Commonwealth Bank has today announced a six per cent increase in cash net profit after tax in an improved result that reflects the Bank's consistent focus on customers and disciplined operational and strategic execution, to deliver sustainable returns for shareholders.
Read the ASX announcement here.
Operating income increased by 13 per cent to $27.2 billion driven by volume growth in home and business lending and an increase in net interest margin (NIM). NIM was up 17bpts to 2.07 per cent due to the rising interest rate environment, partly offset by the impact of home lending competition. The Bank reported cash net profit after tax (NPAT) of $10.16 billion.
Reflecting business growth and as Australia's largest home lender, CBA funded $149 billion of new lending during the financial year ending 30 June 2023, helping 150,000 Australians to buy a home. The bank continues to provide one in four home loans across the country and holds the number one position in consumer NPS, while 35 percent of Australian consumers name CBA as their main financial institution.
The group also supported Australian businesses with $35 billion of new lending and now counts one in four small and medium-sized enterprises as customers. This has contributed to the growth of the business bank which is now rated number one in the net promoter score (NPS) rankings that measures advocacy and the willingness of business customers to recommend CBA to others.
Matt Comyn, CBA's CEO, said the results demonstrate the Bank's continued focus on supporting customers, investing in communities, and providing strength and stability for the broader economy.
"It has been an increasingly challenging period for our customers, dealing with rising cost of living pressures," said Mr Comyn. "Our balance sheet resilience allows us to support our customers and deliver sustainable returns for shareholders."
While the Australian economy has proven resilient in the face of slowing growth and increased financial stress on households and business, Mr Comyn said there were "signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians."
With the Bank's strong balance sheet including total loan impairment provisions now sitting at $6 billion to help manage potential risks, CBA is well placed to support its customers and manage headwinds, Mr Comyn said.
That was also applied more broadly across the sector. "The Australian banking system remains strong and has navigated rapidly changing and uncertain global financial conditions through sound liquidity risk management and strong capital regulation," he said.
Operating expenses were $11.65 billion, 5 per cent higher than FY22 due to inflation, additional technology spend to support the delivery of the Group's strategic priorities, and volume growth. These were partly offset by productivity initiatives.
During the year, the Group spent and invested $750m on operational processes and functionality upgrades to address frauds, scams, financial and cyber-crime. CBA helped protect over $200 million for customers through the scams prevention and detection program.
Loan impairment expense increased $1.47 billion reflecting ongoing cost of living pressures and the impact of rising interest rates on customers, and the non-recurrence of COVID-19 related overlay releases in the prior year.
The CET1 capital ratio was 12.2 per cent as at 30 June 2023, approximately $9 billion in excess of the regulatory minimum capital requirement of 10.25 per cent. This was supported by strong organic capital generation from earnings. Shareholders will receive a fully franked final dividend of $2.40 a share, taking the total dividend per share for the year to $4.50, an increase of 17 per cent on last year.
That will mean the average retail shareholder will have received approximately $3,532 in fully franked dividends for FY23. CBA has over 860,000 shareholders and the dividend indirectly benefits more than 12 million Australians through their super fund holdings.
During the year the Bank also successfully completed its $3 billion on-market share buy-back and in all has directly or indirectly paid out $10 billion in dividend and equity returns to shareholders. Together with the improvement in financial performance, this has seen the Group's return on equity (ROE) improve by 130 basis points to 14 per cent.
In light of the group's strong capital base, CBA intends to undertake a further $1 billion on-market share buy-back in the 2024 financial year subject to market conditions. The reduction in CBA's shares on issue from buy-backs is aimed at delivering sustainable returns to shareholders.
1The FY23 Results ASX Announcement includes references and explanations for the information presented in this section.
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