Commonwealth Bank profit climbs on home, business lending
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Cash profit from continuing operations rose 4 per cent to a record $8.6 billion for the 12 months ended June 30.
PHOTO: REUTERS
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- Commonwealth Bank of Australia's cash profit rose 4 per cent to A$10.25 billion, meeting analysts' estimates due to strong home-loan and business lending growth.
- CEO Matt Comyn cited a resilient Australian economy with a healthy labour market and immigration, expecting modest economic growth despite subdued sentiment.
- The bank will pay a A$2.60 final dividend per share; operating expenses rose 6 per cent due to technology investment and inflation, partly offset by productivity.
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MELBOURNE – Commonwealth Bank of Australia profit met estimates as home-loan growth and lending to businesses supported the country’s biggest lender.
Cash profit from continuing operations rose 4 per cent to a record A$10.25 billion (S$8.6 billion) for the 12 months ended June 30, according to a statement on Aug 13. That compared with the A$10.26 billion average estimate of analysts surveyed by Bloomberg.
Chief executive Matt Comyn has prioritised lending to companies at the same time as maintaining the firm’s pole position in mortgages. That has helped to offset difficulties from falling benchmark interest rates in Australia that are weighing on banks’ margins.
“Despite global uncertainty, the Australian economy has remained resilient, with strong fundamentals including a healthy labour market, steady immigration and ongoing public sector investment,” Mr Comyn said in the statement. “Even though sentiment remains subdued, we expect economic growth to improve modestly as the year progresses.”
Expectations were high heading into the Aug 13 results, with the shares up about 37 per cent over the past year. The stock hit an all-time high in June when its market capitalisation climbed above A$200 billion.
Profit in the company’s key retail banking services division rose 2 per cent on the prior year to A$5.4 billion, while business banking saw an 8 per cent climb to A$4.1 billion.
The bank will pay a final dividend of A$2.60 per share, while its net interest margin was flat on the first half at 2.08 per cent.
Meanwhile, the company said operating expenses increased 6 per cent driven by inflation and accelerated investment in technology, though that was partly offset by productivity initiatives. Loan impairment expenses dropped as economic conditions improved.
Mr Comyn indicated that consumers and households are seeing benefits from lower borrowing costs.
“Pleasingly, many households have seen a rise in disposable incomes due to the recent relief from reduced interest rates, lower inflation and tax cuts,” he said.
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