Commonwealth Bank Posts Another Record Net Profit Of $8.63 Billion

Commonwealth Bank CEO Ian Narev. Getty

The Commonwealth Bank lifted net profit 13% to of $8.63 Billion for the full year to June 30.

The record statutory profit was just slightly under analyst expectations of $8.7 billion and the cash net profit measure closer to forecasts at $8.68 billion, up 12%.

Statutory revenue was $44.312 billion, down 1%.

CEO Ian Narev says he’s cautiously optimistic on the outlook for the bank.

“We will continue to focus on the future and building our priority capabilities: people, technology, productivity and strength,” he says.

“Whilst business and consumer confidence levels have remained fragile, the levels of underlying activity confirm the strong foundations of the Australian economy.

“Lower interest rates have been positive for the housing and construction sectors, where increased activity has gone some way to offset the impacts of the anticipated reduction in investment in the resources sector.

“And although investment in the resources sector has tapered off as predicted, the fruits of previous investment are showing up in increased production of iron ore and LNG, as new projects move into the production phase.”

The bank announced a fully franked dividend of $2.18 compared to $2 the year before, bringing the year total to $4.01, a rise of 10% on the previous year. The final dividend will be fully franked and will be paid on October 2.

Here are the key results:

The bank has lent more than $130 billion to Australian households and businesses, held $26 billion more deposits, and increased the investments the bank helps manage by $20 billion.

“Our Australian-based shareholders, comprising nearly 800,000 households who own our shares directly and millions more who own them through their pension funds, received over $6.4 billion in dividends, and saw the value of their investment in the Commonwealth Bank increase by over $19 billion,” Narev says.

He says $1.2 billion was reinvested into the business over the 12 month, most of which was targeted at long term strategic priorities: people, technology, strength and productivity.

“We have also continued investment in our capability-based strategy outside Australia,” he says.

The bank improved its net interest margin (NIM) by 0.01% to 2.14% despite increasing competition in the lending market;

Wealth management’s earnings grew as average Funds Under Administration increased by 19% and 84% of funds outperforming their respective three year benchmarks

In the announcement to the ASX, Narev made no comment on the financial planning scandal. He’s due to speak to analysts later today.

The Commonwealth has already spent $52 million compensating customers who received bad advice from bank financial planners between 2003 and 2012.

Last month the bank announced what it called an Open Advice Review program to to fix any wrong and “make it right for our customers”.

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