Commonwealth Bank has lifted dividends and posted a robust increase in full year profit on the back of strong home and business lending and a reduction in provisions related to the COVID-19 pandemic.
The country's biggest lender on Wednesday reported a better-than-expected cash profit of $9.59 billion for the year to June 30, an 11 per cent increase from the year earlier.
Its statutory bottom-line result was up 9 per cent to $9.67 billion.
Chief executive Matt Comyn attributed the result to the bank's focus on customer engagement as well as disciplined operational and strategic execution, which allowed it to lift deposit and lending volumes to retail, business and institutional clients.
"Our operating performance was higher as a result of this continued volume growth and profitability was further supported by sound portfolio credit quality," he said in a statement.
It was also boosted by a $911 million drop in its provisions for impaired loans to reflect an improvement in economic conditions, resulting in a net benefit of $357 million.
Net interest income rose 1.0 per cent over the year as deposits and business lending grew at a rapid pace. However, home lending expanded at lower than the industry average.
The lender's net interest margin, or the cost of funding loans compared with what it charges for them, slid 18 basis points to 1.9 per cent largely due to the impact of fierce competition in the home loan market.
However, it expects these margins to improve as cash rate hikes from the Reserve Bank temper rampant inflation and higher rates boost the bank's profitability.
The bank says while Australian households and businesses remain in a strong position, the rapid increase in the cash rate is negatively impacting consumer confidence and it expects consumer demand to moderate as cost of living pressures increase.
"It is a challenging time but we remain optimistic a path can be found to navigate through these economic conditions. We remain of the view that the medium term outlook for Australia is a positive one," Mr Comyn said.
CBA will pay a fully franked final dividend of $2.10 per share, taking the full year payout to $3.85 a share.
CBA'S SOLID FY PROFIT
* Cash earnings up 11pct to $9.6b
* Net profit up 9pct to $9.67b
* Operating income up 1pct to $24.38b
* Fully-franked final dividend $2.10/sh vs $2/sh year ago.
