---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 109087
conversation_id: 4fd936b7-1714-4a43-b97f-5fb67175f1ad
citations: 9
created: 2026-05-31 20:41:39Z
---

# What is CBA’s core business franchise and the key components of its operating model?

## CBA's Core Business Franchise and Operating Model

Commonwealth Bank of Australia (CBA) is structured as a **simpler, better bank focused on core retail and commercial banking businesses in Australia and New Zealand** [4]. The franchise is anchored in scale, deposit funding, technology leadership, and a multi-divisional distribution model.

### 1. Core Franchise — The Three-Pillar Construct

CBA frames its franchise as **"Building stronger, deeper customer relationships"** [1], underpinned by three reinforcing pillars management has consistently used across reporting periods [6]:

| Pillar | Key Components |
|---|---|
| **1. Stronger customer relationships & frequency of engagement** | Australia's most valuable brand; leading Main Financial Institution (MFI) share; superior deposits and data franchise; focus on NPS improvement [1][6] |
| **2. Better understanding of customer needs & risk** | Technology leader with history of innovation; leading decisioning technology; higher-quality, lower-risk lending; personalisation and machine learning at scale [1][6] |
| **3. Superior customer experience** | Disciplined operational execution; leading physical and digital distribution; distinctive products and services; more rewarding loyalty proposition [1][6] |

Value creation is further described as flowing from **favourable business mix, sector-leading ROE and organic capital generation, and a strong balance sheet with disciplined risk management** [1][6].

### 2. Customer Franchise Depth

- **~35% of Australians and >26% of businesses** consider CBA their **Main Financial Institution (MFI)**, a margin that "leads peers by a considerable margin and continues to grow" [2].
- CBA describes itself as **"Australia's leading transaction bank for both households and businesses"**, with this transactional density translating into **more stable and lower-cost deposit funding and better risk identification** [2].
- For 13 consecutive months at the time of its 1H24 result, CBA held the **leading Net Promoter Score (NPS) across all three of its core business segments** [2].

### 3. Balance Sheet & Capital Engine

The franchise sits on a structurally advantaged balance sheet [3]:

- **75% deposit-funded**, with weighted-average long-term funding maturity of **5.8 years** [3].
- **Liquid assets of A$193bn** and CET1 ratio of **11.4%** (pro forma 12.1% under APRA's revised framework at the 1H23 reporting date) [3].
- **Lower loan losses, higher franking, and higher/more stable capital generation** vs. peers, translating into a lower cost of capital and more reinvestment capacity than competitors over time [2].

### 4. Operating Model — Divisional Architecture

CBA operates a **divisional model centred on retail and commercial banking in Australia/NZ** [4], with the principal operating segments being:

- **Retail Banking Services (RBS)** — the largest segment, serving **>10 million personal and business customers** [9] via "an extensive network of over 1,000 branches, more than 3,000 ATMs, Australian-based customer call centres, leading online services and apps, as well as mobile banking specialists and support teams" [5]. Bankwest and Commonwealth Financial Planning were consolidated into RBS, "aligning all retail businesses within one division" [9].
- **Business and Private Banking (BPB)** — consolidates the Group's business-banking operations after Small Business was transferred out of RBS [5].
- **Institutional Banking & Markets (IB&M)** — corporate, institutional and markets-facing activities (the third domestic banking pillar in the capital-generation disclosures) [8].
- **New Zealand (ASB)** — the NZ retail and business banking subsidiary [8].
- **IFS and Other** — international financial services and corporate/group functions [8].

### 5. Operating-Model Simplification Programme

Since 2018, CBA has explicitly executed against a **"Simpler operating model"** strategy [8]:

- **Definition**: "Focusing on our core business allows us to create a leaner organisation by consolidating overlapping and complementary activities and teams across business units, and by streamlining processes and operations in support functions" [8].
- **Portfolio rationalisation**: Wealth (CFS GAM, CommInsure Life) divested and the General Insurance business placed under strategic review and moved into RBS — described as part of "becoming a simpler, better bank" [9]. The CEO confirmed at the FY19 result that the Group had made "very good progress on simplifying both our operating model and our portfolio" [7].
- **Cost discipline**: A simpler model is being used to lower IT costs through "a new operating model and new procurement strategies," combined with digitisation and automation of the distribution model [8].
- **Capital efficiency**: The simpler operating model is one of the explicit levers driving organic capital generation (Cash NPAT less dividends and RWA movements) alongside cost reduction, capital-efficient NPAT growth, and improved data/models/pricing tools [8].

### 6. Synthesis — What Makes the Franchise Distinctive

Putting these components together, CBA's franchise model can be characterised as a **scale + transactional density + deposit-funding flywheel**:

1. **Density of primary relationships** (#1 MFI, #1 NPS) [2] →
2. **Disproportionate share of low-cost transaction deposits and proprietary customer data** [1][2] →
3. **Better credit decisioning, lower loss rates, structurally lower cost of funds and capital** [2] →
4. **Higher and more stable ROE / organic capital generation** [1] →
5. **Reinvestment in technology and digital distribution that further deepens relationships** [1][8].

The operating model — Retail Banking Services as the anchor, supported by Business & Private Banking, IB&M, and New Zealand [5][8][9], all governed under a simplified three-lines-of-defence risk framework and a "simpler, better bank" portfolio thesis [4][7][8] — is the structural expression of this flywheel.

---
**Sources**
[1] Commonwealth Bank of Australia, H1 2026 — Slides (Core franchise diagram)
[2] Q2 2024 Commonwealth Bank of Australia — Earnings Call (MFI share, NPS leadership, structural advantages)
[3] Q2 2023 Commonwealth Bank of Australia — Earnings Call (Balance sheet composition: 75% deposit-funded, A$193bn liquids, CET1 11.4%)
[4] 2018 Annual Report — "Focus on core retail and commercial banking businesses in Australia and New Zealand"
[5] 2019 Annual Results Profit Announcement — Retail Banking Services overview, distribution network
[6] Commonwealth Bank of Australia IR PPT: Q2 2023 — Three-pillar franchise framework
[7] Q4 2019 Commonwealth Bank of Australia — Earnings Call, Matt Comyn on simplifying operating model and portfolio
[8] 2018 Annual Report — "Simpler operating model" definition and capital-generation levers
[9] Half Year Profit Announcement 31 Dec 2018 — Re-segmentation, RBS scope (>10m customers, ~1,100 branches)

## Citations

- [1] **Commonwealth Bank of Australia, H1 2026** · external
- [2] **Q2 2024 Commonwealth Bank of Australia** · external
- [3] **Q2 2023 Commonwealth Bank of Australia** · external
- [4] **2018 Annual Report** · external
- [5] **2019 Annual Results Profit Announcement** · external
- [6] **Commonwealth Bank of Australia IR PPT: Q2 2023 Earnings Call** · external
- [7] **Q4 2019 Commonwealth Bank of Australia** · external
- [8] **2018 Annual Report** · external
- [9] **Half Year Profit Annnouncement 31 Dec 2018** · external

