Commbank posts better-than-expected profit result
Despite concerns over the economic impact of the bushfires and coronavirus, Commonwealth Bank has posted a better-than-expected profit result. Here’s how they pulled it off.
Business
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Commonwealth Bank chief Matt Comyn says he expects the economy to largely shake off the negative headwinds of the bushfires and coronavirus during the second half of the year.
The optimistic outlook was delivered as CBA posted a better-than-expected profit result.
Net profit surged 34 per cent to $6.16 billion for the six months to December compared to the same result a year earlier.
The bottom line swelled as CBA collected $1.69 billion from the sale of the Colonial First State asset management business.
Cash profit – an underlying profit measure which strips out one-offs such as asset sales – fell 4.3 per cent to $4.48 billion.
The hit to the bottom line came as the bank booked $83 million of insurance provisions for claims relating to the bushfires and increased impairments related to drought and bushfires.
But the result was better than what analysts were expecting and CBA also posted above industry average lending growth.
The nation’s biggest bank also lifted its net interest margin – broadly the difference between what it charges for loans and pays for deposits – despite ultra-low interest rates putting the banking sector under pressure.
CBA’s home lending rose 4 per cent in its first-half compared to the same period a year earlier, while business lending was up 3 per cent
Its net interest margin was up 1 basis point at 2.11 per cent
Mr Comyn said he was “optimistic” about the Australian economy with property prices rising and low unemployment.
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“Clearly, in the near term, we’ll also have to deal with the impact from the drought, the bushfires and now global uncertainty around the coronavirus,” he said.
“We do expect that that’s going to weigh on both sentiment as well as GDP (gross domestic product) 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 will hold its interim dividend flat at a fully franked $2 per share, as forecast.
— with AAP