CBA books $9 billion profit, seeks $5 billion in capital

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The Commonwealth Bank posted a full year cash profit of $9.137 billion, up 5% on the $8.68 billion the previous year.

The result is within analyst expectations and means the bank makes more than $1 million profit each hour of the day, every day of the year.

The bank is also raising $5 billion to meet stricter capital rules, the last of the big four banks to announce its plans to meet APRA requirements. About 71 million new fully paid ordinary shares, 4.3% of the company, will be issued.

Revenue was up just 2% to $45.310 billion and the bank’s market share of home loans was slightly weaker at 25.1%, down from 25.3% a year ago. Net interest margins fell 5 basis points to 2.09% due to the low interest rate environment.

Expense grew 5% to $9.993 billion due to staff costs and the impact of the lower Australian dollar.

Wealth management was the only division to shrink its earnings, to $623 million, a drop of 17% over the full year.

However, there was a slowing of growth in the second half of the year. The retail banking cash net profit was down 6% to $1.875 billion in the second half, business banking slipped 4% to $716 million and institutional 6% to $615 million.

CEO Ian Narev says technology again featured strongly in the bank’s investment in the business.

“Our focus remains on the use of technology to improve all our channels, and to underpin continuous process improvement, to simplify our customers’ experience with us,” he says.

“The impact of our technology focus is particularly clear in transaction banking and deposits in this result.”

Group interest income increased by 5%, with average interest earning assets up $50 billion to $755 billion and retail and business average interest bearing deposits up $32 billion to $445 billion.

Funds management income was flat at $1.938 billion.

Insurance income fell 3% to $792 million due to a large number of storm damage claims in New South Wales and Queensland.

A fully franked final dividend of $2.22 a share was declared, taking total for the year to $4.20, up 5%.

Results at a glance:

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