Hello and welcome to the Commonwealth Bank of Australia's Result’s Presentation for the Half-Year ended 31 December 2022. I'm Melanie Kirk, and I'm Head of Investor Relations. Thank you for joining us for this virtual results briefing. For this briefing, we will have a presentation from our CEO, Matt Comyn, with an overview of the business and an update of the results. Our CFO, Alan Docherty, will provide details of the financial results, and then Matt will provide an outlook and summary. The presentations will be followed by the opportunity for analysts and investors to ask questions. I'll now hand over to Matt. Thank you, Matt. Thanks, Mel. Good morning, everyone. It's great to be with you today to present the bank's half-year results. Before I get into the detail of the result, I want to spend a few moments on the disconnect that we've observed in the past six months between our headline measures today and some of the underlying conditions. The cost of living pain for many customers is very real, yet the impact is not yet evident in our first-half financial performance. We are very conscious that many of our customers are feeling significant strain from rising interest rates alongside the rising costs of electricity, groceries, and other household items. This is becoming increasingly challenging for many households and an increasing source of worry, given that the cash rate is likely to rise further in the coming months. If we assume that there are two further cash rate increases, Australian homeowners have to date only experienced about half of the likely impact on monthly cash flows. We are proactively contacting every customer who's coming off a fixed-rate mortgage this year so we can discuss what kind of support and options we can offer them. We can see some customers drawing down on savings and reducing spending to compensate. Yet we have not seen this translate into customers falling behind on repayments. While this has resulted in higher earnings in the period, it is driven by timing rather than the economic reality of higher rates. While there has been an improvement in margins as the cash rate increased from emergency levels, margins have not returned to pre-COVID levels. We saw margins peak in October on a month-on-month spot basis. Funding costs have increased significantly, which has also coincided with escalating price-based offers across the home loan market in Australia and New Zealand. We believe home loan pricing across the industry is below the cost of capital. One the other hand, this has served to dampen the impact of rising rates on home loan customers. Against this backdrop, we've been focused on serving our customers well and disciplined execution in this highly competitive environment. This half, we've finished the period with peer-leading Net Promoter Scores and have delivered a strong financial result. Our continued balance sheet strength and capital position means we are well placed to support our customers and the broader Australian economy. We're announcing today a dividend of AUD 2.10, fully franked, a neutralised dividend reinvestment plan, and an expansion of our on-market share buyback program by up to AUD 1 billion. Turning to our results, our statutory net profit was AUD 5.2 billion. Cash net profit was also AUD 5.2 billion, up 9%, driven by strong net interest income, partly offset by higher operating costs and increased loan impairment expense. Our operating performance was AUD 7.8 billion, up 18%. Our operating performance and strong capital position has allowed the board to declare a first-half dividend of AUD 2.10, an increase of AUD 0.35 on the prior corresponding period. Our operating income was up 12% for the half, driven by volume growth and a recovery in margins. Operating expenses were up 5%, driven by wage and supplier inflation and higher IT costs. Pre-provision profit was up 18%, reflecting the strong underlying performance. Loan impairment expense is normalising post-large writebacks in the last financial year, while credit quality remains sound. The combination of 18% growth in operating performance and higher loan impairment expenses resulted in cash profit up 9% on the same period last year. Our balance sheet remains strong heading into a lower growth environment, and we hold substantially higher capital levels. The balance sheet is 75% deposit-funded. Weighted average maturity of our long-term funding is 5.8 years, and liquid assets are AUD 193 billion. Our Common Equity Tier 1 capital ratio is 11.4. We have implemented APRA's changes to the Prudential Capital Framework, which were effective from the 1st of January 2023, and have a pro forma capital ratio of 12.1%. The overall credit environment remained very benign in the period. However, we are watching closely for early signs of stress, particularly among high-risk cohorts. Troublesome and impaired assets decreased modestly to AUD 6.3 billion from AUD 6.4 billion in the half. Home loan arrears are at near-record lows at 43 basis points, although leading indicators suggest that arrears will start to trend upwards from here. Given the uncertain outlook, we remain well provisioned and capitalized for a range of economic scenarios. We hold total provisions of AUD 5.5 billion, which is approximately AUD 2 billion above our central economic scenario. Our core business continues to perform well through disciplined execution. The strength of the franchise starts with our strong customer relationships. We are fortunate to serve nine million customers and over one million businesses and to have the leading proprietary physical and digital distribution channels. Through our CommBank app, we have nearly nine million touchpoints with customers each day. By delivering a superior customer experience through our digital channels, we're able to develop deeper relationships to better understand and serve our customers' needs. We continue to invest in our Customer Engagement Engine, which is now making 53 million decisions in real time each day to deliver superior customer experiences. We've also built a number of proprietary assets over time to better manage and assess risk using transactional data, representing approximately 40% of payment flows in Australia. These assets allow us to deliver superior customer experiences at scale, driving customer advocacy and NPS, which are increasingly important in a digital era. We finished the half with peer-leading Net Promoter Scores in all of our key segments: Consumer, Business Banking, and Institutional. We led the market on Net Promoter Scores for 11 of the last 12 months in our business bank. Despite being number one, we still have a lot of work to do to improve our absolute scores, and this will continue to be a significant focus for us in the years ahead. Our MPS is critical to building customer relationships. 35% of Australians consider the Commonwealth Bank to be their main financial institution, which is more than double our nearest peer. In business, one in four businesses consider the Commonwealth Bank their main financial institution, an increase of 1.5 percentage points in the last 12 months and 21% more than our nearest peer. Transaction account relationships have again grown strongly in this period. We opened 716,000 new retail transaction accounts in the half, an increase of 50%, and now have nearly 1.1 million business transaction accounts, which is up 9% year-on-year. Having a transaction banking relationship allows us to better understand customer needs and risk and underpins continued growth in both home and business lending. More than 95% of our home loan customers and approximately 90% of business lending customers hold a transaction account with us. As you know, we made a strategic choice to increase our investment in Business Banking. Cumulatively, over the past three years, we've directed an incremental AUD 600 million investment into our business bank, resulting in strong customer and earnings growth. Since December 2018, we've delivered market-leading MFI share growth of 170 basis points. Over that same period, deposit market share has grown 270 basis points to 22.4%. We hold AUD 68 billion more Business Banking deposit balances than we did in June 2020, which is a 43% increase. This growth in primary customer relationships has meant transaction banking now contributes 47% of the business bank's revenue, up from 34% two years ago. The business bank has moved from a net asset position of AUD 38 billion in June 2019 to being fully deposit-funded today. We've continued to grow volumes above system in the past 12 months, with deposit balances growing AUD 8 billion at 1.5x system and lending balances growing AUD 16 billion at 1.3x system. This deepening of primary customer relationships and prudent lending has resulted in strong earnings performance. Return on target equity has increased by a third over the past three years, and the business bank now contributes 38% of group profit after tax. Our business bank now leads the market on MPS, MFI share and MFI growth, deposit share and deposits growth, and merchants' market share. Despite higher growth, we will remain second in market on business lending. We've remained cautious given the economic uncertainty and continue to focus on opportunities to further grow our business by leveraging our transaction banking advantage. A big focus for our investment in Business Banking has been payments and merchant acquiring, which underpin the relationship we have with our business customers. We've launched a range of new smart terminals and have more than 50,000 devices now in market, 30% of those to new merchant customers. These new devices allow us to build differentiated propositions by industry verticals, and we've been particularly focused on healthcare and hospitality. In healthcare, we enable digital claiming of rebates via full integrations into Medicare, the NDIS, and various health insurers and access to digital receipts. This has helped us to win new healthcare clients, including the NDIS, and has supported strong lending growth of 21% in the healthcare sector. For businesses accepting online payments, late last year we launched a new e-commerce proposition called PowerBoard, which helps businesses get online and, with a few clicks, offers a broad range of payment services to their customers without the need for costly technical integrations. The home lending market is undergoing a period of extreme change and intense competition. There are a number of contributing factors, including aggressive volume growth, the cyclical slowing in new lending growth, the pending surge in fixed-rate maturities, and high levels of refinancing. This has occurred at a time where wholesale funding costs have increased substantially. Cashbacks are growing in size and prevalence, and we estimate the banks have deferred costs relating to cashbacks of over AUD 1 billion. This figure has increased almost 50% in the past two years, and combined with a substantial increase in commissions over the same period, creates a margin headwind that will flow unevenly across the market. The operational performance of our home buying business remains strong, and we are regularly reviewing how we compete given the atypical market conditions. We have a number of unique assets, including the largest home lending frontline team, a direct-to-consumer digital proposition, Unloan, and a distinct proposition through Bankwest. We also now account for approximately 37% of all proprietary originated loans in Australia. We decision more than four in five home loan applications within a day, and 64% of proprietary applications are auto-decisioned in less than 10 minutes. We are very focused on proactively engaging with our customers as the surge of fixed-rate roll-overs occurs across the industry over the coming 12 months. Unloan, the digital direct home loan we launched mid-last year, is becoming an increasingly important channel and has already funded over AUD 1.5 billion of loans. We're able to pass on the lower servicing and distribution costs from a direct-to-consumer model through a competitive rate that rewards customer loyalty and doesn't rely on cashbacks, honeymoon rates, or fees. Through Home-in, our digital e-conveyancing service, we have now settled over AUD 3 billion in home loans, with 98% of these customers taking up a CBA home loan. To navigate the current economic and competitive environment, we will continue our focus on strong, disciplined operational execution across all channels: proprietary, digital, and broker. Digital remains central to our strategy. We continue to grow digital engagement and now have over 8.3 million digitally active customers, nearly a million more than two years ago. The Net Promoter Score for our mobile banking app sits at a peer-leading 28.5, and the digital Net Promoter Score in our business segment also sits at a peer-leading 11.4. Through digital, we see increasing returns to scale in terms of building deeper, more trusted customer relationships, better understanding customer needs and risk, and delivering a superior customer experience. Strong digital assets and engagement allow us to help customers in a range of ways. One area we have been extremely focused on is fraud and scams, given the growing prevalence in the market. Customer losses to scams were estimated by the ACCC at over AUD 2 billion in 2021, and our data suggests they have been more than doubling each year since. We have a range of services and security features in place to help protect our customers. We've been investing in technology to keep our customers safe, including real-time monitoring, fraud prevention technology, and secure banking. We're also doing all we can to raise awareness and educate customers about the actions they can take to stay safe online. We've contacted more than nine million customers about uplifting their banking security. The security checkup in the CommBank app also walks customers through key steps to keep accounts and cards secure, from activating location-based security and setting up alerts. We also recently introduced two unique features: CallerCheck and NameCheck. CallerCheck is a new app feature that allows customers to verify whether a caller claiming to be from the Commonwealth Bank is actually legitimate. NameCheck helps customers ensure that the account they are paying to belongs to the person they are trying to pay. We have dedicated teams working around the clock to look out for unusual activity across our customers' accounts, and we are reaching out promptly if we detect anything suspicious. We also know that many of our customers are concerned about the cost of living pressures and rising interest rates. We have increased deposit rates nine times in the past nine months and are helping customers better manage their finances through budgeting and spending tools in our CommBank app. Customers have now accessed more than AUD 1 billion in benefits and entitlements through our Benefits Finder feature, which will help with the rising cost of living. We are here to help our customers and encourage anyone who has questions or concerns about their financial situation to get in touch with us. With that, I'll hand over to Alan to talk to the result in more detail. Thank you, Matt. Good morning to everyone who is dialed in. I'll unpack the financial results to December 31 in a little more detail, and I'll also cover the changes to our regulatory capital, which arose from our Prudential Framework provisions, which became effective on the 1st of January this year. In summary, these financial results were driven by a combination of macroeconomic variables, management actions, and franchise strengths. We are well positioned to support our customers and the broader economy as financial conditions continue to tighten during the 2023 calendar year. Looking firstly at the macro context, interest rates have increased very quickly to their highest level in more than a decade, while unemployment is at a 50-year low. The full effects of the rapid tightening of interest rates are still to emerge, but we fully expect to see a moderation in discretionary Consumer spending in the months ahead. Those macro factors have manifested in a rapid recovery in our net interest margins, continued historical lows in arrears rates due to full employment, but also increased loan loss provisioning as we take a forward-looking view of that coming slowdown in consumer spending. Turning now to the results of management actions, our continued focus on customer outcomes is manifesting in our leading customer advocacy scores. Our focus on consistent, high-quality operational execution has contributed to the significant growth in pre-provision profits. As a management team, we are responding to the tighter financial conditions with a deliberate conservatism in our funding risk settings, together with careful calibration of credit risk settings. Finally, looking at how the structure of our franchise is evolving, we've seen another period of improvement in both retail and business main financial institution share, as well as continued growth in customer deposit balances. This has driven strong organic capital generation in the period, which enables us to continue to support our customers' lending needs, as well as continue to reduce our share count and sustainably increase the dividends paid to our shareholders. Onto the detail. Statutory profits from continuing operations were AUD 5.2 billion. Non-cash items within continuing operations were relatively small, with continuing cash profits also rounding to AUD 5.2 billion. That cash profit represents 8.6% growth on the same period last year. That was the result of operating income growth of 12%, operating expense growth of 5%, pre-provision profits increasing 18%, and loan impairment expense returning somewhat closer to long-run averages during the half. Looking firstly at operating income, net interest income increased by AUD 1.9 billion on the prior comparative half, a combination of strong volume growth in all businesses and on both sides of the balance sheet, and also the recovery in net interest margins. Other operating income decreased by AUD 400 million over the same period. This was largely due to the revenue foregone from divested businesses and lower associate earnings. Excluding those items, we continue to see strong underlying volume-driven growth in deposit, foreign exchange, and business lending fee revenues. Turning now to net interest margins. Over the most recent six-month period, margins increased by 23 basis points, with the benefit of rising rates on deposits, the replicating portfolio, and equity hedges, partly offset by lower lending margins. Taking a slightly longer view of margins in the box at the bottom right, margins have recovered back to around the same level we had seen in 2020, before the full impact was felt of the historical lows in interest rates during the COVID response. Margins do, however, remain lower than they were four or five years ago, despite the overnight cash rate sitting at a decade high. You can see that monthly spot margins peaked around October before stabilizing in the December quarter. This was due to the increased intensity of home loan and deposit price competition, offsetting the benefit of rising rates. We look ahead to the second half, the same factors that have called out previously will continue to be important considerations. Headwinds include the competitive pricing dynamics in home lending and deposits, the rate of customer deposit switching, and increasing wholesale funding costs. Against that, the trajectory of domestic interest rates will determine the strength of the remaining margin tailwind from deposits, the replicating portfolio, and our equity hedge. Turning now to operating expenses, they increased by 5.2% on the prior comparative period. Excluding the slight increase in remediation costs, underlying costs were up 4.4% due to inflationary increases in wages and supplier input costs. Growth in other costs were offset by our ongoing business simplification initiatives. Our cost-to-income ratio improved by three percentage points to 42.5%. Turning to our balance sheet settings and looking firstly at credit risk, loan and permanent expenses were AUD 511 million in the half as we see loss rates begin to increase off an extremely low base. Leading indicators of credit risk remained benign, with the 90-day arrears rates within our Consumer portfolios below where they were a year ago, and corporate troublesome balances remaining at historic lows. As you would appreciate, we are looking closely at very early-stage arrears of even one day or more across both our Consumer and Corporate portfolios. These have increased in the last few months, though off a very low base, and they remain well below long-run averages. We are watching those measures closely and do expect arrears to increase in the coming months. Given the expected tightening of conditions in the year ahead, we've decided to top up both our Consumer and Corporate credit provisions. Total provisions were increased by AUD 200 million to AUD 5.5 billion. This provides us with an AUD 2 billion buffer to our central scenario of a relatively soft landing for the Australian economy and gives us approximately 80% coverage of the potential AUD 6.9 billion loss modeled under our stagflationary downside scenario. Our balance sheet settings remain peer-leading, with our deposit funding ratio increasing again, now at 75%. Long-term funding settings also remain conservative. Given we are forecasting much tighter financial conditions over the next couple of years, we've again reduced short-term wholesale funding to a historical low proportion of total funding of 7%. This form of funding used to represent 26% of our liability stack. This conservatism costs money. We could increase our net interest margins by shortening our funding mix closer to industry peers, we feel keeping extra capacity in this part of the funding stack remains the prudent course, given the current macro environment. On capital, we've delivered a Common Equity Tier 1 ratio at 31 December of 11.4%. This is 10 basis points lower over the half, largely due to the progress we made on the on-market share buyback in the last six months. Our pro forma CET1 capital from 1 January 2023, under the new APRA Capital Framework, was 12.1%, an increase of 70 basis points, and well above the new prudential minimum of 10.25%. Today, we also announced a AUD 1 billion upsize to our on-market share buyback, and the completion of that buyback in the period to 30 June would see an expected change in capital of 25 basis points. I thought it would be helpful to provide some more detail on how the new prudential requirements manifested in our new capital ratio of 12.1%. As we had previously indicated, the aggregate effect of the prudential changes are to increase the reported capital ratio as a result of a lowering of risk-weighted assets. As you can see on the bottom right of this chart, when you take into account our higher capital target of 11%, the overall capital requirement remains broadly the same. Asset classes that seen a reduction in their risk weighting included owner-occupied home loans and commercial property exposures. Importantly, we can now take account of greater risk discrimination in these portfolios and more fully recognize the benefit of high-quality collateral held against these exposures. On the other hand, risk weightings increased for investor home loans as these exposures are generally more highly geared. New Zealand risk weightings increased in alignment with the new RBNZ requirements. Operational risk capital increased under a simplified and standardized calculation, which is now proportional to the level of banking income. All other risk-weighted assets remained largely unchanged. The first-half dividend of AUD 2.10 represents a 20% increase on the prior comparative dividend and a normalized interim dividend payout ratio of around 70%, in line with our longstanding dividend policy. Given our very strong capital position, the board have also decided to, again, neutralize the DRP in respect of the interim dividend. I'll now hand back to Matt, who will take you through the economic outlook and a closing summary. Thank you. Thanks, Alan. The Australian economy continues to respond to the higher cash rate, which has increased 325 basis points over the past nine months to levels we haven't seen since late 2012. The starting point for the Australian economy is strong as the impact of these changes continue to flow through. Unemployment remains near 50-year lows, underemployment is low, and the participation rate is near record highs. Energy and commodity prices have supported strong export volumes in terms of trade, non-mining investment remains strong, and migration has recovered. However, there is a disconnect between headline measures and the challenging conditions for many households and businesses. In the past year, gas prices are up 17%, fuel prices are up 13%, and grocery prices are up 11%. These impacts are even more acutely felt by mortgage holders given increases in the cash rate. We've seen the household savings ratio fall to 7% from a COVID peak of over 23%, and house prices have fallen 9% from their peak in April last year. We can see savings buffers being drawn down, particularly for customers at higher risk from rising cash rates. There is more impact to come given the changes in the cash rate take time to work through the economy, and the market expects at least two further rate rises. A customer with a $500,000 loan for 30 years on a variable rate has already seen repayments increase by $700, with another $400 likely to come in the next six months. Given this, and the fact that 40% of home loan customers were on fixed rates, roughly half of the total expected impact has been felt by homeowners so far, rising to 75% by July. In 2023, we expect GDP growth to slow, driven by a pullback in consumer spending. A significant slowdown is expected in many peak global economies this year, and the outlook appears particularly challenging in the U.K. and European Union. Australia is well-positioned, but the effects of a slower growth environment will be unevenly felt, and we will be ready to support our customers feeling the strain. It is a challenging situation for policymakers and many of our customers, but we remain optimistic that a soft landing for the Australian economy can be achieved, and we remain of the firm view that the medium-term outlook remains positive. In summary, we have delivered a strong result with customer relationships and engagement translating through to volume growth. This has been underpinned by consistent, multi-year, disciplined execution. Our balance sheet and capital position remain strong. Looking ahead, we will continue to invest in the bank's core retail, business, and Institutional banking franchises to further differentiate our proposition and extend our digital leadership. While we're facing a period of economic uncertainty, we're optimistic about the medium to long-term opportunities for Australia. The strength of our balance sheet means we remain well-positioned to continue supporting our customers and the broader Australian economy while delivering consistent and sustainable returns to our shareholders. I'll now hand back to Mel to go through the questions. Thank you, Matt. For this briefing, we will be having questions from analysts and investors. I'll say your name, but please state your organization that you represent. Please also limit your questions to no more than two questions to allow others the opportunity to ask questions. We'll now start with the first question from Andrew Lyons. Thanks, Mel. Good morning, Andrew Lyons from Goldman Sachs. Matt, just a question. You noted your view that industry-wide mortgages are being written well below cost of capital, and yet despite this, I note that you still grew mortgages in Australia about in line with system over the half. Just in light of this, could you just provide some more detail as to the extent to which your strength in proprietary lending improves the relative return metrics and how your mortgage strategy might evolve if current pricing does remain? I've got a second question. Yeah, sure. Good morning, Andrew. Look, I think you're right. We're slightly above system in the six months, but down over a 12-month basis. I guess as I set out in the comments, we're finding it certainly an atypical environment and one that we're managing very closely. I think in particular, as we've seen rising funding costs, and clearly, there's a range of factors contributing to this, we've been surprised that we haven't seen some changes in terms of the pricing and offers that are available on market. I think there's probably some downside risk to margins there as well. We've typically seen a higher level of basis risk or bills overnight cash spread. I think it's for us a period where we will be continuing to manage all of our settings very closely on both sides of the balance sheet, and I think that's incredibly important and necessary. Of course, we're going to continue to try and play to our strengths. We certainly feel like we have relative advantages, not just in our customer franchise, but of course in our technology and the relationship that we have with customers. The broker channel is, of course, a very important channel, but we have the strongest proprietary channel and mix. We've seen that grow from so probably a third of proprietary mortgage originations a couple of years ago to now be 37%. We've seen strong growth in Unloan. Look, we're participating in that market, and clearly, we're also seeing the impacts of that flow through. No doubt, you and others will have some questions around margins and where they stabilized in October and the outlook. Of course, there's uncertainty around that, but something that we're very focused on. Thanks. Appreciate it. Just a second question. You did note that the first half 2023 reported results did not particularly reflect the environment we're in, and there was some timing there. That said, your 42.5% cost-to-income ratio is the lowest you've delivered in a number of halves. I just guess given the various moving parts around inflation and expenses and rates and margins, I'd be just keen to get your views or your comments on the extent to which you think CBA can sustainably deliver a low to mid-40s cost-to-income ratio. Yeah, no, thanks, Andrew. Of course, we're trying to indicate that I mean, net interest margins, as you know very well across the industry, have been under real pressure for many years, and particularly during the sort of emergency cash rate settings. You see a recovery in those margins, particularly in that six-month period. There are, as we've just discussed, a range of different factors. Of course, that's the predominance of what's driving the relative change in the cost-to-income ratio, which is a metric that we look at, but certainly not the only metric. I think as we've said in the past, we will continue to look very closely, clearly, at any operating and investments that we're making. As you would have seen, we've been prepared to increase our investments both in areas like Business Banking and technology more broadly. Of course, we want to be and need to be satisfied that we're earning an appropriate return on those investments, certainly in the context, as we talked about earlier, in Business Banking that's been a very beneficial strategic investment. We're going to continue to sort of manage our cost base very carefully. Something, of course, as we look forward into multi-years of what we think the income environment will be and potentially some of the structural changes in the competitive landscape, we also want to make sure that we've got the right flexibility in our cost base when we're making investments to make some structural reductions to that cost base, predominantly through improving processes. Thank you. Thanks so much. Thank you, Andrew. The next question comes from John Storey. Thanks very much. It's John Storey from UBS. Matt, I just wanted to ask you about net interest margins. I think slide 23 that you put up was pretty interesting. Looks like margins have peaked, as you mentioned, in October. One of the things that certainly surprised me is the rate at which your funding costs have increased, and it doesn't bode that well, I guess, for other banks that are more wholesale-funded in the market. You've had a 100-basis point increase in your cost of interest bearing deposits in the six-month period. Just wanted to get a sense around the delta and whether or not you actually see a slowdown. You mentioned some timing differences. I think you've got an interesting slide just showing what's happened with term deposit funding mixes. The question is, do you see a slowdown in the rate of increase in terms of funding costs? That's my first question. No problem, John. Look, let me start, and I'll throw to Alan, no doubt, can add some more specifics. I mean, we've touched on them clearly, an increase in wholesale funding costs. On a relative basis, as you indicated, we've got more capacity and resilience, which is really important from our perspective, not just from capital provisioning, but also in our funding stack. We feel that we're better able to absorb the relative change, certainly, versus peers. Alan and I are very focused on managing for sort of flexibility and resilience, which enables us to probably time the market. In some cases, we've certainly had a strong last six months of issuance. We've had a strong start to the year in issuance, including the largest-ever domestic bond issuance. In terms of our weighted average cost, I think it looks very favourable versus peers. On wholesale funding, as you know, John, I mean, there's banks, not just domestically, but all around the world, on our increasingly tapping wholesale funding markets. You've seen a big rebound in wholesale funding costs, and that's likely to be sustained. Basis risk hasn't normalized back to levels that we've seen over the long term. You've got to expect that that's a matter of time before you see a normalization in basis risk, so you're not seeing that feeding through yet. On the deposit part of the liability stack, you've seen increased deposit competition, and we've engaged very markedly in that regard. You've seen it's a very attractive term deposit and savings rate offers made, particularly in that back quarter, and that manifested through in terms of that net interest margin on a spot basis in the back calendar quarter of December. Again, that switching and deposit competition is going to be an ongoing feature in calendar 2023. That's great. Just the second question is around the Business Bank. I mean, obviously, a phenomenal result that was delivered there. As you mentioned, 40% of group earnings now coming from the Business Banking division. Just the question on this is more around asset quality. I mean, I've seen early signs of stress in the book around unsecured and retail, you also saw a significant increase in the charge in Business Banking. I just wanted to get a sense, the 23 basis points in Business Banking, what's happening with Business Banking clients? Do you see further stresses emerging here? The charge looks like it's a lot higher than a through-the-cycle level already. Is this where you expect higher impairment charges to manifest themselves? I mean, look, firstly, the credit environment remains very benign across sort of retail and businesses, both in terms of what we can see directly in the book and also anecdotally talking with customers across a range of different industries. Very strong trading conditions in the six months to December. Of course, there'll always be some smaller individual names within those subsectors, and we're thinking much more about sort of the future period. We've been very focused on making sure that we're, from a credit origination perspective, pricing off forward curves, adding more contingency in around sort of costs in areas like commercial property, making sure we're thinking through sort of contingency and delays, which have sort of come in. At this point, we're not, per se, concerned around the credit quality or the broader outlook. We probably, on the balance of our total provisions, would think there'll be more stress in the non-retail. I think just the impact on household consumption over the course of the year will inevitably flow through into the non-retail book, particularly in some of those discretionary retail sectors. If you look at origination, both from a probability default, also just security positions where LVRs have been for some time, I think we feel very comfortable in terms of total provisioning. I mean, what you're seeing in terms of the loan loss rate, for corporate, 13 basis points overall for the half. The loan loss expense in the half is very much us taking a forward-looking view and bringing those factors back in through some of the downside scenarios that we can model out. We're seeing very little in terms of the flow in the business bank in terms of the clients and bad debts. We keep a very close eye on very early-stage arrears. There was a little increase in corporate early-stage arrears, but they've all cured since the end of the year. We're not seeing that flow through yet, but we do expect things to tighten and those arrears rates to increase both in Consumer and corporate in the year ahead. Yeah, abundance of caution and the top-up to the provisioning on the business bank in this period. Great. Thanks very much, Matt. Thanks, Alan. Thank you, John. Our next question comes from Jonathan Mott. Hi, Jon Mott. Here's from Barrenjoey. I've got a question that kind of follows on from Andrew Lyons' earlier question where you've seen on that slide 23 that competition's very intense, and it drove the fall in the NIM in the last couple of months of the year. You also said, Matt, and you've reiterated this statement, that mortgages have been written below the cost of capital. If we take a step back and we also look at the APRA stats, what it shows is that you've re-engaged in the housing market over the last couple of months. The last couple of months have actually been winning share, growing above system in November-December period, which would suggest that you're the one that's driving a lot of this competition. Is that a fair assessment? Why don't you just step back out of the market at this stage and only focus on high-quality customers we already have a relationship with? Yeah. I mean, like Jon, I'd say not a fair assessment, but a couple of factors that are certainly worth sort of picking up on. As you've seen in the past and as you know, we've certainly been prepared to step in and out of the market. If you go back to sort of mid-year, we looked at some of the share loss that we had there. We were trying to stabilize, and also we want to engage closely with our customers. It's predominantly around retention, but there are also, of course, high levels of refinancing activity. We're very confident we're not driving. In fact, we feel we're substantially, in some areas, lagging others, particularly in areas like cashback. It is a market that's hard to get the precision around the settings about exactly where we'd like. I mean, when we're above system, we're talking sort of a couple of basis points. I think on both sides of the balance sheet, as we've looked at both what's happened in liabilities, how that market's evolving, some of the benefits that we had through the COVID period, we're just trying to get those overall settings right. I mean, obviously, I'd be very conscious about not turning my mind to future actions that we might be taking, but it's fair to say that we're watching the dynamics very carefully and certainly prepared to make the necessary adjustments. Confident that we're not driving the pricing at all, but we're participating in a market which is atypical to the one that we've seen over just about every period I can think of in the last 20 years. Okay. Just following a follow-on question, sorry, Alan. Sorry to interrupt. Another question that we put on slide 63, which just shows a change in the mix of deposits that you've seen coming through. It shows quite over a period of time from basically pre-pandemic to today, a material change in the deposit mix. It looks like the worm's buried, if you want to call it that, especially in retail and, to some extent, Business Banking as well. Do you expect that to normalize all the way back to where it was back in December 2019? How much of a headwind is this mix of deposits likely to be on your margin and your funding cost over the next two or three years? I mean, look, hard to say exactly how much. It's certainly something that Alan would be happy to talk to. We've watched that very closely and still very confident about the earlier guidance that we've given about sort of rate increases. I'd say it's been relatively modest, the compositional shift in retail. As you said, there's been a big growth in transaction balances. That also makes sense. We would put it down to we probably gained about 80 points of share during the two years of COVID, just given the customer base and the government payments that went through. Some of that starts to unwind. You get into a higher spend environment. We've got a high proportion of spend across debit and credit. There's some smaller factors that play through, but I mean, you're quite right. We're looking at sort of the liability stack across the different products and thinking through different scenarios, both in retail and in business. Broadly, we'd certainly expect you'll see the composition shift the most into TDs, but hasn't been too significant, certainly not beyond our expectations in retail. Business is a little lumpy. We're sort of a bit more on Q1, which we think's mostly seasonal, about almost 70% of the shift in Q1 versus the second quarter. It's certainly something that we're watching closely. Yeah. I mean, I don't think there was anything unexpected about those trends, given the sort of macro backdrop and the very attractive yield zone offer. I'd say going back to deck 10, I think there's a couple of things you'd have to adjust relative to that time period. One is just the broad increases and broad money supply over that period. In an absolute sense, there's obviously more dollars and money supply in the system, and money supply, unlike in other parts of the world's, continuing to grow in Australia. That will provide some support around all of the deposit categories. Also, we've had a big change in terms of the franchise build in both the retail and business bank over that time period. We've been growing MFI share in both retail and business bank. Again, I think that provides support to some of those transaction deposit categories in particular. Yeah, it hasn't been unexpected what we've seen today, but obviously, we'll keep a close eye on it, and we've called that out as one of the considerations around second-half margin. Thank you, Jon. The next question comes from Richard Wiles. Good morning, everyone. Alan, I've got a couple of questions for you. The first one relates to deposits and also to slide 63. It shows you've got AUD 250 billion of at-call interest-bearing deposits. Given the focus from the Treasurer on deposit rates at the moment, I thought it was interesting to ask about the difference between GoalSaver and NetBank Saver. GoalSaver, you're now offering 4%. NetBank Saver, it's more like 1.6%, the standard rate. What proportion of those AUD 250 billion of at-call deposits are in each of those two products? How much are in NetBank and how much are in GoalSaver? Well, we haven't provided that level of granularity in the disclosures, Richard. We've got significant balances in both those products, and we've got a very strong rate also available on NetBank Saver at the moment. Yeah, we don't, as you know, provide product-by-product level balance statistics across either side of the balance sheet. Yeah. I guess what I'd add, Richard, is across a range of different products. I mean, NetBank Saver, yes, there's an introductory rate of 4%. GoalSaver, which is a very popular product, but that won't display out what the balance composition that's running it for, or GoalSaver is, has been running a 12-month TD. There's some very competitive rates in market, as you'd expect. I think the other thing, since you're on that sort of category of questioning, often we get asked about sort of the relative speed we're putting up rates and products. I mean, we've been very careful to make sure that we're broadly within sort of the 10 and 15 day range. We're putting up both our rates on both sides of the balance sheet, and that's broadly in line with what we were doing as rates were coming down. If I could ask a second question. A year ago, Alan, you included a slide that said a 25 basis point rate hike would boost margins by around 4 basis points over time. Given that rates have moved a lot higher, I imagine that sensitivity has changed. Could you provide us an update on your sensitivity to higher rates, and can you also talk about how you expect the replicating portfolio to support margins in the period ahead? Yep. Thanks, Richard. Yeah, the sensitivity, that was particular to low-rate deposits' native replicating portfolio and was an overtime sensitivity. As you know, the yield on the replicating will change on a tractor over that five-year period. We haven't changed that sensitivity or provided any updated guidance on that. That sensitivity still holds over the longer term, and we'll see in the fullness of time whether it's borne out. You would expect, obviously, the rate of switching to change over that period, you're going to see a different sensitivity early in the rate cycle versus the middle and the end of the rate cycle and over the next couple of years. We keep an eye on that. We haven't updated that outlook. I think that the sensitivity, I would say, still holds over the longer term. On the replicating portfolio and on the duration of equity, we've provided our usual disclosures and updated them around the average tractor rates there. Obviously, you're seeing that in the margins in the first half, and you continue to see that come through in the second-half margin considerations that we're putting on new replicating tractors at the five-year marginal swap rate, the new equity tractors at the marginal three-year swap rate. They're higher than the average tractor rate that you're seeing. You'll see continued support for margins through the operation of those hedge balances. I think you'll see that that'll be a continuing theme for the year ahead. Thank you, Richard. The next question comes from Brian. Good morning, everyone. It's nice to hear a bank talk about balance sheet strength. That said, if we have a look at page 87 of the profit release, and I was calling this out, I think, at the last result as well, is when you have a look at your central scenario, we've got the cash rate kind of finishing the year at 3.6%. House prices falling further 10%. Given that we started this cycle with a cash rate at 0.75%, it's already 3.35%. That terminal rate looks very low relative to what the market is saying, and the house price declined. Can we just get a feeling on the veracity of that central case provisioning? It's page 87 of the result. Yeah. Thanks, Brian. That terminal rate was effectively the consensus rate when we struck the result during the early days in January. Obviously, the consensus terminal rates moved significantly since then, given the hawkish comments coming out of the RBA's recent meeting. So that terminal rate has moved a little higher in terms of the overall impact, though, on the central ECL. As you know, the central ECL, we've got a relatively moderate weighting on that central ECL. We've got very high weighting on the downside scenario, which is a much higher terminal rate than current expectations. We've moved some other assumptions around on that central ECL, including further house price reductions relative to the reductions that we've already seen at the December spot and the unemployment rate that has also changed since the previous central ECL. There's a few moving parts in there. Changing that terminal rate to current consensus terminal rate wouldn't have a material impact on the AUD 3.5 billion ECL that we calculate, particularly as we've got such strong collateral coverage on many parts of the portfolio, both Consumer and Corporate. Yeah, that terminal rate assumption is a little dated, given the events of the last couple of weeks. Just a second one, if I may, from Matt. Matt, you've been asked a lot about housing. I would make the observation that given ANZ have disclosed, they've got $1.3 billion of capitalized upfront commissions. Perhaps those numbers, the AUD 1 billion, perhaps looks a little bit light. That said, when we have a look at CommBank's household deposit market share, I just want to read through sequential months. In August 2022, it declined 12%. The next month, it declined 9%. The next month, it declined 9%. The next month, it declined 9%. In December, it declined another 11%. When we have a look at the market at the moment, you can see that CommBank used to have outsized profitability on housing lending. Clearly, the incremental loans at the moment are being written, you're saying, below the cost of capital, which is really a function of the fact that you're stepping back into the market, I'd sense. If we have a look at this household deposit market share that you've lost, when do you have to come in and really step into the market to basically defend the franchise and the household deposit share? Yeah. No, thanks, BJ. I think the 1.3 that you're referring to in ANZ, I haven't looked at the number myself, but I'd guess that probably includes both sort of capitalized broker commissions as well as capitalized expenditure around cashbacks. We've certainly tried to total the cashbacks across the industry and looked at their NIM headwind for us and also for peers. On household deposits, yes, you're right. I'd say if we looked at that period we've been very focused on then trying to stabilize share in the last couple of months. As we've looked at some of the underlying reasons, and I touched on it earlier in terms of we got some of the benefits from COVID in terms of government expenditure and the way that sort of unevenly felt across our customer base and the scale, there's a few of those elements that are unwinding, which are providing a headwind. We've certainly, for a variety of reasons, including wanting to make sure that we're supporting our customers, we've stepped more into some of the sharper deposit pricing across a range of products more recently. Again, as I sort of touched on earlier, it's very much for us about both sides of the balance sheet. We feel that we've got fairly unique competitive strengths on the deposit-gathering side and combination of technology and digital offering. As you know well, there are some very competitive offerings in market. Perhaps the competitive intensity sort of changes to that side of the balance sheet. Obviously, a number of things have changed in the last six months, and it's not uncommon across many industries for there perhaps to be sort of different lags and changes in terms of relative competitive intensity in different parts of the market. It remains to be seen. I mean, your broader assumption is quite right in terms of the way we're looking at it and the relative importance for us. Great. Thank you, BJ. The next question comes from Brendan. Hi. It's Brendan Sproules from Citi. I've just got a couple of questions on particularly in the inside around the lending margin but outside housing. My first question's on the Institutional and banking —Institutional division where you had falling assets and quite sharp falling NIMs. I was wondering if you could make some comments as to some of the business drive that's there. My second question is in the retail division where you saw you Consumer Finance NII fall something like 15% on flat balances. Maybe you could describe some of the NIM pressures that you're seeing there. Yep. Yeah, in the Institutional Bank, we've seen a decline in margins through the sequential period. Some of that relates to classification differences between net interest income and other banking income. You'll see a little bit of a pickup in other banking income driven by the operation of a fixed income and commodities portfolio. It was a sort of tougher period for them in net interest income, but they picked up a little more in other banking income. It's really just the higher funding costs manifesting through that commodities portfolio. That's the real driver of the IB&M and net interest margin headwind in this period. On the retail portfolio, on Consumer Finance in particular, credit card rates don't change through the cash rate cycle as much as many other products. You're seeing the effect of effectively stable yields on credit cards and personal lending products in a period where the cash rates are increasing, obviously, the funding costs are increasing. There's a little bit of that pressure manifesting through that asset pricing part of the waterfall on Consumer Finance. Revolve rates also reduced again in the period. There's a contributing effect from lower revolve rates in the Consumer Finance portfolio on that six-month period as well, Brendan. Yeah. I mean, revolves as an example, that'd be down, Brendan, 20 percentage points over the last several years, which is, of course, a bit of a function of the broader economic backdrop. It's the percentage of people with interest-bearing balances, but it's the contribution of both that and predominantly they're not a pass-through from the changes in the cash rate. Great. Thank you, Brendan. The next question comes from Andrew Triggs. Thanks, Mel. Morning, Matt and Alan. First question, please, just around the deposit book. It obviously reprices reasonably slowly in term deposits in terms of the averaging onto the net interest margin, but quickly in savings deposits. That does make it somewhat difficult to model. How long do you think it will take this increased deposit beta that we're seeing generally to play through the margin? Is it a few quarters that it takes to largely wash its way through, or is it more protracted than that, do you think? I mean, you've already seen a lot of change in pricing, particularly accelerated, I think, increasingly over the last six-month period ending in the December quarter. You're continuing to see, I think, strong competition for both transaction at-call savings and term deposit pricing. You started to see that feed through. That'll continue for the next few quarters. I mean, we obviously provide disclosures at that level in the average balance sheet as well. You can start to see how those yield moves are feeding through. I tried to give you a view of domestic retail and business deposits on slide 63 that's been referenced earlier. Yeah, that'll continue to flow through, I think, over the next few quarters in particular. You've seen a lot of it in the margins in the half today. Thanks, Alan. Just second question, sorry to harp on, about your mortgage growth. One change that CBA has made recently is improved price transparency in your mortgage offerings. It does show that CBA pricing for low-risk home loans is only single-digit basis points above the likes of a Macquarie best offer in the market. I'm just sort of interested in, A, why the move to the better price transparency and, B, what does that say about, I guess, the commodity-like nature of the product considering the strength of CBA's brand name, technology, distribution network, etc.? No, both important points. I mean, I guess strategically, of course, it still remains very focused on your primary relationship with customers that obviously helps on the I mean— I think it's probably protracted on the liability side, but ultimately hugely focused on having that main bank relationship in both retail and business, which has helped us in liabilities. We think it gives us an advantage trying to secure the strongest share of proprietary and direct relationships. I think the more recent sort of change, it's really a function of, I think, particularly as we've seen a more elevated level of discounting across the market and then some of the pricing constructs, which there's a smaller proportion but still a reasonable proportion of loans priced off the SVR. We're just getting feedback from customers it's a little harder to tell exactly what sort of end price we were going to get. That's predominantly some of that change. Our pricing across tiers really differs. Depending on the sort of customer base and, of course, there's both existing relationships, which is our core focus, a broader view on customer lifetime value. Alan touched on some of the considerations from our capital on Basel III. We will price more sharply but certainly not leading and always lagging. The competitor that you touched on is a very significant originator of mortgages in the market at the moment. Great. Thank you, Andrew. The next question comes from Victor. Thank you, Victor German from Macquarie. I was hoping to actually follow up on this mortgage discussion as well. Obviously, a lot of questions on that already. If we look at the number that you disclosed with respect to margin compression this past five basis points relating to competition, a little bit elevated relative to history, but it's not a particularly large number, particularly in the context of the front-to-back book spreads that we're seeing and a lot of customers moving from fixed into variable. I'd be interested in your thoughts as to where that goes from here, whether you think that that number gets bigger as more customers getting better rates. If you can give us maybe a sense for what proportion of customers in the half have already been repriced to newer rates, that would be helpful as well. I have a follow-up question on expenses as well. Thank you. I mean, one of the obviously the key dynamics as we look over the next six to 12 months, Victor, as you know, is the amount of refinancing that's going to come through on our fixed-rate mortgage customers. We've got disclosures of around I think we've got about AUD 96 billion of fixed-rate customers that'll be rolling over the course of the next 12 months. You've seen, obviously, a large number across the industry. That level of discounting that you've seen in the six-month period, we're likely to see an increased run rate on that from the natural charm of that portfolio. It's obviously a very price-sensitive, as you can understand, a price-sensitive borrower at the moment given the large increase in rates. That's the key, I think, dynamic as we look six to 12 months out in terms of the level of discount that we've seen in the six months and then how you project that forward over the course of the next 12 months. That's obviously going to be a factor in second-half margin. Yeah. Maybe, Victor, we would say that we think that gap's going to narrow. Maybe another way to think about it is in terms of another external source. I can't remember the page number, but in the statement of monetary policy that the RBA put out last Friday, there's a comment in there about the weighted average standard variable across the market. I think they put it at 35 basis points less than the cash rate increases. That gives you a sense of sort of what the portfolio level is. We think it might be higher than that depending on peers across the market. It sort of gives you a sense that this is going to normalise the front book, back book, obviously, depending on how the dynamic plays out in the market more broadly. In terms of sort of churn, do you think that that's already kind of happening, or is that more of a second-half or first-half 2024 story? No, I mean, there's certainly I mean, that's been a constant theme, I think, of the mortgage market for the last few years where there has been, I think, a lot of proactivity in terms of more competitive pricing within the back book given a lot of focus around market share across the industry. That's been an ongoing thematic. There was certainly additional churn in the back book through that six-month period. I think given the refi market and the higher level of absolute rates in the economy, it'll continue to be a feature in the period ahead. Yeah. I mean, I think given clearly, there's a lot of interest in that area. Maybe just a very quick comment in terms of backdrop and context. We've all seen very substantial share shift over the last few years. Clearly, there's a reaction and response to that. We've got a falling level of system volume growth that's available in market. Against that backdrop, net interest margins have been expanding at an industry level. In other periods where we've seen pretty rapid changes in funding costs, it depends a little bit on transfer pricing mechanisms and how that's being sort of transmitted through. We think there's sort of explanations for what's potentially been occurring in the last six months. Of course, we need to make the right decisions every day in terms of how do we best support customers and also choose to compete. Thank you. On the expenses, I think in the past, you often chose to invest into franchise when revenue conditions were supportive. If we're looking at more tough outlook for margins from here and volumes are slowing as well, how are you thinking about managing expenses in this environment? Is that a time when you want to increase the productivity initiatives, or do you feel like there's still a lot of investment that you want to make to continue your leadership position that you talked about throughout the results? Yep. I mean, we've had a very consistent approach, I think, around business simplification, productivity initiatives. We will continue that regardless of the macro backdrop. We obviously need to be very conscious around what's the pre-provision profit outlook given tighter financial conditions and a slowing top line, which is likely given the conditions that we're looking at in the period ahead. I'm not sure it's a very different approach to the one we've had in past periods. You've seen in past periods is manage our cost base relative to the level of revenue performance, ongoing approach to delivering productivity improvements. One of the things that's changed in the last couple of years is we are able to allocate more of our investment allocation towards productivity and growth initiatives. That's been a gradual change in the share of that envelope, which is gradual and appropriate. We'll continue to invest, I think, in both strategic growth and productivity initiatives for the foreseeable future. Not a very different approach on cost to the one that we've talked about through the historic lows and rates in a pretty anemic top-line environment over much of the past four or five years. Great. Thank you, Victor. The next call-up question comes from Ed Henning. Hi. It's Ed Henning from CLSA. Thank you for taking my questions. Can you just touch on the three basis points of higher liquids costs and the margin? Was that from increasing the term or carrying excess liquids? Do you anticipate the liquids creating a further headwind, or is it unwind, and if so, when? As a first question. Yep. Most of the three basis points was actually an increase in some repo balances that we hold in the Institutional banking and markets division. There was about one basis point of the three related to the liquids that we hold at the HQLA that's the numerator for the Liquidity Coverage Ratio. They're both in the category of non-lending interest-earning assets. They both increased over that period. As I look ahead, I mean, the repo balances will move around depending on the spreads available in that market. That can change over time. In terms of the broad trajectory on liquidity, that's really going to be a function of money supply growth and then our share of deposit growth. I think across all of our franchises, we've been doing a good job over many years of continuing to grow MFI share, continue to grow transaction accounts. You've seen that through the overall growth in customer deposit balances. Those deposit balances will attract and need to hold more liquid assets. In an environment where if you assume that money supply is going to continue to grow, albeit at a slower rate in Australia, which would be our forecast, then you should assume that deposits will grow commensurately and liquidity will grow commensurately. That will be a headwind, if you like, in terms of the nominal net interest margin, albeit as you know, it doesn't have much of an earnings impact in net interest income. No, that's great. Thanks. Historically, you've called out about a 12 basis point headwind when the shift from variable to fixed-rate loans. Now the front books lower than the back books, and there's lots of competition there. Is it still a tailwind when loans are starting to shift back to variable or not nearly as much as the 12 basis points? Yeah. It's not going to be nearly as much as the 12 basis points. There was a one basis point benefit in the half from the switching from fixed to variable. Yeah, as we've talked about, given the level of front book margins on the floating-rate product, it's going to be less of a tailwind as we look ahead as things stand. Thank you, Ed. The next question comes from Matt Dunger. Yes. Thank you, gentlemen. If I could ask on the average funding size of new mortgages up strongly about 7.5% half-on-half, are you able to comment where this is coming from and what impact LVR limit you've called out on page 82 might have and to what extent that this is feeding home loan offsets as well? Sorry. What specifically on 82? Slide 82, I was just referencing the LVR limit, what impact they would have on the strong growth that you've seen in new mortgage funding. This is the take-down of LVR limits for high-value properties. I mean, really, we'd see that as just I mentioned in the presentation that given the tighter conditions as we look ahead, we're continually recalibrating all of our balance sheet settings. One of the things we're doing on credit risk settings in both the Consumer portfolio, home lending, also in our business credit settings, looking at areas where we think there would be increased risk, increased credit risk. We adopted some tightening around LVR on very high-value properties given their exposure, obviously, relatively to falling house prices and falling collateral values against high-value lending. That's not a material part of the flow, however, in volume terms. I wouldn't expect that to be showing up in terms of overall volume performance given the majority of the book isn't in those very high-value properties. Yeah. I think that's exactly right. It'd have a very minimal impact. I mean, LVR lending or higher LVR lendings come down. I've seen price cycles of very large loans. There can be some lumpier losses. Hence why we've tightened there. We're trying to obviously be very thoughtful about where we're competing. I think the other probably big change is higher DTI lendings come down very substantially, which is both from a setting perspective, but also it's a function of as the buffers are being applied to a much higher cash rate environment. We set that out on one of the slides as a commensurate reduction in borrowing capacities as well. All things being equal, that's not a bad thing either. Thank you. If I could just follow up on capital allocation, how are you thinking about that given your comments around mortgage returns, around APRA's changes to lowering commercial property risk weightings? How are you thinking about deploying capital versus maximizing the dividend payout ratio? I mean, we obviously look at risk-adjusted returns across all of our product types. The capital's obviously a big impact on that. On particular changes around risk weighting, I mean, in some ways, the way to think about the capital changes are more, I think, the changes play to our franchise strengths in the sense that we've had a very well-collateralized commercial property portfolio under the old rules. It was adopted a supervisory slotting approach where you had to take a very punitive risk weighting on those exposures. We can now bring the full collateral to bear in assessing the capital that we hold against those exposures. We were always happy with our risk appetite and settings in that sector. I'm not sure that I mean, the change in the prudential capital requirements doesn't change our overall view of risk appetite and where we're willing to grow. That individually won't change our view on that sector and our appetite for growth in that sector. I think what you're really seeing is that the true economic risks related to that portfolio now are more there's more discrimination and more granularity in that assessment as we work out the capital ratio. That doesn't necessarily change your view on that sector. On home loans, we've always had a very strong focus on proprietary business or owner-occupied. Home loan mix is very high. Again, the greater risk discrimination and new prudential requirements, I think, reflect the economic benefit that was already there in terms of lower losses on that portfolio relative to other forms of home lending. Again, the greater risk discrimination, I think, just gives a better reflection of the underlying economic risks that we've been writing. I think granularity really helps with sharper capital allocation, as we've touched on today. We want to manage for the long term. We're very focused on resilience overall of investing in our franchise in our strengths. We're fortunate. We've got a business mix that's able to generate organic capital and no change to things like our capital allocation and our dividend payout ratios, etc. Great. Thank you, Matt. We will have to take our final question from Carlos. Thanks, Mel. I'm Carlos Cacho from Jarden. First up, a question on borrowing capacity still on that slide 80. Your chart on the top left shows what looks to be maybe a 30% fall in capacity. Given you previously disclosed those charts showing that kind of 8%-10% of borrowers borrow the maximum, presumably, a lot of those borrowers are not going to be able to refinance or qualify for their current loan. Is there any indication of what share of recent borrowers are going to struggle to refinance, leave to a competitor, or even extend their loan term with you based on those falls in capacity? Yeah. Maybe firstly, the borrowing capacity, I think it's not quite 30%. Maybe it's like 27%, 26%, or 27%. Obviously, there's some differences in terms of scenarios. I mean, as you would expect, as those buffers are applied, that's a tighter serviceability test. I'd say it's a very small impact to date. I think the other part is we've looked forward as well. We've tried to estimate what proportion of customers against a much higher rate environment. Of course, then, which we think is a very small number, you're relying on a number of different assumptions there as well in terms of obviously, the year of origination matters both in the context of how their income may or may not have changed. If you assume it's sort of basically inflated over that period by sort of CPI, sometimes borrowers only provide enough income to actually meet serviceability. I think many borrowers do that. You've got to look at sort of expenditure and then what might a reasonable level of expense reduction be. Of course, that depends on your starting position. You start basically in it's probably not a particularly helpful answer, but you start in sort of lower single digits and get much lower depending on what sort of assumptions that you push out. Of course, it's, again, circular with where does the terminal cash rate end up? That would imply there'd be less than that 10% who borrow close to the maximum? Yeah. Our estimate would be lower than that, yes. Just a second question around the kind of quality of the mortgage book. You noted on slide 70 or showed on slide 78 a modest rise in 30-day arrears. Alan, you noted you were seeing a bit of an increase in 1-day arrears, albeit off a low level. Are you seeing any common trends across those customers that have fallen behind repayments in terms of geography, reasons for it, whether it's job loss or if purchasing at a certain time? Is there any customer characteristics that you're particularly watching as a warning sign now? I mean, we're watching across a number of characteristics. I would say, though, that the increase in the very early stage arrears that we've seen was more a function. The thematic across most of that was actually operational changes in terms of making sure that you've got enough money in your account as your scheduled repayments increasing. Because we've gone through this very unusual period where there's had to be lots of changes to scheduled repayments, you find there's a minority of customers who just need to get the right money in the right account so that they make the right payment. It turns up in something called partial arrears, which means they might pay the old minimum, and they haven't yet paid the new minimum. That's the vast majority of the early stage arrears. You see a very high cure rate. Those arrears don't turn up in the 30-day plus because the customer makes the full repayment after it goes one day in arrears. They get back to performing very quickly. It's more been an operational change for people to get used to higher scheduled minimum. That's the driver of what we've seen in very early stage arrears. Obviously, we're keeping a close eye on that because we do expect a cohort of customers as some of the cohorts you mentioned to come under more stress as we go into calendar 2023. We're keeping a very close eye on it. We haven't yet seen that manifest in the early stage arrears as yet. Great. Thank you, Carlos. That brings us to time. Thank you very much for joining us for the briefing. Please let us know if you have any follow-up questions, and we'll come back to you. Thank you for joining us.