Commonwealth Bank posts over $5.5B in profits as rates rise
Interest rate hikes have driven impressive gains in the profits of Australia's biggest bank in terms of market capitalisation, leading to bumper dividends for shareholders.
Australia's biggest bank in terms of market capitalisation has reported record-high profits as well as a generous dividend for shareholders for the first half of FY23.
CBA books record half-year profits
The Commonwealth Bank of Australia (CBA) released its first-half results for FY23 today, with strong profits being the most prominent feature of its recent performance.
CBA posted a record $5.514 billion in profits for the half year, a rise of 9% compared to the same period last year.
Operating income saw an increase of 12% to hit $13.593 billion, while net interest income jumped 19%.
CBA said growth in profit and earnings was driven primarily by a recovery in its net interest margins, amidst a hawkish monetary policy environment and a string of consecutive rate hikes from the RBA starting in May 2022.
The bank also highlighted growth in home, business and institutional lending.
CBA touted the solid quality of its loan book following this rapid growth in profit and earnings, with $511 million in loan impairment or bad debt expenses.
"The result was further supported by sound portfolio credit quality."
Operating expenses rose 5% to $5.773 billion, on the back of inflation, rising IT costs and remediation in relation to the banking royal commission.
Investment spending saw a 2% increase to $963 million, as compared to $945 million for the same period last year. CBA said that this spending was directed towards productivity and growth initiatives, alongside the development of IT infrastructure and cybersecurity measures.
CBA offers ample dividends to shareholders
In the wake of its strong profits for FY23, CBA has stepped up its dividend offerings for shareholders.
CBA has lifted its declared interim dividend by 20% compared to the same period last year, to $2.10 per share.
Its latest dividend offering could also signal a recovery from the impacts of the pandemic, marking an increase of 5% compared to its pre-Covid dividends.
The interim dividend is also equal to 69% of CBA's cash earnings, which is in line with the bank's target ratio for interim payouts.
Digital and tech at core of CBA strategy
In its FY23 half-year results, CBA CEO Matt Comyn highlighted the bank's commitment to the use of digital channels to drive business in future.
Comyn said digital 'remains central to our strategy', and that digital channels enabled CBA to 'develop deeper relationships to better understand and serve our customer's needs.'
According to Comyn, CBA currently has over 8.3 million digitally-active customers, an increase of nearly one million compared to just two years ago.
First founded in 2011 by the Federal government, CBA became fully privatised in 1996 and is one of Australia's big four banks alongside the National Australia Bank, ANZ and Westpac.
As of July 2022, CBA was the second largest company listed on the ASX, with a market capitalisation of over $155.6 billion.
In addition to its own brand, CBA's portfolio of businesses includes Bankwest, Colonial First State Investments, Commonwealth Securities and Commonwealth Insurance. CBA is a multinational bank with operations spread across New Zealand, Asia, the United States and the United Kingdom, in addition to its home territory of Australia.
Take your position on over 13,000 local and international shares via CFDs or share trading – all at your fingertips on our award-winning platform.* Learn more about share CFDs or shares trading with us, or open an account to get started today.
* Winner of ‘Best Multi-Platform Provider’ at ADVFN International Finance Awards 2022
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get commission from just 0.08% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets