Clients face crunch as CBA chief Matt Comyn’s pay hits $10m

The nation’s biggest bank says customers face a financial crunch as borrowers move from cheap fixed loans to higher rates, with younger customers most exposed.

The nation’s biggest bank says customers face a financial crunch as borrowers move from cheap fixed loans to higher rates, with younger customers most exposed as they use savings to stay financially afloat.

CBA said a dozen interest rate rises and high inflation had led to many customers finding it “very tough”, with a third of official rate rises yet to be felt by all borrowers and thousands of CBA’s cheaper fixed rate loans still to roll off on to more expensive rates.

A string of rate hikes since mid-2022 saw CBA top $10bn in annual cash profit for the first time, handing its boss a hefty pay rise, with Matt Comyn taking home more than $10m.

Higher profit margins underpinned CBA lifting its cash profit by 6 per cent to $10.2bn and rewarding its 875,000 shareholders with a sharply higher dividend.

However, Mr Comyn said “downside risks” were emerging amid a lagged impact on mortgage customers of rising interest rates and other cost-of-living pressures.

The bank chief said most of the bank’s borrowers would be able to handle the full impact of the recent cash rate increases over the next six months, although many were finding it “very tough”.

“We are very conscious that many Australians are feeling under pressure as a function of inflation and higher rates and higher increases in the number of household expenses,” he said.

Mr Comyn’s pay rose 50 per cent to $10.4m from $6.97m largely due to hitting long-term bonus targets. Still, analysts and academics said it was not a good look while everyday Australians struggled with surging living costs.

The bank’s shareholders might be happy to pay Mr Comyn well for running a top-performing bank, but the salary remained a PR challenge, Baker Young portfolio analyst Toby Grimm said.

“The optics of the CEO getting a 50 per cent pay rise are not good, and how they handle that situation is a tough question,” he said.

The bank’s bad debt expense surged above $1bn, and the proportion of customers falling behind on their mortgages and personal loans increased but loan arrears remained below long-term averages, Mr Comyn said. “We are seeing consumer demand moderate and economic growth slow and we are closely monitoring the impact of reduced discretionary spend,” he said.

“We believe we are near the end of the rate hike cycle but rates may stay high for some months to come.”

Bank profits benefit from Reserve Bank rate rises when deposit interest rates don’t increase at the same pace as mortgages.

RMIT University associate professor of finance Angel Zhong said the CEO’s pay had been approved by shareholders and the bank’s independent remuneration committee and was warranted, but the public would generally disagree.

“The perception of the public is that it’s not justifiable because of increased interest rates and the cost-of-living crisis,” she said.

Mr Comyn’s pay increase dwarfs the bank’s offer to its staff of 17 per cent over four years, and Finance Sector Union national secretary Julia Angrisano said CBA “very obviously” could ­afford to pay more.

“Their proposed pay rise would be a pay cut in real terms, given inflation,” she said.

CBA’s shareholders will be paid a $2.40 final dividend, up 14 per cent on last year, on September 28.

Mr Grimm said the dividend jump was exactly what shareholders would want to see: “Significant income growth faster than inflation”.

“A great deal of bank shares are held by retirees, super funds and retirement accounts,” he said.