The Commonwealth Bank will tap its shareholders for $5 billion to lift its capital reserves, after unveiling a record $9.15 billion cash profit.

The profit result is up five per cent from last year’s $8.68 billion result and is largely in line with expectations.

Meanwhile, the bank will look to raise $5 billion though a renounceable entitlement offer aimed at lifting its capital reserves ahead of a move by the banking regulator.

The Australian Prudential Authority has said it wants the nation’s major banks to lift their capital reserves in line with the top quartile of their global peers.

“We now have greater certainty regarding the key requirements of global relativity and mortgage risk weights,” chief executive Ian Narev said.

“Our announcement today strengthens our position in response to those requirements. This will provide us with on-going flexibility so we can continue to support our customers.”

As part of the offer, shareholders will be able to buy one share for every 23 they own at $71.50 per share, which is a 10.5 per cent discount on the price of $82.12 that CBA shares last traded at.

The Commonwealth also lifted its final dividend four cents to $2.22 per share, fully franked, which is slightly below expectations of a $2.25 pay out.

Tough competition for loans and falling interest rates saw the bank’s net interest margin – the profit it makes on loans – fall five basis points to 2.09 per cent during the year, though group net interest income was up five per cent.

Narev said low interest rates, the federal government’s tax incentives for small business, along with solid household savings rates and business credit quality levels provided a good foundation for the Australian economy over the next 12 months.

But he said the banking sector was aware of the risks to the housing sector in light of strong property price growth in Sydney and Melbourne.

“Household credit quality remains high, though the banking sector and our regulators are conscious of the potential impacts of a sustained period of low interest rates, and are therefore taking measured action,” he said.

CBA shares have been placed in a trading halt while it carries out the institutional component of its capital raising.

– AAP