The Commonwealth Bank of Australia posted a cash net profit after tax (NPAT) of $9.881bn for the 2017 financial year, up 4.6% on the previous financial year.
The strong performance of the bank means that more than 800,000 shareholders will be paid a fully franked dividend of $2.30 per share, taking the full year dividend to $4.29. This is up 9 cents on the 2016 financial year and means a dividend payout ratio of 75% of cash NPAT.
Investors must own CommBank shares before the ex-dividend date of 16 August to be eligible for the dividend, which will be paid on 29 September.
Shareholders may opt for the bank’s dividend reinvestment plan (DRP) to receive new shares in place of all or part of the cash. A discount of 1.5% will apply to the market price of shares issued under DRP for the final dividend. The deadline for notifying of participation in DRP is 18 August.
In a statement on the results, CommBank said its operating income improved 3.8% due to “volume growth in home lending, business lending and deposits”.
However, the group’s net interest margin fell 3 basis points to 2.11% due to higher wholesale funding costs and increased competition in home and business lending.
On a cash earnings basis, its return on equity stood at 16%, down from 16.5% a year earlier. Cash earnings per share were up to $5.75 per share from $5.55 in the 2016 financial year.
Over the year, CommBank provided $197bn in new lending to customers, including providing 330,000 home loans. Customer deposits made up 67% of the group’s total funding.
What CommBank said
Group chief executive Ian Narev said the full year results showed the role that CommBank had in the lives of Australian people and the national economy.
“Commonwealth Bank’s performance this year has again contributed to the financial wellbeing of our customers, shareholders, our people and the Australian economy. This is the result of our consistent focus on customer satisfaction, innovation and financial strength,” he said in a statement released to the Australian Securities Exchange (ASX).
“Headline indicators show that the Australian economy remains sound overall, albeit variable. However many households are concerned about job security, wages and the cost of living. Cyclical investment in mining and construction has underpinned our economy for some time. The next wave of more broad-based business investment that we need to secure jobs and lift wages is important.”
Looking forward, Narev called for continued work together so that the economy and businesses can keep growing.
“So all of us need to focus on working together to create an environment where businesses continue to invest to create rewarding jobs,” he said.
“For our part, we will continue to strengthen our balance sheet to ensure that we can support our customers through a variety of economic scenarios. We will also maintain our focus on our long term sources of competitive advantage in our customer base and in technology, while accelerating the focus on productivity that we need to remain competitive for the long term, and listening more to our community to strengthen trust.”
The bank said in the ASX statement it is in discussions with third parties regarding the potential sale of its life insurance businesses in Australia and New Zealand and that it would acquire the remaining 20% interest in Aussie Home Loans.
It added that the Group's Common Equity Tier 1 (CET1) ratio was 10.1%, below the Australian Prudential Regulation Authority's (APRA) 10.5% benchmark, but it maintained it would meet the requirement by the 1 January 2020 deadline.