Commonwealth Bank of Australia (CBA) announced on Feb. 15 that its cash profit for the first half of the 2022-2023 financial year was $5.15 billion (US$3.6 billion), a nine percent increase from 12 months prior. Statutory net profit after tax also rose ten percent to $5.22 billion, which was in line with what market analysts had forecasted. CBA CEO Matt Comyn attributed the strong result to a rise in lending volumes and a recovery in margins due to the interest rate hiking cycle implemented by the Reserve Bank.
Operating income increased 12 percent to $13.59 billion, mainly due to robust growth in the bank’s residential and commercial loan businesses. Net interest margin, a profitability indicator, also lifted 23 basis points to 2.1 percent. Operating expenses rose five percent to $5.9 billion, as a result of more spending on staff and technology and inflation.
In January, analysts at Goldman Sachs estimated that Australian banks would see a 20 percent surge in earnings this financial year as they engaged in the practice of delaying and not passing the increases in the official cash rate to savers in full. Earlier, Treasurer Jim Chalmers criticised banks for not treating their customers fairly and asked the Australian Competition and Consumer Commission to investigate.
Despite predicting an economic slowdown, CBA was confident that the Australian economy would avoid a recession. CBA also expressed optimism about the economic outlook, pointing to the “solid” fundamentals such as low unemployment, strong exports, and returning migration.
As a result of its strong half-year financial performance, CBA announced an additional share buyback of $1 billion and declared a fully franked interim dividend of $2.10 per share, up 20 percent from the previous year. The bank estimated that over 860,000 shareholders would receive the dividend, with an average amount of $1,650.