Commonwealth Bank will maintain and increase where necessary its support for customers after a challenging 2023 caused by cost-of-living pressures that are expected to continue well into this calendar year, CBA CEO Matt Comyn said today.
While the economy has been resilient, increases in the cost of living have been felt by more and more households and businesses, Mr Comyn added.
As a consequence, customers have reduced their spending to manage these pressures.
Announcing the Bank’s half year results for the six months ending 31 December 2023, Mr Comyn said: “We know many Australians are feeling under pressure and are cutting back to deal with the rising cost of living and we’re here to support them with flexible and personalised solutions.
“Our commitment to building deeper and more rewarding relationships, along with our strong financial settings, help us to provide meaningful support to our customers and the broader Australian economy when it matters most.”
While expecting the financial strain on households and businesses to continue into 2024, Mr Comyn said CBA had a range of options available to customers to help them if they were experiencing financial difficulty.
“We offer more options today than ever before and we’ve made them easier to access, including flexibility with loan repayment deferrals, customised payment arrangements and a loan repayment pause for 12 months if required,” he added.
Mr Comyn was speaking as he unveiled a half year cash net profit of $5 billion, 3 per cent lower on the corresponding period 12 months ago based on flat operating income and higher operating expenses partly offset by a decrease in loan impairment charges.
Net interest margins (NIM) came in at 1.99 per cent, which was 11 basis points lower on the prior comparative period and six basis points down on the second half of the 2023 financial year. This was a consequence of increased competition, customers switching to higher yielding deposit accounts and higher wholesale funding costs and increased competition in New Zealand.
CBA’s capital position remained strong throughout the half with its Common Equity Tier 1 (CET1) Capital Ratio coming in at 12.3 per cent as at 31 December 2023, up 10 basis points on the 30 June 2023 level. This was after the payment of the 2023 final dividend to shareholders and the purchase of $154 million worth of CBA shares as part of the previously-announced $1 billion on-market share buy-back.
The board has declared a fully franked, interim dividend of $2.15 per share, an increase of 5 cents on 12 months ago and which represents a pay-out ratio of 72 per cent of cash net profit after tax.
The record date for shareholders to be on the register is 22 February 2024 with the dividend expected to be paid on or around 28 March 2024.
Other key points of the result were:
- Operating expenses of $6 billion were up 4 per cent due to inflation and additional technology spend, partly offset by productivity initiatives;
- Loan impairment expenses fell $96 million to $415 million driven mainly by lower collective provision charges;
- Total impairment provisions increased slightly to just over $6 billion, reflecting the impact of ongoing cost of living pressures and rising interest rates on consumer and corporate customers;
- Consumer arrears in home loans and credit cards ticked up as a consequence but remain at historically low levels;
- Customer deposits continue to account for 75 per cent of total funding.
Mr Comyn said that while the profit outcome reflected cost inflation and a competitive operating environment, CBA had maintained a disciplined approach to volume and margin management at the same time as increasing the group’s share of industry net interest income.
“We have consistently executed our customer-focused strategy,” he said. “Our balance sheet remains strong with high levels of provision coverage, surplus capital and conservative funding metrics.”
“This ensures we have capacity to support our customers, manage potential headwinds and deliver sustainable returns to our shareholders.
“We remain optimistic about the outlook for the Australian economy and we remain focused on executing our strategy.”
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