CBA shares mount recovery after early slide
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More news: Commonwealth Bank shares reversed early losses on the ASX after the banking giant's first-half cash profit and dividend beat market forecasts.
CBA shares climbed 1.75% to $164.99 by 1:41pm AEDT, after dropping more than 1% during early trading, and is edging towards closing on a record high.
CBA shares dip despite strong half-year result
More news: Shares in Commonwealth Bank have dipped nearly 1% to $160.70 after Australia’s biggest lender posted a better-than-expected lift in first-half cash profit and dividend.
Analysts backed the performance, but have maintained their cautious view on the expensive stock, which has run up 40% over the last 12 months.
UBS has a 'sell' rating on the stock with a price target of $115.
What they said: "CBA’s 1H 25 result does reflect positive underlying EPS drivers though and we think recent pre-revenue profit upgrades is a positive. A detraction, in our opinion is the still elevated cost growth and negative jaws year-on-year," UBS analysts said in a note.
CBA posts better-than-expected $5.13b first-half profit
The news: Australia’s biggest lender, Commonwealth Bank, posted a modest but better-than-expected lift in first-half cash profit, as well as higher dividends on the back of volume growth in its core business.
The numbers: Cash profit for the six months to December 2024 was up 2% to $5.13 billion, better than Visible Alpha consensus estimates of $5.06 billion.
Statutory net profit was up 6% to $5.14 billion while pre-provision profit was up 1.14% to $7.73 billion.
CBA will pay a fully-franked interim dividend of $2.25 a share, up 5% from a year ago and slightly ahead of analyst expectations.
The context: The lender attributed its solid performance to volume growth in the core business and lower loan impairment costs, although these were partly offset by higher operating costs.
It reported a 2 basis points increase in net interest margins to 2.08%, helped by higher earnings on capital hedges and replicating portfolio.
Chief executive Matt Comyn said the Australian economy had slowed considerably, with cost-of-living pressures weighing on consumer demand. However, he expects an interest rate easing cycle to provide some relief to households and improve business confidence.
What they said: "Private sector growth is weak, immigration is starting to slow and geopolitical uncertainties remain," Comyn said in a statement to the exchange.
"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."
The source: ASX announcement
