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Highlights:
- Commonwealth Bank of Australia’s (ASX:CBA) cash NPAT increased 9% YoY in H1FY23.
- The net interest income increased 19% over the year, and the net interest margin (NIM) grew to 2.10%.
- CBA declared an interim dividend of AU$2.10 per share, fully franked, payable on 30 March 2023.
Commonwealth Bank of Australia (ASX:CBA), the banking titan of Australia, reported its earnings for the first half of FY23. Despite reporting a 10% annual improvement in the statutory net profit after tax (NPAT), its shares came under selling pressure.
| Company Name | Market Price (AU$) |
Market Cap (AU$) |
Yearly Return (%) |
Dividend Yield (%) |
PE Ratio (x) |
YTD (%) |
52W High (%) |
52W Low (%) |
|
|---|---|---|---|---|---|---|---|---|---|
| CWLTH BANK FPO [CBA] | 102.38 | 172.86B | 9.21 | 3.5 | 20.33 | 6.48 | 111.38 | 86.98 | |
*Data powered by Morningstar®. Data delayed 20 minutes unless otherwise indicated. Read More
as of 15/02/2023, 01:21:25 PM AEDT
The drop in CBA shares weighed on the overall banking sector and dragged the ASX200 banking sub-sector by more than 3%.
The bank reported a statutory profit after tax of AU$5,216 million (up 10% over H1FY22) and cash NPAT of AU$5,153 million for H1FY23, up 9% YoY, driven by constant hikes in interest rates and higher loan loss provisioning. However, higher operating costs and expenses related to loan impairment limited the NPAT gain.
The banking giant set aside AU$511 million towards loan impairment, AU$586 million higher than last year. The lender said that higher impairments reflect rising interest rates and falling property prices.
Its net interest income increased 19% over the year to AU$11,637 million, and net interest margin (NIM) grew 18 basis points to 2.10% for H1FY23, underpinned by higher deposit earnings and equity hedges amid rising rates.
As per the bank, its strong profit growth was driven by volume growth and margin recovery in the increasing interest rate environment. Also, the sound credit quality remained a significant factor behind the noticeable results.
The bank’s total group lending grew 7.3% to AU$910.5 billion in H1FY23 compared to the same period the previous year, while the total group deposits increased 7.9% YoY to AU$877.7 billion.
The bank reported a Common Equity Tier 1 capital (CET1) ratio of 11.4% as on 31 December 2022, after dividend payments and on-market share buy-backs showing a strong capital position. Considering the capital position, CBA may increase its on-market share buy-back by AU$1 billion, mentions the announcement. If that happens, the bank expects its CET1 ratio to decrease by approximately 25 basis points.
CBA declared an interim dividend of AU$2.10 per share, fully franked. The dividend payout ratio was 69% of the bank’s cash earnings. The interim dividend is 35 cents or 20% higher compared to the first half of FY22 and is payable on 30 March 2023, for which the record date is 23 February.
