CBA Reports $5.14 Billion NPAT, Declares $2.25 Fully Franked Dividend
Commonwealth Bank of Australia delivered a solid half-year performance with a 6% increase in net profit after tax and declared a fully franked interim dividend of $2.25 per share, underscoring resilience amid economic challenges.
- Net profit after tax rose 6% to $5.14 billion
- Interim dividend declared at $2.25 per share, fully franked
- Loan impairment expenses declined by 23%
- Operating expenses increased 6% due to inflation and technology investments
- Strong capital position maintained with CET1 ratio at 12.2%
Solid Financial Performance Despite Economic Challenges
Commonwealth Bank of Australia (CBA) reported a robust half-year result for the six months ended 31 December 2024, with net profit after tax (NPAT) increasing 6% to $5.14 billion compared to the prior corresponding period. This growth was driven by volume expansion across core businesses and a notable reduction in loan impairment expenses, which fell 23% to $320 million, reflecting disciplined credit practices and improving consumer finance conditions.
Despite ongoing inflationary pressures and a slowing Australian economy, CBA’s pre-provision profit edged up 1% to $7.73 billion, highlighting operational resilience. The bank’s net interest margin remained broadly stable at 2.08%, supported by higher earnings on capital hedges and offsetting competitive pressures on deposit and lending rates.
Customer Support and Franchise Investment
CEO Matt Comyn emphasised the bank’s commitment to supporting customers through cost-of-living pressures, with more than 65,000 tailored payment arrangements provided to those most in need. Over 3 million customers actively used digital money management tools monthly, reflecting CBA’s focus on delivering superior digital experiences. The bank also connected customers to approximately $1.2 billion in grants and concessions via its Benefits finder tool.
Investment in the franchise increased, with operating expenses rising 6% to $6.37 billion, driven by inflation, additional working days, and a discretionary boost in technology spending. Notably, $450 million was invested in fraud, scam, and cybercrime protections, contributing to a 70% reduction in customer scam losses over two years.
Capital Strength and Shareholder Returns
CBA maintained a strong capital position with a Common Equity Tier 1 (CET1) ratio of 12.2%, comfortably above APRA’s 10.25% minimum requirement. The bank has completed $300 million of its $1 billion on-market share buy-back, which is expected to reduce CET1 by approximately 15 basis points upon completion.
Shareholders benefited from a fully franked interim dividend of $2.25 per share, representing a 5% increase on the prior period and a payout ratio of 73% of cash NPAT. The Dividend Reinvestment Plan remains active, with purchases expected to be made on-market. Return on equity improved to 13.7%, supported by higher profits and a reduced share count from ongoing buy-backs.
Outlook Amid Economic Uncertainty
Looking ahead, CBA acknowledges the Australian economy’s slowdown, with cost-of-living pressures and weaker private sector growth weighing on demand. However, the bank anticipates inflation will moderate towards target ranges and expects an easing cycle to commence in 2025, potentially improving household finances and business confidence. The strong labour market and sustained public infrastructure spending provide additional optimism for the domestic outlook.
Overall, CBA’s half-year results reflect a disciplined approach to risk and investment, balancing customer support with franchise growth and shareholder returns amid a challenging macroeconomic environment.
Bottom Line?
CBA’s disciplined execution and strong capital base position it well to navigate economic uncertainties while continuing to deliver shareholder value.
Questions in the middle?
- How will CBA’s increased technology investments, including Gen AI capabilities, translate into competitive advantage?
- What impact will the slowing immigration and private sector growth have on loan demand in the coming quarters?
- How might ongoing geopolitical uncertainties influence CBA’s risk provisioning and capital management strategies?
