The Commonwealth Bank of Australia (CBA) has released its financial results for the full FY2024–25, reporting a statutory net profit after tax (NPAT) of $10.13 billion and a cash NPAT of $10.25 billion.
CBA chief financial officer Alan Docherty noted that operating income had increased 4.8 per cent over the year or approximately $1.3 billion, up to $28.5 billion.
“That growth in the top line gave us the opportunity to increase the level of investment in the business, resulting in growth and operating expenses of 6 per cent over the year,” Docherty said.
Net interest income was the key driver of the growth in operating income, increasing $1.2 billion due to strong lending growth across all of their banking businesses in Australia and New Zealand.
“Importantly, that growth did not come at the cost of margin contraction, margins were broadly stable to improving on an underlying basis, reflecting our ability to compete effectively while maintaining our pricing discipline,” Docherty said.
CBA chief executive Matt Comyn said that over the year, CBA has continued to execute its strategic priorities and maintain strong operational performance.
The major bank said it had been operating in an environment characterised by a rise in global macroeconomic uncertainty, increased geopolitical risk and competitive intensity.
Speaking in the investor presentation, Comyn said the bank recognised that cost of living remained a challenge and that global issues are still creating uncertainty.
“We’ve been focused on consistent operational execution and investing for the long term. This year we’ve chosen to increase lending across all of our key segments with record risk weighted asset growth of $29 billion and disciplined margin management,” Comyn said.
Comyn said maintaining prudent balance sheet settings over the longer-term has meant the bank is able to withstand uncertainty and volatility.
CBA has also refreshed its business strategy, which focuses on four key pillars, including supporting the growth and resilience of the Australian economy, more personalised customer experiences, investment in technology and artificial intelligence (AI) and ensuring secure and reliable services for customers.
Further investment in technology and AI
As part of its broader investment into AI, the bank announced a multi-year partnership with OpenAI to bring advanced AI to customers and employees, becoming OpenAI’s strategic banking partner in Australia.
CommBank and OpenAI engineers will work together to explore advanced generative AI solutions that aim to strengthen scam and fraud detection and deliver more personalised services for CommBank customers.
Comyn noted that the major bank had already invested more than $900 million over the past year to combat fraud, scams, cyber threats and financial crime to better protect its customers.
“These efforts have led to a 76 per cent reduction in customer losses from scams since the peak in late 2022,” he said.
As part of the arrangement with OpenAI, CommBank employees will progressively get access to OpenAI’s advanced AI tools, including its enterprise grade AI solution, ChatGPT Enterprise.
The bank is also investing in comprehensive training and upskilling programs to increase AI capability and embed the responsible use of AI across its workforce.
“To be globally competitive, Australia must embrace this new era of rapid technological change. Our strategic partnership with OpenAI reflects our commitment to bringing world-class capabilities to Australia and exploring how AI can enhance customer experiences, better protect our customers, and unlock new opportunities for Australian businesses,” Comyn said.
“Equipping our people with the most advanced AI tools and capability is a key objective of this strategic partnership. We will continue to invest in our people and their AI proficiency so they can better support our customers while building their skills and experience.”
CBA still trading at a premium
Martin Currie Australia portfolio manager Matthew Davison warned that despite the bank continuing to post strong results, CBA’s recent upgrade cycle may be drawing to a close.
“CBA is still delivering solid performance with modest growth, but sequential momentum is weakening as cost and reinvestment pressures offset stable margins and strong loan growth,” he said.
“The return on equity (ROE) and growth trends remain disconnected from the current valuation.”
Davison noted that the latest result came broadly in line with consensus expectations, with no major surprises.
“We saw a small beat on trading income, but this was offset by higher costs. There were no shocks on asset quality. Investment spending is running higher, particularly in AI – something that will be seen as a positive by some investors.”
He remains cautious on the stock’s outlook and considers it to be an underweight position.
“CBA trades at a significant premium to our valuations and to its key peers,” he said.
“This premium is disconnected from the ROE and growth trends we see in these results and has been disproportionately driven by passive flows.”
Across the banks, the fund manager said it still prefers ANZ, which trades at a discount to its peers.
