CBA posts $10.2b profit, margins sliding
Commonwealth Bank has lifted full-year cash profits 6 per cent to a record $10.16 billion, propelled by higher official interest rates and in line with expectations, even as net interest margins suffered in the second half due to increasing loan competition and funding costs.
Chief executive Matt Comyn said the result reflected a challenging period for customers but said the bank remained resilient, as CBA lifted its dividend and said it would buy back up to $1 billion of its shares in 2024.
Home and personal loans more than 90 days overdue rose but Mr Comyn said the overall quality of lending “has remained sound, with arrears and impairments below long-term averages, supported by a strong labour market as well as savings and repayment buffers.”
Loan impairment expenses rose to $1.5 billion and weighed on profits, which the bank said reflected “ongoing cost of living pressures and rising interest rates”.
CBA reported its net interest margins – a key measure of profitability – were up 17 basis points to 2.07 per cent across the 12 months to June, compared to the prior corresponding period, on the back of the higher cash rate which allowed the bank to pass more rate rises through to home loan borrowers compared to savers.
Yet, when compared to the first half of the financial year, NIMs fell 5 per cent to 2.05 per cent in the second half, and the bank flagged ongoing pressures, including from deposits and higher funding costs in wholesale markets.
Monthly spot margins peaked in late 2022, it said, and next financial year “we expect competition, customer deposit switching and higher wholesale funding costs to remain margin headwinds, partly offset by the benefit of higher average cash rates”.
Mr Comyn said, “with tighter and
Read more on afr.com
