What boosted CBA’s (ASX:CBA) cash profit in FY22

Highlights

• CBA on Wednesday released earnings for the 12 months ending 30 June 2022.

• CBA reported an 11% rise in cash net profit to AU$9.6 billion in FY22.

• The board of CBA also announced a final dividend of AU$2.10 per share.

Shares of Commonwealth Bank of Australia (ASX:CBA) would be closely tracked on Wednesday following the release of the banking giant’s earnings for the 12 months ending 30 June 2022. CBA reported an 11% rise in cash net profit to AU$9.6 billion in FY22, buoyed by robust home lending and lower bad debts amid a rise in interest rates.

In the past year, CBA’s shares are down nearly 5%. The share price has fallen over 1% on a year-to-date (YTD) basis.

Operating expenses of the lender declined 1.5% to AU$11,190 million. CommBank operates businesses across New Zealand, Asia, the US, and the UK.

In its results announcement, CBA reported a home lending growth of 7.4%, household deposit growth of 13.2%, business lending growth of 13.6%, and a business deposit growth of 15.1%.

On the other hand, the ASX-listed bank reported an 18-basis point fall in net interest margin (NIM) to 1.9% on account of muted home loan margins. But the bank expects the margin to rebound as rates rise, and it manages to pass on more of the Reserve Bank of Australia’s (RBA) rate hikes to borrowers than savers.

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The board of CBA also announced a final dividend of AU$2.10 per share. With this, the total dividend for the year now stands at AU$3.85 fully franked.

CBA full-year results' highlights

• Revenue rose 3% (Y-O-Y) to AU$25,143 million
• Net profit after tax (NPAT) rose 6% to AU$10,771 million
• Cash earnings surged 11% to AU$9,595 million
• Fully franked final dividend of AU$2.10 per share
• Net interest margin (NIM) fell 18 basis points to 1.9%
• Common Equity Tier 1 (CET1) ratio of 11.5%

CBA’s loan provisions fall

CBA also reported that its loan impairment provisions had declined to AU$5.3 billion, from AU$6.2 billion in FY21. However, the bank was concerned over fresh provisions on account of higher interest rates, inflation, and supply chain disruptions.

What did CBA’s management say?

CBA’s Chief Executive Officer, Matt Comyn, was upbeat about the bank’s performance for the 12 months ending 30 June 2022.

“We have focused on strengthening our customer engagements and relationships, and this has resulted in further growth in our core deposit and lending volumes to retail, business and institutional customers,” Comyn said.

Comyn also said that households and businesses were in a strong position on account of given low unemployment, low underemployment, and robust non-mining investment. 

“Our operating performance was higher as a result of this continued volume growth and profitability was further supported by sound portfolio credit quality,” he added.