This article is from the Australian Property Journal archive
AUSTRALIA’S largest lender Commonwealth Bank (ASX: CBA) reported a record $10.164 billion profit, with the bank’s financial position seemingly unaffected by the broader economic challenges facing much of the country.
CBA’s cash net profit after tax was up 6% for the FY23 period but down 3% on 1H23. With the bank’s statutory NPAT up 5% on FY22 and down 5% on 1H23.
CBA’s pre-provision profit was up 19% on FY22 to $15.59 million, down 1% on 1H23.
Operating income was up 13% to $27.2 billion driven by volume growth in home and business lending and an increase in net interest margin (NIM).
NIM was up 17 bpts to 2.0%, reflecting the high rising interest rate environment, though this was partially balanced by home lending competition.
“It has been an increasingly challenging period for our customers, dealing with rising cost of living pressures. Our balance sheet resilience allows us to support our customers and deliver sustainable returns for shareholders,” said Matt Comyn, CEO at CBA.
CBA’s balance sheet included total loan impairment provisions at $6 billion, up from $5.3 billion, with loan impairment expense up $1,465 million.
Operating expenses were at $11,646 million up 5%, attributed to inflation, additional technology spend and volume growth, partly offset by productivity initiatives.
“The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment,” added Comyn.
“However there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians.”
CBA’s return on equity was up 130 bps to 14.0%, after higher profits and lower share count.
CBA funded $149 billion of new lending during the financial year, providing one in four home loans nationally.
“We are seeing consumer demand moderate and economic growth slow and we are closely monitoring the impact of reduced discretionary spend, particularly on our small and medium sized business customers,” said Comyn.
The bank’s final dividend was $2.40 per share, delivering a total dividend for the year of $4.50 per share fully franked, up 17% from FY22.
The Australian banking system remains strong and has navigated rapidly changing and uncertain global financial conditions through sound liquidity risk management and strong capital regulation,” concluded Comyn.
“We are well provisioned for the changing financial conditions and our strong balance sheet underpins our ability to support our customers and manage headwinds while delivering sustainable returns for shareholders.”
