Australia’s biggest bank beat the $4.34 billion figure that had been tipped by analysts but a flat net operating income result, as well as higher expenses, and a 12.5 per cent increase in loan impairments meant the figure for the six months to December 31 was 4.3 per cent down on last year’s $4.68 billion.
The bank will hold its interim dividend flat at a fully franked $2 per share, as forecast.
Chief executive Matt Comyn said Commonwealth Bank remained positive about the economy’s momentum despite the recent bushfire crisis, which resulted in $83 million of insurance claims provisions at the bank during the first half.
Fires and drought were also behind a $100 million loan impairment overlay.
“Clearly, in the near term, we’ll (have) to deal with the impact from the drought, the bushfires and now global uncertainty around the coronavirus,” Comyn said in a presentation on Wednesday.
“We do expect that that’s going to weigh on both sentiment as well as GDP in this quarter and in the next … but we think the combination of both the recovery and rebuild, and also some of the underlying strength in the Australian economy will start to come through in the back half of this calendar year.”
CBA’s home lending was up 4.0 per cent for the period, while business lending rose 3.0 per cent.
Loan impairment expenses, however, jumped 12 per cent to $649 million, representing 17 basis points of gross loans after factoring in the summer bushfires.
Group net interest margin was up one basis point at 2.11 per cent, while the Common Equity Tier 1 ratio of 11.7 per cent is well above APRA’s unquestionably strong 10.5 per cent benchmark.
The bank said operating expenses increased 2.6 per cent to $5.4 billion due to wage inflation and higher IT, risk and compliance costs.
“Good progress” has been made on customer remediation, with $630 million refunded to customers as at December 31.
Want to comment?
Send us an email, making it clear which story you’re commenting on and including your full name (required for publication) and phone number (only for verification purposes). Please put “Reader views” in the subject.
We’ll publish the best comments in a regular “Reader Views” post. Your comments can be brief, or we can accept up to 350 words, or thereabouts.
InDaily has changed the way we receive comments. Go here for an explanation.
Make your contribution to independent news
A donation of any size to InDaily goes directly to helping our journalists uncover the facts. South Australia needs more than one voice to guide it forward, and we’d truly appreciate your contribution. Please click below to donate to InDaily.