CBA flags impairments ahead of full-year results
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The news: Commonwealth Bank of Australia has flagged losses on the sale of its stake in Indonesian bank PTBC as well as costs related to changes in the operating model of subsidiary Bankwest.
The numbers: Australia’s biggest lender said it would book a non-cash loss of $298 million on the sale of its stake in Indonesian arm, PT Bank Commonwealth (PTBC), which was completed on 1 May. It includes a $133 million impairment loss on remeasurement of PTBC's net assets to fair value in 1H24, an additional $100 million loss recognised on completion of the sale in the second half, and $65 million of separation costs, of which $53 million was provided for in first-half.
It will book another $89 million of provision for costs related to changes to the operating model of Bankwest — including its transition to a digital bank, the transition of Bankwest business banking to CBA, and changes to the group's operating model.
The context: The announcement comes ahead of CBA’s full-year results on 14 August. The lender reported lower net interest margins in its third quarter update in May amid ongoing competitive pressures and higher arrears for home loans, credit cards and personal loans as higher interest rates impacted borrowers.
Despite this, shares in the company have risen more than 21% so far this year, drawing analysts concerns about the overvaluation of the stock. CBA shares closed at a record high of $137.49 on Wednesday.
The source: ASX announcement
