Invest
Commbank’s profit shrinks, but shareholders pocket more cash
Australia’s largest bank has announced a significant increase in dividends to shareholders, despite the fact its bottom line has been rocked by the COVID-19 pandemic and the subsequent pause on mortgage repayments.
Commbank’s profit shrinks, but shareholders pocket more cash
Australia’s largest bank has announced a significant increase in dividends to shareholders, despite the fact its bottom line has been rocked by the COVID-19 pandemic and the subsequent pause on mortgage repayments.
In an announcement to the market on Wednesday, 10 February, CBA reported an annual 10.8 per cent slide in its cash profit to $3.89 billion for the six months ended 31 December.
The result was driven by a 0.5 per cent decline in operating income to $11.96 billion, and a 6.9 per cent increase in operating expenses to $5.57 billion.
But despite a yearly profit drop and generally lower result than projected, CBA is lifting its previously capped dividend to a fully franked $1.50 per share.
The rising dividend payment will see shareholders pocket 53 per cent more in the first half dividend payment compared with the payment made in September last year.
In a statement issued on Wednesday, chief executive Matt Comyn touted CBA’s results as “strong”.
“We have refreshed our strategic priorities to build on our strong foundations and position us for the future. This is an evolutionary change to enable the bank to focus on the new challenges and opportunities ahead.
“We have set an ambitious agenda and are committed to building tomorrow’s bank today for our customers,” Mr Comyn said.
The nation’s largest home lender posted a statutory net profit after tax of $4.9 billion for the first half of 2021, down 20.8 per cent on the prior corresponding period.
Nearly two-thirds of this was due to lower one-off gains on disposals, and about a third was due to a decrease in cash profits from continuing operations.
However, a highlight for the bank was the “strong” business performance that saw lending expand across the board.
Over the past six months, home lending balances have grown at 1.5 times system, while business lending grew at approximately three times system over the year.
In addition, new business transaction account openings grew 50 per cent in comparison with the prior comparative period.
Further, both household and business deposits increased. Over the past six months, household deposits added $23 billion, growing by 1.1 times system, while business deposits increased $13 billion, 1.7 times system.
As such, Mr Comyn believes the bank is well placed for the challenges ahead.
“The strength of our balance sheet and capital position enables us to support customers and help lead the country through recovery.”
But while remaining upbeat and predicting “very good news looking forward”, Mr Comyn cautioned that the coming months may present economic challenges as the government’s stimulus measures start to roll back.
“We continue to monitor our lending portfolios closely for any signs of stress. The low interest environment will continue to put pressure on our revenue, which is why we remain focused on performance, operational execution and capital allocation.”
In other results, CBA’s net profit after tax in its retail banking division hit $2.2 billion, an improvement from the bank’s performance in the second half of FY20 but down on the prior corresponding period’s result of $2.3 billion.
In business and private banking, CBA reported a $1.3 billion cash net profit after tax.
About the author
About the author
Shares
Where to invest $1k and start growing your portfolio
Novice investors with a spare $1,000 in their bank accounts are advised to consider ETFs, as this asset type soars in popularity. ...Read more
Shares
AMP hits record low
Shares in financial wealth giant AMP have closed at a new record low, following the potential sale of AMP Capital to US-based Ares Management falling through. ...Read more
Shares
Aussie investors flock to social media to learn about trading
Aussie investors are increasingly turning to social media platforms for education on trading, as collaboration and reliance on a community become integral in the way traders learn. ...Read more
Shares
GameStop looks to cash in on surge by selling 3.5m shares
The GameStop saga continues as the retailer moves to capitalise on its newfound fame by offering up for sale 3.5 million of its shares. ...Read more
Shares
Expert warns against media-led stock frenzies as GameStop shares plummet to 7-week low
An expert has urged “extreme caution” when joining social media-led stock frenzies, after GameStop shares were rocked by its less than favourable financial results. ...Read more
Shares
GameStop fails to meet revenue estimates, shares seesaw
GameStop has failed to capitalise on the frenzy around the stock, missing its Q4 estimates, although it reported strong sales in early Q1. ...Read more
Shares
Why CBA’s BNPL launch won’t be the end of Afterpay
The big four bank’s arrival into the buy now, pay later sector is unlikely to have an impact on the established players, with the bank focusing on supply instead of consumer demand, an industry expe...Read more
Shares
How investors can practically incorporate more ESG into their portfolios
Six-year-olds and healthy food can be like mixing water with oil – they don’t really like to party together, and it can be a constant source of frustration. That said, the difference is that you h...Read more
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Shares
Where to invest $1k and start growing your portfolio
Novice investors with a spare $1,000 in their bank accounts are advised to consider ETFs, as this asset type soars in popularity. ...Read more
Shares
AMP hits record low
Shares in financial wealth giant AMP have closed at a new record low, following the potential sale of AMP Capital to US-based Ares Management falling through. ...Read more
Shares
Aussie investors flock to social media to learn about trading
Aussie investors are increasingly turning to social media platforms for education on trading, as collaboration and reliance on a community become integral in the way traders learn. ...Read more
Shares
GameStop looks to cash in on surge by selling 3.5m shares
The GameStop saga continues as the retailer moves to capitalise on its newfound fame by offering up for sale 3.5 million of its shares. ...Read more
Shares
Expert warns against media-led stock frenzies as GameStop shares plummet to 7-week low
An expert has urged “extreme caution” when joining social media-led stock frenzies, after GameStop shares were rocked by its less than favourable financial results. ...Read more
Shares
GameStop fails to meet revenue estimates, shares seesaw
GameStop has failed to capitalise on the frenzy around the stock, missing its Q4 estimates, although it reported strong sales in early Q1. ...Read more
Shares
Why CBA’s BNPL launch won’t be the end of Afterpay
The big four bank’s arrival into the buy now, pay later sector is unlikely to have an impact on the established players, with the bank focusing on supply instead of consumer demand, an industry expe...Read more
Shares
How investors can practically incorporate more ESG into their portfolios
Six-year-olds and healthy food can be like mixing water with oil – they don’t really like to party together, and it can be a constant source of frustration. That said, the difference is that you h...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
