CBA posts record $10.2 billion profit, ups dividend

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The Commonwealth Bank has reported a record $10.16 billion profit and will lift its dividend even as it sees increased risks from cost of living rises and high interest rates.

On Wednesday, CBA’s chief executive Matt Comyn said the Australian banking system remained strong even amid slowing economic growth.

Commonwealth Bank chief executive Matt Comyn said signs of downside risk were building.

“The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment,” he said.

“However, there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians. We are seeing consumer demand moderate and economic growth slow, and we are closely monitoring the impact of reduced discretionary spend, particularly on our small and medium-sized business customers.”

In its full-year results, CBA reported a 6 per cent increase in its cash profits to $10.16 billion, driven by a stronger margin. The result surpasses the bank’s previous record of $9.881 billion in 2017.

CBA will pay a final dividend of $2.40 a share, taking the total dividend for the year to $4.50 a share, up 17 per cent from the previous year.

The bank’s earnings were broadly in line with the consensus forecast among analysts who were expecting cash earnings of $10.1 billion, according to Citi.

CBA’s results come as investors look to bank results this earnings season to gauge the state of the economy, bad debts and the extent of pressure on banks’ margins following a period of intense home loan competition among banks and pressure on households from rising interest rates and cost of living.

At CBA’s previous trading update in May, the bank highlighted pressure on its margins from stiff competition in mortgages, prompting it to rein in its measures to win market share.

On Wednesday, the bank reported that its net interest margin – what it charges for loans compared with the funding costs – increased 17 basis points to 2.07 per cent.

Banks so far have maintained that indicators of financial stress among borrowers have remained low.

However, in July, Comyn told the House of Representatives banking inquiry that cost pressure on households would intensify in months ahead as past interest rate rises flow into consumers’ bank accounts.

More to come

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