Commonwealth Bank chief executive Ian Narev
THE Commonwealth Bank could still become Australia’s first lender to punch through the $10 billion full-year profit mark after delivering a record-breaking first-half result this morning.
Despite volatile market conditions, the CBA has chalked up a first-half net profit of $4.62 billion — the equivalent of $1.05 a day for every Australian woman, man and child.
For the six months to December, the nation’s biggest lender raked in a cash profit, which is measure of underlying earnings, of $4.8 billion.
That tally is up 4 per cent on the same period a year ago on the back of a good performance with mortgages and wealth management.
The CBA and other major banks followed Westpac’s lead late last year in delivering a slug to mortgage customers, hiking interest rates without a cue from the Reserve Bank.
Calming nerves among its army of mum and dad investors today, the group kept its interim dividend at $1.98 a share, fully franked.
It comes as analysts raise doubts about the big banks’ ability to keep payouts high.
Unveiling the results today, CBA chief Ian Narev said that if the nation was to continue to prosper all levels of government would need to focus on tax reform and improved infrastructure.
“(These) will be critical to support business innovation and job creation,” he said.
“With the Financial System Inquiry now concluded, all political, regulatory and industry
participants need to be forward-looking and build on this prevailing strength of our economy.”
Mr Narev said a focus on customers had driven the first-half result.
“As a result of their efforts, we ranked outright number one for retail customer satisfaction in the half, and equal first for business customer satisfaction,” he said.
“Customer satisfaction has again led to volume growth across our businesses.”
On the economic outlook he said Australia continued its “steady transition” from a resource-dependent economy and it was “starting to generate a broader base of jobs”.
“The transition is still in its early stages. So global volatility concerns our customers, and presents challenges here in Australia,” he said.
“We must be cautious, but also remain focused on the long-term to ensure that Australia remains a great place to live and to invest.”
Mr Narev said some of the group’s income would be used to further bolster customer service.
Operating income — a figure that excludes key expenses including loan impairments and tax — rose 6 per cent to hit $12.4 billion.
The results suggest the bank is on track to push through last year’s record profit of $9.14 billion, closing in on $10 billion.
The bank also revealed it now held $500 billion of the nation’s deposit pool — up 9 per cent. Deposits now account for 64 per cent of the CBA’s funding.
This is significant as Australian banks have been seeking to bolster funding from deposits rather than rely on volatile wholesale money markets, where they borrow cash from other lenders.
The closely-watched net interest margin — effectively the bank’s profit margin on loans — fell to 2.06 per cent, from 2.11 per cents in the last half.
Cash profit in the retail banking division, which includes mortgages, jumped 8 per cent to $2.2 billion while wealth management earnings rose 7 per cent to $372 million.
Despite this, its share of the home loan market dropped slightly from 25.4 per cent to 25.1 per cent.
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