This article is from the Australian Property Journal archive
AUSTRALIA’S largest lender, the Commonwealth Bank (ASX: CBA) saw a 6% decline in profit over FY24, after a year of high inflation and resulting high operating expenses.
CBA posted a statutory NPAT of $9.48 billion and a cash NPAT of $9.83 billion, which was down 2% on the previous financial year.
Pre-provision profit was also down 2% on FY23 to $14.95 billion, also reflecting inflationary cost increases. CBA posted a dividend of $4.65 per share fully franked, up 3% on FY23, with a final dividend of $2.50 per share.
Operating expenses were up 3% over the year to $12.2 billion, with inflation impacting staff costs.
CBA’s credit quality – loan impairment expense was down 28% to $802 million, reflecting rising house prices and lower expected losses within consumer finance.
CBA Group maintained a consistent home loan market share performance at 25%, up from 24% in June 2019.
Mortgage 90+ days arrears were up over the year to 0.65% from 0.47% in FY23, reflecting the impact of higher interest rates and cost of living pressures on borrowers.
While the majority of the home lending customers remain in advance of scheduled repayments, with 80% of customers in advance and 33% of repayment buffers greater than two-years, with 20% on time.
Provision coverage is at 1.66% of credit risk weighted assets, with a a circa $2 billion buffer maintained relative to the losses expected under our central economic scenario.
“We have retained strong loan loss provision coverage, with surplus capital and conservative funding metrics,” said Matt Comyn, CEO at CBA.
“Our disciplined approach to managing our balance sheet settings positions us with flexibility and capacity for a range of economic scenarios, while continuing to deliver sustainable returns.”
There was an increase in impaired home loans up from $1.2 billion to $1.6 billion.
CBA’s home loan portfolio DLVR is at 43%, down from 45% in FY23, but supported by growth in house prices.
“The Australian economy remains resilient with low unemployment, continued private and public investment, and exports supporting national income,” added Comyn.
“Higher interest rates are slowing the economy and gradually moderating inflation. Australia remains well positioned but downside risks continue around productivity, housing affordability, as well as ongoing global uncertainty.”
