Borrow
CBA announces $10bn bumper profits
Australia’s largest bank will return almost $10 billion to shareholders through buybacks and dividends after announcing a bumper increase in profits.
CBA announces $10bn bumper profits
Australia’s largest bank will return almost $10 billion to shareholders through buybacks and dividends after announcing a bumper increase in profits.
All up, Commonwealth Bank of Australia (CBA) has announced a 19.8 per cent increase in cash profits to $8.65 billion.
Meanwhile, CBA confirmed a $6 billion off-market buyback of shares on the back of the divestment of some of its businesses.
The CBA board determined a final dividend of $2 a share – based on a payout ratio of 71 per cent of cash profit – with the total coming to $3.50 a share fully franked.
Commonwealth Bank’s chief executive, Matt Comyn, said Wednesday’s results reflect an “ongoing strong operational performance of the core businesses of retail, business and institutional banking”.
Describing the Australian and New Zealand economies as resilient, Mr Comyn said Australia’s control of the pandemic and its swift rebounds were the catalyst for a bumper half-yearly result.
“While the Australian economic recovery continued strongly through most of FY21, the pandemic continues to have an impact on the Australian economy,” Mr Comyn said in a statement.
Off the back of stronger economy CBA’s real loan growth was 6.7 per cent increase, while business lending grew by 11.2 per cent.
Plato’s senior portfolio manager Dr Peter Gardner, said today’s result was further evidence that the dire outcomes for Australia’s banks due to COVID-19 simply have not eventuated.
“The forecast avalanche of bad debts has so far been a trickle as we see CBA reporting a loan impairment expense of just 7 bps. It’s a similar story right across the sector with the writing back of provisions also bolstering profits,” he said.
Describing CBA’s results as a win for investors, to Dr Gardner the buyback is a logical way for CBA to take advantage of its surplus capital, as well as pointing to a windfall for retirees through franking credits.
“Using CBA’s closing price yesterday of $106.56 as a guide, we estimate the buyback will be worth approximately $121.63 per share for tax-exempt investors, including a franking credit component of $29.99. This will represent a premium of around 14 per cent to the market price of CBA today for a tax-exempt Australian investor.”
Looking forward, Dr Gardner expects stronger results to continue from the big four bank.
“CBA’s buyback and the strong result galvanises our view that equity income will continue to rise over the next 12 months and deliver greater yield than most other asset classes, with the banks and miners leading the charge,” he concluded.
About the author
About the author
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
