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.