debts

Profit after

Income $M

Tax $M

ASB Bank

878

Other

Asia Pacific

917

490

291

Half Year to June 2006

Net

Other

Total

Underlying

Interest

Banking

Expenses

Bad Debts

Profit after

Income $M

Tax $M

ASB Bank

338

138

476

Other

Asia Pacific

361

176

537

261

182


	As at
Major Balance Items (gross of impairment)	30/06/06		31/12/05		30/06/05		Jun 06 vs			Jun 06 vs
⁽¹⁾	$M		$M		$M		Dec 05 %			Jun 05 %

Home lending		22,287		23,349		20,765		(5	)		7
Other lending assets		10,531		11,157		12,132		(6	)		(13	)
Non lending interest earning assets		4,812		5,523		3,664		(13	)		31
Other assets		1,321		1,044		979		27			35

Total Assets – Asia Pacific		38,951		41,073		37,540		(5	)		4


Debt issues		744		182		6,939	large				(89	)
Deposits ⁽²⁾		18,040		19,256		23,006		(6	)		(22	)
Liabilities at fair value through the Income Statement		11,727		13,691		—		(14	)		—
Other liabilities		772		848		426		(9	)		81

Total Liabilities – Asia Pacific		31,283		33,977		30,371		(8	)		3


Balance Sheet by Segment

Assets
ASB Bank		36,724		38,981		35,593		(6	)		3
Other		2,227		2,092		1,947		6			14

Total Assets – Asia Pacific		38,951		41,073		37,540		(5	)		4


Liabilities
ASB Bank		29,306		31,933		29,658		(8	)		(1	)
Other		1,977		2,044		713		(3	)	large

Total Liabilities – Asia Pacific		31,283		33,977		30,371		(8	)		3


(1)		30 June 2006 balance sheet impacted by deterioration of the NZD (11% over the full year). Refer to page 54 for ASB Bank NZD balance sheet and page 66 for foreign exchange rates.

(2)		Asia Pacific Deposits exclude deposits held in other overseas countries (30 June 2006: A$4 billion and 31 December 2005: A$4 billion and 30 June 2005: A$4 billion).

Profit Announcement 15

Funds Management Analysis

Financial Performance and Business Review

Performance Highlights

Full year underlying net profit after tax of $400 million increased 14% over the year for the Funds Management business reflecting strong revenue growth across the business.

Underlying profit before tax increased by 23%. The after tax result was impacted by a significantly higher effective tax rate primarily due to the phasing out of the transitional tax relief on investment style products within the life insurance entities, which ceased at the end of the last financial year ($27 million).

The underlying profit after tax result for the second half of the year increased 19% to $217 million also underpinned by strong revenue growth.

Funds under administration grew by 23% to $152 billion as at 30 June 2006. The growth in funds under administration was the result of strong net fund flows and favourable investment markets.

Business Review

Industry growth has been positive and industry retail flows have remained strong over the year.

Total funds flow performance for the year was strong with $11 billion of net inflows (up $10 billion on the prior year) due to the continuing success of FirstChoice, significant inflows into Avanteos, including $5.0 billion in net flows from the Goldman Sachs JB Were strategic alliance, excellent sales results in the International businesses and good inflows into domestic wholesale funds. An improvement in fund flows was achieved across most channels, including Independent Financial Advisors, Institutional Clients and the Bank Network.

The success of FirstChoice has underpinned recent growth in retail market share, with the Bank increasing share and maintaining its number one position in the overall retail market. In the latest Plan for Life market share statistics, FirstChoice received in excess of 25% of net flows in the platform market over the year. A recently published survey from ASSIRT showed that 50% of advisors in the market used FirstChoice as one of their platforms.

Investment performance during the year was good, in both absolute terms and against benchmark and this contributed to the improving fund flows.

Other key developments within the business during the year included:

•

Continued platform enhancements and new product offerings including the development of a self managed super offering “YourChoice”, to capitalise on this rapidly growing sector of the market;

•

Strategic alliance formed between Avanteos and Goldman Sachs JB Were, which has contributed $5.0 billion of additional net funds flow;

•

A funds management joint venture has been established to operate within China, with approval being received from the China Securities Regulatory Commission;

•

Further improvement in Bank planner performance, with a 16% increase in productivity for the year;

•

Acquisition of the Gandel Group’s interests in the Colonial First State Property Retail Trust Limited and Gandel Retail Management Trust Ltd, which provides funds management and property management services to a number of Colonial First State Retail Property trusts;

•

The continued rationalisation of legacy systems and products; and

•

Strengthening of the control and operating environment, particularly around unit pricing of investment style products within the life insurance entities.

Investment Performance

Investment performance has been good with 14 out of 18 major funds exceeding benchmark on a one year basis and 11 out of 18 major funds exceeding benchmark on a three year basis.

Importantly, the investment performance of the two flagship Australian Equity funds were well ahead of benchmark on a one year basis with rankings in first and second quartiles.

Operating Income

Operating income for the year increased by 23% to $1,552 million. Income growth was supported by a 23% increase in funds under administration to $152 billion at 30 June 2006 and a significant improvement in sales, particularly within the offshore businesses. The acquisition of Gandel’s Joint Venture interest in October 2005 has also contributed $45 million in revenue during the year. This contributed three basis points to gross margin.

During the second half of the year, operating income increased by 16% to $832 million. This result was driven by an 11% increase in the funds under administration and an additional $29 million contribution from the Gandel Joint Venture acquisition.

Excluding the impact of the Gandel acquisition, margin was stable. This reflects good margins on FirstChoice, strong inflows into higher margin International products and the maintenance of funds under administration levels on the higher margin legacy retail products.

Operating Expenses

Operating expenses (excluding volume expenses) of $765 million were up $123 million or 19% compared to the prior year.

This includes:

•

The acquisition of Gandel’s Joint Venture interest which increased expenses $28 million in the current year; and

•

Expenses in relation to the Unit Pricing control and process improvement program, totalling $55 million. This is expected to incur additional expenses of $20-30 million in the next 12 months.

Excluding the expenses associated with Gandel and the Unit Pricing initiative, expenses increased 6% compared to the prior year, reflecting average salary increases of 4% and performance based remuneration within the asset management business.

Volume expenses, driven predominantly by stronger sales and growth in funds under administration, increased 44%.

Expenses to average funds under administration for the year was 0.71%, an improvement on the prior year of one basis point.

Taxation

The corporate tax expense for the year was $164 million, representing an effective tax rate of 28.4% compared with 21.9% for the prior year. The increase in the effective tax rate is due to the phasing out of transitional tax relief on investment style funds management products within life insurance legal entities ($27 million).

16 Commonwealth Bank of Australia

Funds Management Analysis continued


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Key Performance Indicators	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Operating income – external		1,543		1,247		24			828		715		16
Operating income – internal		9		10		(10	)		4		5		(20	)

Total operating income		1,552		1,257		23			832		720		16
Shareholder investment returns		14		33		(58	)		7		7		—

Funds management income		1,566		1,290		21			839		727		15
Volume expense		224		156		(44	)		125		99		(26	)
Operating expenses		765		642		(19	)		405		360		(13	)
Which new Bank		—		36		—			—		—		—

Total operating expenses		989		834		(19	)		530		459		(15	)

Net profit before income tax (“cash basis”)		577		456		27			309		268		15

Net profit before income tax (“underlying basis”) ⁽¹⁾		563		459		23			302		261		16

Corporate tax expense ⁽²⁾		164		100		(64	)		87		77		(13	)
Minority interests		3		7		(57	)		—		3		—

Net profit after income tax (“cash basis”)		410		349		17			222		188		18

Net profit after income tax (“underlying basis”) ⁽¹⁾		400		351		14			217		183		19


(1)		Underlying basis excludes shareholder investment returns and Which new Bank expenses.

(2)		For purpose of presentation, Policyholder tax benefit and Policyholder tax expense are shown on a net basis (2006: $193 million).


Funds under Administration

Funds under administration – average	139,082	116,262		20	147,684	130,179		13
Funds under administration – spot	151,513	123,064		23	151,513	136,974		11
Net flows	10,830	456	large		8,135	2,695	large
Total retail net flows	8,235	2,190	large		6,870	1,365	large

Productivity and Other Measures

Operating income to average funds under administration (%)

1.12

1.08

4bpts

1.14

1.10

4bpts

Operating expenses to average funds under administration (%)

0.71

0.72

0.72

0.70

)

Effective corporate tax rate (%)

28.4

21.9

large

28.2

28.7

(50)bpts

Underlying Net Profit After Tax growth of 14% on the prior year

Profit Announcement 17

Funds Management Analysis continued

Funds under Administration

Funds under Administration (spot balances) have increased by 23% over the year to $152 billion. The growth in Funds under Administration has been driven by a combination of positive net fund flows, strong investment markets, albeit lower in the second half of the year, and positive absolute investment performance which exceeded benchmark across many of our funds. Net inflows for the year were $11 billion, representing a substantial improvement on the prior year. Investment returns contributed $17 billion for the year and $6 billion for the second half of the year.

Average Funds under Administration of $139 billion were 20% higher than the prior year.

The key drivers of net funds flows were:

•

Continuation of market leading flows into FirstChoice capturing in excess of 25%⁽¹⁾ of the market net flows. FirstChoice has now exceeded $25 billion in funds under administration in less than four years;

•

Significant inflows associated with the Goldman Sachs JB Were strategic alliance of $5.0 billion;

•

Reduced net outflows on Australian equity funds due partly to improved investment performance;

•

A tumaround in net flows into wholesale products, which achieved positive net flows of $1.3 billion for the year;

•

Good flows into higher margin equity products and mandates in the International business;

•

Net outflows from the cash management product due to competition from attractively priced retail deposit products;

•

Property net outflows following the planned sell-down of assets within a closed end fund; and

•

Net outflows in other retail products which include closed legacy products, which is consistent with prior periods.

Market Share

The Australian retail market share increased from 14.5% at 30 June 2005 to 15.7% at 31 March 2006. The business has achieved strong net flows in retail Funds under Administration in recent quarters and has also been favourably impacted by the inflow from the strategic alliance with Goldman Sachs JB Were which contributed 1% to market share growth.

The most recent Plan for Life survey (March 2006) showed the Bank ranking No. 1 for total retail net flows and No. 1 for retail flows excluding cash trusts. Improvement in investment performance has also aided market share gains.

Market Share Percentage ⁽²⁾⁽³⁾

30/06/06

31/12/05

30/06/05

Australian retail — administrator view

15.7

14.6

14.5

New Zealand retail

15.0

15.0

15.2

Platforms (Masterfunds)

12.5

10.8

10.2


(1)		Nine months to March 2006 (source: Plan for Life).

(2)		For market share definitions refer to appendix 25 page 68.

(3)		As at 31 March 2006.


2006 FirstChoice — Fund Manager Destination		2006 FirstChoice — Sources of Funds

18 Commonwealth Bank of Australia

Funds Management Analysis continued


	Full Year Ended 30 June 2006
	Opening									FX⁽³⁾ &			Closing
	Balance							Investment		Other			Balance
	30/06/05		Inflows		Outflows			Income		Movements			30/06/06
Funds under Administration	$M		$M		$M			$M		$M			$M

FirstChoice & Avanteos		19,069		19,219		(5,886	)		3,190		(217	)		35,375
Cash management		4,182		2,417		(3,061	)		152		—			3,690
Other retail ⁽¹⁾		36,069		3,450		(7,904	)		4,353		(413	)		35,555

Australian retail		59,320		25,086		(16,851	)		7,695		(630	)		74,620
Wholesale		24,894		13,099		(11,810	)		3,682		(50	)		29,815
Property		13,456		1,074		(2,144	)		1,520		3			13,909
Other ⁽²⁾		2,886		192		(481	)		454		657			3,708

Domestically sourced		100,556		39,451		(31,286	)		13,351		(20	)		122,052
Internationally sourced		22,508		12,097		(9,432	)		3,835		453			29,461

Total – Funds under Administration		123,064		51,548		(40,718	)		17,186		433			151,513


	Full Year Ended 30 June 2005
	Opening									FX⁽³⁾ &			Closing
	Balance							Investment		Other			Balance
	30/06/04		Inflows		Outflows			Income		Movements			30/06/05
Funds under Administration	$M		$M		$M			$M		$M			$M

FirstChoice & Avanteos ⁽⁴⁾		12,075		10,377		(4,265	)		1,153		(271	)		19,069
Cash management		4,414		2,961		(3,425	)		232		—			4,182
Other retail ⁽⁴⁾		34,705		4,417		(7,875	)		3,951		871			36,069

Australian retail		51,194		17,755		(15,565	)		5,336		600			59,320
Wholesale ⁽⁴⁾		23,955		10,841		(13,350	)		3,177		271			24,894
Property ⁽⁴⁾		12,624		1,207		(1,172	)		1,668		(871	)		13,456
Other		3,033		248		(786	)		391		—			2,886

Domestically sourced		90,806		30,051		(30,873	)		10,572		—			100,556
Internationally sourced		19,077		9,209		(7,931	)		2,453		(300	)		22,508

Total – Funds under Administration		109,883		39,260		(38,804	)		13,025		(300	)		123,064


	Half Year Ended 30 June 2006
	Opening										FX⁽³⁾ &			Closing
	Balance							Investment			Other			Balance
	31/12/05		Inflows		Outflows			Income			Movements			30/06/06
Funds under Administration	$M		$M		$M			$M			$M			$M

FirstChoice & Avanteos ⁽⁴⁾		24,770		12,655		(3,258	)		1,425			(217	)		35,375
Cash management		3,966		1,159		(1,548	)		113			—			3,690
Other retail ⁽⁴⁾		36,647		1,799		(3,937	)		1,459			(413	)		35,555

Australian retail		65,383		15,613		(8,743	)		2,997			(630	)		74,620
Wholesale ⁽⁴⁾		28,012		6,001		(5,901	)		1,753			(50	)		29,815
Property ⁽⁴⁾		13,750		304		(1,008	)		859			4			13,909
Other		3,349		95		(308	)		(85	)		657			3,708

Domestically sourced		110,494		22,013		(15,960	)		5,524			(19	)		122,052
Internationally sourced		26,480		6,633		(4,551	)		805			94			29,461

Total — Funds under Administration		136,974		28,646		(20,511	)		6,329			75			151,513

(1)		Includes stand alone retail and legacy retail products.

(2)		Includes life company assets sourced from retail investors but not attributable to a funds management product (e.g. premiums from risk products). These amounts do not appear in retail market share data.

(3)		Includes foreign exchange gains and losses from translation of internationally sourced business.

(4)		Other movements represent the re-alignment of funds to correctly classify source of funds.

Profit Announcement 19

Insurance Analysis

Financial Performance and Business Review

Performance Highlights

The Insurance business has delivered a strong result for the year to June 2006 with underlying profit after tax increasing by 38% to $215 million.

After adjusting the operating results following the sale of the Hong Kong Insurance business, underlying net profit after tax increased by 35% to $206 million.

The result was underpinned by:

•

Solid inforce premium and operating margin growth in Australia and New Zealand;

•

Positive experience variations; and

•

Good expense control.

The underlying net profit after tax result, on the same basis, for the second half increased 19% and was driven by similar themes to those mentioned above.

The full year cash net profit after tax of $416 million includes the profit from the sale of the Hong Kong Insurance business of $145 million. The cash net profit after tax for the year, excluding the profit on sale of the Hong Kong Insurance business, decreased by 12% mainly due to lower shareholder investment returns. This was the result of the relative strength of investment market indices in the prior year.

The Bank continues to be the largest life insurer in the Australian, New Zealand and Fiji markets.

Business Review

Australia

The Australian business, CommInsure, delivered a strong result for the year. Highlights include:

•

Maintaining number one market share position for Australian risk premiums with 13.5% of the life insurance risk market;

•

Launch of a Guaranteed Index Tracked Annuity Product and a Travel Insurance product; and

•

Productivity improvements through continued simplification and rationalisation of systems and processes.

Underlying net profit after tax was up 32% to $125 million compared to the prior year.

Key drivers of the performance for the year were:

•

Life and General Insurance premium growth, with inforce premiums increasing by 8% for the year;

•

Sales volume growth, particularly within General Insurance (up 13%) and Group Risk products (up 8%); and

•

Positive claims experience in both Life and General Insurance products, despite the impact of claims associated with Cyclone Larry in the second half of the year.

Cash net profit after tax decreased 3% for the year, impacted mainly by lower shareholder investment returns.

New Zealand

The life insurance operations in New Zealand operate predominantly under the Sovereign brand.

Sovereign’s underlying profit after tax was $77 million for the year, an increase of 48% on the prior year. The main drivers of this result were:

•

Strong growth in new business sales of risk products resulting in market share growth and improved margins;

•

Positive persistency experience; and

•

Good investment returns.

The Sovereign strategy has been to focus on growth in new business market share and this was successfully achieved in 2006 with 33.2% of new business sales at 31 March 2006 compared to 30.4% for the same period last year. This enabled Sovereign to grow inforce premiums to NZD 367 million or 14%. Sovereign retained it’s number 1 market share in inforce premium growing from 30.7% to 31.1% at 30 April 2006.

Asia

During the year the Hong Kong based life insurance, pensions administration and financial planning businesses were sold to Sun Life Financial on 18 October 2005.

The Asian insurance businesses now consist of the joint venture life insurance businesses in China, Vietnam and Indonesia.

The underlying profit after tax in the Asia business was $13 million.

Operating Income

After adjusting the operating results following the sale of the Hong Kong Insurance business, operating income of $700 million was up 13% compared to the prior year.

Life insurance income on the same basis increased 11% on the prior year. This reflects strong volume growth and favourable claims experience in both the Australian and New Zealand businesses.

General Insurance income of $73 million was up 35% on the prior year. The result was supported by inforce premium growth of 10% over the year together with favourable claims experience despite the impact of claims associated with Cyclone Larry.

Operating Expenses

After adjusting for the operating results following the sale of the Hong Kong Insurance business, operating expenses of $423 million were slightly lower compared to the prior year.

On an AGAAP basis, underlying expenses to average inforce premiums of 36% has exceeded the Which new Bank target of 42%. Productivity improved over the second half following continued strength in revenue growth.

Volume expenses have increased as a result of increased inforce premiums.

Corporate Taxation

The effective corporate tax rate (excluding the impact of the sale of the Hong Kong Insurance business) for the year was 27.3% compared with 22.4% in the prior year. The increase in the effective corporate tax rate is due to recognition of tax losses in the prior year.

20 Commonwealth Bank of Australia

Insurance Analysis continued


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Key Performance Indicators	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Insurance
Life insurance operating income		669		693		(3	)		322		347		(7	)
General insurance operating income		73		54		35			34		39		(13	)

Total operating income		742		747		(1	)		356		386		(8	)
Shareholder investment returns		87		204		(57	)		30		57		(47	)
Profit on sale of the Hong Kong Insurance business		145		—		—			—		145		—

Total insurance income		974		951		2			386		588		(34	)

Volume expense		181		218		17			86		95		9
Other operating expenses ⁽¹⁾		275		333		17			117		158		26
Which new Bank		—		2		—			—		—		—

Total operating expenses		456		553		18			203		253		20

Net profit before income tax		518		398		30			183		335		(45	)

Corporate tax expense ⁽²⁾		102		89		(15	)		51		51		—

Net profit after income tax (“cash basis”)		416		309		35			132		284		(54	)

Net profit after income tax (“underlying basis”) ⁽³⁾		215		156		38			112		103		9


Productivity and Other Measures

Expenses to average inforce premiums (%)		36.7		45.5		19	%		33.6		40.5		17	%
Expenses to average inforce premiums (underlying %) ⁽³⁾		36.7		45.3		19	%		33.6		40.5		17	%
Effective corporate tax rate excluding impact of profit on sale of Hong Kong business (%)		27.3		22.4	large				27.9		26.8	large

(1)		Operating expenses include $9 million internal expenses relating to the asset management of shareholder funds (June 2005: $10 million).

(2)		For purpose of presentation, Policyholder tax benefit and Policyholder tax expense are shown on a net basis (2006: $138 million).

(3)		Underlying basis excludes shareholder investment returns, the profit on the sale of the Hong Kong Insurance business and Which new Bank expenses.


	Full Year Ended								Half Year Ended
	30/06/06		30/06/05			Jun 06 vs			30/06/06			31/12/05		Jun 06 vs
Sources of Profit from Insurance Activities	$M		$M			Jun 05 %			$M			$M		Dec 05 %

The Margin on Services profit from ordinary activities after income tax is represented by:
Planned profit margins		146		122			20			77			69		12
Experience variations		48		27			78			29			19		53
Other		—		(8	)		—			(2	)		2	large
General insurance operating margins		21		13			62			8			13		(38	)

Operating margins		215		154			40			112			103		9
After tax shareholder investment returns		56		155			(64	)		20			36		(44	)
Profit on sale of the Hong Kong business		145		—			—			—			145		—

Net profit after income tax (“cash basis”)		416		309			35			132			284		(54	)

Geographical Analysis of Business Performance


	Full Year Ended
	Australia				New Zealand				Asia					Total
Net Profit after Income Tax	30/06/06		30/06/05		30/06/06		30/06/05		30/06/06			30/06/05		30/06/06		30/06/05
(“cash basis”)	$M		$M		$M		$M		$M			$M		$M		$M

Operating margins		125		94		77		52		13			8		215		154
After tax shareholder investment returns		56		92		17		22		(17	)		41		56		155
Profit on sale of Hong Kong business		—		—		—		—		145			—		145		—

Net profit after income tax		181		186		94		74		141			49		416		309


	Half Year Ended
	Australia				New Zealand				Asia						Total
Net Profit after Income Tax	30/06/06		31/12/05		30/06/06		31/12/05		30/06/06			31/12/05			30/06/06		31/12/05
(“cash basis”)	$M		$M		$M		$M		$M			$M			$M		$M

Operating margins		70		55		39		38		3			10			112		103
After tax shareholder investment returns		21		35		7		10		(8	)		(9	)		20		36
Profit on sale of Hong Kong business		—		—		—		—		—			145			—		145

Net profit after income tax		91		90		46		48		(5	)		146			132		284

Profit Announcement 21

Insurance Analysis Continued


	Full Year Ended 30 June 2006
	Opening										Closing
	Balance		Sales/New					Other			Balance
	30/06/05		Balances		Lapses			Movements ⁽²⁾			30/06/06
Annual Inforce Premiums ⁽¹⁾	$M		$M		$M			$M			$M

General insurance ⁽³⁾		215		70		(49	)		—			236
Personal life		785		137		(81	)		(109	)		732
Group life		265		71		(48	)		(33	)		255

Total		1,265		278		(178	)		(142	)		1,223


Australia		856		231		(166	)		—			921
New Zealand		296		47		(12	)		(29	)		302
Asia ⁽⁴⁾		113		—		—			(113	)		—

Total		1,265		278		(178	)		(142	)		1,223


	Full Year Ended 30 June 2005
	Opening									Closing
	Balance		Sales/New					Other		Balance
	30/06/04		Balances		Lapses			Movements ⁽²⁾		30/06/05
Annual Inforce Premiums ⁽¹⁾	$M		$M		$M			$M		$M

General insurance ⁽³⁾		192		62		(39	)		—		215
Personal life		703		164		(89	)		7		785
Group life		272		74		(87	)		6		265

Total		1,167		300		(215	)		13		1,265


Australia		815		228		(187	)		—		856
New Zealand		258		48		(15	)		5		296
Asia ⁽⁴⁾		94		24		(13	)		8		113

Total		1,167		300		(215	)		13		1,265


	Half Year Ended June 2006
	Opening										Closing
	Balance		Sales/New					Other			Balance
	31/12/05		Balances		Lapses			Movements ⁽²⁾			30/06/06
Annual Inforce Premiums ⁽¹⁾	$M		$M		$M			$M			$M

General insurance		225		35		(24	)		—			236
Personal life		740		65		(39	)		(34	)		732
Group life		251		31		(24	)		(3	)		255

Total		1,216		131		(87	)		(37	)		1,223


Australia		895		110		(83	)		(1	)		921
New Zealand		321		21		(4	)		(36	)		302
Asia		—		—		—			—			—

Total		1,216		131		(87	)		(37	)		1,223

(1)		Inforce premium relates to risk business. Savings products are disclosed within Funds Management.

(2)		Includes foreign exchange movements.

(3)		General insurance inforce premiums includes approximately $46 million of badged premium (June 2005: $40 million).

(4)		Other movements represent the sale of the Hong Kong Insurance business.

Inforce Premiums

Inforce premiums increased by 9% on the prior year excluding the impact of the sale of the Hong Kong Insurance business and the deterioration of the New Zealand dollar against the Australian dollar in the second half of the year. This was achieved through consistent growth in both Australia and New Zealand. General Insurance premiums increased by 10% for the year.

Australia maintained its leading position of inforce premiums with 13.5% of market share in total life insurance at 31 March 2006.

Sovereign increased its leading market position in New Zealand with an increase to 31.1%, from 30.7% in June 2005.

Market Share Percentage Annual Inforce Premiums ⁽¹⁾

30/06/06

31/12/05

30/06/05

Australia (total risk) ⁽²⁾

13.5

13.5

13.8

Australia (individual risk) ⁽²⁾

12.4

12.6

13.0

New Zealand ⁽²⁾

31.1

30.9

30.7

(1)		For market share definitions refer to appendix 25 page 68.

(2)		As at 31 March 2006.

22 Commonwealth Bank of Australia

Shareholder Investment Returns


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Shareholder Investment Returns	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Funds management business		14		33		(58	)		7		7		—
Insurance business ⁽¹⁾		87		204		(57	)		30		57		(47	)
Profit on sale of Hong Kong business		145		—		—			—		145		—

Shareholder investment returns before tax		246		237		4			37		209		(82	)
Taxation		35		60		42			12		23		48

Shareholder investment returns after tax		211		177		19			25		186		(87	)

(1)

Excluding profit on sale of the Hong Kong Insurance business.


	As at 30 June 2006
	Australia		New Zealand		Asia		Total
Shareholder Investment Asset Mix ($M)	$M		$M		$M		$M

Local equities		41		1		—		42
International equities		—		25		—		25
Property		307		8		—		315

Sub-total		348		34		—		382

Fixed interest		342		191		23		556
Cash		823		132		9		964

Sub-total		1,165		323		32		1,520

Total		1,513		357		32		1,902


	As at 30 June 2006
	Australia		New Zealand		Asia		Total
Shareholder Investment Asset Mix (%)	%		%		%		%

Local equities		3		—		—		2
International equities		—		7		—		1
Property		20		2		—		17

Sub-total		23		9		—		20

Fixed interest		23		54		72		29
Cash		54		37		28		51

Sub-total		77		91		100		80

Total		100		100		100		100

Shareholder investment returns of $246 million pre tax include a $145 million profit on the sale of the Bank’s Hong Kong life insurance business. More detail is contained in Appendix 18 on page 55.

Domestic and international investment markets performed strongly for the year to June 2006, with the benchmark S&P/ASX200 price index increasing by 19% and the MSCI World index by 15%. All other asset classes (fixed interest, property and cash) posted positive returns.

Excluding the profit on sale of the Hong Kong Insurance business, shareholder investment returns for the year of $101 million (pre tax) represent a significant decrease due to the relative strength of the indices in the prior year.

During the second half shareholder investment returns, excluding the profit from the sale of the Hong Kong Insurance business, decreased 42% to $37 million. This was also mainly due to weakening in the indices over the second half.

Profit Announcement 23

Financial Statement

Consolidated Income Statement
For the year ended 30 June 2006


			Full Year Ended						Half Year Ended
			30/06/06			30/06/05			30/06/06			31/12/05
	Appendix		$M			$M			$M			$M

Interest income				19,758			16,781			10,120			9,638
Interest expense ⁽¹⁾				13,244			10,755			6,861			6,383

Net interest income		1		6,514			6,026			3,259			3,255
Other operating income ⁽¹⁾		5		3,036			2,845			1,591			1,445

Net banking operating income				9,550			8,871			4,850			4,700

Funds management income				1,589			1,247			852			737
Investment revenue				2,098			1,956			719			1,379
Claims and policyholder liability expense				(2,064	)		(1,871	)		(721	)		(1,343	)

Net funds management operating income				1,623			1,332			850			773

Premiums from insurance contracts				1,052			1,132			479			573
Investment revenue				1,031			1,186			338			693
Claims and policyholder liability expense from insurance contracts				(970	)		(1,243	)		(384	)		(586	)

Insurance margin on services operating income				1,113			1,075			433			680


Total net operating income				12,286			11,278			6,133			6,153

Bad debts expense				398			322			210			188
Operating expenses:
Comparable business		6		5,994			5,719			3,027			2,967
Which new Bank		6		—			150			—			—

Total operating expenses		6		5,994			5,869			3,027			2,967

Defined benefit superannuation plan expense				(35	)		(75	)		(8	)		(27	)

Profit before income tax				5,859			5,012			2,888			2,971

Corporate tax expense		7		1,569			1,374			816			753
Policyholder tax expense		7		331			228			130			201

Profit after income tax				3,959			3,410			1,942			2,017
Minority interests				(31	)		(10	)		(13	)		(18	)

Net profit attributable to members of the Bank				3,928			3,400			1,929			1,999

(1)

Due to a change in the accounting policy regarding classification of interest expense on certain non traded derivatives, a prior period re-classification of $29 million between interest expense and other operating income has occurred for the half year ended 31 December 2005.


	Cents per share

Earnings per share:
Cash Basic (excluding profit on the sale of the Hong Kong Insurance Business)		304.6	264.8	154.9	149.5
Statutory Basic		308.2	259.6	151.1	157.1

Dividends per share attributable to shareholders of the Bank:
Ordinary shares		224	197	130	94
PERLS ⁽¹⁾		—	1,115	—	—
Trust preferred securities (TPS) – issued 6 August 2003 ⁽¹⁾		—	7,795	—	—
PERLS II – issued 6 January 2004 ⁽¹⁾		—	908	—	—

(1)

Instruments reclassified to loan capital on adoption of AIFRS from 1 July 2005.


	$M			$M			$M			$M

Net profit after income tax comprises:
Net Profit after income tax (“underlying basis”)		3,842			3,420			1,967			1,875
Shareholder investment returns (after tax)		66			177			25			41
Which new Bank (after tax)		—			(105	)		—			—
Profit on sale of the Hong Kong Insurance business		145			—			—			145

Net profit after income tax (“cash basis”)		4,053			3,492			1,992			2,061


Defined benefit superannuation plan expense		(25	)		(53	)		(6	)		(19	)
Treasury share valuation adjustment		(100	)		(39	)		(57	)		(43	)

Net profit after income tax (“statutory basis”)		3,928			3,400			1,929			1,999

24 Commonwealth Bank of Australia

Financial Statements continued

Consolidated Balance Sheet
As at 30 June 2006


	As At
			30/06/06		31/12/05		30/06/05
	Appendix		$M		$M		$M

Assets
Cash and liquid assets				5,131		7,269		6,055
Receivables due from other financial institutions				7,107		5,279		6,087
Assets at fair value through Income Statement:
Trading				15,758		15,617		14,631
Insurance				24,437		25,141		27,484
Other				2,944		3,590		—
Derivative assets				9,675		8,238		—
Available for sale investments				11,203		9,605		—
Investment securities				—		—		10,838
Loans, advances and other receivables		8		259,176		245,606		228,346
Bank acceptances of customers				18,310		17,263		16,786
Investment property				258		252		252
Property, plant and equipment				1,314		1,143		1,132
Investment in associates				190		191		52
Intangible assets		16		7,809		7,740		7,656
Deferred tax assets				650		891		651
Other assets				5,141		3,368		17,434

Total assets				369,103		351,193		337,404


Liabilities
Deposits and other public borrowings		10		173,227		168,723		168,026
Payables due to other financial institutions				11,184		9,902		8,023
Liabilities at fair value through Income Statement				13,811		16,322		—
Derivative liabilities				10,820		9,391		—
Bank acceptances				18,310		17,263		16,786
Current tax liabilities				378		575		833
Deferred tax liabilities				1,336		1,153		921
Other provisions				821		846		871
Insurance policy liabilities		15		22,225		23,055		24,694
Debt issues				78,591		70,036		70,765
Managed funds units on issue				1,109		1,031		—
Bills payable and other liabilities				6,053		3,917		17,551

				337,865		322,214		308,470
Loan capital				9,895		9,129		6,291

Total liabilities				347,760		331,343		314,761

Net assets				21,343		19,850		22,643


Shareholders’ Equity
Share capital:
Ordinary share capital		14		13,505		13,801		13,486
Preference share capital				—		—		687
Other equity instruments				939		—		1,573
Reserves				1,904		1,936		1,265
Retained profits		19		4,487		3,590		3,843

Shareholders’ equity attributable to members of the Bank				20,835		19,327		20,854


Minority interests:
Controlled entities				508		523		631
Insurance statutory funds and other funds				—		—		1,158

Total shareholders’ equity				21,343		19,850		22,643

Profit Announcement 25

Financial Statements continued

Consolidated Statement of Cash Flows ^{(1) (2)}
For the year ended 30 June 2006


		Full Year Ended
		30/06/06			30/06/05
	Appendix	$M			$M

Cash Flows from Operating Activities
Interest received			19,712			16,781
Interest paid			(12,555	)		(10,720	)
Other operating income received			4,319			4,559
Expenses paid			(5,809	)		(5,678	)
Income taxes paid			(1,980	)		(985	)
Net decrease in trading securities			—			318
Assets at fair value through Income Statement (excluding life insurance)			(307	)		—
Life insurance:
Investment income			2,399			1,572
Premiums received ⁽³⁾			2,338			3,183
Policy payments ⁽³⁾			(4,938	)		(4,664	)
Liabilities at fair value through Income Statement (excluding life insurance)			1,445			—

Cash Flows from operating activities before changes in operating assets and liabilities			4,624			4,366
Changes in operating assets and liabilities arising from cash flow movements
Movement in investment securities:
Purchases			—			(22,608	)
Proceeds from sale			—			396
Proceeds at or close to maturity			—			22,799

Movement in available for sale investments:
Purchases			(28,189	)		—
Proceeds from sale			646			—
Proceeds at or close to maturity			24,831			—
Lodgement of deposits with regulatory authorities			(29	)		(7	)
Net (increase) in loans, advances and other receivables			(31,996	)		(31,721	)
Net (increase)/decrease in receivables due from other financial institutions not at call			(881	)		1,097
Net decrease in securities purchased under agreements to resell			537			991

Life insurance business:
Purchase of insurance assets at fair value through Income Statement			(8,078	)		(14,165	)
Proceeds from sale/maturity of insurance assets at fair value through Income Statement			9,398			15,281
Net increase in deposits and other borrowings			12,799			6,332
Net proceeds from issuance of debt securities			14,605			17,934
Net increase in payables due to other financial institutions not at call			2,571			449
Net increase/(decrease) in securities sold under agreements to repurchase			328			(1,480	)

Changes in operating assets and liabilities arising from cash flow movements			(3,458	)		(4,702	)

Net cash provided by/(used in) Operating Activities	19 (a)		1,166			(336	)


Cash flows from Investing Activities
Payment for acquisition of entities and management rights	19 (e)		(418	)		(40	)
Proceeds from disposal of controlled entities	19 (c)		553			—
Proceeds from disposal of entities and businesses (net of cash disposed)			35			173
Dividend received			4			3
Proceeds from sale of property, plant and equipment			32			30
Purchases of property, plant and equipment			(385	)		(286	)
Payment for acquisition of investments in associates			(152	)		(42	)
Purchases of intangible assets			(90	)		(92	)
Net decrease in other assets			31			1,055

Net Cash (used in)/provided by Investing Activities			(390	)		801

(1)		It should be noted that the Bank does not use this accounting Statement of Cash Flows in the internal management of its liquidity positions.

(2)		Adjusted for AIFRS gross-up. Refer note 1 (mm) (ii) of the 31 December 2005 Profit Announcement.

(3)		These were gross premiums and policy payments before splitting between policyholders and shareholders.

26 Commonwealth Bank of Australia

Financial Statements continued

Consolidated Statement of Cash Flows ⁽¹⁾ ⁽²⁾ (continued)
For the year ended 30 June 2006


				Full Year Ended
				30/06/06			30/06/05
	Appendix			$M			$M

Cash Flows from Financing Activities
Buy back of shares					(500	)		—
Proceeds from issue of shares (net of costs)					49			66
Proceeds from issue of preference shares to minority interests					—			323
Proceeds from issue of other equity instruments (net of costs)					939			—
Dividends paid (excluding DRP buy back of shares)					(2,163	)		(2,083	)
Net movement in other liabilities					139			(330	)
Net (purchase)/sale of treasury shares					(10	)		(60	)
Issue of loan capital					2,446			1,233
Redemption of loan capital					(915	)		(1,392	)
Other					1			55

Net cash (used in)/provided by financing activities					(14	)		(2,188	)


Net increased/(decrease) in cash and cash equivalents					762			(1,723	)
Cash and cash equivalents at beginning of period					1,276			2,999

Cash and cash equivalents at end of period		19	(b)		2,038			1,276


(1)		It should be noted that the Bank does not use this accounting Statement of Cash Flows in the internal management of its liquidity positions.

(2)		Adjusted for AIFRS gross-up. Refer note 1 (mm) (ii) of the 31 December 2005 Profit Announcement.

Profit Annoucement 27

Appendices

1. Net Interest Income


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Interest Income	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Loans		17,304		14,846		17			8,829		8,475		4
Other financial institutions		333		229		45			158		175		(10	)
Cash and liquid assets		250		198		26			147		103		43
Investment securities		—		723		—			—		—		—
Assets at fair value through the Income Statement		1,186		785		51			645		541		19
Available-for-sale investments		685		—		—			341		344		(1	)

Total interest income		19,758		16,781		18			10,120		9,638		5


Interest Expense
Deposits		7,388		7,063		(5	)		3,765		3,623		(4	)
Other financial institutions		475		257		(85	)		262		213		(23	)
Liabilities at fair value through the Income Statement		971		—		—			490		481		(2	)
Debt issues		3,795		3,084		(23	)		2,011		1,784		(13	)
Loan capital		615		351		(75	)		333		282		(18	)

Total interest expense		13,244		10,755		(23	)		6,861		6,383		(7	)

Net interest income		6,514		6,026		8			3,259		3,255		—

2. Net Interest Margin

Full Year Ended

Half Year Ended

30/06/06

30/06/05

30/06/06

31/12/05

Australia

Interest spread ⁽¹⁾

2.21

2.33

2.15

2.27

Benefit of interest free liabilities, provisions and equity ⁽²⁾

0.24

0.25

0.23

0.26

Net interest margin ⁽³⁾

2.45

2.58

2.38

2.53

Overseas

Interest spread ⁽¹⁾

0.97

1.03

0.97

0.97

Benefit of interest free liabilities, provisions and equity ⁽²⁾

0.67

0.68

0.68

0.65

Net interest margin ⁽³⁾

1.64

1.71

1.65

1.62

Total Bank

Interest spread ⁽¹⁾

1.98

2.08

1.95

2.02

Benefit of interest free liabilities, provisions and equity ⁽²⁾

0.36

0.35

0.34

0.37

Net interest margin ⁽³⁾

2.34

2.43

2.29

2.39


(1)		Difference between the average interest rate earned and the average interest rate paid on funds.

(2)		A portion of the Bank’s interest earning assets is funded by interest free liabilities and shareholders’ equity. The benefit to the Bank of these interest free funds is the amount it would cost to replace them at the average cost of funds.

(3)		Net interest income divided by average interest earning assets for the year.

Profit Announcement 29

Appendeces

3. Average Balances and Related Interest

The following table lists the major categories of interest earning assets and interest bearing liabilities of the Bank together with the respective interest earned or paid and the average interest rate for each of the years ending 30 June 2006 and 30 June 2005 together with the half years ending 30 June 2006, 31 December 2005 and 30 June 2005. Averages used were predominantly daily averages. Interest is accounted for based on product yield, while all trading gains and losses are disclosed as trading income within other banking income.

Where assets or liabilities are hedged, the amounts are shown net of the hedge, however individual items not separately hedged may be affected by movements in exchange rates.

The overseas component comprises overseas branches of the Bank and overseas domiciled controlled entities.

Non-accrual loans were included in interest earning assets under loans, advances and other.

The official cash rate in Australia increased by 25 bpts during the year while rates in New Zealand increased by a total of 50 basis points.

In the current period, certain interest income and expense items have been reallocated across the average balance sheet line items to better reflect the underlying changes in yield. This reallocation is necessary due to the impact of AIFRS hedge accounting and financial instrument reclassifications. The average balance sheet for the half year ended 31 December 2005 has been restated on a consistent basis.

Average Balances


	Full Year Ended 30/06/06						Full Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield
Interest Earning Assets	$M		$M		%		$M		$M		%

Home loans excluding securitisation		147,710		9,988		6.76		132,086		8,769		6.64
Personal ⁽¹⁾		16,174		1,753		10.84		14,615		1,541		10.54
Business and corporate		68,739		4,798		6.98		58,731		3,939		6.71

Loans, Advances and Other Receivables		232,623		16,539		7.11		205,432		14,249		6.94

Cash and other liquid assets		11,512		583		5.06		10,978		427		3.89
Assets at fair value through Income Statement (excluding life insurance) ⁽²⁾		19,145		1,186		6.19		15,385		785		5.10
Investment Securities		—		—		—		12,913		723		5.60
Available-for-sale investments		11,518		685		5.95		—		—		—

Non Lending Interest Earning Assets		42,175		2,454		5.82		39,276		1,935		4.93

Total interest earning assets (excluding securitisation) ⁽³⁾		274,798		18,993		6.91		244,708		16,184		6.61
Securitisation home loan assets		10,887		765		7.03		8,568		597		6.97
Non interest earning assets		67,729						70,324

Total Average Assets		353,414						323,600


Interest Bearing Liabilities

Transaction deposits		33,827		975		2.88		31,788		770		2.42
Savings deposits		39,968		1,443		3.61		38,221		1,274		3.33
Investment deposits		66,573		3,667		5.51		64,025		3,618		5.65
Certificates of deposits and other ⁽²⁾		19,699		1,303		6.61		25,833		1,401		5.42

Total Interest Bearing Deposits		160,067		7,388		4.62		159,867		7,063		4.42

Payable due to other financial Institutions		9,631		475		4.93		7,999		257		3.21
Liabilities at fair value through the Income Statement		15,304		971		6.34		—		—		—
Debt issue ⁽²⁾		60,918		3,124		5.13		51,393		2,557		4.98
Loan Capital ⁽²⁾		9,180		615		6.70		6,338		351		5.54

Total Interest Bearing Liabilities		255,100		12,573		4.93		225,597		10,228		4.53

Securitisation debt issues		11,541		671		5.81		9,911		527		5.32
Non Interest Bearing Liabilities		64,780						66,062

Total Average Liabilities		331,421						301,570


(1)		Personal includes personal loans, credit cards, and margin loans.

(2)		Comparisons between reporting periods are impacted by hedge acconting.

(3)		Used for calculating net interest margin.

30 Commonwealth Bank of Australia

Appendices

3. Average Balances and Related Interest (continued)

Average Balances


	Half Year Ended 30/06/06						Half Year Ended 31/12/05						Half Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield			Avg Bal		Income		Yield
Interest Earning Assets	$M		$M		%		$M		$M		%			$M		$M		%

Home loans excluding securitisation		150,588		5,063		6.78		144,879		4,925		6.74			136,102		4,529		6.71
Personal ⁽¹⁾		16,475		885		10.83		15,878		868		10.84			15,342		810		10.65
Business and corporate		72,565		2,468		6.86		64,975		2,330		7.11			60,261		2,021		6.76

Loans, Advances and Other Receivables		239,628		8,416		7.08		225,732		8,123		7.14			211,705		7,360		7.01

Cash and other liquid assets		12,068		305		5.10		10,965		278		5.03			10,969		219		4.03
Assets at fair value through Income Statement (ex life insurance) ⁽²⁾		19,473		645		6.68		18,822		541		5.70			14,960		391		5.27
Investment Securities		—		—		—		—		—		—			12,723		379		6.01
Available-for-sale investments		11,384		341		6.04		11,650		344		5.86			—		—		—

Non Lending Interest Earning Assets		42,925		1,291		6.06		41,437		1,163		5.57			38,652		989		5.16

Total interest earning assets (excluding securitisation) ⁽³⁾		282,553		9,707		6.93		267,169		9,286		6.89			250,357		8,349		6.73
Securitisation home loan assets		11,775		413		7.07		10,013		352		6.97			9,932		343		6.96
Non interest earning assets		67,847						67,613							70,197

Total Average Assets		362,175						344,795							330,486


Interest Bearing Liabilities

Transaction deposits		34,403		509		2.98		33,259		466		2.78			32,454		414		2.57
Savings deposits		40,876		748		3.69		39,075		695		3.53			38,193		638		3.37
Investment deposits		68,226		1,862		5.50		64,948		1,804		5.51			65,577		1,870		5.75
Certificates of deposits and other ⁽²⁾		19,901		646		6.55		19,500		658		6.69			25,467		704		5.57

Total Interest Bearing Deposits		163,406		3,765		4.65		156,782		3,623		4.58			161,691		3,626		4.52


Payable due to other financial Institutions		10,291		262		5.13		8,982		213		4.70			8,181		131		3.23
Liabilities at fair value through the Income Statement		15,528		490		6.36		15,084		481		6.33			—		—		—
Debt issue ⁽²⁾		64,193		1,655		5.20		57,696		1,469		5.05			54,277		1,378		5.12
Loan Capital ⁽²⁾		9,785		333		6.86		8,585		282		6.52			6,203		186		6.05

Total Interest Bearing Liabilities		263,203		6,505		4.98		247,129		6,068		4.87			230,352		5,321		4.66

Securitisation debt issues		11,856		356		6.06		11,231		315		5.56			11,124		303		5.49
Non Interest Bearing Liabilities		64,393						65,161							66,609

Total Average Liabilities		339,452						323,521							308,085


(1)		Personal includes personal loans, credit cards, and margin loans.

(2)		Comparisons between reporting periods are impacted by hedge acconting.

(3)		Used for calculating net interest margin.

Profit Announcement 31

Appendices

3. Average Balances and Related Interest (continued)


	Full Year Ended 30/06/06						Full Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield
Net Interest Margin	$M		$M		%		$M		$M		%


Total interest earning assets excluding securitisation		274,798		18,993		6.91		244,708		16,184		6.61
Total interest bearing liabilities excluding securitisation		255,100		12,573		4.93		225,597		10,228		4.53

Net interest income & interest spread (excluding securitisation)				6,420		1.98				5,956		2.08
Benefit of free funds						0.36						0.35

Net interest margin						2.34						2.43


	Full Year Ended
	30/06/06		30/06/05		Jun 06 vs
Reconciliation of Net Interest Margin	%		%		Jun 05 %

Net interest Margin as reported		2.34		2.43	(9)bpts
AIFRS volatility ⁽¹⁾		0.02		—	2bpts

Underlying net interest margin		2.36		2.43	(7)bpts


(1)		Relates to the movement in the AIFRS impact (mainly hybrid distributions and hedge accounting) between repoting periods.

Geographical analysis of key categories


	Full Year Ended 30/06/06						Full Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield
Loans, Advances and Other	$M		$M		%		$M		$M		%

Australia		192,086		13,527		7.04		171,249		11,822		6.90
Overseas		40,537		3,012		7.43		34,183		2,427		7.10

Total		232,623		16,539		7.11		205,432		14,249		6.94


Non Lending Interest Earning Assets
Australia		24,123		1,462		6.06		22,020		1,138		5.17
Overseas		18,052		992		5.50		17,256		797		4.62


Total		42,175		2,454		5.82		39,276		1,935		4.93

Total Interest Bearing Deposits
Australia		137,101		6,041		4.41		134,365		5,422		4.04
Overseas		22,966		1,347		5.87		25,502		1,641		6.43

Total		160,067		7,388		4.62		159,867		7,063		4.42


Other Interest Bearing Liabilities
Australia		58,271		3,308		5.68		42,126		2,466		5.85
Overseas		36,762		1,877		5.11		23,604		699		2.96

Total		95,033		5,185		5.46		65,730		3,165		4.82

The overseas component comprises overseas branches of the Bank and overseas domiciled controlled entities. Overseas intragroup borrowings have been adjusted into the interest spread and margin calculations to more appropriately reflect the overseas cost of funds. Non–accrual loans were included in interest earning assets under loans, advances and other receivables.

In calculating net interest margin, assets, liabilities, interest income and interest expense related to securitisation vehicles have been excluded. This has been done to more accurately reflect the Bank’s underlying net margin.

32 Commwealth Bank of Australia

Appendices

3. Average Balances and Related Interest (continued)


	Half Year Ended 30/06/06						Half Year Ended 31/12/05						Half Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield		Avg Bal		Income		Yield
Net Interest Margin	$M		$M		%		$M		$M		%		$M		$M		%

Total interest earning assets excluding securitisation		282,553		9,707		6.93		267,169		9,286		6.89		250,357		8,349		6.73
Total interest bearing liabilities excluding securitisation		263,203		6,505		4.98		247,129		6,068		4.87		230,352		5,321		4.66

Net interest income & interest spread (excluding securitisation)				3,202		1.95				3,218		2.02				3,028		2.07

Benefit of free funds						0.34						0.37						0.37

Net interest margin						2.29						2.39						2.44


	Half Year Ended
	30/06/06		31/12/05		Jun 06 vs
Reconciliation of Net Interest Margin	%		%		Dec 05 %

Net interest margin as reported⁽¹⁾		2. 29		2. 39	(10)bpts
AIFRS volatility ⁽²⁾		0. 01		—	1bpt

Underlying net interest margin		2. 30		2. 39	(9)bpts


(1)		Restated from 2.41% in the 31 December 2005 Profit Announcement due to a change in accounting policy regarding classification of interest expense on certain non-traded derivatives (resulted in a $29 million increase in interest expense).

(2)		Relates to the movement in the AIFRS impact (mainly hybrid distributions and hedge accounting) between repoting periods.

Geographical analysis of key categories


	Half Year Ended 30/06/06						Half Year Ended 31/12/05						Half Year Ended 30/06/05
	Avg Bal		Income		Yield		Avg Bal		Income		Yield		Avg Bal		Income		Yield
Loans, Advances and Other	$M		$M		%		$M		$M		%		$M		$M		%

Australia		197,262		6,810		6.96		186,994		6,717		7.13		176,197		6,080		6.96
Overseas		42,366		1,606		7.64		38,738		1,406		7.20		35,508		1,280		7.27

Total		239,628		8,416		7.08		225,732		8,123		7.14		211,705		7,360		7.01


Non Lending Interest Earning Assets
Australia		24,695		754		6.16		23,560		708		5.96		21,633		574		5.35
Overseas		18,230		537		5.94		17,877		455		5.05		17,019		415		4.92

Total		42,925		1,291		6.06		41,437		1,163		5.57		38,652		989		5.16


Total Interest Bearing Deposits
Australia		140,037		3,046		4.39		134,212		2,995		4.43		135,402		2,756		4.10
Overseas		23,369		719		6.20		22,570		628		5.52		26,289		870		6.67

Total		163,406		3,765		4.65		156,782		3,623		4.58		161,691		3,626		4.52


Other Interest Bearing Liabilities
Australia		60,216		1,693		5.67		56,358		1,615		5.68		44,260		1,289		5.87
Overseas		39,581		1,047		5.33		33,989		830		4.84		24,401		406		3.36

Total		99,797		2,740		5.54		90,347		2,445		5.37		68,661		1,695		4.98

Profit Announcement 33

Appendices

4. Interest Rate and Volume Analysis


	Full Year Ended
	30/06/06
	vs 30/06/05
	Increase/
	(Decrease)
Change in Net Interest Income

Due to changes in average volume of interest earning assets and interest bearing liabilities		718
Due to changes in interest margin		(254	)
Due to variation in time period		—

Change in net interest income		464


	Full Year Ended Jun 06 vs Jun 05									Full Year Ended Jun 05 vs Jun 04
	Volume			Rate			Total			Volume			Rate		Total
Interest Earning Assets	$M			$M			$M			$M			$M		$M

Home loans		1,047			172			1,219			1,345			318		1,663
Personal		167			45			212			213			77		290
Business and corporate		685			174			859			432			165		597

Loans, advances and other receivables		1,910			380			2,290			1,992			558		2,550


Cash and other liquid assets		24			132			156			(40	)		87		47
Assets at fair value through Income Statement (excluding life insurance)		212			189			401			109			76		185
Investment securities		(362	)		(361	)		(723	)		3			112		115
Available-for-sale investments		343			342			685			—			—		—

Non lending interest earning assets		156			363			519			54			293		347

Total interest earning assets		2,035			774			2,809			1,956			941		2,897

Securitisation home loan assets		162			6			168			299			298		597


Interest Bearing Liabilities

Transaction deposits		54			151			205			42			94		136
Savings deposits		61			108			169			51			104		155
Investment deposits		143			(94	)		49			377			361		738
Certificates of deposits and other		(369	)		271			(98	)		(23	)		108		85

Total interest bearing deposits		9			316			325			421			693		1,114


Payable due to other financial institutions		66			152			218			29			68		97
Liabilities at fair value through Income Statement		486			485			971			—			—		—
Debt issues		481			86			567			775			277		1,052
Loan capital		174			90			264			17			71		88

Total interest bearing liabilities		1,396			949			2,345			1,196			1,155		2,351

Securitised debt issues		91			53			144			264			263		527

These volume and rate analyses were for the years ending 30 June 2006 and 30 June 2005. The volume and rate variances for total interest earning assets and liabilities have been calculated separately (rather than being the sum of the individual categories).


	Full Year Ended Jun 06 vs Jun 05									Full Year Ended Jun 05 vs Jun 04
	Volume			Rate			Total			Volume		Rate		Total
Geographical analysis of key categories	$M			$M			$M			SM		$M		$M

Loans, Advances and Other
Australia		1,453			252			1,705			1,474		421		1,895
Overseas		462			123			585			521		134		655

Total		1,910			380			2,290			1,992		558		2,550


Non Lending Interest Earning Assets
Australia		118			206			324			25		158		183
Overseas		40			155			195			28		136		164

Total		156			363			519			54		293		347


Total Interest Bearing Deposits
Australia		115			504			619			269		457		726
Overseas		(156	)		(138	)		(294	)		185		203		388

Total		9			316			325			421		693		1,114


Other Interest Bearing Liabilities
Australia		931			(89	)		842			702		182		884
Overseas		531			647			1,178			134		219		353

Total		1,505			515			2,020			798		439		1,237

34 Commonwealth Bank of Australia

Appendices

4. Interest Rate and Volume Analysis (continued)


	Half Year Ended
	30/06/06			30/06/06
	vs 31/12/05			vs 30/06/05
	Increase/			Increase/
	(Decrease)			(Decrease)
Change in Net Interest Income	$M			$M

Due to changes in average volume of interest earning assets and interest bearing liabilities		178			377
Due to changes in interest margin		(142	)		(203	)
Due to variation in time period		(52	)		—

Change in net interest income		(16	)		174


	Half Year Ended Jun 06 vs Dec 05									Half Year Ended Jun 06 vs Jun 05
	Volume			Rate			Total			Volume			Rate			Total
Interest Earning Assets	$M			$M			$M			$M			$M			$M

Home loans		193			(55	)		138			485			49			534
Personal		32			(15	)		17			60			15			75
Business and corporate		265			(127	)		138			416			31			447

Loans, advances and other receivables		494			(201	)		293			976			80			1,056

Cash and other liquid assets		28			(1	)		27			25			61			86
Assets at fair value through Income Statement (excluding life insurance)		20			84			104			134			120			254
Investment securities		—			—			—			(190	)		(189	)		(379	)
Available-for-sale investments		(8	)		(5	)		(3	)		171			170			341

Non lending interest earning assets		43			85			128			119			183			302

Total interest earning assets		532			(111	)		421			1,090			268			1,358

Securitisation home loan assets		62			(1	)		61			64			6			70


Interest Bearing Liabilities
Transaction deposits		16			27			43			27			68			95
Savings deposits		33			20			53			47			63			110
Investment deposits		91			(33	)		58			74			(82	)		(8	)
Certificates of deposits and other		12			(24	)		(12	)		(168	)		110			(58	)

Total interest bearing deposits		153			(11	)		142			39			100			139


Payable due to other financial institutions		32			17			49			44			87			131
Liabilities at fair value through Income Statement		14			(5	)		9			245			245			490
Debt issues		166			20			186			254			23			277
Loan capital		40			11			51			115			32			147

Total interest bearing liabilities		396			41			437			785			399			1,184

Securitised debt issues		18			23			41			21			32			53


	Half Year Jun 06 vs Dec 05							Half Year Jun 06 vs Jun 05
Geographical analysis of key	Volume		Rate			Total		Volume			Rate			Total
categories	$M		$M			$M		$M			$M			$M

Loans, Advances and Other
Australia		362		(269	)		93		727			3			730
Overseas		135		65			200		254			72			326

Total		494		(201	)		293		976			80			1,056


Non Lending Interest Earning Assets
Australia		34		12			46		87			93			180
Overseas		10		72			82		33			89			122

Total		43		85			128		119			183			302


Total Interest Bearing Deposits
Australia		128		(77	)		51		98			192			290
Overseas		23		68			91		(93	)		(58	)		(151	)

Total		153		(11	)		142		39			100			139


Other Interest Bearing Liabilities
Australia		109		(31	)		78		457			(53	)		404
Overseas		142		75			217		327			314			641

Total		258		37			295		812			233			1,045

These volume and rate analyses were for half year periods. The calculations were based on balances over the half year. The volume and rate variances for total interest earning assets and liabilities have been calculated separately (rather than being the sum of the individual categories).

Profit Announcement 35

Appendices

5. Other Banking Operating Income


	Full Year Ended									Half Year Ended
	30/06/06			30/06/05			Jun 06 vs			30/06/06			31/12/05			Jun 06 vs
	$M			$M			Jun 05 %			$M			$M			Dec 05 %

Lending fees		800			733			9			411			389			6
Commission and other fees		1,635			1,545			6			820			815			1
Trading income		505			440			15			261			244			7
Net gain/(loss) on disposal of non-trading instruments		45			(13	)	large				44			1		large
Dividends		4			3			33			3			1		large
Net profit on sale of property, plant and equipment		4			4			—			4			—			—
Other		122			133			(8	)		87			35		large

		3,115			2,845			9			1,630			1,485			10
Non-trading derivatives		(79	)		—			—			(39	)		(40	)		(3	)

Total other banking operating income		3,036			2,845			7			1,591			1,445			10

6. Operating Expenses


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Expenses	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Operating expenses		5,994		5,719		(5	)		3,027		2,967		(2	)
Which new Bank		—		150		—			—		—		—

Total		5,994		5,869		(2	)		3,027		2,967		(2	)


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Expenses by Segment	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Operating expenses
Banking		4,558		4,380		(4	)		2,298		2,260		(2	)
Funds management		989		798		(24	)		530		459		(15	)
Insurance		447		541		17			199		248		20

		5,994		5,719		(5	)		3,027		2,967		(2	)

Which new Bank
Banking		—		112		—			—		—		—
Funds management		—		36		—			—		—		—
Insurance		—		2		—			—		—		—

		—		150		—			—		—		—

Total		5,994		5,869		(2	)		3,027		2,967		(2	)


	Full Year Ended							Half Year Ended
	30/06/06		30/06/05		Jun 06 vs			30/06/06		31/12/05		Jun 06 vs
Expenses by Category	$M		$M		Jun 05 %			$M		$M		Dec 05 %

Staff		2,823		2,673		(6	)		1,437		1,386		(4	)
Occupancy and equipment		621		613		(1	)		311		310		—
Information technology services		985		956		(3	)		483		502		4
Other expenses		1,565		1,477		(6	)		796		769		(4	)

Operating expenses		5,994		5,719		(5	)		3,027		2,967		(2	)
Which new Bank		—		150		—			—		—		—

Total		5,994		5,869		(2	)		3,027		2,967		(2	)

Capitalisation of Computer Software Costs

Capitalised computer software costs (net of amortisation) totalled $229 million as at 30 June 2006 (December 2005: $188 million and June 2005: $182 million). Expenditure in the year principally comprises development of customer focussed systems.

36 Commonwealth Bank of Australia

Appendices

6. Operating Expenses (continued)


	Full Year Ended				Half Year Ended
	30/06/06		30/06/05		30/06/06		31/12/05
	$M		$M		$M		$M

Staff Expenses
Salaries and wages		2,419		2,274		1,237		1,182
Share based compensation		39		74		17		22
Superannuation contributions		8		7		4		4
Provisions for employee entitlements		66		67		31		35
Payroll tax		123		115		62		61
Fringe benefits tax		34		32		17		17
Other staff expenses		134		104		69		65

Comparable business		2,823		2,673		1,437		1,386
Which new Bank		—		50		—		—

Total staff expenses		2,823		2,723		1,437		1,386


Occupancy and Equipment Expenses
Operating lease rentals		338		331		169		169
Depreciation
Buildings		22		21		11		11
Leasehold improvements		56		58		28		28
Equipment		64		63		31		33
Operating lease assets		9		8		5		4
Repairs and maintenance		73		71		39		34
Other		59		61		28		31

Comparable business		621		613		311		310
Which new Bank		—		13		—		—

Total occupancy and equipment expenses		621		626		311		310


Information Technology Services
Projects and development		364		331		179		185
Data processing		227		248		109		118
Desktop		137		150		61		76
Communications		201		204		99		102
Amortisation of software assets		43		17		27		16
IT Equipment Depreciation		13		6		8		5

Comparable business		985		956		483		502
Which new Bank		—		52		—		—

Total information technology services		985		1,008		483		502


Other Expenses
Postage		118		112		60		58
Stationery		98		108		47		51
Fees and commissions		636		614		322		314
Advertising, marketing and loyalty		307		288		161		146
Amortisation of other intangible assets (excluding software)		6		3		4		2
Non lending losses		116		103		64		52
Other		284		249		138		146

Comparable business		1,565		1,477		796		769
Which new Bank		—		35		—		—

Total other expenses		1,565		1,512		796		769

Comparable business		5,994		5,719		3,027		2,967
Which new Bank		—		150		—		—

Total Operating Expenses		5,994		5,869		3,027		2,967

Profit Announcement 37

Appendices

7. Income Tax Expense


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
	$M			$M			$M			$M

Profit from Ordinary Activities before Income Tax
Banking		4,594			4,057			2,342			2,252
Funds management		643			508			324			319
Insurance		657			522			230			427
Defined benefit superannuation plan expense		(35	)		(75	)		(8	)		(27	)

		5,859			5,012			2,888			2,971


Prima Facie Income Tax at 30%
Banking		1,378			1,217			702			676
Funds management		193			153			97			96
Insurance		197			157			69			128
Defined benefit superannuation plan expense		(11	)		(23	)		(3	)		(8	)

		1,757			1,504			865			892


Tax effect of expenses that are non-deductible/income non-assessable in determining taxable profit:

Current period
Taxation offsets and other dividend adjustments		(29	)		(48	)		(11	)		(18	)
Tax adjustment referable to policyholder income		232			160			91			141
Non assessable income – life insurance transitional fee relief		—			(30	)		—			—
Non–assessable gains		(43	)		—			2			(45	)
Tax losses recognised		(35	)		(9	)		(32	)		(3	)
Other		3			25			(1	)		4

		128			98			49			79


Prior periods
Other		15			—			32			(17	)

Total income tax expense		1,900			1,602			946			954


Income Tax Attributable to Profit from Ordinary Activities
Banking		1,328			1,197			688			640
Funds management		139			88			77			62
Insurance		102			89			51			51

Corporate tax		1,569			1,374			816			753
Policyholder tax		331			228			130			201

Total income tax expense		1,900			1,602			946			954


		%			%			%			%

Effective Tax Rate
Total – corporate		28.4			28.7			29.6			27.2
Banking – corporate		29.1			30.1			29.5			28.8
Funds management – corporate		30.8			21.8			32.0			29.5
Insurance – corporate		19.7			22.4			27.9			15.2

New Zealand Subsidiaries

Certain subsidiaries of the Bank in New Zealand are being audited by the Inland Revenue Department (IRD) as part of an industry-wide review of structured finance transactions.

An assessment has been received from the IRD in respect of one structured finance investment for the year ended 30 June 2001.

Notices of proposed adjustment have been received for other similar investments for other years.

The Bank is confident that the tax treatment it has adopted for these investments is correct, and any assessments received will be disputed.

38 Commonwealth Bank of Australia

Appendices

8. Loans, Advances and Other Receivables


	30/06/06			31/12/05			30/06/05
	$M			$M			$M

Australia
Overdrafts		2,672			2,220			2,564
Housing loans		144,834			135,990			129,913
Credit card outstandings		6,997			6,870			6,682
Lease financing		4,924			4,906			5,055
Bills discounted		2,779			3,898			3,399
Term loans		56,950			51,938			46,451
Redeemable preference share financing		1			6			9
Other lending		597			401			389

Total Australia		219,754			206,229			194,462


Overseas
Overdrafts		2,435			2,694			2,660
Housing loans		22,287			23,349			20,765
Credit card outstandings		428			478			406
Lease financing		139			124			195
Bills discounted		7			—			—
Term loans ⁽¹⁾		15,282			14,265			12,804
Redeemable preference share financing		1,194			894			—
Other lending		8			34			192
Other securities ⁽¹⁾		438			300			—

Total overseas		42,218			42,138			37,022

Gross loans, advances and other receivables		261,972			248,367			231,484


Less:
Provisions for impairment:
Collective provision ⁽²⁾		(1,046	)		(1,041	)		(1,390	)
Individually assessed provisions ⁽²⁾		(171	)		(179	)		(157	)
Unearned income:
Term loans		(934	)		(921	)		(889	)
Lease financing		(645	)		(620	)		(683	)
Interest reserved ⁽³⁾		—			—			(19	)

		(2,796	)		(2,761	)		(3,138	)

Net loans, advances and other receivables		259,176			245,606			228,346


(1)		Certain other securities have been reclassified to term loans during the period. The prior period has been restated on a consistent basis.

(2)		Collective provision and individually assessed provisions re-calculated under AIFRS for 30 June 2006 and 31 December 2005.

(3)		Interest reserved is not recognised under AIFRS from 1 July 2005.

Profit Announcement 39

Appendices

9. Asset Quality


	As at
	30/06/06			31/12/05			30/06/05
	$M			$M			$M

Total Impaired Assets
Gross non–accruals		326			396			395
Less interest reserved ⁽¹⁾		—			—			(19	)

		326			396			376
Less individually assessed provisions for impairment		(171	)		(179	)		(157	)

Total net impaired assets		155			217			219


Net impaired assets by geographical segment
Australia		146			214			218
Overseas		9			3			1

Total		155			217			219


(1)		Interest and fees reserved are not recognised under AIFRS from 1 July 2005.


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
	$M			$M			$M			$M

Provisions for impairment
Collective provisions
Opening balance ⁽¹⁾		1,021			1,393			1,041			1,021
Charge against profit and loss		398			322			210			188
Transfer to individually assessed provisions		(440	)		(352	)		(240	)		(200	)
Impairment losses recovered		127			81			70			57
Adjustments for exchange rate fluctuations and other items		(7	)		2			(8	)		1

		1,099			1,446			1,073			1,067
Impairment losses written off		(53	)		(56	)		(27	)		(26	)

Closing balance		1,046			1,390			1,046			1,041


Individually assessed provisions
Opening balance ⁽¹⁾		191			143			179			191
Transfer from collective provision for:
New and increased provisioning		468			408			254			214
Less write—back of provisions no longer required		(28	)		(56	)		(14	)		(14	)

Net transfer		440			352			240			200


Adjustments for exchange rate fluctuations and other items		(16	)		(3	)		(13	)		(3	)
Impairment losses		(444	)		(335	)		(235	)		(209	)

Closing balance		171			157			171			179


Total provisions for impairment		1,217			1,547			1,217			1,220
General reserve for credit losses (pre-tax equivalent)		500			—			500			404

Total provisions including general reserve for credit losses		1,717			1,547			1,717			1,624


(1)		The opening balance at 1 July 2005 includes the impact of adopting AASB 132 and AASB 139.


	%		%		%		%

Coverage Ratios
General provisions as a % of risk weighted assets		—		0. 73		—		—
Collective provisions as a % of a risk weighted assets		0. 48		—		0. 48		0. 51
Collective provision plus general reserve for credit losses (pre-tax equivalent) as a % of risk weighted assets		0. 71		—		0. 71		0. 71
Specific provisions for impairment as a % of gross impaired assets net of interest reserved ⁽¹⁾		—		41. 8		—		—
Individually assessed provisions for impairment as a % of gross impaired assets		52. 5		—		52 .5		45. 2
Total provisions for impairment as a % of gross impaired assets net of interest reserved ⁽¹⁾		373. 3		411. 4		373. 3		308. 1
Total provisions for impairment plus general reserve for credit losses (pre-tax equivalent) as a % of gross impaired assets		526. 7		—		526. 7		410. 1


(1)		Interest reserved not recognised under AIFRS.

Coverage Ratios under AIFRS

The re-measurement of impairment provisions under AIFRS has resulted in a lower level of total provisions previously assessed using Australian GAAP. However the Australian prudential regulator, APRA, has proposed for the 2005/2006 financial year that banks maintain a provisioning benchmark of at least 0.5% of risk weighted assets to adequately cover potential credit losses. The Group has consequently established a General Reserve for Credit Losses, which together with the Collective Provisions (net of deferred tax) will satisfy this requirement.

40 Commonwealth Bank of Australia

Appendices

9. Asset Quality (continued)

Full Year Ended

Half Year Ended

30/06/06

30/06/05

30/06/06

31/12/05

Impaired Assets

Total income received ⁽¹⁾

Interest income forgone ⁽¹⁾


(1)		Interest reserved is no longer recognised under AIFRS


Movement in Impaired Asset Balances
Gross impaired assets at period beginning	395		363		396		395
New and increased	745		769		380		365
Balances written off	(450	)	(350	)	(241	)	(209	)
Returned to performing or repaid	(364	)	(387	)	(209	)	(155	)

Gross impaired assets at period end	326		395		326		396

Impaired Asset Ratios

Gross impaired assets net of interest reserved as % of risk weighted assets

0. 15

0. 20

0. 15

0. 20

Net impaired assets as % of:

Risk weighted assets

0. 07

0. 12

0. 07

0. 11

Total shareholders’ equity

0. 73

0. 97

0. 73

1. 09

The following amounts comprising loans less than $250,000 are reported in accordance with regulatory returns to APRA. They are not classified as impaired assets and therefore not included within the above impaired asset summary.

As At

30/06/06

31/12/05

30/06/05

Loans Accruing but Past Due 90 Days or More (consumer segment)

Housing loans

155

154

183

Other loans

137

119

Total

292

273

302

Provisioning Policy

Provisions for impairment are maintained at an amount adequate to cover incurred credit related losses.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If there is objective evidence of impairment, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the expected future cash flows discounted at the financial asset’s original effective interest rate. Short term balances are not discounted.

For credit risk management purposes both collective provisions ($1,046 million) and general reserve for credit losses of $500 million (pre-tax equivalent) are available to support possible credit losses and the total of $1,546 million equates to 0.71% of risk weighted assets. This percentage can be compared with the previous general provisions assessed under AGAAP of 0.73% at 30 June 2005.

Profit Announcement 41

Appendices

11. Financial Reporting by Segments

This note sets out segment reporting in accordance with statutory reporting requirements. Refer to the business analysis at the front of this report for detailed profit and loss accounts by segment.


	Full Year Ended 30 June 2006
Primary Segment				Funds
Business Segments	Banking			Management			Insurance			Total
Income Statement	$M			$M			$M			$M

Interest income		19,758			—			—			19,758
Premium and related revenue		—			—			1,052			1,052
Other income		3,036			3,687			1,031			7,754

Total revenue		22,794			3,687			2,083			28,564

Interest expense		13,244			—			—			13,244


Segment result before income tax		4,559			643			657			5,859
Income tax expense		(1,328	)		(331	)		(241	)		(1,900	)

Segment result after income tax		3,231			312			416			3,959
Minority interests		(28	)		(3	)		—			(31	)

Segment result after income tax and minority interests		3,203			309			416			3,928

Net profit attributable to shareholders of the Bank		3,203			309			416			3,928


Non–Cash Expenses
Intangible asset amortisation		49			—			—			49
Bad debts expense		398			—			—			398
Depreciation		157			2			5			164
Defined benefit superannuation plan expense		35			—			—			35
Other		65			1			—			66

Balance Sheet
Total assets		340,254			19,201			9,648			369,103
Acquisition of property, plant & equipment, intangibles and other non—current assets		510			94			8			612
Associate investments		106			52			32			190
Total liabilities		324,185			16,423			7,152			347,760


	Full Year Ended 30 June 2005
Primary Segment				Funds
Business Segments	Banking			Management			Insurance			Total
Income Statement	$M			$M			$M			$M

Interest income		16,781			—			—			16,781
Premium and related revenue		—			—			1,132			1,132
Other income		2,845			3,203			1,186			7,234

Total revenue		19,626			3,203			2,318			25,147

Interest expense		10,755			—			—			10,755


Segment result before income tax		3,982			508			522			5,012
Income tax expense		(1,197	)		(192	)		(213	)		(1,602	)

Segment result after income tax		2,785			316			309			3,410
Minority interest		(3	)		(7	)		—			(10	)

Segment result after income tax and minority interests		2,782			309			309			3,400

Net profit attributable to shareholders of the Bank		2,782			309			309			3,400


Non–Cash Expenses
Intangible asset amortisation		20			—			—			20
Bad debts expense		322			—			—			322
Depreciation		135			8			13			156
Defined benefit superannuation plan expense		75			—			—			75
Other		84			27			—			111

Balance sheet
Total assets		304,620			16,191			16,593			337,404
Acquisition of property, plant & equipment, intangibles and other non—current assets		303			8			39			350
Associate investments		19			1			32			52
Total liabilities		287,549			16,832			10,380			314,761

Profit Announcement 43

Appendices

11. Financial Reporting by Segments (continued)


Secondary Segment	Full Year Ended
Business Segments	30/06/06				30/06/05
Income Statement	$M		%		$M		%

Revenue
Australia		22,802		79. 8		20,003		79. 5
New Zealand		4,021		14. 1		3,361		13. 4
Other countries ⁽¹⁾		1,741		6. 1		1,783		7. 1

		28,564		100. 0		25,147		100. 0

Net Profit Attributable to Shareholders of the Bank
Australia		3,200		81. 5		2,778		81. 7
New Zealand		387		9. 8		363		10. 7
Other countries ⁽¹⁾		341		8. 7		259		7. 6

		3,928		100. 0		3,400		100. 0

Assets
Australia		304,831		82. 6		280,255		83. 0
New Zealand		43,318		11. 7		41,383		12. 3
Other countries ⁽¹⁾		20,954		5. 7		15,766		4. 7

		369,103		100. 0		337,404		100. 0

Acquisition of Property, Plant & Equipment and Intangibles and Other Non—current Assets
Australia		564		92. 2		303		86. 6
New Zealand		34		5. 5		37		10. 6
Other countries ⁽¹⁾		14		2. 3		10		2. 8

		612		100. 0		350		100. 0


(1)		Other countries were: United Kingdom, United States of America, Japan, Singapore, Malta, Hong Kong, Grand Cayman, Fiji, Indonesia, China and Vietnam.

The geographical segment represents the location in which the transaction was booked.

44 Commonwealth Bank of Australia

Appendices

12. Integrated Risk Management (Excludes Insurance and Funds Management)

The major categories of risk actively managed by the Bank include credit risk, liquidity and funding risk, market risk and other operational risks. The 2005 Annual Report pages 30 to 32, Integrated Risk Management, details the major risks managed by a diversified financial institution.

Credit Risk

The Bank uses a portfolio approach for the management of its credit risk. A key element is a well diversified portfolio. The Bank is using various portfolio management tools to assist in diversifying the credit portfolio.

The commercial portfolio remains well rated and low actual bad debts were experienced during the year.


	30/06/06		31/12/05		30/06/05
Industry On Balance Sheet Exposure	%		%		%

Accommodation, cafes and restaurants		1. 0		1. 0		1. 2
Agriculture, forestry and fishing		2. 8		3. 0		3. 2
Communication services		0. 4		0. 3		0. 3
Construction		1. 4		1. 4		1. 4
Cultural and recreational services		0. 6		0. 6		0. 7
Electricity, gas and water supply		1. 6		1. 9		1. 7
Finance and insurance		12. 2		11. 4		11. 6
Government administration and defence		1. 2		1. 4		1. 6
Health and community services		1. 5		1. 6		1. 8
Manufacturing		3. 1		2. 9		3. 2
Mining		0. 8		0. 8		0. 7
Personal and other services		0. 6		0. 5		0. 5
Property and business services		8. 3		8. 1		8. 4
Retail trade		1. 7		1. 8		2. 0
Transport and storage		2. 5		2. 0		2. 1
Wholesale trade		1. 4		1. 4		1. 3
Consumer		58. 9		59. 9		58. 3

		100.0		100. 0		100. 0

The Bank has the bulk of committed exposures concentrated in Australia and New Zealand.


	30/06/06		31/12/05		30/06/05
Regional Credit Exposure	%		%		%

Australia		82. 6		82. 9		83. 8
New Zealand		13. 6		13. 5		11. 7
Europe		1. 8		2. 2		3. 1
Americas		1. 2		0. 7		0. 7
Asia		0. 6		0. 6		0. 6
Other		0. 2		0. 1		0. 1

		100. 0		100. 0		100. 0


	30/06/06		31/12/05		30/06/05
Commercial Portfolio Quality	%		%		%

AAA/AA		31		29		32
A		20		22		18
BBB		17		16		16
Other		32		33		34

As a percentage of commercial portfolio exposure (including finance and insurances) which has been individually risk rated, the Bank has 68% of commercial exposures at investment grade quality.

Profit Announcement 45

Appendices

12. Integrated Risk Management (continued)

The Bank in its daily operations is exposed to a number of market risks which are detailed in the 2005 Annual Report under Integrated Risk Management (pages 30 to 32) and Note 39 Market Risk.

Interest Rate Risk

Interest rate risk in the balance sheet is discussed within Note 39 of the 2005 Annual Report.

Next 12 months’ Earnings

The potential impact on net interest earnings of a 1% parallel rate shock and the expected change in price of assets and liabilities held for purposes other than trading is as follows:


	30/06/06		31/12/05		30/06/05
Interest Rate Risk	%		%		%

(expressed as a % of expected next 12 months’ earnings)
Average monthly exposure		1. 1		1. 2		1. 1
High month exposure		2. 1		1. 8		1. 5
Low month exposure		0. 2		0. 2		0. 5

Value at Risk (VaR)

VaR within Financial Markets Trading is discussed in the 2005 Annual Report (page 31 Integrated Risk Management). The following table provides a summary of VaR by type.

Average VaR

During

Average VaR

During

December

During

June 2006

2005

June 2005

Half Year

VaR Expressed based on 97. 5% confidence

Group

Interest rate risk

3. 16

2. 65

3. 44

Exchange rate risk

0. 65

0. 53

0. 26

Implied volatility risk

0. 61

0. 61

0. 49

Equities risk

0. 10

0. 08

0. 04

Commodities risk

1. 20

0. 36

0. 18

Prepayment risk

0. 33

0. 28

0. 38

ASB Bank

0. 30

0. 36

0. 22

Diversification benefit

(2. 26

)

(1. 40

)

(0. 98

)

Total general market risk

4. 09

3. 47

4. 03

Credit spread risk

5. 97

5. 74

4. 85

Total

10. 06

9. 21

8. 88

Average VaR

During

Average VaR

During

December

During

June 2006

2005

June 2005

Half Year

VaR Expressed based on 99. 0% confidence

Group

Interest rate risk

4. 01

3. 36

4. 78

Exchange rate risk

0. 77

0. 62

0. 31

Implied volatility risk

0. 80

0. 95

0. 73

Equities risk

0. 13

0. 09

0. 05

Commodities risk

1. 61

0. 45

0. 21

Prepayment risk

0. 33

0. 28

0. 38

ASB Bank

0. 40

0. 48

0. 32

Diversification benefit

(3. 04

)

(1. 93

)

(1. 28

)

Total general market risk

5. 01

4. 30

5. 50

Credit spread risk

7. 09

6. 81

5. 75

Total

12. 10

11. 11

11. 25

46 Commonwealth Bank of Australia

Appendices

13. Capital Adequacy


	30/06/06			31/12/05			30/06/05
Risk-Weighted Capital Ratios	%			%			%

Tier One		7. 56			7. 54			7. 46
Tier Two		3. 10			3. 28			3. 21
Less deductions		(1. 00	)		(1. 01	)		(0. 92	)

Total		9. 66			9. 81			9. 75

Adjusted Common Equity ⁽¹⁾		4. 50			5. 00			4. 91


	30/06/06			31/12/05			30/06/05
Regulatory Capital	$M			$M			$M

Tier One capital
Shareholders’ equity		21,343			19,850			26,060
Reverse effect to shareholder’s equity of AIFRS transition ⁽²⁾		7,183			7,183
Reverse effect AIFRS during the period to 30 June 2006: ⁽²⁾
Purchase/(sale) and vesting of treasury shares		10			(18	)		—
Actuarial gains and losses from defined benefits superannuation plan		(387	)		(68	)		—
Realised gains and dividend income on treasury shares held with in the Bank’s life insurance statutory funds		(85	)		(25	)		—
Cash flow hedge reserve		(20	)		(23	)		—
Employee compensation reserve		(11	)		5			—
General reserve for credit loss		(92	)		(25	)		—
Available-for-sale investments		(9	)		13			—
Defined benefit superannuation plan expense		25			19			—
Treasury share valuation adjustment		100			43			—
Preference share capital		(687	)		—			—
Issue of hybrid instruments		1,147			—			—
Other		(6	)		31			—

Adjusted shareholders’ equity per APRA’s transitional arrangements		28,511			26,985			26,060
Eligible loan capital		281			317			304
Estimated reinvestment under Dividend Reinvestment Plan ⁽³⁾		303			221			272
Foreign currency translation reserve related to non-consolidated subsidiaries		160			160			211
Deduct:
Asset revaluation reserve ⁽⁴⁾		(131	)		(117	)		(92	)
Expected dividend		(1,668	)		(1,211	)		(1,434	)
Goodwill ⁽⁵⁾		(4,416	)		(4,392	)		(4,394	)
Intangible component of investment in non—consolidated subsidiaries ⁽⁶⁾		(5,397	)		(5,397	)		(5,397	)
Minority interest in entities controlled by non—consolidated subsidiaries		—			—			(111	)
Minority interest in insurance statutory funds and other funds		(1,158	)		(1,158	)		(1,158	)
Capitalised expenses		(122	)		(107	)		(107	)
Other		(9	)		(11	)		(13	)

Total Tier One capital		16,354			15,290			14,141


Tier Two capital
Collective provision for impairment losses ⁽⁷⁾		1,046			1,041			—
General reserve for credit loss (pre-tax equivalent) ⁽⁷⁾		500			404			—

General provision for bad debts		1,546			1,445			1,389
FITB related to general provision for bad debts		(464	)		(434	)		(414	)
Asset revaluation reserve ⁽⁴⁾		131			117			92
Upper Tier Two note and bond issues		235			232			237
Lower Tier Two note and bond issues ^{(8) (9)}		5,335			5,349			4,783
Other		(58	)		(65	)		—

Total Tier Two capital		6,725			6,644			6,087

Total Capital		23,079			21,934			20,228


(1)		Adjusted Common Equity (“ACE”) is one measure considered by Standard & Poor’s in evaluating the Bank’s credit rating. The ACE ratio has been calculated in accordance with Standard & Poor’s methodology at 30 June 2006.

(2)		APRA requires regulatory capital to continue to be calculated in accordance with AGAAP accounting principles until 1 July 2006. As such, all material changes to capital resulting from the Bank adopting AIFRS accounting standards on 1 July 2005 have been reversed from regulatory capital.

(3)		Based on reinvestment experience related to the Bank’s Dividend Reinvestment Plan.

(4)		The Bank agreed with APRA to adopt AIFRS on 1 July 2005 for the reporting of the Asset Revaluation Reserve.

(5)		Consistent with APRA requirements goodwill is reported on an AGAAP basis.

(6)		Per APRA’s transitional arrangements, it was agreed to deduct the value as at 30 June 2005 of the intangible component of the carrying value of the life insurance and funds management business from Tier 1 capital, until 1 July 2006.

(7)		In line with current APRA requirements the Bank has established a General Reserve for Credit Loss.

(8)		APRA requires these Lower Tier Two note and bond issues to be included as if they were un—hedged.

(9)		For regulatory capital purposes, Lower Tier Two note and bond issues are amortised by 20% of the original amount during each of the last five years to maturity.

Profit Announcement 47

Appendices

13. Capital Adequacy (continued)


	30/06/06			31/12/05			30/06/05
Regulatory Capital	$M			$M			$M

Total capital		23,079			21,934			20,228
Deduct:
Investment in non–consolidated subsidiaries (net of intangible component deducted from Tier One capital):
Shareholders’ net tangible assets in life and funds management businesses		(1,902	)		(1,517	)		(2,513	)
Reverse effect of transition to AIFRS ⁽¹⁾		(592	)		(592	)		—
Capital in other non-consolidated subsidiaries		(256	)		(321	)		(348	)
Value of acquired inforce business ⁽²⁾		(1,339	)		(1,339	)		(1,152	)
Less: non-recourse debt		2,077			1,851			2,292

		(2,012	)		(1,918	)		(1,721	)
Other deductions		(151	)		(130	)		(28	)

Capital base		20,916			19,886			18,479


(1)		APRA requires regulatory capital to continue to be calculated in accordance with AGAAP accounting principles until 1 July 2006. As such, all material changes to capital resulting from the Bank adopting AIFRS accounting standards on 1 July 2005 have been reversed from regulatory capital.

(2)		Per APRA’s transitional arrangements, it was agreed to deduct the value as at 30 June 2005 of acquired inforce business from Total Capital, until 1 July 2006. However, values as at 30 June 2005 have been adjusted to reflect the acquisition of the Gandel Group interests in Colonial First State Property Retail Trust and Gandel Retail Management Trust.


	30/06/06			31/12/05			30/06/05
Adjusted Common Equity ⁽¹⁾	$M			$M			$M

Tier One capital		16,354			15,290			14,141
Deduct:
Eligible loan capital		(281	)		(317	)		(304	)
Preference share capital		—			(687	)		(687	)
Other equity instruments		(3,659	)		(1,573	)		(1,573	)
Minority interest (net of minority interest component deducted from Tier One capital)		(508	)		(523	)		(520	)
Investment in non–consolidated subsidiaries (net of intangible component deducted from Tier One capital)		(2,012	)		(1,918	)		(1,721	)
Other deductions		(151	)		(130	)		(28	)

Total Adjusted Common Equity		9,743			10,142			9,308


(1)		Adjusted Common Equity (“ACE”) is one measure considered by Standard & Poor’s in evaluating the Bank’s credit rating. The ACE ratio has been calculated in accordance with Standard & Poor’s methodology at 30 June 2006.


							Risk
	Face Value						Weights		Risk-Weighted Balance
	30/06/06		31/12/05		30/06/05				30/06/06		31/12/05		30/06/05
	$M		$M		$M		%		$M		$M		$M

Risk-Weighted Assets
On balance sheet assets
Cash, claims on Reserve Bank, short term claims on Australian Commonwealth and State Government and Territories, and other zero–weighted assets		23,301		25,677		27,447		0		—		—		—
Claims on OECD banks and local governments		16,742		18,771		14,754		20		3,348		3,754		2,951
Advances secured by residential property		157,962		154,274		143,746		50		78,981		77,137		71,873
All other assets		110,971		99,794		92,510		100		110,971		99,794		92,510

Total on balance sheet assets – credit risk		308,976		298,516		278,457				193,300		180,685		167,334

Total off balance sheet exposures – credit risk										19,691		18,626		19,371

Risk-weighted assets – market risk										3,447		3,356		2,854

Total risk-weighted assets										216,438		202,667		189,559

48 Commonwealth Bank of Australia

Appendices

13. Capital Adequacy (continued)

Active Capital Management

The Bank maintains a strong capital position. The Tier One Capital Ratio increased from 7.46% to 7.56% during the year reflecting the issue of hybrid securities during the second half of the year. The Total Capital Ratio decreased from 9.75% at 30 June 2005 to 9.66% at 30 June 2006 impacted by the growth in Risk Weighted Assets. Risk Weighted Assets increased from $190 billion to $216 billion at 30 June 2006 due to strong growth in lending assets particularly in the business/corporate sector. The Bank’s credit ratings remained unchanged.

The Bank adopted the Australian equivalent of International Financial Reporting Standards (“AIFRS”) on 1 July 2005. APRA required reporting under AGAAP accounting principles to continue for regulatory capital purposes until the introduction of revised prudential standards which take effect on 1 July 2006.

The revised prudential standards that apply from 1 July 2006 will impact Tier One Capital and the Capital Base. However, APRA has granted transition relief in relation to changes to their prudential regulations from 1 July 2006, until 31 December 2007.

Total transition relief is $1,715 million comprised of $1,641 million of relief for Tier 1 Capital and $74 million of relief for Upper Tier 2 Capital.

Transition relief principally relates to:

•

Excess of Market Value Over Net Assets (“EMVONA”) $1,339 million;

•

Software capitalised expenses $229 million; and

•

Defined benefit superannuation plan deficit $45 million.

The Adjusted Common Equity (“ACE”) ratio at 30 June is 4.50%. At 1 July 2006, ACE is 4.39% as Standard and Poor’s has not granted transitional relief for the impact of software expenses capitalised and defined benefit superannuation deficit. EMVONA is already excluded from ACE.

The following significant initiatives were undertaken to actively manage the Bank’s capital:

Tier One Capital

•

Issue of $262 million and $219 million shares in October 2005 and April 2006 respectively to satisfy the Dividend Reinvestment Plan (“DRP”) in respect of the final dividend for 2004/05 and interim dividend for 2005/06;

•

In accordance with APRA guidelines, the estimated issue of $303 million shares to satisfy the DRP in respect of the final dividend for 2005/06;

•

Issue of US$700 million Tier 1 hybrid in March 2006;

•

Redemption of $700 million PERLS ($687 million net of issue costs) in April 2006;

•

Issue of $1,166 million PERLS III ($1,147 million net of issue costs) in April 2006; and

•

Completion of $500 million on-market share buyback.

Tier Two Capital

•

Issue of the equivalent of $840 million Lower Tier Two capital;

•

In accordance with APRA guidelines, the reduction in Tier Two note and bond issues of $278 million due to amortisation;

•

The call and maturity of the equivalent of $78 million of Tier Two note and bond issues; and

•

Increase in the value of Tier Two note and bond issues of $66 million resulting from changes in foreign exchange movements (whilst these notes are hedged, the unhedged value is included in the calculation of regulatory capital in accordance with APRA regulations).

Deductions from Total Capital

The following items have resulted in deductions during the period:

•

An increase in deductions due to the Banks acquisition of a 19.9% interest in Hangzhou City Commercial Bank for $102 million;

•

A deduction due to a $291 million increase in net tangible assets arising from the retention of profits in the insurance and funds management business; and

•

A decrease in deductions due to the $145 million profit realised on the sale of CMG Asia which was repatriated to the Bank. The balance of the proceeds, $463 million, was used to repay part of the non-recourse debt funding in the Bank’s life and funds management business.

As required by APRA, the Bank’s investment in its life insurance and funds management companies is deducted from regulatory capital to arrive at the Bank’s Capital Ratios. The Bank’s insurance and funds management companies held an estimated $642 million excess over regulatory capital requirements at 30 June 2006 in aggregate.

Profit Announcement 49

Appendices

14. Share Capital


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
Ordinary Share Capital	$M			$M			$M			$M

Opening balance (excluding treasury shares deduction)		13,871			13,359			14,168			13,871
Dividend reinvestment plan: Final Dividend prior year		262			246			—			262
Dividend reinvestment plan: Interim Dividend		219			200			219			—
Share buyback		(500	)		—			(499	)		(1	)
Exercise of executive options		50			67			14			36
Issue costs		(2	)		(1	)		(2	)		—

Closing balance (excluding Treasury Shares deduction)		13,900			13,871			13,900			14,168
Less Treasury Shares		(395	)		(385	)		(395	)		(367	)

Closing Balance		13,505			13,486			13,505			13,801


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
Shares on Issue	Number			Number			Number			Number

Opening balance (excluding treasury share deduction)		1,280,276,172			1,264,006,062			1,288,562,729			1,280,276,172
Dividend reinvestment plan issue:
2004/2005 Final dividend fully paid ordinary shares at $37.19		7,032,857			—			—			7,032,857
2005/2006 Interim dividend fully paid ordinary shares at $43.89		4,979,668			—			4,979,668			—
2003/2004 Final dividend fully paid ordinary shares at $30.14		—			8,172,546			—			—
2004/2005 Interim dividend fully paid ordinary shares at $35.90		—			5,581,364			—			—
Share buy back		(11,139,988	)		—			(11,114,988	)		(25,000	)
Exercise under executive option plan		1,756,200			2,516,200			477,500			1,278,700

Closing balance (excluding Treasury Shares deduction)		1,282,904,909			1,280,276,172			1,282,904,909			1,288,562,729
Less Treasury Shares		(11,085,258	)		(13,511,769	)		(11,085,258	)		(10,767,501	)

Closing balance		1,271,819,651			1,266,764,403			1,271,819,651			1,277,795,228

Terms and Conditions of Ordinary Share Capital

Ordinary shares have the right to receive dividends as declared and in the event of winding up the company, to participating in the proceeds from sale of surplus assets in proportion to the number of and amounts paid up on shares held.

A shareholder has one vote on a show of hands and one vote for each fully paid share on a poll. A shareholder may be present at a general meeting in person or by proxy or attorney, and if a body corporate, it may also authorise a representative.

Dividend Franking Account

After fully franking the final dividend to be paid for the year ended 30 June 2006 the amount of credits available, as at 30 June 2006 to frank dividends for subsequent financial years is $nil (June 2005: $194 million). This figure is based on the combined franking accounts of the Bank at 30 June 2006, which have been adjusted for franking credits that will arise from the payment of income tax payable on profits for the year ended 30 June 2006, franking debits that will arise from the payment of dividends proposed for the year and franking credits that the Bank may be prevented from distributing in subsequent financial periods. The Bank expects the future tax payments will generate sufficient franking credits for the Bank to be able to fully frank future dividend payments. These calculations have been based on the taxation law as at 30 June 2006.

Dividends

The Directors have declared a fully franked final dividend of $1.30 per share amounting to $1,668 million. The dividend will be payable on 5 October 2006 to shareholders on the register at 5pm on 18 August 2006.

The Board determines the dividends per share based on net profit after tax (“cash basis” excluding the profit on sale of the Hong Kong Insurance business) per share, having regard to a range of factors including:

•

Current and expected rates of business growth and the mix of business;

•

Capital needs to support economic, regulatory and credit ratings requirements;

•

The rate of return on assets;

•

Investments and/or divestments to support business development; and

•

The regulatory capital requirements around the maintenance of a general reserve for credit loss.

Dividends paid since the end of the previous financial year:

•

As declared in the 31 December 2005 Profit Announcement, a fully franked interim dividend of 94 cents per share amounting to $1,211 million was paid on 5 April 2006. The payment comprised cash disbursements of $992 million with $219 million being reinvested by participants through the Dividend Reinvestment Plan.

Share Buyback

On 16 June 2006 the Bank announced the successful completion of an on-market share buyback. A total of 11,139,988 shares were bought back at a total cost of $500 million. Shares were purchased for an average price of $44.88.

Dividend Reinvestment Plan

The Bank expects to issue around $303 million of shares in respect of the Dividend Reinvestment Plan for the final dividend for 2005/06.

The Dividend Reinvestment Plan continues to be capped at 10,000 shares per shareholder.

Record Date

The register closes for determination of dividend entitlement and for participation in the DRP at 5:00pm on 18 August 2006 at Link Market Services, Locked Bag A14, Sydney South, 1235.

Ex Dividend Date

The ex-dividend date is 14 August 2006.

50 Commonwealth Bank of Australia

Appendices

15. Life Insurance Business

Life Insurance contract liabilities

Appropriately qualified actuaries have been appointed in respect of each life insurance business and they have reviewed and satisfied themselves as to the accuracy of the policy liabilities included in this financial report, including compliance with the regulations of the Life Insurance Act (Life Act) 1995 where appropriate. Details are set out in the various statutory returns of these life insurance entities.

Life Investment contract liabilities

Investment contracts consist of a financial instrument and an investment management services element, both of which are measured at fair value. The resulting liabilities to policyholders are closely linked to the performance and the value of the assets (after tax) that back those liabilities. The fair value of such liabilities is therefore the same as the fair value of those assets, after tax on the basis charged to the policyholders.


	30/06/06			31/12/05			30/06/05
Components of Policy Liabilities ⁽¹⁾	$M			$M			$M

Future policy benefits ⁽²⁾		23,916			24,861			27,790
Future bonuses		1,128			1,106			1,385
Future expenses		1,844			1,851			1,829
Future profit margins		1,388			1,224			1,795
Future charges for acquisition expenses		(434	)		(450	)		(540	)
Balance of future premiums		(5,706	)		(5,604	)		(7,660	)
Provisions for bonuses not allocated to participating policyholders		89			67			95

Total policy liabilities		22,225			23,055			24,694


(1)		Includes both investment and insurance business.

(2)		Including bonuses credited to policyholders in prior years.

Taxation

Taxation has been allowed for in the determination of policy liabilities in accordance with the relevant legislation applicable in each market.

Actuarial Methods and Assumptions

Insurance contract policy liabilities have been calculated in accordance with AASB 1038 (Life Insurance Contracts) and the Margin on Services (MoS) methodology as set out in Actuarial Standard 1.04 – Valuation Standard (‘AS1.04’) issued by the Insurance Actuarial Standards Board (‘LIASB’). The principal methods and profit carriers used for particular product groups were as follows:


Product Type	Method	Profit Carrier

Individual

Conventional	Projection	Bonuses or expected claim payments
Investment account	Projection	Bonuses or funds under management
Lump sum risk	Projection	Premiums/claims
Income stream risk	Projection	Expected claim payments
Immediate annuities	Projection	Annuity payments


Group

Investment account	Projection	Bonuses or funds under management
Lump sum risk	Accumulation	Not applicable
Income stream risk	Projection	Expected claim payments

The ‘Projection Method’ measures the present values of estimated future policy cash flows to calculate policy liabilities. The policy cash flows incorporate investment income, premiums, expenses, redemptions and benefit payments.

Bonuses were amounts added, at the discretion of the life insurer, to the benefits currently payable under Participating Business. Bonuses may take a number of forms including reversionary bonuses, interest credits and terminal bonuses (payable on the termination of the policy).

Actuarial assumptions

Set out below is a summary of the material assumptions used in the calculation of policy liabilities.

Discount rates

These were the rates used to discount future cash flows to determine their net present value in the policy liabilities. The discount rates were risk free rates or were determined with reference to the expected earnings rate of the assets that support the policy liabilities adjusted for taxation where relevant. The following table shows the applicable rates for the major classes of business in Australia and New Zealand. The changes relate to changes in long term earnings rates and asset mix.

Profit Announcement 51

Appendices

15. Life Insurance Business (continued)

June 2006

December 2005

June 2005

Class of Business – Australia ⁽¹⁾

Rate Range %

Traditional – ordinary business (after tax)

6. 00 – 6. 75

5. 59 – 6. 34

5. 52 – 6. 26

Traditional – superannuation business (after tax)

7. 33 – 8. 26

6. 82 – 7. 76

6. 74 – 7. 67

Annuity business (after tax)

5. 79 – 6. 30

5. 61 – 5. 88

5. 71 – 6. 49

Term insurance – ordinary business (before tax)

5. 58 – 5. 81

5. 02 – 5. 32

5. 11 – 5. 50

Term insurance – superannuation business (before tax)

5. 58 – 5. 81

5. 02 – 5. 32

5. 11 – 5. 50

Income Protection business (before tax)

5. 58 – 5. 81

5. 02 – 5. 32

5.11

Investment account – ordinary business (after tax)

4.21

3.80

3.74

Investment account – superannuation business (after tax)

5.12

4.63

4.55

Investment account – exempt (after tax)

5.98

5.40

5.31


(1)		For New Zealand, investment earning rates assumed were 3.9% to 5.6% net of tax.

Bonuses

The calculation assumes that the long-term supportable bonuses will be paid, which is in line with company bonus philosophy. There have been no significant changes to these assumptions.

Maintenance expenses

The maintenance expenses are based on an internal analysis of experience and are assumed to increase in line with inflation each year and to be sufficient to cover the cost of servicing the business in the coming year after adjusting for one off expenses. For Participating Business, expenses continue on the previous charging basis with adjustments for actual experience and are assumed to increase in line with inflation each year.

Investment management expenses

Investment management expense assumptions now vary by asset classes and are based on the recently negotiated investment fees as set out in Fund Management Arrangements. There has been no significant change to overall investment fees.

Inflation

The inflation assumption is consistent with the investment earning assumptions.

Benefit indexation

The indexation rates were based on an analysis of past experience and estimated long term inflation and vary by business and product type. There have been no significant changes to these assumptions.

Taxation

The taxation basis and rates assumed vary by market and product type.

Voluntary discontinuance

Discontinuance rates were based on recent company and industry experience and vary by market, product, age and duration in force. The experience has been broadly in line with assumptions. There have been no significant changes to these assumptions.

Surrender values

Current surrender value bases were assumed to apply in the future. There have been no significant changes to these assumptions.

Mortality and morbidity

Rates vary by sex, age, product type and smoker status. Rates were based on standard mortality tables applicable to each market e.g. IA95-97 in Australia for risk, IM/IF80 for annuities, adjusted for recent company and industry experience where appropriate.

Solvency

Australian life insurers

Australian life insurers are required to hold prudential reserves in excess of the amount of policy liabilities. These reserves are required to support solvency requirements and provide protection against adverse experience. Actuarial Standard AS2.04 ‘Solvency Standard’ (‘AS2.04’) prescribes a minimum solvency requirement and the minimum level of assets required to be held in each insurance fund. All controlled Australian insurance entities complied with the solvency requirements of AS2.04.

Overseas life insurers

Overseas insurance subsidiaries were required to hold reserves in excess of policy liabilities in accordance with local Acts and prudential rules. Each of the overseas subsidiaries complied with local requirements.

Managed assets & fiduciary activities

Arrangements were in place to ensure that asset management and other fiduciary activities of controlled entities were independent of the insurance funds and other activities of the Bank.

Disaggregated information

Life Insurance business is conducted through a number of life insurance entities in Australia and overseas. Under the Australian Life Insurance Act 1995, life insurance business is conducted within one or more separate statutory funds, which are distinguished from each other and from the shareholders’ funds. The financial statements of Australian life insurers which are lodged with the relevant Australian regulators show all major components of the financial statements disaggregated between the various life insurance statutory funds and their shareholder funds and as well as between investment linked business and those relating to non-investment linked business.

52 Commonwealth Bank of Australia

Appendices

16. Intangible Assets


	As At
	30/06/06			31/12/05			30/06/05
	$M			$M			$M

Total Intangible Assets
Goodwill		7,200			7,214			7,214
Computer software costs		229			188			182
Other		380			338			260

Total		7,809			7,740			7,656


Goodwill
Purchased goodwill – Colonial		6,705			6,705			6,705
Purchased goodwill – other		495			509			509

Total goodwill		7,200			7,214			7,214


Computer Software Costs
Cost		290			228			206
Accumulated amortisation		(61	)		(40	)		(24	)

Total computer software costs		229			188			182


Other
Cost		393			347			267
Accumulated amortisation		(13	)		(9	)		(7	)

Total other		380			338			260


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
	$M			$M			$M			$M

Goodwill (reconciliation)
Opening balance		7,214			7,184			7,214			7,214
Additions		7			30			7			—
Impairment		(21	)		—			(21	)		—

Closing balance		7,200			7,214			7,200			7,214


Computer Software Costs (reconciliation)
Opening balance		182			107			188			182
Additions:
From internal development		90			92			68			22
Amortisation		(43	)		(17	)		(27	)		(16	)

Closing balance		229			182			229			188


Other (reconciliation)
Opening balance		260			250			338			260
Additions:
From acquisitions		126			13			46			80
Amortisation		(6	)		(3	)		(4	)		(2	)

Closing balance		380			260			380			338

Profit Announcement 53

Appendices

17. ASB Bank Group


	Full Year Ended
	30/06/06		30/06/05		30/06/06		30/06/05
Income Statement ⁽¹⁾	NZDM		NZDM		$M		$M

Interest income		3,210		2,682		2,861		2,476
Interest expense		2,406		1,906		2,144		1,759

Net interest earnings		804		776		717		717
Other income		344		268		307		247

Total operating income		1,148		1,044		1,024		964
Impairment losses on advances		19		16		17		15

Total operating income after debt provisions expense		1,129		1,028		1,007		949
Total operating expense		495		470		442		434
Salaries and other staff expense		276		258		246		238
Building occupancy and equipment expense		85		80		76		74
Information technology expense		50		52		45		48
Other expenses		84		80		75		74

Net surplus before taxation		634		558		565		515
Taxation		194		179		173		165

Net surplus after taxation		440		379		392		350


	As at
	30/06/06		30/06/05			30/06/06		30/06/05
Balance Sheet ⁽²⁾	NZDM		NZDM			$M		$M

Assets
Cash and liquid assets		17		53			14		49
Due from other banks		1,728		521			1,424		478
Money market advances		966		—			796		—
Securities at fair value through Income Statement		3,021		—			2,489		—
Derivative assets		511		—			421		—
Investment securities		—		399			—		366
Other securities		—		2,497			—		2,291
Advances to customers		37,989		—			31,304		—
Advances		—		34,978			—		32,089
General provisions for bad debts		—		(123	)		—		(113	)
Property, plant and equipment		152		149			125		137
Intangible assets		20		15			16		14
Other assets		164		293			135		269
Deferred taxation benefit		—		14			—		13

Total assets		44,568		38,796			36,724		35,593

Total interest earning and discount bearing assets		43,682		38,395			35,994		35,225


Liabilities
Money and market deposits		14,390		—			11,857		—
Derivative liabilities		241		—			199		—
Deposits from customers		21,145		—			17,423		—
Deposits		—		31,959			—		29,320
Due to other banks		5,531		4,091			4,558		3,753
Other liabilities		361		463			297		425
Deferred taxation liabilities		13		—			11		—
Provision for taxation		15		14			12		13
Subordinated debt		183		—			151		—

Total liabilities		41,879		36,527			34,508		33,511


Shareholder Equity
Contributed capital – ordinary shareholder		1,013		323			835		296
Asset revaluation reserve		23		18			19		17
Cash flow hedge reserves		50		—			41		—
Accumulated surplus		1,053		1,378			868		1,264

Ordinary shareholders’ equity		2,139		1,719			1,763		1,577
Contributed capital – perpetual preference shareholders		550		550			453		505

Total shareholders’ equity		2,689		2,269			2,216		2,082

Total liabilities and shareholders’ equity		44,568		38,796			36,724		35,593

Total interest and discount bearing liabilities		39,852		34,802			32,838		31,928


(1)		Income Statement has been translated at AUD 1.00= NZD 1.122 for the year ended 30 June 2006 (AUD 1.00= NZD 1.083 for year ended 30 June 2005).

(2)		Refer to appendix 23 for rates at which balance sheet has been translated.

54 Commonwealth Bank of Australia

Appendices

18. Sale of the Hong Kong Business

The Bank sold its life insurance and financial planning business in Hong Kong on 7 July 2005. The transaction was completed on 18 October 2005, and a profit of A$145 million was realised. To assist with the period-on-period comparison of the Bank’s operating performance, the operating result of the Hong Kong Insurance business set out below needs to be excluded from the Insurance segment and the consolidated result.


	Full Year Ended				Half Year Ended
	30/06/06		30/06/05		30/06/06		31/12/05
	$M		$M		$M		$M

Insurance income		42		128		—		42

Total income		42		128		—		42
Operating expenses		33		125		—		33

Total expenses		33		125		—		33

Operating performance		9		3		—		9
Shareholder investment returns – pre tax		1		50		—		1

Shareholder operating profit before tax		10		53		—		10
Operating profit after tax		10		53		—		10

Net profit after tax – cash		10		53		—		10

Net profit after tax – underlying		9		3		—		9

19. ASX Appendix 4E


Cross Reference Index	Page

Results for Announcement to the Market (Rule 4.3A Item No. 2)	Inside front cover
Income Statement (Rule 4.3A Item No. 3)		24
Balance Sheet (Rule 4.3A Item No. 4)		25
Statement of Cash Flows (Rule 4.3A Item No. 5)		26
Dividends (Rule 4.3A Item No. 6)		3
Dividend dates (Rule 4.3A Item No. 7)	Inside front cover
Net tangible assets per security (Rule 4.3A Item No. 9)		64
Commentary on Results (Rule 4.3A Item No. 14)		2

Compliance Statement

This preliminary final report for the year ended 30 June 2006 is prepared in accordance with the ASX listing rules. It should be read in conjunction with any announcements to the market made by the Group during the year.

The preliminary final report has been prepared in accordance with Accounting Standards in Australia. This is the first annual reporting period under the Australian equivalent to International Financial Reporting Standards.

The financial statements of the Group are in the process of being audited.

John Hatton

Company Secretary

9 August 2006

Profit Announcement 55

Appendices

19. ASX Appendix 4E (continued)

Consolidated retained profits reconciliation (Rule 4.3A Item No. 8)


	2006			2005
	$M			$M

Retained profits
Opening balance		3,843			2,840
AIFRS transition adjustments ⁽¹⁾		(780	)		9

Restated opening balance		3,063			2,849
Actuarial gains and losses from defined benefit superannuation plan		387			110
Realised gains and dividend income on treasury shares held within the Bank’s life insurance statutory funds ⁽²⁾		85			21
Operating profit attributable to members of the Bank		3,928			3,400

Total available for appropriation		7,463			6,380
Transfers to general reserve		(239	)		(8	)
Transfers to general reserve for credit loss		(92	)		—
Interim 2006 dividend – cash component		(992	)		(883	)
Interim 2006 dividend – dividend reinvestment plan		(219	)		(200	)
Payment of 2005 final dividend – cash component		(1,172	)		(1,069	)
Payment of 2005 final dividend – dividend reinvestment plan		(262	)		(246	)
Other dividends		—			(131	)

Closing balance		4,487			3,843

(1) Comprises:

	•		Actuarial and other movements within the defined benefit surplus superannuation plan;

	•		Net movement in the calculation of life insurance policyholder liabilities;

	•		Adjustment in respect of realised gains and dividend income on treasury shares;

	•		Deferral of initial entry fee income earned by life insurance entities;

	•		Adjustment to the fair value calculation for assets held by the life insurance business;

	•		Adjustment in respect of derivative financial instruments;

	•		Deferral of previously recognised net income and expenses within the banking business;

	•		Foreign exchange adjustment on the reclassification of hybrid financial instruments;

	•		Adjustment to fair value calculation for trading assets within the banking portfolios and for other financial instruments designated as fair value through profit and loss; and

	•		A change in functional currency designation resulting in a reclassification of $51 million between retained earnings and foreign currency translation reserve.

(2) Relates to movements in treasury shares held within life insurance statutory funds and the employee share scheme trust.

56 Commonwealth Bank of Australia

Appendices

19. ASX Appendix 4E (continued)

Details of entities over which control was lost during the year


		Ownership Interest
(Rule 4.3A Item No. 10)	Date control lost	Held (%)

CMG Asia Limited	18 October 2005		100	%
Commserve Financial Limited	18 October 2005		100	%
Financial Solutions Limited	18 October 2005		100	%

Details of associates and joint ventures (Rule 4.3A Item No. 11)


As at 30 June 2006	Ownership Interest Held (%)

Computer Fleet Management		50	%
Cyberlynx Procurement Services		50	%
PT Astra CMG Life		50	%
AMTD Group Limited (formerly Allday Enterprises Limited)		30	%
China Life CMG Life Assurance Company		49	%
Bao Minh CMG Life Insurance Company		50	%
CMG CH China Funds Management Limited		50	%
Hangzhou City Commercial Bank		19.9	%
452 Capital Pty Limited		30	%
Alster & Thames Partnership		25	%
First State Cinda Fund Management Company Limited		46	%
Healthcare Support (Newcastle) Ltd		50	%
Equion Health (Barts) Limited		50	%
Acadian Asset Management (Australia) Limited		50	%
Five D Holdings		50	%

Any other significant information (Rule 4.3A Item No. 12)

Change in accounting policies

On 1 July 2005 the Bank commenced application of the Australian equivalent of International Financial Reporting Standards to the maintenance of all financial records.

Post Balance Date Events

On 11 July 2006 the appointment of Mr. David Turner as a director was announced. Mr. Turner’s appointment is effective from 1 August 2006.

On 20 July 2006 the Bank concluded agreements to dispose of all holdings in its Loy Yang investment to several parties, for total net proceeds of approximately $175 million.

On 25 July 2006 the appointment of Mr. David Craig as CFO was announced. Mr. Craig’s appointment is due to commence in September 2006.

On 8 August 2006 the retirement of Mr Tony Daniels and Ms Barbara Ward from the Board of the Bank and the appointment of Mrs Jane Hemstritch as a Director of the Bank was announced. Mr Daniels and Ms Ward will retire at the Bank’s Annual General Meeting on 3 November 2006 and Mrs Hemstritch’s appointment will take effect from 9 October 2006.

Foreign Entities (Rule 4.3A Item No. 13)

Not Applicable

Profit Announcement 57

Appendices

19. ASX Appendix 4E Statement of Cash Flows (continued)


	2006			2005
19 (a) Reconciliation of Operating Profit after Income Tax to Net Cash Provided by Operating Activities	$M			$M

Net profit after income tax		3,959			3,410
Net (Increase) in interest receivable		(99	)		(17	)
Increase/(decrease) in interest payable		784			64
Net decrease in trading securities		—			318
Net (increase) in assets at fair value through Income Statement (excluding life insurance)		(53	)		—
Net (gain)/loss on sale of investments		—			(8	)
Net (gain)/loss on sale of controlled entities and associates		(163	)		13
Net Decrease/(increase) in derivative assets		128			—
(Gain)/loss on sale property plant and equipment		(4	)		(4	)
Charge for bad and doubtful debts		398			322
Depreciation and amortisation		209			176
Increase in liabilities at fair value through Income Statement (excluding life insurance)		1,374			—
(Decrease) in derivative liabilities		(445	)		—
(Decrease) in other provisions		(92	)		(86	)
(Decrease)/increase in income taxes payable		(455	)		406
Net increase in deferred income taxes payable		182			332
Decrease/(increase) in deferred tax assets		184			(86	)
(Increase) in accrued fees/reimbursements receivable		(88	)		(41	)
Increase in accrued fees/other items payable		133			106
Amortisation of premium on investment securities		—			(4	)
Unrealised (gain)/loss on revaluation of trading securities		—			408
Unrealised (gain)/loss on revaluation of assets at fair value through Income Statement (excluding life insurance)		(112	)		—
Change in life insurance contract policy liabilities		(814	)		56
(Decrease) in managed fund units on sale		(46	)		—
Increase in cash flow hedge reserve		31			—
Changes in operating assets and liabilities arising from cash flow movements		(3,458	)		(5,921	)
Other		(387	)		220

Net Cash provided by/(used in) Operating Activities		1,166			(336	)


19 (b) Reconciliation of Cash: For the purposes of the statement of cash flows, cash includes cash, money at short call, at call deposits with other financial institutions and settlement account balances with other banks.

Notes, coins and cash		1,703			1,723
Other short term liquid assets		491			859
Receivables due from other financial institutions — at call ⁽¹⁾		4,657			2,893
Payables due to other financial institutions — at call ⁽¹⁾		(4,813	)		(4,199	)

Cash and Cash Equivalents at end of year		2,038			1,276


19 (c) Disposal of Controlled Entities
Fair value of assets disposed
Cash and liquid assets		55			—
Assets at fair value through Income Statement — insurance		2,297			—
Other assets		148			—
Life Insurance policy liabilities		(1,996	)		—
Bills payable and other liabilities		(41	)		—
Profit on sale		145			—

Cash consideration received		608			—
Less cash and cash equivalents disposed		(55	)		—

Net cash inflow on disposal		553			—


19 (d) Non Cash Financing and Investing Activities: Shares issued under the Dividend Reinvestment Plan for 2006 were $481 million.

19 (e) Acquisition of Controlled Entities
Fair value of assets acquired
Cash and liquid assets		—			4
Other intangibles		122			—
Other assets		167			4
Bills payable and other liabilities		(8	)		(8	)
Minority interests		126			—
Goodwill		7			44

Cash consideration paid		414			44
Less cash and cash equivalents acquired		—			(4	)

Net cash outflow on acquisition		414			40


19 (f) Financing Facilities : Standby funding lines are immaterial


(1)		At call includes certain receivables and payables due from and to financial institutions within three months.


58		Commonwealth Bank of Australia

Appendices

20. Summary of Major AIFRS Impacts


	Full Year Ended									Half Year Ended
	30/06/06			30/06/05			Jun 06 vs			30/06/06			31/12/05			Jun 06 vs
	$M			$M			Jun 05 %			$M			$M			Dec 05 %

Net Interest Income (AIFRS basis)		6,514			6,026			8			3,259			3,255			—
AIFRS Impacts:
Reclassification of Securitisation OBI⁽¹⁾		(94	)		(71	)		32			(57	)		(37	)		54
Income Deferral — Banking⁽²⁾		(11	)		11		large				(3	)		(8	)		(63	)
Hybrid Instruments ⁽³⁾		123			—			—			66			57			16
Hedging & Derivatives⁽⁴⁾		(47	)		—			—			(21	)		(26	)		(19	)

Net Interest Income (AGAAP equivalent)		6,485			5,966			9			3,244			3,241			—


Other Banking Income (AIFRS basis)		3,036			2,845			7			1,591			1,445			10
AIFRS Impacts:
Reclassification of Securitisation to NIE⁽¹⁾		94			70			34			57			37			54
Income Deferral — Banking⁽²⁾		(15	)		—			—			(21	)		6		large
Hedging & Derivatives⁽⁴⁾		79			—			—			39			40			(3	)

Other Banking Income (AGAAP equivalent)		3,194			2,915			10			1,666			1,528			9


Total Banking Income (AIFRS basis)		9,550			8,871			8			4,850			4,700			3
Total AIFRS Impacts		129			10		large				60			69			(13	)

Total Banking Income (AGAAP equivalent)		9,679			8,881			9			4,910			4,769			3


Funds Management Income (AIFRS cash basis)		1,543			1,247			24			828			715			16
AIFRS Impacts:
Income Deferral & DAC- Funds Management⁽⁵⁾		20			14			43			7			13			(46	)

Funds Management Income (AGAAP equivalent)		1,563			1,261			24			835			728			15


Insurance Income (AIFRS cash basis)		742			747			(1	)		356			386			(8	)
AIFRS Impacts:
Income Deferral — Insurance⁽⁵⁾		(5	)		—			—			(4	)		(1	)	large

Insurance Income (AGAAP equivalent)		737			747			(1	)		352			385			(9	)


Operating Expenses — comparable business (AIFRS basis)		5,994			5,719			5			3,027			2,967			2
AIFRS Impacts:
Volume Expense Deferral — Funds Management⁽⁵⁾		37			14		large				19			18			6
Share-Based Compensation & Other — Banking⁽⁶⁾		(10	)		(36	)		(72	)		—			(10	)		—

Operating Expenses (AGAAP equivalent)		6,021			5,697			6			3,046			2,975			2


Total AIFRS Impact on Net Profit Before Tax (“cash basis”)		117			46		large				44			73			(40	)


Total AIFRS Impact on Net Profit After Tax (“cash basis”) ⁽⁷⁾		115			46		large				45			70			(36	)
AIFRS Non-cash items:
Defined benefit superannuation plan expense		25			53			(53	)		6			19			(68	)
Treasury share valuation adjustment		100			39		large				57			43			33

Total AIFRS Non-Cash Items After Tax		125			92			36			63			62			2


Total AIFRS Impact on Net Profit After Tax (“statutory basis”)		240			138		large				108			132			(18	)


Movement in General Reserve for Credit Losses⁽⁸⁾		131			—			—			96			35		large


Description of AIFRS Impacts:

(1)		Reclassification of securitisation income from other banking income to net interest income.

(2)		Includes the netting of Fees and Commissions against Interest Income, and measuring on an effective yield basis.

(3)		On reclassification of hybrid instruments from equity to loan capital, preference share dividends paid are reclassified to interest paid.

(4)		Reclassification of interest expense on certain non-hedged derivatives to other banking income, and measuring all derivatives on a Fair Value basis.

(5)		Capitalisation and amortisation of certain funds management and insurance revenue and expense items. In the current period the AIFRS impact on deferred acquisition costs has been reclassified from Insurance Income to Funds Management Income. The prior period has been restated on a consistent basis.

(6)		Principally relates to share-based compensation expense arising on the final issue under the mandatory Equity Participation Plan.

(7)		The effective tax rate on the AIFRS impact is not equivalent to the corporate tax rate due to tax treatment of distributions on some hybrid instruments, and non-deductibility of other expenses (e.g. share based compensation).

(8)		Represents the addition of the AIFRS Bad Debt Expense and the movement in the APRA General Reserve for Credit Loss on a pre-tax equivalent basis.

Profit Announcement 59

Appendices

20. Summary of Major AIFRS Impacts (continued)


	Full Year Ended						Half Year Ended
	30/06/06		30/06/05		Jun 06 vs		30/06/06		31/12/05		Jun 06 vs
	$M		$M		Jun 05 %		$M		$M		Dec 05 %

Net Profit After Tax (“underlying basis“) (AIFRS)		3,842		3,420		12		1,967		1,875		5
AIFRS Impact		115		46	large			45		70		(36	)

Net Profit After Tax (“underlying basis”) (AGAAP equivalent)		3,957		3,466		14		2,012		1,945		3


Net Profit ex HK sale After Tax (“cash basis”) (AIFRS)		3,908		3,492		12		1,992		1,916		4
AIFRS Impact		115		46	large			45		70		(36	)

Net Profit ex HK sale After Tax (“cash basis”) (AGAAP equivalent)		4,023		3,538		14		2,037		1,986		3


Net Profit After Tax (“statutory basis”) (AIFRS)		3,928		3,400		16		1,929		1,999		(4	)
AIFRS Impact		240		138	large			108		132		(18	)

Net Profit After Tax (“statutory basis”) (AGAAP equivalent)⁽¹⁾		4,168		3,538		18		2,037		2,131		(4	)


	Full Year Ended									Half Year Ended
	30/06/06			30/06/05			Jun 06 vs			30/06/06			31/12/05			Jun 06 vs
	$M			$M			Jun 05 %			$M			$M			Dec 05 %

Weighted average number of shares — cash basic (number)

AIFRS		1,283			1,269			1			1,285			1,281			—
AIFRS Adjustments⁽²⁾		3			4			(25	)		2			4			(50	)

AGAAP		1,286			1,273			1			1,287			1,285			—


Weighted average number of shares — cash diluted (number)

AIFRS		1,338			1,325			1			1,344			1,333			1
AIFRS Adjustments⁽³⁾		(51	)		(51	)		—			(56	)		(47	)		19

AGAAP		1,287			1,274			1			1,288			1,286			—


Weighted average number of shares — statutory basic (number)

AIFRS		1,275			1,260			1			1,277			1,273			—
AIFRS Adjustments⁽⁴⁾		11			13			(15	)		11			12			(8	)

AGAAP		1,286			1,273			1			1,288			1,285			—


Net Assets ($M)

AIFRS		21,343			22,643			(6	)		21,343			19,850			8
AIFRS Adjustments⁽⁵⁾		—			3,417			—			—			—			—

AGAAP		21,343			26,060			(18	)		21,343			19,850			8


Intangible Assets ($M)

AIFRS		7,809			7,656			2			7,809			7,740			1
AIFRS Adjustments⁽⁶⁾		—			(3,262	)		—			—			—			—

AGAAP		7,809			4,394			78			7,809			7,740			1


Average Interest Earning Assets ($M)

AIFRS		274,798			244,708			12			282,553			267,169			6
AIFRS Adjustments⁽⁷⁾		—			(759	)		—			—			—			—

AGAAP		274,798			243,949			13			282,553			267,169			6


Description of AIFRS Impacts:

(1)		Net profit after tax (“statutory basis”) (AGAAP equivalent) excludes the impact of appraisal value uplifts and goodwill amortisation from comparative periods.

(2)		Relates to the deduction of “Treasury Shares” held within the employee share scheme trust.

(3)		Relates to the dilutive impact under AIFRS which requires inclusion of hybrid instruments which have any probability of conversion to ordinary shares.

(4)		Relates to the deduction of all Treasury Shares.

(5)		Relates principally to the write-off of internally-generated appraisal value excess.

(6)		Relates principally to the reclassification of acquired appraisal value excess from Other assets to Intangible assets.

(7)		Average interest earning assets are increased under AIFRS due to the consolidation of non-home loan securitisation assets.

60 Commonwealth Bank of Australia

Appendices

21. Analysis Template


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05			Page
Profit Summary — Input Schedule	$M			$M			$M			$M			References

Income
Net interest income		6,514			6,026			3,259			3,255		Page 7
Other banking operating income		3,036			2,845			1,591			1,445		Page 7

Total banking Income		9,550			8,871			4,850			4,700		Page 7
Operating income		1,543			1,247			828			715		Page 17
Shareholder investment returns		14			33			7			7		Page 17


Funds management income		1,557			1,280			835			722		Page 17
Operating income — life insurance		669			693			322			347		Page 21
Operating income — general insurance		73			54			34			39		Page 21


Operating income insurance		742			747			356			386		Page 21
Shareholder investment returns		87			204			30			57		Page 21
Profit on sale of the Hong Kong business		145			—			—			145		Page 21

Insurance income		974			951			386			588		Page 21

Total income		12,081			11,102			6,071			6,010		Page 3

Expenses
Banking		4,558			4,380			2,298			2,260		Page 36
Funds management		989			798			530			459		Page 36
Insurance		447			541			199			248		Page 36

Operating expenses		5,994			5,719			3,027			2,967		Page 36
Banking		—			112			—			—		Page 36
Funds management		—			36			—			—		Page 36
Insurance		—			2			—			—		Page 36

Which new Bank expenses		—			150			—			—		Page 36

Total expenses		5,994			5,869			3,027			2,967		Page 36

Profit before bad debts expense		6,087			5,233			3,044			3,043		Page 3
Bad debts expense		398			322			210			188		Page 3

Profit before tax expense		5,689			4,911			2,834			2,855		Page 3
Income tax — corporate		1,605			1,409			829			776		Page 3

Operating profit after tax		4,084			3,502			2,005			2,079		Page 3
Minority interest (OEI)		31			10			13			18		Page 3

Net profit after tax & OEI — cash basis		4,053			3,492			1,992			2,061		Page 3

Defined benefit superannuation plan expense		(25	)		(53	)		(6	)		(19	)	Page 3
Treasury share valuation adjustment		(100	)		(39	)		(57	)		(43	)	Page 3

Net profit after tax & OEI — statutory basis		3,928			3,400			1,929			1,999		Page 3

Investment return on shareholder funds		246			237			37			209		Page 23
Tax expense on shareholder investment returns		35			60			12			23		Page 23

Shareholder Investment Returns — after tax		211			177			25			186		Page 23
Which new Bank expenses		—			150			—			—		Page 3
Tax expense on Which new Bank expenses		—			(45	)		—			—		Page 3

Which new Bank expenses — after tax		—			105						—		Page 3

Net profit after tax — underlying basis		3,842			3,420			1,967			1,875		Page 3

Profit Annoucement 61

Appendices

21. Analysis Template (continued)

Full Year Ended

Half Year Ended

30/06/06

30/06/05

30/06/06

31/12/05

Page

Profit Summary – Input Schedule

References

Other Data

Net interest income (excluding securitisation)

6,420

5,956

3,202

3,218

Page 32

Average interest earning assets

274,798

244,708

282,553

267,169

Page 32

Average net assets ⁽¹⁾

21,994

22,307

20,597

21,247

Page 25

Average minority interest ⁽¹⁾

1,148

2,135

515

1,156

Page 25

Average preference shares & other equity instruments ⁽¹⁾

1,600

2,260

470

1,130

Page 25

Average treasury shares ⁽¹⁾

(390

)

(378

)

(381

)

(376

)

Page 50

Average defined benefit superannuation plan net surplus ⁽¹⁾

631

418

656

471

Page 24

Preference dividends

127

131

Page 24

Preference dividends (after tax)

100

Page 24

Average number of shares – statutory

1,275

1,260

1,277

1,273

Page 3

Average number of shares – fully diluted – statutory

1,329

1,316

1,336

1,324

—

Average number of shares – cash and underlying

1,283

1,269

1,285

1,281

Page 3

Average number of shares – fully diluted – cash and underlying

1,338

1,325

1,344

1,333

—

Dividends per share (cents)

224

197

130

Page 3

No of shares at end of period

1,283

1,280

1,283

1,289

Page 50

Average funds under administration

139,082

116,262

147,684

130,179

Page 17

Operating income – internal

Page 17

Average inforce premiums ⁽¹⁾

1,244

1,216

1,220

1,241

Page 22

Net assets

21,343

22,643

21,343

19,850

Page 25

Total intangible assets

7,809

7,656

7,809

7,740

Page 25

Minority interests

508

1,789

508

523

Page 25

Preference share capital

—

687

—

Page 25

Other equity instruments

939

1,573

939

—

Page 25

Tier one capital

16,354

14,141

16,354

15,290

Page 47

Eligible loan capital

281

304

281

317

Page 47

Other equity instruments

3,659

1,573

3,659

1,573

Page 48

Minority interest (net of minority interest component deducted from Tier One capital)

508

520

508

523

Page 48

Investment in non consolidated subsidiaries (net of Intangible component deducted from Tier One capital)

2,012

1,721

2,012

1,918

Page 48

Other deductions

151

130

Page 48

Risk-weighted assets

216,438

189,559

216,438

202,667

Page 48

(1)

Average of opening & closing balance.

62 Commonwealth Bank of Australia

Appendices

21. Analysis Template (continued)


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
Ratios – Output Summary	$M			$M			$M			$M

EPS

Earnings per share – cash basis ex Hong Kong (cents)		304.6			264.8			154.9			149.5

Earnings per share – cash basis (cents)		315.9			264.8			154.9			160.9

Net profit after tax – cash basis		4,053			3,492			1,992			2,061
less preference dividends		—			(131	)		—			—
Adjusted profit for EPS calculation		4,053			3,361			1,992			2,061
Average number of shares (M)		1,283			1,269			1,285			1,281
Add back preference dividends (after tax) (M)		100			90			54			46
Adjusted diluted profit for EPS calculation		4,153			3,451			2,046			2,107
Diluted average number of shares (M)		1,338			1,325			1,344			1,333
EPS diluted – cash basis (cents)		310.5			260.5			152.1			158.1

Earnings per share – underlying basis (cents)		299.4			259.2			153.0			146.4

Net profit after tax – underlying		3,842			3,420			1,967			1,875
less preference dividends		—			(131	)		—			—
Adjusted profit for EPS calculation		3,842			3,289			1,967			1,875
Average number of shares (M)		1,283			1,269			1,285			1,281
DPS

Dividends

Dividends per share (cents)		224			197			130			94
No of shares at end of period (M)		1,283			1,280			1,283			1,289
Total dividend		2,879			2,517			1,668			1,211

Dividend payout ratio – cash basis

Net profit after tax – cash basis		4,053			3,492			1,992			2,061
less preference dividends		—			(131	)		—			—
NPAT – ordinary shareholders		4,053			3,361			1,992			2,061
Total dividend		2,879			2,517			1,668			1,211
Payout ratio – cash basis (%)		71.0			74.9			83.7			58.8

Dividend cover

NPAT – ordinary shareholders		4,053			3,361			1,992			2,061
Total dividend		2,879			2,517			1,668			1,211
Dividend cover – cash basis		1.4			1.3			1.2			1.7

ROE

Return on equity – cash basis

Average net assets		21,993			22,307			20,597			21,247
Less:
Average minority interests		(1,148	)		(2,135	)		(515	)		(1,156	)
Average preference shares		(1,600	)		(2,260	)		(470	)		(1,130	)

Average equity		19,245			17,912			19,612			18,961
Less average treasury shares		(390	)		(378	)		(381	)		(376	)
Less average defined benefit superannuation plan net surplus		631			418			656			471

Net average equity		19,004			17,872			19,337			18,866
NPAT (“cash basis”)		4,053			3,492			1,992			2,061
less preference dividends		—			(131	)		—			—

Adjusted profit for ROE calculation		4,053			3,361			1,992			2,061
Return on equity – cash basis (%)		21.3			18.8			20.8			21.7

Return on equity – underlying basis

Average net assets		21,993			22,307			20,597			21,247
Average minority interests		(1,148	)		(2,135	)		(515	)		(1,156	)
Average preference shares		(1,600	)		(2,260	)		(470	)		(1,130	)

Average equity		19,245			17,912			19,612			18,961
Less average treasury shares		(390	)		(378	)		(381	)		(376	)
Less average defined benefit superannuation plan net surplus		631			418			656			471

Net average equity		19,004			17,872			19,337			18,866
NPAT (“underlying basis”)		3,842			3,420			1,967			1,875
Less preference dividends		—			(131	)		—			—

Adjusted profit for ROE calculation		3,842			3,289			1,967			1,875
Return on equity – underlying basis (%)		20.2			18.4			20.5			19.7

NIM

Net interest income (excluding securitisation)		6,420			5,956			3,202			3,218
Average interest earning assets (excluding securitisation)		274,798			244,708			282,553			267,169
NIM ( % pa)		2.34			2.43			2.29			2.39

Profit Announcement 63

Appendices

21. Analysis Template (continued)


	Full Year Ended						Half Year Ended
	30/06/06			30/06/05			30/06/06			31/12/05
Ratios – Output Summary	$M			$M			$M			$M

Productivity
Banking expense to income ratio
Expenses including Which new Bank expenses		4,558			4,492			2,298			2,260
Banking Income		9,550			8,871			4,850			4,700
Expense to Income – cash basis (%)		47.7			50.6			47. 4			48.1

Operating expenses		4,558			4,380			2,298			2,260
Banking Income		9,550			8,871			4,850			4,700
Expense to income – underlying basis (%)		47.7			49.4			47. 4			48.1

Funds management expenses to average FUA ratio

Expenses including Which new Bank expenses		989			834			530			459
Average funds under administration		139,082			116,262			147,684			130,179
Expenses to average FUA – cash basis (%)		0.71			0.72			0. 72			0.70

Insurance expenses to average inforce premiums ratio

Operating expenses including Which new Bank expenses – external		447			543			199			248
Operating expenses – internal		9			10			4			5
Total expenses		456			553			203			253
Average inforce premiums		1,244			1,216			1,220			1,241
Expenses to average inforce premiums – cash basis (%)		36.7			45.5			33. 6			40.5

Operating expenses – external		447			541			199			248
Operating expenses – internal		9			10			4			5
Total expenses		456			551			203			253
Average inforce premiums		1,244			1,216			1,220			1,241
Expenses to average inforce premiums – underlying basis (%)		36.7			45.3			33. 6			40.5

Net Tangible Assets (NTA) per share

Net assets		21,343			22,643			21,343			19,850
Less:
Intangible assets		(7,809	)		(7,656	)		(7,809	)		(7,740	)
Minority interests		(508	)		(1,789	)		(508	)		(523	)
Preference share capital		—			(687	)		—			—
Other equity instruments		(939	)		(1,573	)		(939	)		—

Total net tangible assets		12,087			10,938			12,087			11,587
No of shares at end of period (M)		1,283			1,280			1,283			1,289
Net tangible assets (NTA) per share ($)		9.42			8.54			9. 42			8.99

ACE ratio

Tier one capital		16,354			14,141			16,354			15,290
Deduct:
Eligible loan capital		(281	)		(304	)		(281	)		(317	)
Preference share capital		—			(687	)		—			(687	)
Other equity instruments		(3,659	)		(1,573	)		(3,659	)		(1,573	)
Minority Interest (net of minority interest component deducted from Tier One capital)		(508	)		(520	)		(508	)		(523	)
Investment in non-consolidated subsidiaries (net of intangible component deducted from Tier One capital)		(2,012	)		(1,721	)		(2,012	)		(1,918	)
Other deductions		(151	)		(28	)		(151	)		(130	)

Total Adjusted Common Equity		9,743			9,308			9,743			10,142
Risk weighted assets		216,438			189,559			216,438			202,667
ACE ratio (%)		4.50			4.91			4. 50			5.00

64 Commonwealth Bank of Australia

Appendices

22. Summary


					Full Year Ended									Half Year Ended
											Jun 06 vs									Jun 06 vs
Total			Page		30/06/06			30/06/05			Jun 05 %			30/06/06			31/12/05			Dec 05 %

Net profit after tax – underlying	$	M		3		3,842			3,420			12			1,967			1,875			5
Net profit after tax – cash basis	$	M		3		4,053			3,492			16			1,992			2,061			(3	)
Defined benefit superannuation plan expense	$	M		3		(25	)		(53	)		53			(6	)		(19	)		(68	)
Treasury shares valuation adjustment	$	M		3		(100	)		(39	)	large				(57	)		(43	)		33
Net profit after tax – statutory	$	M		3		3,928			3,400			16			1,929			1,999			(4	)
Earnings per share cash basis – basic (cents)	cents			3		315.9			264.8			19			154.9			160.9			(4	)
Dividend per share	cents			3		224			197			14			130			94			38
Dividend pay-out ratio cash basis (ex Hong Kong)		%		3		73.7			74.9		(120)bpts				83.7			63.2		large
Tier 1 capital		%		47		7.56			7.46		10bpts				7.56			7.54		2bpts
Total capital		%		47		9.66			9.75		(9)bpts				9.66			9.81		(15)bpts
Adjusted common equity		%		47		4.50			4.91		(41)bpts				4.50			5.00		(50)bpts
Return on equity – cash		%		3		21.3			18.8		250bpts				20.8			21.7		(90)bpts
Return on equity – underlying		%		—		20.2			18.4		180bpts				20.5			19.7		80bpts
Weighted average number of shares – statutory	No.			3		1,275			1,260			1			1,277			1,273			—
Net tangible assets per share	$			64		9.42			8.54			10			9.42			8.99			5


Banking

Net profit after tax – underlying	$	M		7		3,227			2,913			11			1,638			1,589			3
Net profit after tax – cash basis	$	M		7		3,227			2,834			14			1,638			1,589			3
Net Interest Income	$	M		7		6,514			6,026			8			3,259			3,255			—
Net Interest Margin		%		7		2.34			2.43		(9)bpts				2.29			2.39		(10)bpts
Other banking income	$	M		7		3,036			2,845			7			1,591			1,445			10
Other banking income/total bank income		%		—		31.8			32.1		(30)bpts				32.8			30.7		large
Expense to income ratio – underlying		%		7		47.7			49.4			3			47.4			48.1			1
Average interest earning assets	$	M		4		274,798			244,708			12			282,553			267,169			6
Average interest earning liabilities	$	M		4		255,100			225,597			13			263,203			247,129			7
Bad debts expense	$	M		7		398			322			(24	)		210			188			(12	)
Bad debts expense to risk-weighted assets (annual)		%		9		0.18			0.17		1bpt				0.19			0.19			—
Collective provision plus general reserve for credit losses (pre-tax equivalent) to risk weighted assets		%		9		0.71			—			n/a			0.71			0.71			—
General provision to risk weighted assets		%		9		—			0.73			n/a			—			—			n/a
Total provisions ⁽¹⁾plus general reserve for credit losses (pre-tax) to gross impaired assets		%		40		526.7			—			n/a			526.7			410.1			28
Total provision ⁽¹⁾ to gross impaired assets		%		40		373.3			411.4			(9	)		373.3			308.1			21
Individually provisioned to Impaired Assets		%		40		52.5			—			n/a			52.5			45.2			16
Risk weighted assets	$	M		48		216,438			189,559			14			216,438			202,667			7


Funds Management

Net profit after tax – underlying	$	M		17		400			351			14			217			183			19
Net profit after tax – cash basis	$	M		17		410			349			17			222			188			18
Shareholder investment returns	$	M		17		14			33			(58	)		7			7			—
Average funds under administration	$	M		17		139,082			116,262			20			147,684			130,179			13
Net inflows	$	M		17		10,830			456		large				8,135			2,695		large
Income to average funds under administration		%		17		1.12			1.08		4bpts				1.14			1.10		4bpts
Expenses to average funds under administration		%		17		0.71			0.72			1			0.72			0.70			(3	)


Insurance

Net profit after tax – underlying	$	M		21		215			156			38			112			103			9
Net profit after tax – cash basis	$	M		21		416			309			35			132			284			(54	)
Shareholder investment returns	$	M		21		232			204			14			30			202			(85	)
Inforce premiums	$	M		22		1,223			1,265			(3	)		1,223			1,216			1
Expenses to Average Inforce premiums – underlying		%		21		36.7			45.3			19			33.6			40.5			17

(1)

Impairment provision ratios have changed because of the re-measurement under AIFRS.

Profit Announcement 65

Appendices


Term		Description

Banking		Banking operations includes retail; business, corporate and institutional; Asia Pacific banking; treasury and centre support functions. Retail banking operations include banking services which were distributed through the Premium and Retail distribution divisions. Business, Corporate and Institutional banking includes banking services which were distributed to all business customers through the Premium Business Services division and the small business customers which were serviced through the Premium and Retail divisions and funding operations. Asia Pacific banking includes offshore banking subsidiaries, primarily ASB Bank operations in New Zealand.

Borrowing Corporation		‘Borrowing Corporation’ as defined by Section 9 of the Corporations Act 2001 is CBFC Limited, Colonial Finance Limited and their controlled entities.

Dividend Payout Ratio		Dividends paid on ordinary shares divided by earnings (earnings are net of dividends on preference shares).

DRP		Dividend reinvestment plan.

DRP Participation		The percentage of total issued capital participating in the dividend reinvestment plan.

Earnings Per Share		Calculated in accordance with the revised AASB 133: Earnings per Share

Funds Management		Funds management business includes funds management within the Wealth Management division and International Financial Services division.

Insurance		Insurance business includes the life risk business within the Wealth Management division and the International Financial Services division and general insurance financial results. The insurance segment as reported on page 21 includes the operating performance of the Hong Kong Insurance business up to the effective date of sale (18 October 2005). Refer to appendix 18.

Net Profit after Tax (“Cash Basis”)		Represents profit after tax and minority interests, before defined benefit superannuation plan expense and treasury share adjustment.

Net Profit after Tax (“Statutory Basis”)		Represents profit after tax, minority interests, defined benefit superannuation plan expense and treasury shares. This is equivalent to the statutory item “Net Profit attributable to Members of the Group”.

Net profit after tax (“Underlying Basis”)		Represents net profit after tax (“cash basis”) excluding Which new Bank and shareholder investment returns.

Net Tangible Assets per Share		Net assets excluding intangible assets, Minority interests, preference shares and other equity instruments divided by ordinary shares on issue at the end of the period.

Overseas		‘Overseas’ represents amounts booked in branches and controlled entities outside Australia .

Return on Average Shareholders’ Equity		Based on net profit after tax, minority interests applied to average shareholders equity, excluding minority interests.

Return on Average Shareholders’ Equity - Cash Basis		As per the return on average shareholder equity, excluding the effect of defined benefit superannuation plan expense and treasury shares valuation adjustment.

Return on Average Total Assets		Based on net profit after tax and Minority interests. Averages were based on beginning and end of period balances.

Staff Numbers		Staff numbers include all permanent full time staff, part time staff equivalents and external contractors employed by 3rd party agencies.

Underlying Expense to Income Ratio		Represents operating expenses (excluding Which new Bank) as a percentage of total operating revenue.

Weighted Average Number of Shares (“Statutory Basis”)		Includes an adjustment to exclude “Treasury Shares” related to investments in the Bank’s shares held by both the life insurance statutory funds and by the employee share scheme trust.

Weighted Average Number of Shares (“Cash Basis”)		Includes an adjustment to exclude only those “Treasury Shares” related to the investment in the Bank’s shares held by the life insurance statutory funds.

Profit Announcement 67

Appendices

25. Market Share Definitions


Banking


Australian Retail

Home Loans		Total Household Loans(APRA) - MISA (Pre Sep 04) + Securitised Assets (APRA) + Homepath. Total Housing Loans (incl securitisations) (from RBA which includes NBFI’s unlike APRA). ⁽¹⁾

Credit Cards		CBA ^Total Credit Card Lending (APRA). Total Credit Cards with Interest Free + Total Credit Cards without Interest Free (from RBA which includes NBFI’s unlike APRA). ⁽¹⁾

Retail Deposits		CBA Current Deposits + Term (excl CD’s) + Other (All as reported to RBA) Total RBA: Current Deposits with banks + Term (excl CD’s) + Other with banks.(from RBA monthly bulletin statistics) ⁽¹⁾

Household Deposits		CBA Household Deposits (as reported to APRA) - MISA (Pre Sep 04) Total Bank Household Deposits (from APRA monthly banking statistics)

APRA Other Household Lending		CBA Term Personal Lending + Margin Lending net balances + Personal Leasing + Revolving credit Total Market Term Personal Lending + Margin Lending + Personal Leasing + Revolving credit

Business

Business Lending		CBA business lending and credit (specific ‘business lending’ categories in lodged APRA returns - 320.0, 320.1 and 320.4) Total of business lending and credit to the private non-financial sector by all financial intermediaries (sourced from RBA table Lending & Credit Aggregates which is in turn sourced from specific ‘business lending’ categories in lodged APRA returns - 320.0, 320.1 and 320.4) (includes bills on issue and securitised business loans). ⁽¹⁾

Asset Finance		Total end of month asset finance net receivables excluding repossessed assets, non-accrual receivables, progressive fundings and the consumer loan balance Total market as determined by Australian Equipment Lessors Association (AELA)

Equities Trading (CommSec)		12 months rolling average of total value of CommSee equities trades 12 months rolling average of total value of equities market trades as measured by ASX SEATS

Asia Pacific

NZ Lending		All retail, business, commercial, corporate, and rural deposits on ASB Balance Sheet Total retail, business, commercial, corporate, and rural deposits in New Zealand

NZ Deposits		All retail, business, commercial, corporate, and rural loans on ASB Balance Sheet Total retail, business, commercial, corporate, and rural deposits in New Zealand

Funds Management

Retail market share (admin view):		Total funds in CBA Wealth Management retail investment products (including WM products badged by other parties) Total funds in retail investment products market

Platforms/ masterfunds:		Total funds in CBA Wealth Management platforms and masterfunds (including WM platforms badged by other parties) Total funds in platform/masterfund market

New Zealand retail		Total ASB + Sovereign + JMNZ Retail net Funds under Management Total Market net Retail Funds under Management

Insurance

Australia (Total Risk)		Total risk inforce premium of all CBA Group Australian life insurance companies Total risk inforce premium for all Australian life insurance companies (from Plan for Life)

Australia (Individual Risk)		(Individual lump sum + individual risk income) inforce premium of all CBA Group Australian life insurance companies Individual risk inforce premium for all Australian life insurance companies (from Plan for Life)

New Zealand		Total Sovereign (inforce annual premium income + new business – exits – other) Total inforce premium for New Zealand (from ISI statistics)


(1)		The RBA restates the total of all financial intermediaries retrospectively when required. This may be due to a change in definition, the inclusion of a new participant or correction of errors in prior returns. CBA restates its market share where the RBA total has changed based on current balances less implied percentage growth rates now reported by the RBA for previous months.

68 Commomwealth Bank of Australia


Report for the full year ended 30 June 2006	$M

Revenues from ordinary activities	Up 14% to $28,564
Profit (loss) from ordinary activities after tax attributable to members	Up 16% to $3,928
Net profit (loss) for the period attributable to members	Up 16% to $3,928
Dividends (distributions)
Final Dividend – fully franked (cents per share)		130
Interim Dividend – fully franked (cents per share)		94
Record date for determining entitlements to the dividend	18 August 2006


Warwick Bryan
Phone:		02 9378 5130
Facsimile:		02 9378 2344
Email:		ir@cba.com.au


Ex-dividend Date		14 August 2006
Record Date		18 August 2006
Final Dividend payment Date		5 October 2006
Annual General Meeting		3 November 2006
2007 Interim results Date		14 February 2007


Highlights			2
Financial Performance and Business Review			2
Group Performance Summary			3
Shareholder Summary			3
Balance Sheet Summary			4
Key Performance Indicators			4

Banking Analysis			6
Financial Performance and Business Review			6
Key Performance Indicators			7
Balance Sheet			9
Australian Retail			10
Premium, Business & Corporate and Institutional			12
Asia Pacific			14

Funds Management Analysis			16
Financial Performance and Business Review			16
Key Performance Indicators			17
Funds under Administration			18

Insurance Analysis			20
Financial Performance and Business Review			20
Key Performance Indicators			21
Annual Inforce Premiums			22

Shareholder Investment Returns			23

Financial Statements			24
Consolidated Income Statement			24
Consolidated Balance Sheet			25
Consolidated Statement of Cash Flows			26

Appendices			28


(1)		2006 and 2005 presented on an AIFRS basis excluding the profit from sale of the Hong Kong Insurance Business.


1	Net Interest Income	29

2	Net Interest Margin	29

3	Average Balances and Related Interest	30

4	Interest Rate and Volume Analysis	34

5	Other Banking Operating Income	36

6	Operating Expenses	36

7	Income Tax Expense	38

8	Loans, Advances and Other Receivables	39

9	Asset Quality	40

10	Deposits and Other Public Borrowings	42

11	Financial Reporting by Segment	43

12	Integrated Risk Management	45

13	Capital Adequacy	47

14	Share Capital	50

15	Life Insurance Business	51

16	Intangible Assets	53

17	ASB Bank Group	54

18	Sale of the Hong Kong Business	55

19	ASX Appendix 4E Statement	55

20	Summary of Major AIFRS Impacts	59

21	Analysis Template	61

22	Summary	65

23	Foreign Exchange Rates	66

24	Definitions	67

25	Market Share Definitions	68


Exchange Rates Utilised
As At		30/06/06		31/12/05		30/06/05

AUD 1. 00=	USD		0.7428		0.7341		0.7643
	GBP		0.4053		0.4251		0.4223
	JPY		85.276		86.214		84.165
	NZD		1.214		1.071		1.090
	HKD		5.770		5.692		5.940
	EUR		0.5848		0.6187		0.6316