CBA share price opens higher, 98 cent final dividend declared

We examine the highlights from Commonwealth Bank of Australia’s full-year (FY20) results.

The Commonwealth Bank of Australia (CBA) saw its share price rise modestly after the biggest of the big four banks reported its full-year (FY20) results to the market.

Here, CBA reported stronger statutory profits, impressive volume growth across its lending portfolios, and a final dividend of 98 cents per share, down 31% year-over-year.

Despite a lower dividend, the stock was bid higher at the open, rising some 2.6% to $76.64 per share – within the first 15 minutes of trade. By the afternoon however the stock traded lower, sitting at $74.22 per share as of 12:44pm (AEST).

CBA share price: Full-year results unpacked

On the top line, the bank reported total income of $23,761 million – with net interest income continuing to be the major profitability driver – at $18,610 million.

From an earnings perspective, CBA reported a statutory NPAT of $9,634 million (+12.4%), a cash NPAT of $7,296 million (-11.3%) and earnings per share (EPS) of 412.5 cents.

This all comes as the bank’s volume growth remained robust – partly offsetting margin decline. Here, the bank reported that home lending grew 1.3x the system (+$18.4 billion), deposits grew 9.8% (+$25.0 billion), while business lending rose by $7.0 billion.

In spite of that growth, net interest margins (NIMs) remain under pressure as a result of historically low interest rates – with NIMs down 2 basis points year-over-year and 7 basis points on a half-on-half basis.

Commenting on these results, Mr Comyn, said:

'The strength of our core banking businesses, combined with strong operational performance, has delivered good outcomes for our customers and shareholders – despite the challenges presented by lower interest rates and COVID-19.'

Finally, as a result of the coronavirus pandemic, CBA also raised its loan loss provisions, with the bank taking a $1.5 billion credit provision across its lending portfolios. Provisions now total $6.4 billion.

'We continue to monitor our lending portfolios closely and reassess our provisioning levels as the situation around COVID-19 evolves,' it was pointed out.

A dividend at the top-end of consensus

Heading into the full-year, much was being made of CBA’s dividend in light of APRA’s recent directive that deposit taking institution’s dividend payouts should not exceed 50% of earnings. This led to much speculation about the quantum of CBA’s final dividend, given that the bank had already paid out a 200 cents per share dividend in March.

The bank ended that speculation today – revealing a 98 cents per share dividend – equal to 49.95% of H2 statutory earnings. This takes CBA’s full-year dividend to 298 cent per share

Describing its approach to capital management as ‘cautious’, the bank said that the final dividend 'reflects APRA's recently updated guidance (which applies until the end of the calendar year) that the banks should retain at least 50% of earnings.'

CBA will trade ex-dividend on 19 August.

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