Commonwealth Bank profits slump

Big dividend bump as loan impairment expenses increase

Commonwealth Bank profits slump

Australia’s largest lender has announced that it has seen a nearly 11% fall in cash profits for the last six months of 2020 when compared to the same period the year before. This year’s figure was still an impressive $3.9 billion. The bank’s statutory net profit after tax from its Retail Banking Services fared better than the overall number, being $116 million down, or around 5%. Lower operating income, the costs associated with the proposed Lendi/Aussie Home Loans deal, as well an increase in operating expenses and loan impairment expenses all contributed to the profit drop.

The results didn’t take into account the outcome of CBA’s proposed deal with Lendi, as the deal is still subject to regulatory approvals and isn’t expected to complete until the middle of this year.

Both business and home lending have increased substantially – CBA’s business borrowers took out an extra $4 billion compared to the same period last year, while home lending increased by $13 billion.

Key profit figures

Retail Banking                    $2,189 million   -5% on 2019

Business banking              $1,321 million    -5% on 2019

Institutional/Markets      $423 million       -9% on 2019

Wealth Management      $726 million       -57% on 2019

New Zealand                      $490 million       -3% on 2019

Loan impairment expenses

Up $233 million to $882 million

The bank also announced a big bump in dividends for shareholders to $1.50, up from 98c.