Commonwealth Bank has posted a record $8.68 billion full-year cash profit, with gains across each of its core divisions.
Australia’s largest bank lifted its cash profit 12 per cent for the year to June 30, 2014, from $7.82 billion in 2013.
Cash profit is a measure banks use to reflect underlying performance.
Analysts had expected a cash profit of around $8.7 billion.
Net profit, which includes one-off financial items, was $8.63 billion, up 13 per cent from $7.67 billion in 2013.
The bank lifted its fully-franked final dividend 18 cents to $2.18, taking its full-year dividend payout to $4.01, a 10 per cent increase.
Chief executive Ian Narev said the bank was “cautiously positive” about the outlook for the 2015 financial year as low interest rates help to offset weak consumer confidence and the slide in mining investment.
“Whilst business and consumer confidence levels have remained fragile, the levels of underlying activity confirm the strong foundations of the Australian economy,” he said.
“Lower interest rates have been positive for the housing and construction sectors, where increased activity has gone some way to offset the impacts of the anticipated reduction in investment in the resources sector.”
The Commonwealth lifted its net interest margin, the profit it makes on its loans, by one basis point to 2.14 per cent during the year, despite strong competition among the big four banks for loans.
Customer deposits were up $34 billion to $439 billion and now represent 64 per cent of the group’s total funding.
Earnings from its retail banking division were up 12 per cent to $3.47 billion, and up four per cent from its business and private banking business to $1.53 billion.
Meanwhile, the bank’s wealth management division lifted earnings 17 per cent to $793 million, and its institutional banking and markets division recorded a five per cent increase to $1.26 billion.
Despite the record profit, Commonwealth shares were down 70 cents to $80.99 as of 1130am.
OptionsXpress market analyst Ben Le Brun said the result met market expectations but wasn’t enough to push the bank’s shares higher, given it is already valued at around 15 times its forward earnings.
“The market got what it was expecting … but that 15 times forward earnings is probably a reason to sell off a tiny bit in this session,” he said.
But, he said, the result was a good one and the bank’s shares were unlikely to weaken substantially.
“It is a very impressive result and it probably goes some way to show why it is probably the highest rated bank in the world at the moment,” he said.
“I think, if it does fall out of favour with the market over the next few days, it will be a very short-lived story.”
