The Commonwealth Bank is expected to announce a record annual cash profit on Wednesday of $9.1 billion, up almost 5% on the $8.68 billion the previous year.
But the news the market will be looking for is what Australia’s biggest home lender will be doing to meet APRA’s stricter capital rules.
CommBank says it’s working on a number of options for managing capital but no decision has been made. The bank will comment further when it releases its annual results.
It is the last of the four big banks to reveal its capital raising plans to meet APRA’s rules.
Westpac did a $750 million hybrid note issue, the ANZ a $3 billion issue of equity and the NAB has completed a $5.5 billion raising, the biggest in Australian corporate history, to partly back the float of its troubled UK business.
Some analysts say CommBank will need to raise as much as $10 billion through a share issue or asset sales. The other option is to cut dividends but this would risk losing support from managed funds and big investors.
Among the Commonwealth’s assets are its stake in VISA and holdings in Asia including the Bank of Hangzhou.
Some reports say the Commonwealth is looking at a $5 billion rights issue.
The banks have been marked down recently by investors after a series of disappointing results including a flat March quarter profit of $2.2 billion for CommBank.
However, adding the March quarter to the first half profit of $4.623 billion, the final quarter needs to be only slightly higher than $2.2 billion to hit a record $9.1 billion in annual cash profit.