In a statement to the ASX on Wednesday, Commonwealth Bank said it posted a statutory net profit after tax (NPAT) of $5.14 billion in the half year ending 31 December 2024, an increase of 6 per cent on the same period a year earlier.
The bank’s cash profit, which excludes hedging and demerged businesses, added 2 per cent in the reviewed period to $5.13 billion.
The better-than-predicted result was supported by volume growth in its core businesses and a lower loan impairment expense, which was partly offset by higher operating expenses on the back of continued inflationary pressure and a discretionary increase in franchise investment spend.
Acknowledging the first half as “another challenging period for many of our customers”, CBA chief executive Matt Comyn said CBA has been able to deliver “solid results” for its shareholders despite the weaker economic backdrop.
“Millions of Australians continue to benefit from our focus on strong and sustainable returns and we have declared an interim dividend of $2.25 per share, fully franked,” Comyn said.
Reflecting on the bank’s balance sheet, he said “settings remain strong, with surplus capital and conservative funding, provisioning and interest rate risk settings”.
“This enables us to support our customers, while lending to productive parts of the economy to stimulate economic growth,” Comyn said.
The big four bank’s operating income grew 3 per cent to $14.1 billion in the reviewed period, supported by a “disciplined” approach to volume growth, coupled with stable underlying margin.
First-half operating expenses rose 6 per cent to $6.37 billion, with CBA attributing the lift to staff expenses, alongside additional investments to accelerate the refresh of its technology infrastructure and generative artificial intelligence capabilities.
Its net interest margin was 2.08 per cent, 2 basis points higher than 1H24. Expounding on this, the bank said the underlying margin remained broadly stable, excluding the impact from lower liquids and lower institutional pooled facilities.
Loan impairment expense decreased by 23 per cent to $320 million, largely driven by the bank’s “disciplined” credit origination and underwriting practices, rising house prices and lower expected losses within its consumer finance arm.
Moreover, CBA said its capital position remained strong throughout 1H25 with its Common Equity Tier 1 (CET1) Capital Ratio coming in at 12.2 per cent, well above the Australian Prudential Regulation Authority’s minimum regulatory requirement.
The bank clarified that, by the close of 2024, it had completed $300 million of the announced $1 billion on-market share buyback, with the remaining $700 million expected to reduce its CET1 Capital ratio by around 15 basis points.
Reflecting on the economic predicament ahead, Comyn said: “The Australian economy has slowed considerably, with cost-of-living pressures continuing to weigh on consumer demand and younger customers, in particular, making real sacrifices. Private sector growth is weak, immigration is starting to slow and geopolitical uncertainties remain.
“However, underlying inflation is now moderating towards the target range and we expect Australia will follow offshore economies with an easing cycle starting in 2025. This should provide some relief to many households and improve business confidence.”
Commenting on the CBA’s results, Saxo Asia Pacific senior sales trader Junvum Kim said they reflect a “resilient stance amid economic headwinds”.
“Strong performances in home lending and business banking, alongside a net interest margin of 2.08 per cent, showcase effective management in a competitive landscape,” Kim said.
“Despite a 6 per cent rise in operating expenses due to inflation and tech investments, the bank’s decision to increase the interim dividend to $2.25 per share signals confidence in its financial health.
“While cost-of-living pressures persist, CBA’s solid CET1 ratio of 12.2 per cent and favourable labour market conditions position it well for future growth, with an anticipated interest rate easing cycle in 2025 offering additional optimism.”
CBA’s share price gained some 1.7 per cent by 1pm (AEDT), further cementing its status as a market darling. Namely, over the past two years, CBA returned some 67 per cent, outperforming the S&P/ASX 200 banks.
However, in a market comment preceding the big bank’s ASX listing, VanEck’s senior portfolio manager, Cameron McCormack, said: “We don’t expect CBA’s earnings today will justify its elevated valuation.
“We believe the clock is ticking on this Cinderella story and there is limited upside from here.”
