CBA delivers bumper $2.60 dividend on the back of $10.1b net profit
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More news: On an analyst call Commonwealth Bank chief executive Matt Comyn has rebuffed the suggestion that Macquarie is a 'medium-sized' bank, conceding it is bringing direct competitive pressure to bear on the much larger CBA.
What they said: In response to a question from MST Financial analyst Brian Johnson about which banks were winning market share as Australians' main financial institution (MFI), Comyn said Macquarie was causing headaches for the majors.
"They are a formidable competitor...we would see them in a category that's beyond, you know, a medium bank," Comyn said, saying Macquarie benefited from its structure.
"They have a slightly different, I guess, motivation and posture. And you know, they're a good and strong competitor. And we think and worry about them at least as much as we do any other majors," he said.
Johnson appeared to agree, observing on the call that Macquarie is CBA's "only competitor".
CBA shares sink on FY25 result, UBS flags soft FY26 guidance
More news: Commonwealth Bank retreated in morning trade after the banking giant reported a 7% lift in full-year net profit for the 2025 financial year and a higher-than-expected final dividend of $2.60 per share.
CBA shares were down 4.5% to $170.77 at 10:39am AEST, having returned around 30% over the last 12 months.
What they said: "Overall, the investment case for CBA hinges around the bank being in a strong position and the [market] assessing if the strongest in the sector can get stronger," said UBS analyst John Storey.
"We think the [market] might be disappointed around guidance for FY26 and the lack of signs of acceleration in the key retail segment," he said.
Jarden analysts call CBA result as 'just OK'
More news: Jarden analysts called Commonwealth Bank’s result as “just OK” as growth is limited and returns were stable.
Jarden said its 2H25 profit of $5.1 billion was a “smidgeon below consensus” while net interest market was in line at 2.08% with good loan and deposit growth.
Jarden has a ‘sell’ rating on the stock with a target price of $110. CBA’s shares last closed at $178.8.
The analysts noted that the bank’s key downside risks included a worse-than-expected housing, macro, or cash rates backdrop; and digital money. However, upside risks included industry mortgage pricing improving materially; and lower-than-expected deposit pricing competition.
What they said: “Balance sheet is clearly well-managed and the higher dividend should please. This is unlikely to drive material positive consensus earnings revisions,” Jarden said.
“...Expectations reside in rarified air whilst the actual performance points to a ‘good ordinary’ bank.”
CBA delivers bumper $2.60 dividend on the back of $10.1b net profit
The news: The Commonwealth Bank of Australia has reported a full-year net profit after tax of $10.133 billion and a higher-than-expected final dividend of $2.60 on the back of strong results.
The numbers: CBA's net profit was up 7% on the year prior, attributing the gain to lending volume growth and stable net interest margins. It posted a cash net profit of $10.25 billion, up 4% on the last financial year. Profit in the second half was flat compared with the first.
A final dividend of $2.60 for the second half of the year came in higher than analyst estimates in the $2.55-$2.58 range. That takes the full year dividend to $4.85 fully franked, and the payout ratio to 79% of cash NPAT, around the upper end of the bank's target payout range.
The result sees shareholder return on equity fall 10 basis points to 13.5%, but remain at the front of other major Australian banks.
Net interest margins, a key measure of bank profitability, were resilient at 2.08% despite the falling interest environment. That figure was 9 basis points higher than the previous financial year, with the metric unchanged during the second half despite rate cuts, the bank said.
Operating expenses rose 6% this financial year to $12.996 billion, taking the cost to income ratio to 45.7%. This was largely driven by inflation and 14% growth in investment spending, particularly in technology.
It's been enabled to increase spending to in part due to excess capital as it delays buying back stock due to its elevated share price. CBA holds common equity tier 1 capital of 12.3%, well above the 10.25% minimum threshold set by APRA.
The bank said 85% of its borrowers were now ahead of their repayment schedule, as impairment expenses came in at $726 million, implying a loan loss rate of 7 basis points. The expense figure is 9% lower than last year, although the second half of the year was 27% higher than the first. The bank said this reflected improved economic conditions and stable home loan arrears but added it would continue to carry a $2.6 billion buffer relative to expected losses.
The context: Despite its strong performance, CBA's share price has run hard over the last two years and the bank is widely considered overvalued as a result of a range of external factors including passive and foreign investment flows. As the largest single stock on the ASX, it is also seen as a barometer for the broader Australian market and economy.
"Pleasingly many households have seen a rise in disposable incomes due to the recent relief from reduced interest rates, lower inflation and tax cuts," CEO Matt Comyn said.
"Despite global uncertainty, the Australian economy has remained resilient with strong fundamentals including a healthy labour market, steady immigration and ongoing public sector investment. Even though sentiment remains subdued, we expect economic growth to improve modestly as the year progresses."
The sources: ASX, UBS research, Jarden research
