CBA expected to make $5 billion profit in just six months
While Australians struggle to pay their bills, the country’s largest bank is set to post a record profit in just six months.
Australia’s largest bank is expected to make an eye-watering profit of around $5 billion in just half a year.
The Commonwealth Bank of Australia (CBA) is set to announce its half-year interim earnings ending on December 31 this Wednesday – but some experts think they already know what they will be.
Several analysts have forecast CBA’s cash profits and they all seem to be in agreement that it will be around the $5 billion mark.
Bloomberg put the figure at $5.17 billion.
Meanwhile, CLSA market analyst Ed Henning has predicted a $5.19 billion windfall while Jarden analyst Carlos Cacho is bracing for a $5.2 billion profit.
Morgan Stanley analyst Richard Wiles had the most bullish estimate of all, at $5.39 billion.
That’s compared to $4.75 billion in cash profits the bank generated in a similar period the year before.
Interest rate rises – which are seeing many Australians drowning in debt – is reportedly behind the CBA’s bumper profits.
It’s good news for anyone with shares in the bank, as analysts have also predicted substantial dividends.
Bloomberg expects a $2.09 dividend to shareholders, while CLSA predicts $2.10.
Citigroup was more hawkish, expecting a half-year dividend of $2 per share.
For comparison, for the same period last year, stock holders received a $1.75 interim payment.
At time of writing, CBA shares were trading at $109.95 per stock, before the market opened for the week.
The forecast comes as Australia is caught in a cost of living crisis crunch as annual inflation rose to 7.8 per cent in January, the worst level since 1990.
In contrast, however, CBA’s stocks rose by 9.91 per cent in the past year.
Morningstar analyst Nathan Zaia said all the banks were enjoying massive windfalls as they had minimal bad debts.
“The banks are not seeing anything to worry them or cause them to move provisions yet,” Mr Zaia said.
It comes as all four of Australia’s big banks were accused of ripping off customers as interest rates rose, according to comparison website Canstar.
CBA, Westpac, ANZ and NAB have been accused of being quick to pass the buck on to borrowers – but it was a different story when it came to passing on the higher rates to savers.
Canstar found that savers who have passed the introductory period have only seen a 1.35 per cent increase despite interest rates rising by 325 basis points.
Canstar finance expert Steve Mickenbecker said the big four banks “are using existing savers to balance the books as they have offered attractive rates for new borrowers and paid higher interest rates for wholesale funding.
“It’s not fun for savers to be the meat in the sandwich,” he said.
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