The Commonwealth Bank’s full year profit dipped 4.8%

People talk on their phones outside the Commonwealth Bank headquarters in Sydney. (Getty Images) Peter Parks/ Getty Images
  • CBA reported a 4.8% drop to $9.23 billion in full year cash net profit.
  • Operating income was $25.9 billion, up 2.6%, and the net interest margin 2.15%, up 5 basis points.
  • A final dividend of $2.31, making a full year payout of $4.31 per share, up 2 cents.
  • Excluding one-offs, including the $700 million money laundering penalty, the result would have been a 3.7% rise to $10 billion in cash profit.

The Commonwealth Bank reported a 4.8% drop in cash profit for continuing operations to $9.23 billion for the full year to June, squeezed by fines for poor behaviour and by the costs of responding to inquiries including the financial services royal commission.

The result, below analyst expectation of around $9.5 billion, supported a final dividend of $2.31, bringing the full year payout to $4.31 a share, up 2 cents on 2017.

CEO Matt Comyn says the the fundamentals of the bank remain strong.

He says the result, when stripping out one-off items, including a couple of large penalties, looks more like a 3.7% rise to $10 billion in cash profit.

“Operating momentum was driven by our core franchise which delivered good volume margin management in home and business lending, ongoing growth in transaction accounts and deposits, and continued uptake of our technology offering,” he says.

“We also continued to strengthen our balance sheet. This performance has supported a higher dividend for shareholders.”

At midday, Commonwealth Bank shares were 2.4% higher at $74.68.

Operating income rose 2.6% to $25.9 billion and the net interest margin rose 5 basis points to 2.15%.

But expenses jumped 9.2% to $11.6 billion mainly due to the AUSTRAC civil penalty of $700 million for breaching anti-money laundering regulations.

Loan impairment expense were down 1.5% to $1.08 billion, equivalent to 15 basis points of gross loans and acceptances.

One-off regulatory costs, relating to the APRA inquiry and also the financial services Royal Commission, are running at $155 million.

“We just have to recognise we have not done a good enough job for our customers,” Comyn says.

“We got some things wrong. We have made mistakes. We absolutely need to make sure we do not make them again.

“And a big part of my job of course is making sure we are a simpler and better bank for our customers, working closely with any customers who have not had a good experience, but most importantly making sure that those sorts of issues do not recur.

“Ultimately it is going to be something that our customers need to decide, and I am very comfortable, and feel very accountable, for ensuring that we deliver great experience and outcomes for our customers over the long term.”

The 2018 results:

Source: CBA

Comyn says the bank is very optimistic about the long term prospects of Australia.

“We are seeing GDP growth above trend. We have seen a continuing fall in unemployment. Inflation remains low,” he says.

“You look to the long term prospects and of course there have been some big shifts in the economy over recent years, but we are seeing investments in infrastructure, we see good potential from just population growth, and of course some of our Asian neighbours which will continue to drive a good focus on growth in the local Australian economy.

“And of course an Australia that performs well is good for the Commonwealth Bank.”