CBA lifts dividend as profits rise by 11 per cent to $9.6 billion

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The Commonwealth Bank has notched up a $9.6 billion profit and will lift its dividend, after the banking giant’s bottom line benefited from solid loan growth and cuts to its bad debt charges.

As CBA delivered its full-year results on Wednesday, chief executive Matt Comyn said households were in a strong position, but the bank expected a softening in consumer spending amid rising costs of living.

CBA will pay a final dividend of $2.10 a share.Credit:James Alcock

“Against many measures, Australian households and businesses are in a strong position given low unemployment, low underemployment, and strong non-mining investment. However inflation is high, and we have seen a rapid increase in the cash rate which is negatively impacting consumer confidence,” Comyn said.

The bank said cash profits rose 11 per cent to $9.6 billion, helped volume growth in its core businesses and a $355 million loan impairment benefit. CBA will pay a final dividend of $2.10 a share.

The consensus forecast among analysts had been for cash earnings of $9.24 billion, according to Citi analysts, and a final dividend of $2.09.

CBA’s result comes as investors are focused on how banks are being affected by rising interest rates, which have sparked fears of bad debts, and alongside a slowdown in the property market, which is a critical influence on banks’ loan growth.

chief executive Matt Comyn said households were in a strong position, but the bank expected a softening in consumer spending amid rising costs of living.Credit:Alex Ellinghausen

At the same time, investors expect rising interest rates to ultimately widen banks’ profit margins, as lenders raise rates on loans more steeply than on deposits.

At CBA’s previous trading update in May, CBA had reported a squeeze on its margins due to stiff competition in the mortgage lending, alongside slower growth in the mortgage market.

In June, CBA economists predicted peak-to-trough declines in Sydney and Melbourne house prices of 18 per cent, in response to aggressive interest rate hikes from the Reserve Bank.

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