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Australia’s largest bank has reported that its statutory full-year profit has jumped 5% to $10.19 billion.
The Commonwealth Bank’s earnings were propped up by its net interest margin (NIM) — the difference between how much the bank pays to borrow money and how much interest it charges to lend money.
The bank’s NIM rose to 2.07% (up 0.17 percentage points).
However, its profit was somewhat weighed down by its loan impairment expenses, which rose $1.47 billion, which reflects ongoing cost of living pressures.
CBA also reported that its annual cash profit (its preferred measure of earnings) lifted 6% to $10.16 billion.
The company also said it will buy back an additional $1 billion worth of stock from the market, and declared a fully-franked final dividend of $2.40 per share (which is 30 cents more than a year earlier).
CBA and its competitors saw their margins rebound, thanks to the Reserve Bank’s aggressive rate-hiking cycle.
But there are concerns about rising bad debts as the banks’ mortgage units are expected to take a hit from higher borrowing costs.
CBA warned that for the next financial year “competition, customer deposit switching and higher wholesale funding costs” could impact its margins, partly offset by the benefit of higher average cash rates.
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