“Overall, a largely in-line result but with some lower quality boosts,” said Strong, who has a “sell” rating on CBA shares.
Barrenjoey analyst Jon Mott said there were “no surprises” in CBA’s result, as he also said trading income had helped the bank’s revenue. Mott, who has an “underweight” rating on CBA shares, said it was the bank’s first result since February 2023 that was unlikely to result in upgrades in the market’s forecasts for CBA’s earnings.
Jarden analyst Matthew Wilson described the result as “just OK,” and also said the numbers were unlikely to drive further upgrades in the market’s forecasts for CBA’s future earnings. Wilson, who has a “sell” on CBA, said the bank’s “exalted” valuation meant it was vulnerable to falling short of market expectations.
CBA’s full-year result report said the bank would raise its second-half dividend to $2.60 a share, after its profits grew due to growth in its core business of lending and taking deposits, and lower charges for impaired loans.
The result is virtually in line with analyst forecasts for CBA’s cash profits to hit $10.26 billion for the year.
The bank’s net interest margin – which compares the cost of funding with what it charges for loans – was 2.08 per cent – 9 basis points higher compared with the 2024 financial year, but flat in the June half compared to the December half.
Across the industry, margins have generally been pressured by the fall in interest rates, as so far in this cycle of rate cuts all the major banks have passed on Reserve Bank reductions to mortgage customers in full.
Charges for impaired loans, an important influence on a bank’s bottom line, fell 9 per cent to $726 million, and CBA said the proportion of customers behind on their mortgage repayments had stabilised in the March quarter.
CBA’s full-year result report said the bank would raise its second-half dividend to $2.60 a share, after its profits grew due to growth in its core business of lending and taking deposits, and lower charges for impaired loans.Credit: Oscar Colman
Net interest income rose 5 per cent, while the bank’s operating expenses rose 6 per cent due to inflation and increased investment in technology. CBA said increased spending by 14 per cent to almost $2.3 billion to improve its technology infrastructure and artificial intelligence capabilities.
The bank also announced a partnership with OpenAI, which it said would bring advanced AI to customers and staff, and help to fight scams and deliver “more personalised” service.
“To be globally competitive, Australia must embrace this new era of rapid technological change,” Comyn said.
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“Our strategic partnership with OpenAI reflects our commitment to bringing world-class capabilities to Australia, and exploring how AI can enhance customer experiences, better protect our customers, and unlock new opportunities for Australian businesses.”
CBA’s use of AI has been in the spotlight after it last month said it planned to cut 45 positions because of an artificial intelligence-powered “chatbot” for handling enquiries from customers.
Return on equity, an important measure of profitability, declined by 10 basis points to 13.5 per cent.
Analysts have reported that global institutional investors piled into the bank’s shares as a way of gaining exposure to Australia’s economy, which is less affected by trade turmoil than many other nations.
With bank profit margins expected to come under pressure from falling interest rates and stiff competition, analysts expect banks to cut their costs, including staff expenses.
More to come
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