CBA boss Matt Comyn remains bullish about the next 1-2 years

The CEO of the nation’s biggest bank says there are “very substantial economic tailwinds” for the next year or two.

CBA has sold a 10 per cent stake in Bank of Hangzhou for $1.8bn. Picture: Dean Lewins/AAP Image

Matt Comyn remains bullish about the nation’s economic prospects over the next year or two, despite recent volatility caused by Russia’s invasion of Ukraine.

The Commonwealth Bank chief executive said Australia had “very substantial economic tailwinds”, particularly the boom in savings over the pandemic period.

“Our overall view on the economic conditions over the next couple of years, notwithstanding much higher geopolitical risk, is a very positive for 2022 and 2023,” Mr Comyn told a Melbourne business lunch hosted by the Australia Israel Chamber of Commerce.

“And looking forward, for Australia to really prosper, we need greater productivity, innovation and investment.

“I think that message is very clear, regardless of who’s in government.”

The CBA chief said tax reform was, realistically, one of the most difficult tasks to undertake.

Also important, however, was an understanding of the kind of skills Australia needed for the future, and the big infrastructure investments that would improve productivity.

“I think it’s absolutely critical that we make substantial progress in the next year or two to be able to complement what should be a very good couple of years,” Mr Comyn said.

On the war in Ukraine, he said there would be “minimal” impact on the Australian economy because trade relationships were insignificant.

The bank was navigating volatility in funding markets, and watching with “real concern” for those who were directly impacted by the war.

Overall, Mr Comyn said the number one challenge for about 50 businesses he had recently visited was the skills shortage and access to labour.

Demand was probably strongest for cyber capabilities.

Separately, CBA said it had sold a 10 per cent stake in Bank of Hangzhou to Hangzhou Urban Construction & Investment Group and Hangzhou Communications Investment Group for $1.8bn.

Australia’s biggest bank also agreed to keep its remaining 5.57 per cent stake until at least February 28, 2025.

The deal is expected to result in a post-tax gain on sale of approximately $340m and boost the common equity tier one ratio by 35 basis points.

CBA will no longer recognise its share of HZB profits within other banking income, which over the past three financial years has averaged $200 million revenue per annum.

Chief executive Matt Comyn said the partial sale was “consistent with our strategy to focus on our core banking business in Australia and New Zealand”.

“Our ongoing shareholding in HZB following completion of the transaction will enable us to continue to support its development as one of China’s leading city commercial banks, and complement our relationships in the region,” Mr Comyn said.

HZB chairman Chen Zhenshan said it has grown quickly over the over ten years of strategic cooperation between the two parties.

“CBA has also achieved a good return on investment, which is a win-win outcome for both parties. HZB understands and respects the decision of CBA to reduce its shareholding based on its own strategic considerations and capital allocation needs,” he said in a CBA media release.

He said the parties would “continue to cooperate and maintain a strong partnership.”