CBA Reports Slight Profit Increase Amid Cost of Living Crisis

By Byron Kaye and Himanshi Akhand

(Reuters) – Commonwealth Bank of Australia, the country’s largest lender, reported a slight profit increase for the first half of the year, as an improving economy allowed the bank to reduce loan impairment charges. This positive news drove its shares to a record high.

Despite the bank’s strong performance, many customers continue to face challenges from a prolonged cost of living crisis over the past two years.

However, income tax cuts that became effective in July and rising wages have allowed consumers to save and spend more, resulting in a 15% decrease in loan hardship cases from June to December, with most borrowers remaining ahead on repayments.

CBA CEO Matt Comyn stated, “We expect Australia will follow offshore economies with an easing cycle starting in 2025, which should provide some relief to many households and improve business confidence.”

The cash net profit rose 2% to A$5.1 billion ($3.2 billion) for the six months ending December, backed by a notable 23% drop in loan impairment charges. This figure slightly surpassed the Visible Alpha consensus estimate of A$5.06 billion. Without the reduced loan impairments, profit would have remained almost flat.

In addition, CBA announced an interim dividend of A$2.25 per share, up from A$2.15 the previous year, marking its highest first-half payout to date.

CBA’s shares saw a 1% increase, reaching their highest intraday level of A$164.71, contributing to a year-long rally that positioned the bank as the largest in Australia by market capitalisation, while the broader market saw a modest upturn of 0.2%.

Analysts at Citi commented that although the results met market expectations, they saw no justification for the recent surge in share prices.

CBA, controlling about a quarter of Australia’s A$2.2 trillion mortgage market, indicated that costs rose by 6% during the six-month period due to investments in technology and enhancements to its generative AI and data capabilities. The lender’s net interest margin increased by 2 basis points year-on-year, reaching 2.08%.

($1 = 1.5886 Australian dollars)