CBA shares fall after half-year profit drop
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More news: Shares in Commonwealth bank of Australia were down nearly 3% at $112.66 in early trading on the ASX after the country's top lender reported a 3% drop in half-year cash profit to $5.02 billion.
The results were broadly in line with market estimates, along with an 11 basis point decrease in net interest margins to 1.99%. Shares in the lender have run up more than 16% since November despite being considered an expensive stock.
CBA first-half profit drops, margins narrow
The news: Australia’s biggest lender, Commonwealth Bank, has posted a drop in half-year cash profit as its margins narrowed amid higher costs and a competitive market.
The numbers: Cash profit for the six months to 31 December fell 3% from a year ago to $5.02 billion. Statutory net profit was down 8% to $4.84 billion while operating income was also flat. CBA will pay a fully-franked interim dividend of $2.15 a share, slightly higher than a year ago.
The context: The lender reported an 11 basis points decrease in net interest margins to 1.99% due to higher funding costs, customers switching to higher-yield deposits and increased competition. This was partly offset by lower bad debts provision in the period.
There was a 4% increase in operating expenses due to higher staff costs and increased technology spending.
What they said: CBA chief executive Matt Comyn noted that many customers are finding it harder to absorb cost of living pressures.
“As cash rate increases have a lagged impact on households and business customers, we expect financial strain to continue in 2024, with an uptick in our arrears and impairments,” he said.
The source: ASX announcement
