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CBA profit falls 11% to $7.3b as COVID-19 bites

Chief executive Matt Comyn said there was continued uncertainty about the pandemic and the next few months would be critical, but Australia was “relatively well positioned,” with more government support expected.

“Significant stimulus measures have supported the economy, there is a strong pipeline of infrastructure projects, and the outlook for mining and agriculture exports is strong,” Mr Comyn said.

“The Government has announced there will be some tapering of measures, but we anticipate continued, targeted support, and monetary policy is likely to remain accommodative for the foreseeable future.”

Bell Potter analyst TS Lim said the profit figure was slightly below market expectations, as some had expected the bank would take higher bad debt charges, but the dividend suggested other banks could make a second half payout to shareholders. “There’s a lot of headwinds, but it’s a solid result,” Mr Lim said.

As investors brace for a wave of COVID-triggered bad debts. CBA’s expense for impaired loans rose more than $1.3 billion to $2.5 billion, but this largely was as a result of a provision for COVID-19 that CBA announced three months ago.

CBA said the number of loans that had been deferred head fallen from a peak of 154,000 to 135,000 at the end of July, which was equal to 8 per cent of accounts. CBA said about 14 per cent of these deferred loans were receiving the wage subsidy JobSeeker.

CBA's final dividend was 31 per cent lower than last year, but still higher than many expected.

CBA’s final dividend was 31 per cent lower than last year, but still higher than many expected.Credit:James Alcock

It is the first result from a bank since the banking regulator last month gave the green light for bank boards to resume dividend payments, after urging them to consider deferring the payments in April at the height of the pandemic.

CBA said its dividend was equal to 49.95 per cent of its second-half statutory profit, at the limit of the banking regulator’s instruction for banks to keep dividend payout ratios no higher than 50 per cent.

CBA’s annual report, also released on Wednesday, said Mr Comyn received $3.9 million in remuneration for the year, up from $3.4 million last year due to a larger cash bonus. Mr Comyn’s statutory remuneration, an accounting measure of pay that listed companies are required to disclose, increased from $4.4 million to $5.7 million.

In a sign the country’s largest bank has been growing its market share strongly, the bank’s household deposits surged 9.8 per cent in the half, while its mortgage lending grew at 1.3 times the industry average.

CBA’s net interest margin, which compares funding costs with what it charges for loans, was 2.07 per cent for the year, down by 2 basis points.

CBA shares have rallied more than 35 per cent from the March low of less than $55, as markets have taken the view Australia’s recession will not be as brutal as feared in the early stages of the pandemic.

Shares in the banking giant, at $74.70 on Tuesday, are still well below their February highs of more than $90.

National Australia Bank, ANZ Bank and Westpac will provide quarterly updates on their performance over this week and next.

More to come

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