Commonwealth Bank of Australia Up on 2018 annual result

  • Aug 08, 2018 AEST
  • Team Kalkine
Commonwealth Bank of Australia Up on 2018 annual result

Stock price rise despite softness in FY18 Performance: Commonwealth Bank of Australia’s (ASX:CBA) stock rose 2.47% on August 08, 2018 (before market close) despite the company for full year 2018 reported for a 4% fall in the statutory net profit after tax (NPAT) from continuing operations to $9,375 million and 4.8% fall in the Cash NPAT from continuing operations of $9,233 million. In 2018, CBA has posted 2.6% growth in operating income and 5 basis point expansion for net interest margin to 2.15%. Further, the operating expenses grew 9.2% to $11.599 billion, primarily due to the $700 million penalty paid to settle the anti-money laundering action by the Australian Transaction Reports and Analysis Centre (AUSTRAC). Additionally, during the year 2018, the bank had replaced its CEO with Matt Comyn after Ian Narev exited the bank due to investigations from Australia's financial intelligence and regulatory agency, Austrac.

In addition to a new CEO appointment, CBA in June has reshuffled its structure, hired six new executives to lead its digital and cultural transformation. CBA in June had entered into an agreement with Austrac to end civil proceedings initiated in August 2017. The agreement sees the bank admitting to 53,750 breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF). As per the agreement, CBA will pay AU$700 million, of which AU$375 million was accounted for in H1 and AU$325 million in H2 along with Austrac's legal cost of AU$2.5 million, and the regulator's proceedings were dismissed. On the other hand, CBA has increased the dividend. CBA has determined a final dividend of $2.31 per share, up 1 cent on 2H17, which brings the full year dividend to $4.31, fully franked, up 2 cents on FY17. Meanwhile, CBA stock has risen 0.25% in three months as on August 07, 2018  and is trading at a reasonable P/E of 12.81x.

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