This article is from the Australian Property Journal archive
AUSTRALIA’S largest lender, the Commonwealth Bank has posted 3% drop in profits to $5 billion after record profits a year earlier.
CBA’s cash net profit after tax came in at $5.019 billion for 1H24 and a $4.837 billion statutory NPAT, down 8% on 1H23.
Pre-provision profit was down 3% to $7.638 billion, reflecting ongoing competitive pressure on margins and inflationary cost increases for the bank.
“2023 was increasingly challenging for many of our customers who are finding it harder to absorb cost of living pressures,” said Matt Comyn, CEO at CBA.
“The economy has been fairly resilient, supported by a strong labour market, savings and repayment buffers, population growth and relatively high commodity prices. However, downside risks are building as slowing demand and persistent inflation impact Australian businesses.”
Net interest margin was at 1.99%, down 6bpts on 2H23 and 11bpts on 1H23, with declines attributed to increased competition as well as an unfavourable portfolio mix mainly from customers switching to higher yielding deposits, higher wholesale funding costs and a lower contribution from New Zealand.
Operating income was flat at $13.649 billion, attributed to volume growth and higher volume based fee income, offset by margin compression.
CBA’s posted an improved dividend per share of $2.15 fully franked, up 2% on 1H23 with the dividend payout ratio is 72% of cash NPAT.
Operating expenses were at $6,011 million, up 4% as a result of inflation and additional technology spend to support the delivery of our strategic priorities, partly offset by productivity initiatives.
“As cash rate increases have a lagged impact on households and business customers, we expect financial strain to continue in 2024, with an uptick in our arrears and impairments,” added Comyn.
Home loan balances declined $2 billion on the prior half, driven by declines in Retail Banking Services and Business Banking, reflecting ongoing competition and a disciplined approach to managing margins to deliver sustainable returns.
With domestic home loan balances flat on the previous half, below system growth. Proprietary mix for CBA and Unloan branded home loans increased from 61% to 67% of new business flows.
Compared to a year earlier, home loan balances increased $11 billion to $650 billion, a 2% increase on the prior comparative period.
For the 12 month period, domestic home loan growth of 2% was below system growth, with a proprietary mix for CBA and Unloan branded home loans increased from 58% to 67% of new business flows.
“We remain well provisioned and capitalised, with capacity to navigate an uncertain economic environment. We will stay focused on our customers, offering personalised support and financial flexibility, and we will continue to invest in our franchise,” said Comyn.
“We remain optimistic about the outlook for the Australian economy and we remain focused on executing our strategy to deliver on our purpose.”
